House of Representatives

Treasury Laws Amendment (2020 Measures No. 2) Bill 2020

Second Reading Speech

Mr SUKKAR (Deakin - Assistant Treasurer and Minister for Housing)

I move:

That this bill be now read a second time.

This omnibus bill, the Treasury Laws Amendment (2020 Measures No. 2) Bill 2020, includes a series of tax measures, including a measure to amend the hybrid mismatch rules, continuing the Morrison government's work on combating multinational tax avoidance while ensuring that compliance burdens are kept to a minimum. The bill also allows employers to report information already required for child support under Single Touch Payroll, further streamlining employer reporting obligations. The bill establishes a deductible gift recipient general category for men's sheds and women's sheds and includes a number of other organisations on the list of deductible gift recipients. The bill also includes a measure providing funding for Australia's continued financial support of the World Bank. Finally, this bill will also allow the ATO to share critical JobKeeper related information with the Fair Work Commission and the Fair Work Ombudsman to ensure employers comply with the scheme.

In more detail, schedule 1 amends the Income Tax Assessment Act 1997, continuing again the government's commitment to tackling multinational tax avoidance by improving Australia's hybrid mismatch rules, which are based on one of 15 actions from the OECD/G20 Base Erosion and Profit Shifting Project.

The hybrid mismatch rules are designed to prevent multinational companies from exploiting differences in the tax treatment of instruments or entities between jurisdictions which enable those companies to defer or reduce tax.

The amendments in this bill will ensure that the hybrid mismatch rules operate as intended and help to ensure the integrity of Australia's income tax laws and their application to multinational enterprises. The amendments achieve this by making technical changes to the rules which clarify their operation and prevent the rules from applying in inappropriate circumstances.

Schedule 2 of the bill amends the Taxation Administration Act 1953 to broaden the information employers can voluntarily report under the Single Touch Payroll rules to include employer withholding of child support deductions and child support garnishee amounts. This measure will further streamline employer reporting to government, demonstrating the efficiency gains for employers that are provided by Single Touch Payroll.

Schedule 3 of the bill amends the Income Tax Assessment Act 1997 to establish a deductible gift recipient general category for men's sheds and women's sheds. This will enable sheds to more easily access DGR status from 1 July 2020, which in turn helps them attract public financial support for their very important activities. The Morrison government fully supports the important work undertaken by men's sheds and women's sheds, and this is a demonstration of that.

Donors to DGR endorsed sheds can claim, once these amendments are made, an income tax deduction for donations of $2 or more. The DGR tax arrangements are intended to encourage philanthropy and provide additional support for the not-for-profit sector.

There are currently over 1,000 men's sheds and around 20 women's sheds. The number of sheds is growing, as the movement gains support around the country for the benefits that it provides our community.

Eligibility for endorsement in this new DGR category requires sheds to demonstrate that their activities advance mental health and prevent or relieve social isolation.

Schedule 4 of the bill amends the International Finance Corporation Act 1955 and International Monetary Agreements Act 1947 to effect obligations that the World Bank's International Bank for Reconstruction and Development and the International Finance Corporation have under this bill. Both of these play a vital role in providing financial assistance and advisory services to middle- and low-income developing countries.

This assistance creates significant benefits throughout our Indo-Pacific region, allowing countries to reduce poverty and build shared prosperity through investment in much-needed physical infrastructure and improved social outcomes.

The IBRD and IFC periodically raise capital to fund their activities by issuing new shares to member countries, including Australia.

However, our participation in these capital raisings is a costly and time-consuming process, requiring the drafting and introduction of new legislation for each instance where Australia subscribes to an IBRD or IFC capital increase.

These amendments therefore will streamline the process by creating a clear legislative framework for Australia to enter into agreements, or amend existing agreements, to subscribe to any capital increases. The amendments also establish standing special appropriations that will facilitate payments that Australia has committed to in subscribing to capital increases.

As these types of purchases of shares in the World Bank Group constitute a formal international treaty action, they will always be subject to oversight and consideration by the Joint Standing Committee on Treaties.

The passage of these amendments will also enable Australia to make its $154 million contribution to the IBRD's latest capital raising that was announced in October 2018.

Schedule 5 to the bill amends the Income Tax Assessment Act 1997 to include C.E.W. Bean Foundation, Governor Phillip International Scholarship Trust, High Resolves, Australian Academy of Law, Foundation Broken Hill, Motherless Daughters, Superannuation Consumers' Centre and The Headstone Project (Tasmania) on the list of DGRs. This will allow members of the public to receive income tax deductions for the donations they make to these eight organisations.

Finally, schedule 6 to the bill allows the Australian Taxation Office to share JobKeeper related information with the Fair Work Commission and the Fair Work Ombudsman. Access to this information will help the Fair Work Commission and Fair Work Ombudsman address JobKeeper related compliance issues, in relation to obligations under the Fair Work Act 2009. This measure, of course, will help the JobKeeper scheme operate efficiently and equitably.

Full details of these measures are contained in the explanatory memorandum.

Debate adjourned.