Second Reading Speech
This Bill amends various taxation laws to implement a range of improvements to Australia's tax laws.
Schedule 1 amends the Superannuation Industry (Supervision) Act 1993 and the Retirement Savings Accounts Act 1997 to permit the ATO to operate a scheme that will make it easier and simpler for lost superannuation fund members and retirement savings account holders to consolidate their benefits. This scheme, known as the electronic portability form, will allow members reported as lost by their superannuation funds to electronically request the transfer of their superannuation benefits through the ATO.
The new form will enable lost members to visit the ATO website, find their benefits, fill in a simple transfer request and submit it electronically to the ATO. The ATO will apply a verification process using data supplied by the member. If these processes are successfully completed, the ATO will electronically send the member's request to the fund that reported the member as lost, which will then transfer the member's benefits to the nominated receiving fund. The electronic portability form will not prevent members from dealing directly with their fund to arrange the transfer of their benefits if they so wish. The amendments allow the regulations to set out the operating details of the electronic portability form and also amend the tax file number provisions for the purposes of the new form.
The amendments are expected to reduce the amount of lost superannuation. There are about 5 million lost super accounts worth $20.2 billion (as at 30 June 2011). These amendments will benefit individual members by reducing the fees they pay on multiple accounts and maximising their benefits on retirement.
Schedule 2 amends the CGT provisions to make it easier for businesses to restructure. These changes include extending the CGT roll-over for the conversion of a body to an incorporated company and broadening the range of CGT roll-overs where entities can use a share or interest sale facility for foreign residents in a restructure. These changes also allow CGT demerger relief for demerger groups that include corporations sole or complying superannuation entities, which currently cannot access the relief. These changes are consistent with the Government's objective of promoting flexibility for business.
Schedule 3 amends the GST law to implement three of the recommendations agreed to by the Government arising out of Treasury's Review of the GST financial supply provisions. The remaining measures require amendments to GST regulations and will be put before the Parliament at a later date. Part 1 amends the GST law to increase the first limb of the financial acquisitions threshold from $50,000 to $150,000. This increase will reduce compliance costs for businesses that only make a small number of low value financial supplies, through reducing the number of businesses that are drawn into the financial supplies regime and then prevented from claiming input tax credits on acquisitions that relate to making financial supplies.
An entity can now make up to $1.65 million of financial acquisitions in the relevant 12-month period and still be able to claim input tax credits on those acquisitions. This compares with up to only $550,000 of similar acquisitions prior to 1 July 2012. Part 2 amends the GST law to exclude financial supplies consisting of a borrowing made through the provision of deposit accounts by an Australian authorised deposittaking institution from the current concession for borrowings. This will better target the exemption to reflect the policy intent.
Part 3 allows taxpayers who account on a cash basis to claim input tax credits upfront for acquisitions they make under hire purchase agreements. This change will remove the distortion between hire purchase and other forms of financing for cash-based taxpayers, and also ensure that hire purchase transactions are treated the same regardless of whether taxpayers account on a cash or non-cash basis. Removing the current discrepancy in the GST treatment will allow cash based taxpayers to acquire business assets at a lower cost.
These amendments apply from 1 July 2012.
Schedule 4 amends the GST Act to ensure that sales or long-term leases of new residential premises by a registered entity are taxable supplies, and that sales or long-term leases of existing residential premises are input taxed supplies. This Schedule provides that a 'wholesale supply' of residential premises is disregarded in certain circumstances for the purposes of determining whether a subsequent supply of the premises is a supply of new residential premises. In addition, any supply of residential premises by a government body as a result of the lodgment of a property sub-division plan is disregarded for the purposes of determining whether a subsequent supply of the premises is a supply of new residential premises.
Further, these amendments clarify and remove any doubt that the subdivision of existing residential premises that are not new residential premises, by itself, does not result in the subdivided premises being new residential premises. The main provisions take effect from the date of the Government's announcement on 27 January 2011. This is to reduce risks to revenue that might otherwise arise from behavioural change.
However, this Schedule also contains a transitional provision to ensure that developers who were 'commercially committed' to arrangements to develop premises before 27 January 2011 are not disadvantaged by the measure. Schedule 5 adds one new organisation to list of deductible gift recipients, namely, the Rhodes Trust in Australia. The purpose of Rhodes Trust in Australia is to raise monies in Australia to augment the existing Rhodes Scholarship program at Oxford University in the United Kingdom. All monies raised in Australia are used to provide scholarships to Australians to undertake tertiary education at Oxford University in the United Kingdom.
Schedule 5 also recognises the name change of 'Playgroup Australia Incorporated' to 'Playgroup Australia Limited'.
DGR status will assist this organisation to attract public support for their activities. Schedule 6 includes amendments to the tax laws to ensure that the law operates as intended by correcting technical or drafting defects, removing anomalies, and addressing unintended outcomes.
These amendments are part of the Government's commitment to the care and maintenance of the tax law.
This package also includes some legislative issues raised by the public through the Tax Issues Entry System, or TIES for short.
Full details of the measures in this Bill are contained in the explanatory memorandum.