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Wednesday, 16 October 2019
Page: 3076

Senator DAVEY (New South WalesThe Nationals Whip in the Senate) (10:09): I rise to make a brief contribution on the Treasury Laws Amendment (2019 Tax Integrity and Other Measures No. 1) Bill 2019. This bill contains a package of important measures that are designed to improve the integrity of Australia's tax system, save businesses time and money, through implementing an electronic invoicing framework, and protect workers' superannuation. My interest in this bill is specifically with the proposed changes to schedule 3 of the bill, which provides an integrity measure that will deny deductions, for some taxpayers, for expenses associated with holding vacant land. I want to specifically speak on government proposed amendments to schedule 3.

This is a classic case of the Senate doing its work and working well through the processes. As the bill first came into this chamber and we looked at it, we realised that there were potential implications for agricultural businesses and farmers owning primary production land that would have fallen to the definition of 'vacant land' in this instance. By working together, working through the committee processes, allowing stakeholders to raise their concerns and having an active Senate with senators in the chamber who have a specific regional focus, we were able to identify those unintended consequences, propose amendments that would ensure that the integrity of the bill is sustained and remove those unintended consequences that could have had significant negative impacts for farmers and primary producers throughout Australia.

Specifically, our proposed amendments to schedule 3 will make it clear that deductions may be available for entities that incur costs in holding land that becomes vacant due to a significant or unusual event—which often happens in regional Australia—such as bushfire, flood or other unforeseeable events. It also allows deductions while the land is carrying on a business of primary production or is being used by another entity to carry on a business. In essence, if a farmer holds a title of 'vacant land' with no permanent structure and, for their own business reasons, they decide to lease that to another farmer or business, as long as that person is carrying out a lawful business they can claim the deductions.

The amendments will also allow for succession planning. A lot of farmers make arrangements through their family units to allow for succession planning so that mum and dad can enter retirement with dignity. They can move off the farm and the children can take over, or the parents might stay in the residence on the farm but children might take over the management of what would be vacant land to carry out farming practices. Because that is an ongoing lawful business, that will be allowed and the parents will be allowed to claim deductions. This is a really important issue that was raised by several stakeholders both personally to me and through the other processes. It is a major concern for farmers throughout regional Australia and particularly those farmers who are looking to transition into retirement.

Agricultural land is often unique. One farm may be made up of multiple titles, and businesses will ascertain what is best for their business unit. Some of those titles might be vacant insofar as they don't have permanent structures, but they're certainly not vacant insofar as they're a business enterprise. The capacity for farmers to manage their businesses and tax purposes is fundamental to their ongoing viability. It may change from year to year, so they need the flexibility to carry on their business, manage their titles and their blocks and manage their succession planning so that they can have all the tax benefits that are enabled to them through a legitimate lease arrangement for the vacant land.

I commend the government. I have worked directly with the assistant minister Michael Sukkar's office to make sure that these amendments have been proposed. I certainly commend the government amendments to the chamber. I hope that people see the reasons for them and understand the reasons for them, because this will enable legitimate business to be ongoing while people can claim legitimate deductions. This does in no way undermine the integrity of the bill or the purpose of schedule 3, which is to prevent land banking or withholding land from reasonable development; in agricultural enterprises, such residential developments are unlikely to occur on a lot of the vacant land that's out there. As I said earlier, this is a classic case of the Senate doing its job, doing what it was designed to do: review legislation and make sure that we identify unintended consequences to ensure there is no negative impact on legitimate businesses that may otherwise have been caught up in the red tape. So I commend the government amendments to the Senate. I thank you for your time.