House of Representatives

Tax Laws Amendment (2006 Measures No. 5) Bill 2006

Second Reading Speech

Senator ELLISON (Western Australia-Minister for Justice and Customs) (12.58 p.m.)-

I thank those senators who have taken part in the debate on the Tax Laws Amendment (2006 Measures No. 5) Bill 2006. It is an important bill that makes a number of changes to tax law and which will reduce compliance costs for Australian taxpayers. That is always important. These changes are in keeping with the government's commitment to remove unnecessary regulation of business.

Schedule 1 implements a number of fringe benefits tax changes. These have been touched on by senators who have contributed to the debate. It gives effect to two fringe benefits tax, FBT, recommendations from the report of the task force on reducing the regulatory burdens on business: Rethinking regulation. The first change increases the minor benefits exemption threshold from less than $100 to less than $300. This change will lower compliance and record keeping costs for businesses that provide low-value benefits to employees infrequently.

The bill raises the reportable fringe benefits threshold from more than $1,000 to more than $2,000. This will reduce compliance and record keeping costs by removing the need for businesses to report fringe benefits for employees who receive no more than $2,000 worth of benefits. Schedule 1 also increases from $500 to $1,000 the FBT-free threshold for in-house fringe benefits and airline transport fringe benefits. In addition, this schedule extends the definition of 'remote' for the purposes of the fringe benefits tax concessions where the shortest practicable route involves travel by water. This is in recognition of the special circumstances of employees who work in locations isolated from populated areas by a body of water.

The bill also provides GST concessions to recipients of the government's due military compensation scheme. Schedule 2 will ensure that supplies of drugs, medicines and other pharmaceutical items are GST free when supplied as pharmaceutical benefits under the military compensation scheme. In addition, the GST-free car concession is extended to include people whose service in the Defence Force or in any other armed force of Her Majesty has resulted in them receiving, or being eligible to receive, a special rate disability pension under the military compensation scheme.

Schedule 3 represents another instalment of the government's continuing reform of the personal income tax system. It removes the part-year tax-free threshold for taxpayers who cease to be engaged in full-time education for the first time. Under the current law, taxpayers who cease full-time education for the first time are not eligible for their full tax-free threshold of $6,000. Rather, they are entitled to a reduced tax-free threshold that depends on the number of months they are not studying as well as their income during the time they are studying. This measure extends the full tax-free threshold of $6,000 to these taxpayers. The amendments simplify the law and reduce compliance costs. Again, I thank those senators who have participated in the debate. I commend the bill to the Senate.

Question agreed to.

Bill read a second time.