House of Representatives

Tax Laws Amendment (2011 Measures No. 3) Bill 2011

Second Reading Speech

Mr Shorten (Assistant Treasurer and Minister for Financial Services and Superannuation)

I move:

That this bill be now read a second time.

This bill amends various taxation laws to implement a range of improvements to Australia's tax laws.

Schedule 1 to this bill provides a 12-month export period for the supply of a recreational boat to be GST free, subject to certain conditions, where the boat has been supplied under a contract entered into on or after 1 July 2011.

The schedule implements a measure announced by the government in the 2010-11 budget. The measure overcomes a geographic disadvantage Australian boatbuilders face when competing in international markets.

The distance and sailing conditions between Australia and foreign ports make it difficult for boat buyers intending to have an extended sailing holiday before taking the boat out of Australia to meet the existing 60-day export period for a GST-free supply. On the other hand, it is relatively easy for boat purchasers in some other countries to meet the export requirements of comparable legislation because these countries are comparatively closer.

The schedule makes the supply of a boat GST free if the seller or purchaser exports the boat from Australia within 12 months of delivery. The main conditions are that the boat must be a new recreational boat and the boat must not be used in any disqualifying activity.

The first condition is designed to ensure that the 12-month export period applies only to boats of a type used for recreational purposes. It is not intended to apply to boats of a type used for commercial gain. The boat also has to be a new boat. This will generally be one that has not been used or sold before, although certain activities before sale are allowed. These include delivering the boat to a dealer or to a boat show, conducting speed trials on the boat or other uses in connection with the use of the boat as trading stock.

The disqualifying activity test is, broadly, designed to ensure that the boat cannot be used for commercial or financial gain while it is in Australia.

The Commissioner of Taxation will have a discretion to extend the 12-month export period. The discretion could cover circumstances that reasonably explain the delay in exporting the boat, such as bad weather, serious illness to a crew member or significant accidental damage to the boat.

Schedule 2 amends the tax laws to remove a technical deficiency which prevents the ongoing imposition of the general interest charge in some cases. The general interest charge is an interest charge imposed by the tax laws on the late payment of income tax and shortfall interest charge liabilities.

These amendments will restore the ongoing imposition of the general interest charge. This ensures that all unpaid amounts of income tax and shortfall interest charge will be treated equally under the law and that the commissioner's ability to collect the general interest charge will remain uninterrupted.

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

Debate adjourned.