Explanatory Memorandum
(Circulated by authority of the Assistant Treasurer, Minister for Housing and Minister for Homelessness, Social and Community Housing, the Hon Michael Sukkar MP)General outline and financial impact
Schedule 1 - Fringe benefits tax exemption to support retraining and reskilling
Schedule 1 to the Bill amends the Fringe Benefits Tax Assessment Act 1986 to provide employers with an exemption from FBT if they provide training or education to a redundant, or soon to be redundant, employee for the purpose of assisting that employee to gain new employment.
Date of effect: Schedule 1 to the Bill applies to benefits provided on or after 2 October 2020.
Proposal announced: Schedule 1 to the Bill fully implements the measure 'Fringe Benefits Tax - exemption to support retraining and reskilling' from the 2020-21 Budget as announced on 2 October 2020.
Financial impact: This measure was estimated to have the following revenue impact over the forward estimates period ($m):
| 2020-21 | 2021-22 | 2022-23 | 2023-24 |
| -1.0 | -2.0 | -2.0 | -2.0 |
Human rights implications: Schedule 1 to the Bill does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 7.
Compliance cost impact: Schedule 1 to the Bill is estimated to result in a regulatory saving of $1.1 million over the next 10 years.
Schedule 2 - Junior minerals exploration incentive extension
Schedule 2 to the Bill extends the operation of the junior minerals exploration incentive in Division 418 of the ITAA 1997 for a further four years to continue to encourage mineral exploration companies to undertake greenfields minerals exploration in Australia. Schedule 2 also includes a reporting requirement for mineral exploration companies where no exploration investment has occurred to enable unused exploration credits to be identified earlier and reallocated.
Date of effect: The amendments in Schedule 2 apply to the 2021-22 income year through to the 2024-25 income year.
Proposal announced: Schedule 2 to the Bill fully implements the 'Junior Minerals Exploration Incentive - extension' measure from the 2021-22 Budget as announced on 5 May 2021.
Financial impact: This measure is estimated to have the following impact on the underlying cash balance over the forward estimates period ($m):
| 2021-22 | 2022-23 | 2023-24 | 2024-25 |
| - | - | -19.4 | -19.4 |
This measure is estimated to reduce the fiscal balance by $100 million over four years from 2021-22.
Human rights implications: Schedule 2 to the Bill does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 7.
Compliance cost impact: Schedule 2 to the Bill is expected to result in a minimal increase in compliance costs for mineral exploration companies that choose to participate.
Schedule 3 - Exempting granny flat arrangements from CGT
Schedule 3 to the Bill amends the CGT provisions in the ITAA 1997 to provide a targeted CGT exemption for CGT events that occur on entering into, varying or terminating formal written arrangements under which an older person or person with a disability acquires, varies or disposes of a granny flat interest.
The amendments ensure that CGT consequences are not an impediment to formalising granny flat arrangements and seek to reduce the risk of financial abuse and exploitation of older Australians and other vulnerable people.
Date of effect: Schedule 3 to the Bill commences on the first 1 July after the Bill receives Royal Assent.
The amendments apply in relation to events that happen on or after the amendments commence that would, apart from the provisions contained in the amendments, be CGT events.
Proposal announced: Schedule 3 to the Bill fully implements the measure "Supporting Older Australians - exempting granny flat arrangements from capital gains tax" from the 2020-21 Budget.
Financial impact: This measure was estimated to have an unquantifiable impact on receipts over the forward estimates period.
| 2020-21 | 2021-22 | 2022-23 | 2023-24 |
| - | - | * | * |
* unquantifiable
Human rights implications: Schedule 3 to the Bill is compatible with Human Rights. See Statement of Compatibility with Human Rights - Chapter 7.
Compliance cost impact: Schedule 3 to the Bill will result in a low increase in compliance costs.
Schedule 4 - Amendments to product intervention regime
Schedule 4 to the Bill amends the Corporations Act 2001 and the National Consumer Credit Protection Act 2009 to provide that ASIC is not prohibited from making a product intervention order that has conditions relating to fees, charges or other consideration paid or payable as remuneration by a retail client or consumer to a person, including the provider (or their associates) of a financial product or a credit product.
These amendments are to address unintended outcomes and to ensure that the product intervention regime operates as intended.
Date of effect: Schedule 4 to the Bill commences the day after the Bill receives Royal Assent.
Proposal announced: Not applicable.
Financial impact: Nil.
Human rights implications: Schedule 4 to the Bill does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 7.
Compliance cost impact: The amendments in Schedule 4 to the Bill are technical in nature and as such will have no impact on compliance costs.
Schedule 5 - New Zealand sports teams members and support staff
Schedule 5 to the Bill amends the International Tax Agreements Act 1953 to disregard days spent in Australia due to COVID-19 by NZ sportspersons on teams participating in cross-border competitions and their support staff in determining whether income derived from such competitions is taxable in Australia.
These amendments preserve the uniquely targeted outcome ordinarily achieved by Article 17(3) of the NZ Convention for NZ sporting professionals and their support staff, in circumstances affected by COVID-19.
Date of effect: The amendments in Schedule 5 to the Bill take effect from the start of the 2020-21 income year.
Proposal announced: Schedule 5 to the Bill fully implements the measure New Zealand Sporting Professionals Tax Treatment from the 2021-2022 Budget.
Financial impact: This measure is estimated to result in an unquantifiable decrease in receipts over the forward estimates period.
Human rights implications: Schedule 5 to the Bill does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 7.
Compliance cost impact: Schedule 5 to the Bill is estimated to have a minor impact on compliance costs because it aims to preserve the original policy intent of the NZ Convention in easing the compliance burden and regulatory impacts for sporting teams competing in cross-border league competitions. It also ensures that additional compliance costs are not incurred to meet unintended Australian tax obligations.
Schedule 6 - Low and Middle Income tax offset
Schedule 6 to the Bill amends the Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Act 2020 to make the low and middle income tax offset available in the 2021-22 income year, with the offset now ceasing to be available in the 2022-23 income year and later income years.
Date of effect: The changes to the low and middle income tax offset apply to the 2021-22 income year.
Proposal announced: Schedule 6 to the Bill fully implements the retaining the low and middle income tax offset for the 2021-22 income year measure from the 2021-22 Budget.
Financial impact: This measure is estimated to decrease receipts by $7.8 billion over the forward estimates period ($m):
| 2021-22 | 2022-23 | 2023-24 | 2024-25 |
| - | -7,400 | -400 | .. |
.. not zero but rounded to zero
Human rights implications: Schedule 6 to the Bill does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 7.
Compliance cost impact: Schedule 6 to the Bill is expected to only have a minor regulatory impact.