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Thursday, 4 September 2014
Page: 9719

Mr CIOBO (MoncrieffParliamentary Secretary to the Treasurer) (09:15): I move:

That this bill be now read a second time.

Today I introduce a bill to amend the Income Tax Assessment Act 1997 to implement a range of changes to Australia's tax laws.

The government's Economic Action Strategy is not about undoing our strong safety net—it is about making it sustainable.

This government's Economic Action Strategy is about setting up a stronger and more sustainable economy, which starts off with a stronger budget.

We have already delivered on our promise to abolish the carbon tax, and its associated savings will be passed on to households and businesses. That means the average cost of living, across all households, will be around $550 lower than it would otherwise have been this year.

This bill represents another chapter in the government's Economic Action Strategy.

We inherited from Labor an unsustainable budget position. The measures in this bill will return around $1.4 billion to the budget over the forward estimates.

Schedule 1: Abolish the Mature Age Worker Tax Offset

The Mature Age Worker Tax Offset, which merely reduces by up to $500 the amount of tax payable for those who are already working, simply does not work.

It doesn't work because it does not help older Australians enter the workforce.

It does not help reduce labour market disadvantage.

Many older Australians don't need to be encouraged to enter the workforce. They want to work and we need them to work.

That's why this government is introducing a new wage subsidy for older job seekers called the Restartprogram.

From 1 July 2014 an incentive of up to $10,000 will be available to employers who hire an older job seeker. That means that job seekers aged 50 years or over and in receipt of income support for a minimum of six months can get back into work without some of the hurdles they might otherwise encounter due to age.

The Mature Age Worker Tax Offset achieved little and abolishing it will save the taxpayer $760 million over the forward estimates period.

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

Schedule 2: Abolish the Seafarer Tax Offset

The Seafarer Tax Offset is a refundable tax offset.

It is provided to companies for salaries, wages and allowances paid to Australian resident seafarers employed to undertake overseas voyages on certified vessels.

Australian companies are eligible for the Seafarer Tax Offset if they employ seafarers on overseas voyages for at least 91 days in the income year.

The current regulatory regime for shipping imposes a cost on shippers and their customers. Because it is a part of a current shipping regulation, the Seafarer Tax Offset effectively imposes a cost on all Australian taxpayers.

The Seafarer Tax Offset's primary goal was to increase the employment of Australian seafarers. In fact, the seafarer tax offset was claimed by fewer than 20 shipping companies in respect of around just 250 employees.

With low take-up of all the tax concessions offered by the previous government's Stronger Shipping package, the Seafarer Tax has not achieved its goal.

Abolishing this offset is expected to save the government $12 million over four years.

And that is another small step towards repairing the budget.

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

Schedule 3: Reducing the tax offset under the Research and Development Tax Incentive

We are also reducing the tax offset available under the Research and Development Tax Incentive.

The rates will be reduced by 1.5 percentage points from 1 July 2014.

These changes are in line with the government's commitment to cutting the company tax rate by 1.5 percentage points from 1 July 2015—which is the same amount as the reduction in the R&D offset rates.

Changing the offset will affect neither the eligibility of companies for the R&D tax incentive nor the way companies claim the incentive.

Nor will the changes affect the administration of the R&D tax incentive more generally.

The R&D tax incentive will continue to provide generous easy-to-access support for thousands of eligible companies in all sectors of the Australian economy.

If this measure were not enacted, the cut to the company tax rate would entail an increase in the benefit provided by the R&D tax incentive relative to the normal treatment of business expenses.

The gain to revenue and savings from this measure will be around $620 million over the forward estimates.

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

Schedule 4: Deductible Gift Recipients

Australians are generous, choosing to donate over $2 billion every year to charity.

Donations made to organisations with DGR status are income tax deductible to the donor, so DGR status helps listed organisations attract public support for their activities.

Three organisations are being added to the DGR list.

Australian Schools Plus supports schools that face disadvantage to improve education outcomes.

The second DGR to be specifically listed is the East African Fund, which runs the School of St Jude in Tanzania.

Another organisation to be listed as a DGR is the Minderoo Foundation Trust, which supports three programs: the Walk Free Foundation; GenerationOne; and Hope for Children Australia.

Full details of the changes to the DGR list are contained in the explanatory memorandum.


The measures in this bill are responsible. They represent another step in our Economic Action Strategy towards a stronger, better and more compassionate Australia.

This bill might seem like a small chapter in this story—but it is a significant element in reducing our debt. As a government, we recognise that we cannot continue borrowing $1 billion every month to pay the interest on Labor's debt.

The measures in this bill will return around $1.4 billion to the budget over the forward estimates.

These measures represent a careful and measured approach to re-prioritising government revenue.

This government will continue to make the right decisions to position Australia for future opportunities and challenges.

I commend the bill to the House.

Debate adjourned.