Second Reading SpeechMs O'DWYER (Higgins-Minister for Revenue and Financial Services, Minister for Women and Minister Assisting the Prime Minister for the Public Service)
That this bill be now read a second time.
This bill enhances the integrity of Australia's tax system with the introduction of the government's response to the Black Economy Taskforce interim report.
The Turnbull government established the Black Economy Taskforce in December 2016 to develop a whole-of-government response for tackling the black economy.
The black economy extends from organised crime to individuals and businesses who operate outside the tax and regulatory system, understating their income and avoiding their obligations to report to the Australian Taxation Office.
More broadly, participation in the black economy undermines community trust in the tax system, creates an uneven playing field among competing businesses and results in the loss of government revenue.
The use of technology to hide income, and the non-reporting or understating of income by contractors, are two black economy activities targeted in this bill.
The Turnbull government is committed to improving tax fairness among businesses and strengthening the integrity of our tax system. We are committed to collecting tax properly payable from those who are dodging their liability.
Schedule 1 to this bill creates new offences to ban the manufacture, distribution, possession, sale and use of electronic sales suppression tools.
There is no legitimate reason for these tools. They remove transactions from electronic record-keeping systems, falsify transactions to reduce the amount of each sale and modify GST taxable sales to GST non-taxable sales. And they leave no audit trail.
These new, strict liability offences target each stage of the supply chain manufacture and production, supply and use of electronic sales suppression tools. Heavy penalties can be imposed in order to deter the use of this technology across the supply chain.
Schedule 2 introduces compulsory reporting to the ATO by businesses operating in the courier and cleaning industries.
The Black Economy Taskforce identified that contractor payments in the courier and cleaning industries are areas of high risk for the non-reporting of income. The government is therefore extending the taxable payments reporting system to the courier and cleaning industries.
The taxable payments reporting system applies to entities holding an Australian Business Number that provide services in identified industries. These entities have to report annually to the ATO about payments they have made to contractors for undertaking those services for them, for example as a subcontractor. Reporting these payments will improve transparency to the ATO and bring the payments more into line with the compliance obligations on employers who must report the wages they pay.
The taxable payments reporting system has been successful. The implementation of that reporting system in the building and construction industry led to improvements in contractor compliance with GST and income disclosure.
The introduction of mandatory reporting of business-to-business payments for services within the courier and the cleaning industries will encourage correct disclosure of income. The payments the subcontractors receive will have been reported to the ATO by the businesses that acquired their services. The additional reporting will allow the ATO to target compliance activity.
Full details of the measure are contained in the explanatory memorandum.