House of Representatives

Taxation Laws Amendment Bill (No. 3) 2001

Second Reading Speech

Mr Ian MacFarlane (Groom - Minister for Small Business)

I move:

That the bill be now read a second time.

This bill makes amendments to implement the changes to GST and PAYG reporting announced by the government on 22 February 2001. It also contains some additional changes developed since that announcement.

The changes will ease the compliance burden for taxpayers in the PAYG system and will simplify and streamline GST payment and reporting arrangements for small business.

This bill demonstrates the government is listening to the concerns of small business. After the experience of the first two quarterly returns, small business said that they wanted a simpler option for their business activity statement. This bill will dramatically reduce reporting requirements, and follows extensive consultation with business and accounting groups with a specific focus on the needs of small business.

This government talks to small business, understands their needs and acts accordingly. I have spent a great deal of my time between sessions going out and meeting with small business and listening to their concerns before coming back to this place and inputting their ideas into the legislative process.

Importantly, these changes will not force businesses to change the way they have been completing their BAS. If businesses are happy with the way they have been completing their BAS, they do not need to change.

Alternatively, under the new arrangements businesses reporting quarterly can choose to pay GST quarterly, complete only three boxes on the BAS quarterly and lodge an annual GST information report.

Businesses with a turnover of $2 million or less are also able to choose to pay an amount each quarter worked out by the Taxation Office and then lodge an annual GST return.

The changes in this bill will also allow many more taxpayers to be able to make PAYG instalments based on an amount notified by the tax office. They will no longer have to make quarterly calculations of their income, unless they choose to.

Primary producers, as well as authors, artists and other special professionals, will benefit from the change that allows them to make only two GST or PAYG payments each year-one in April and one in July. This will allow these taxpayers to meet their obligations in a way that better reflects their fluctuating income flows.

The quarterly due dates have been extended for the BAS and Instalment Activity Statement lodgments and payments, so that they are now due on the 28th day of the month after the end of the quarter. In addition, the due date for the December quarter return has been extended to 28 February in recognition of the Christmas-New Year break.

Other minor changes made by the bill include ensuring that businesses with substituted accounting periods will not have to account for GST on a monthly basis and that entities will be able to make changes to their current BAS to correct small GST mistakes in the previous BAS.

The changes in this bill have been positively embraced by the business community. The Institute of Chartered Accountants said:

We also endorse the flexibility introduced into the new system, which allows reporting to be based either on accruals or estimates of income tax and GST. One of the advantages of the BAS regime for small business has been the need for more discipline in record keeping.

That is a comment I hear over and over from small business. It is a comment I heard here yesterday in a meeting with small businessmen, and small businessmen are saying that the discipline that the new tax system is asking them to implement is actually benefiting their business and the way in which they can manage their business. The CPA said:

CPA Australia welcomed the Treasurer's statement on BAS this afternoon, hailing it as a victory for small and medium-sized businesses. This is an excellent outcome and demonstrates what can be achieved through ongoing consultation.

I could only agree with that. The consultative process that we, as a government, have established with small business is one that is reaping rewards for small business and giving us these changes that small business have requested. The Australian Chamber of Commerce and Industry said:

It is clear from the Government's announcements today that they have been listening to the concerns of the business community, particularly small businesses, and have responded in a way which will ensure the compliance burden of moving to the new tax system will be dramatically reduced.

The National Farmers Federation said that they:

... congratulated Prime Minister John Howard and Treasurer Peter Costello on delivering such a highly-sought after and vital outcome for farmers and small business.

It is clear that the changes in this bill have been welcomed by businesses and make the payment and reporting arrangements for GST and PAYG far simpler.

Full details of the changes in this bill are contained in the explanatory memorandum. I commend the bill to the House and present the explanatory memorandum.

Debate (on motion by Mr Kelvin Thomson) adjourned.