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Wednesday, 16 October 2019
Page: 3078


Senator HUME (VictoriaAssistant Minister for Superannuation, Financial Services and Financial Technology) (10:22): Firstly, I would like to thank those senators who have contributed to this debate on the Treasury Laws Amendment (2019 Tax Integrity and Other Measures No. 1) Bill 2019. I would also specifically like to acknowledge the report of the Senate Economics Legislation Committee on this bill. Senators Sterle, Patrick, Davey and Roberts are absolutely correct: the Senate is a house of review. The committee did the job that it was tasked with, and the government has responded appropriately. The bill, as amended, will address the recommendations made by the committee and the opposition's additional comments from that committee.

This bill contains a number of measures designed to improve the integrity of Australia's tax and superannuation systems and save businesses time and money through implementing an electronic invoicing framework. Schedule 1 to the bill improves the integrity of the tax treatment of concessional loans made to a tax-exempt entity that is privatised, by removing inappropriate tax deductions which arise on the repayment of loan principal for certain privatised entities. Schedule 2 to the bill will ensure that partners and partnerships cannot inappropriately access the small-business capital gains tax concessions when they alienate future income from the partnership. Partners will now only be eligible for the concessions when such rights make the assignee a partner in the partnership.

Schedule 3 to the bill amends the Income Tax Assessment Act 1997 to deny deductions for some taxpayers for expenses associated with holding vacant land. The amendments that will be presented today will improve the integrity of the tax system by tightening the link between claiming deductions for holding vacant land and earning assessable income. In response, however, to the Senate Economics Legislation Committee's recommendation regarding schedule 3, the government is ensuring that this measure will not apply to taxpayers affected by defective buildings and other exceptional and unforeseen circumstances. People in these situations are dealing with enough stress, and the government does not want taxpayers in these unfortunate situations to face any uncertainty regarding the tax treatment of land that has become vacant due to events outside their control.

The government's amendments will allow taxpayers affected by unforeseen and uncontrollable circumstances to continue claiming deductions on vacant land. To be eligible for that exemption, taxpayers would need to have held the land when it was previously not vacant for tax purposes. The exemption will apply for three years from the date of the exceptional circumstance, with an option for taxpayers to request an extension from the Commissioner of Taxation. The government's amendments also ensure that taxpayers carrying on primary production businesses, such as farming, and taxpayers who rent vacant land to businesses are not affected by the measure. Overall, the amendments provide greater certainty and clarity to taxpayers on the scope of this measure, while also ensuring that the measure improves the integrity of the tax system through targeting those taxpayers who improperly claim deductions when the land is not genuinely held for the purpose of earning income.

Schedule 4 of this bill will extend to family trusts a specific anti-avoidance rule that applies to other closely held trusts that engage in circular trust distributions. This will better enable the ATO to pursue family trusts that engage in these arrangements.

Schedule 5 to the bill amends the Taxation Administration Act 1953 to allow the ATO to disclose to credit reporting bureaus the tax debt information of businesses that have owed the ATO at least $100,000 for more than 90 days and, during that period, have not effectively engaged with the ATO to manage their debt. This measure will encourage businesses to engage with the ATO and repay their debt in a timelier manner. In response to the recommendation of the Senate Economics Legislation Committee concerning schedule 5, I would note that the ATO and the Inspector-General of Taxation are working closely together to address the concerns that the inspector-general raised in her submission on schedule 5.

In response to the opposition's comments in the committee report regarding schedule 5, the government has agreed to the amendment proposed by Senator McAllister, on behalf of the opposition, amending the notice period under schedule 5 from 21 days to 28 days. The government also notes the opposition's comments with respect to tax practitioner representatives being provided notification of a proposed disclosure to a credit reporting bureau, under schedule 5, and I'm advised that the ATO will provide notifications to the individual taxpayer's preferred address for contact. In many cases where the taxpayer has elected their tax practitioner to be their preferred address, the tax practitioner will receive that notification. However, not all taxpayers with a tax practitioner will have the tax practitioner's address as their preferred address. It's important to respect each taxpayer's choice of preferred address. The government therefore will not be supporting Centre Alliance's amendments, but thanks Senator Patrick for his input into this bill.

Schedule 6 to the bill amends the Taxation Administration Act 1953 to allow the ATO to implement an electronic invoicing framework, known as e-invoicing, in Australia.

Schedule 7 to the bill protects hardworking Australians' superannuation by closing a legal loophole which has been used by some unscrupulous employers to short-change employees who make salary sacrifice contributions. These changes will prevent employers from using a salary sacrificed contribution to satisfy the employer's superannuation guarantee obligations and prevent employers from reducing the base on which they calculate the superannuation guarantee obligations by the amount of the salary sacrifice contributions. In response to the opposition's comments in the committee report regarding schedule 7, the government has agreed to the amendment proposed by Senator McAllister, on behalf of the opposition, to change the implementation date from 1 July 2020 to 1 January 2020.

I commend this bill to the Senate.

Question agreed to.

Bill read a second time.