House of Representatives

Treasury Laws Amendment (2021 Measures No. 4) Bill 2021

Second Reading Speech

Mr SUKKAR (Deakin - Assistant Treasurer, Minister for Housing and Minister for Homelessness, Social and Community Housing)

I move:

That this bill be now read a second time.

This bill contains a number of important measures which are designed to achieve the following:

incentivise employers to retrain and reskill redundant employees;
encourage greenfields minerals exploration;
protect older Australians and people with a disability from financial abuse and exploitation;
support ASIC to proactively address consumer harm;
ensure that New Zealand maintains its primary taxing right in respect of New Zealand sporting teams; and, importantly,
deliver tax relief to around 10.2 million taxpayers.

In particular, schedule 1 to the bill will introduce an exemption from fringe benefits tax for employer provided retraining and reskilling benefits provided to redundant, or soon to be redundant employees where the training is not related to the employee's current employment. This change will apply from 2 October 2020.

This will incentivise employers to retrain and reskill redundant (or soon to be redundant) employees so that they are better prepared to transition to their next career. This incentive supports the government's skills reform agenda and current programs and assistance for education and training.

Schedule 2 to the bill extends the Junior Minerals Exploration Incentive for a further four years from 2021-22 to 2024-25, with a minor amendment to allow unused exploration credits to be redistributed a year earlier than under current settings.

The Junior Minerals Exploration Incentive provides a tax incentive for new investment in junior exploration companies that are undertaking greenfields minerals exploration in Australia. Eligible companies can create exploration credits by giving up a portion of their tax losses relating to exploration expenditure, which can then be distributed to new investors as a refundable tax offset or a franking credit.

Greenfields minerals exploration underpins the Australian resources sector by finding new mineral deposits and ensuring a strong investment pipeline of new projects that will support our economy into the future. It's a high-risk activity that can involve large upfront costs and long time frames before any return on that exploration is made.

In conjunction with Australia's broader support for resources development, the Junior Minerals Exploration Incentive will help to open up new opportunities for the sector into the future.

Schedule 3 to the bill provides a targeted capital gains tax exemption for granny flat arrangements where there is a formal written agreement in place.

Capital gains tax consequences are currently an impediment to the creation of formal and legally enforceable granny flat arrangements. When faced with a potentially significant capital gains tax liability, families often opt for informal arrangements, which can then lead to financial abuse and exploitation - for example, following a family or relationship breakdown.

The changes mean that capital gains tax will not apply to the creation, variation or termination of a formal written granny flat arrangement providing accommodation for older Australians or people with a disability. The measure encourages the take-up of formal agreements between families, reducing the risk of abuse to vulnerable Australians.

Schedule 4 to the bill makes some technical amendments to the Australian Securities and Investments Commission's product intervention power so that it can continue to proactively address consumer harm caused by financial and credit products.

This schedule ensures that the Australian Securities and Investments Commission can make a product intervention order which imposes conditions relating to the costs (fees, charges or other considerations) of a financial or credit product to a consumer, where the product is suspected to cause significant consumer detriment.

The Legislative and Governance Forum on Corporations was notified of the measure, as required under the Corporations Agreement 2002 and the National Credit Law Agreement 2009.

Schedule 5 to the bill ensures that New Zealand maintains its primary taxing right under the Convention between Australia and New Zealand for the Avoidance of Double Taxation with Respect to Taxes on Income and Fringe Benefits and the Prevention of Fiscal Evasion (the convention). This is in respect of New Zealand sporting teams and support staff that spend an extended period of time in Australia to participate in league sporting competitions because of the COVID-19 pandemic.

Due to the circumstances of the COVID-19 pandemic, in order to compete in league competitions in Australia, members of New Zealand sporting teams and support staff may have been required to spend more than 183 days in Australia in a 12-month period. This has led to Australian income tax and fringe benefits tax liabilities which normally would not arise in non-COVID circumstances.

The measure ensures that the convention operates as intended in this situation by relinquishing the Australian taxing right that has arisen due to COVID-19. This applies quite strictly to income years 2020-21 and 2021-22 only.

Finally, schedule 6 to the bill delivers tax relief to low- and middle-income earners to support household incomes and create jobs as the economy recovers.

Importantly, it retains the low- and middle-income tax offset in 2021-22. The low- and middle-income tax offset is worth up to $1,080 for individuals and $2,160 for dual-income households, which is paid on assessment after taxpayers lodge their tax return.

It is estimated that around 10.2 million taxpayers will benefit from retaining the low- and middle-income tax offset in the 2021-22 income year, with the majority of the benefits delivered to those earning less than $90,000.

This is on top of the $25.1 billion in tax relief flowing to households in the 2021-22 income year, which was announced in previous budgets.

Retaining the low- and middle-income tax offset will ultimately put more money in taxpayers' pockets, allowing them to spend more and strengthen the economic recovery.

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

Debate adjourned.