Second Reading SpeechMr Brough (Longman - Minister for Revenue and Assistant Treasurer)
That this bill be now read a second time.
This bill implements the first part of the government's response to the report on aspects of income tax self assessment. The report, which was released on 16 December 2004, identified a number of legislative refinements to the self assessment system. They are aimed at reducing uncertainty and compliance costs for taxpayers, while preserving the Australian Taxation Office's capacity to collect legitimate income tax liabilities.
Schedule 1 to the bill introduces a new interest regime-the shortfall interest charge-that will apply to underassessment of income tax. For income tax shortfalls, the shortfall interest charge will replace the existing general interest charge for the period before the taxpayer is notified of the underassessment. The shortfall interest charge will be set at a rate that is four percentage points lower than the general interest charge rate.
This reduces the interest consequences for taxpayers who make errors in their returns. The changes will apply to amendments of assessments for the 2004-05 income year and in later years.
Schedule 2 amends the administrative penalty provisions of the tax laws.
Firstly, this schedule will abolish the penalty for tax shortfalls resulting from a failure to follow a private ruling issued by the Commissioner of Taxation. This is because of fears that the penalty was acting as a disincentive to applications for rulings.
Secondly, the commissioner will be required to provide an explanation of why a taxpayer is liable to a penalty and why the penalty has not been remitted in full.
Finally, the bill clarifies the definition of 'reasonably arguable' in the provision which says that a taxpayer can be charged interest in relation to an underpayment where a claim was not 'reasonably arguable'.
These amendments will broadly apply from the 2004-05 income year and later income years.
Full details of the measures in this bill are contained in the explanatory memorandum.
I commend this bill and present the explanatory memorandum.
Debate (on motion by Ms George) adjourned.