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Wednesday, 12 October 2016
Page: 1662

Mr MORRISON (CookTreasurer) (09:44): I move:

That this bill be now read a second time.

The Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2016 forms part of a package of bills to implement the government's working holiday maker reform package.

This bill amends the Superannuation (Departing Australia Superannuation Payments Tax) Act 2007 to increase to 95 per cent the rate of tax on superannuation payments to working holiday makers after they leave Australia.

Working holiday makers can access the balance of their superannuation after they leave Australia and their visa expires or is cancelled. These funds, which are accessed after the working holiday maker has left Australia, are typically spent offshore.

The payment of this superannuation balance is known as the departing Australia superannuation payment.

The new rate of tax introduced by this bill will apply from 1 July 2017. It is estimated to raise $105 million over the forward estimates.

This bill, together with the bill that increases the passenger movement charge by $5, will fully offset the government's working holiday maker reform package and ensure the budget is no worse off.

The superannuation arrangements that were put in place to support Australians provide for their retirement income were not put in place to provide for the retirement incomes of visitors to Australia. As a result, this is an entirely appropriate measure and ensures that employers of working holiday makers will be paying the same rates of pay to those that they would provide to an Australian.

The reform package will lower the rate of tax that applies to income earned by working holiday makers, which means they will have more money to spend during their holiday in Australia.

Full details of the measure are contained in the explanatory memorandum.

Debate adjourned.