Revised Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Jim Chalmers MP)Chapter 5: Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Treasury Laws Amendment (Tax Incentives and Integrity) Bill 2024
Schedule 1 – Luxury car tax
Overview
5.1 This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
5.2 Schedule 1 to the Bill amends section 25-1 of the A New Tax System (Luxury Car Tax) Act 1999 to:
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- update the definition of a fuel-efficient car by reducing the maximum fuel consumption for a car to be considered fuel-efficient for the LCT to 3.5 litres per 100 kilometres from the current 7 litres per 100 kilometres; and
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- amend the index number used to index the LCT threshold from All Groups CPI to the motor vehicle purchase sub-group of the CPI to ensure that both thresholds grow at the same pace and no longer continue to converge.
5.3 The amendments seek to incentivise the take-up of fuel-efficient and electric vehicles and ensure the concessional treatment of fuel-efficient cars is consistent with the Australian Government's National Electric Vehicle Strategy (NEVS).
Human rights implications
5.4 This Schedule does not engage any of the applicable rights or freedoms.
Conclusion
5.5 This Schedule is compatible with human rights as it does not raise any human rights issues.
Schedule 2 - Denying deductions for interest charges
Overview
5.6 This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
5.7 The Schedule amends the Income Tax Assessment Act 1997 to ensure that the general interest charge and shortfall interest charge are no longer tax deductible.
5.8 This is intended to encourage taxpayers to pay their tax in full and on time, level the playing field for individuals and businesses who already correctly self-assess their tax liabilities and pay tax on time and assist in lowering the amount of collectable debt owed to the ATO.
Human rights implications
5.9 This Schedule does not engage any of the applicable rights or freedoms.
Conclusion
5.10 This Schedule is compatible with human rights as it does not raise any human rights issues.
Schedule 3 - Extending ATO notification period for retaining refunds
Overview
5.11 Schedule 3 to this Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
5.12 Schedule 3 to the Bill amends the TAA 1953 to extend from 14 to 30 days the period within which the Commissioner must notify a taxpayer of their decision to retain a refund amount arising from a BAS or another notification under the BAS provisions for verification of information. A reference to 'days' in this Chapter means 'calendar days'. The extension of this mandatory notification period aims to strengthen the ATO's ability to combat fraud during periods of increased risk of fraudulent activity.
5.13 The TAA 1953 allows taxpayers to seek review of the Commissioner's decision to retain a refund for verification of information. Schedule 3 to this Bill does not alter the existing review mechanisms available to taxpayers.
5.14 By reducing the risk of fraud and strengthening the integrity of the tax system, the amendments in Schedule 3 to the Bill are ultimately beneficial to taxpayers.
Human rights implications
5.15 Schedule 3 to this Bill does not engage any of the applicable rights or freedoms.
5.16 Schedule 3 to the Bill provides the ATO with additional time to determine whether it is necessary to retain a refund to verify information following lodgement of a BAS or another notification under the BAS provisions. The amendments seek to reduce the number of potentially fraudulent refunds released to taxpayers without appropriate scrutiny by the ATO, and do not affect taxpayers' entitlement to a refund if fraudulent activity has not occurred.
5.17 Accordingly, Schedule 3 to the Bill does not directly advance or limit a relevant human right or freedom.
Conclusion
5.18 Schedule 3 to this Bill is compatible with human rights as it does not raise any human rights issues.
Schedule 4 - $20,000 instant asset write-off for small business entities
Overview
5.19 Schedule 4 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
5.20 Schedule 4 to the Bill amends the IT(TP) Act to extend the $20,000 instant asset write-off by 12 months until 30 June 2025. This will allow small businesses (with an aggregated annual turnover of less than $10 million) to immediately deduct the full cost of eligible depreciating assets costing less than $20,000 that are first used or installed ready for use for a taxable purpose on or before 30 June 2025. The extension will improve cash flow and reduce compliance costs for small businesses.
Human rights implications
5.21 Schedule 4 to the Bill does not engage any of the applicable rights or freedoms.
Conclusion
5.22 Schedule 4 to the Bill is compatible with human rights as it does not raise any human rights issues.