House of Representatives

Second Reading Speech

Authority

I move:

That this bill be now read a second time. Mr JONES (Whitlam - Assistant Treasurer and Minister for Financial Services) (09:48): I move:

This bill delivers for the Australian people.

From enhancing a digital games industry to supporting our veterans, this bill delivers.

From boosting small business to being a significant step in the government's plan to reduce Australia's emissions, the bill delivers.

I am also pleased to announce that the Albanese government will overhaul the transparency requirements for superannuation funds so that members can access clearer, more meaningful, and more consistent information about their fund.

The government is committed to strengthening Australia's world-class superannuation system to maximise returns so that all Australians can retire with dignity.

A transparent system with consistently reported data is central to this outcome so that members have meaningful information to hold trustees to account and make accurate comparisons between funds on performance, fees and expenditure.

I want to take this opportunity to outline the government's three-part plan to deliver a genuinely transparent superannuation system that is member-centric.

Today is part 1, introducing legislation aligning super funds' financial and accounting reporting obligations with those of public companies. This includes filing an annual report, publicly available financial reports with ASIC.

Part 2 is a new annual superannuation transparency report to be delivered by the regulator, the Australian Prudential Regulatory Authority.

This will be a single source of granular, consistent information for members to compare performance and analyse expenditure of their fund and every other regulated superannuation entity.

Part 3 is reforming the existing rules so that every part of the reporting stream, from the annual report to the annual transparency support published by the regulator, and the annual member meeting notice, is in alignment - all aligned and ensuring that members, regulators and the public have access to the relevant information in the right place at the right time and in a consistent format. No double counting, no infection of ideology in what should be a straightforward operation of providing members with the information that they need and deserve in the right place at the right time.

Our world-class $3.3 billion superannuation system is, frankly, something that every Australian can and should be proud of.

We should always look for ways to strengthen it, and this bill achieves that by embracing transparency and accountability.

Schedule 1 to the bill establishes the digital games tax offset (DGTO). For the first time, Australia will have a dedicated tax offset that supports the emerging digital games sector.

The DGTO is a 30 per cent refundable tax offset for eligible companies that develop eligible games and spend a minimum of $500,000 on qualifying Australian development expenditure from 1 July of this year. This new offset is estimated to increase payments by a total of $38.4 million over four years from financial year 2021-22.

All entertainment and educational games will be eligible for the DGTO, provided they can receive a classification from the Australian Classification Board and are broadly available to the general public. Importantly, gambling-like activities are excluded from this measure. All entertainment and educational games are eligible for the DGTO, as I said, as long as they receive the Australian Classification Board rating and do not involve gambling-like activities.

The DGTO will strengthen the Australian digital games industry, expand employment opportunities for digital and creative talent, enhance the industry's international competitiveness and make Australia more attractive for foreign investment. I want to commend the Minister for the Arts and the Minister for Communications for their energy and their activity around this particular measure, something that they have been longstanding advocates for.

Schedule 2 of the bill amends the tax law to clarify that digital currencies (such as bitcoin) continue to be excluded from being treated as a foreign currency for Australian income tax purposes. Now, many members of this House might be curious to know why we need to do this. The fact is the legislation will maintain the status quo. Clarification in the legislation is necessary following a decision by the El Salvadorian government to recognise bitcoin as unrestricted legal tender from 7 September 2021. We're advised by the Australian tax commissioner that this introduced uncertainty about the status of bitcoin and similar digital currencies for Australian income tax purposes. This bill addresses the uncertainty by making it quite clear that bitcoin is not currency, or will not be taxed as currency, under Australian law.

Schedule 3 to the bill provides the Commissioner of Taxation with the power to allow employers to rely on existing corporate records, rather than employee declarations and other prescribed records, to finalise their fringe benefits tax (FBT) returns. This will reduce compliance costs for employers, while maintaining the integrity of the FBT system.

Schedule 4 to the bill and schedule 5 to the bill are related. They introduce the Skills and Training Boost and the Technology and Investment Boost arrangements respectively.

The Skills and Training Boost will support small businesses to train and upskill employees.

Small businesses with annual turnover less than $50 million per annum will have access to a bonus of 20 per cent deduction for eligible expenditure on external training of employees. This measure is being legislated to build a better trained and more productive workforce, helping to address skills shortages. The Skills and Training Boost will be available to eligible businesses from 30 June 2024.

Schedule 5 to the bill introduces the Technology and Investment Boost, again directed at small business, to support eligible small businesses to improve their digital capacity, allowing them to enhance productivity and business growth. Small businesses will have access to a bonus of 20 per cent tax deduction for eligible expenditure of up to $100,000 per income year to support their digital operations. Unlike the previous measure, this will be available until 30 June 2023.

Schedule 6 to the bill, which I alluded to in my opening comments, extends and adapts the financial reporting auditing requirements which apply to registrable superannuation entities, or RSEs.

Australia's superannuation system manages over $3.3 trillion in retirement savings on behalf of around 16 million Australians. Given the superannuation system's size and compulsory nature, every Australian should expect to have the highest level of accountability and transparency from their superannuation fund and its trustees. This measure seeks to ensure that the transparency, regulatory oversight and rigorous standards for the reporting of superannuation fund financial information meet these expectations.

The new financial reporting requirements require RSEs to lodge financial reports with ASIC, and that these will be publicly available.

These new requirements will also impose stricter requirements for auditors of RSEs. This includes imposing additional reporting and independence obligations for audit firms and audit companies.

The Legislative and Governance Forum for Corporations was consulted in relation to this measure as required under the Corporations Agreement 2002.

Schedule 7 to the bill amends the Income Tax Assessment Act 1997 to include Australian Education Research Organisation Ltd, the Jewish Education Foundation (Vic) Ltd, Melbourne Business School Ltd, Australians for Indigenous Constitutional Recognition Ltd, Leaders Institute of South Australia Inc, and St Patrick's Cathedral Melbourne Restoration Fund on the list of deductible gift recipients.

The schedule extends the current listings for Sydney Chevra Kadisha and Australian Women Donors Network respectively. It also removes the listing for Mt Eliza Graduate School of Business and Government Ltd, which is no longer in operation.

DGR status allows members of the public to receive income tax deductions for the gifts to the listed organisations.

If I could move now to schedule 8 to the bill, it makes amendments to the Clean Energy Finance Corporations Act 2012 - very important to enable the government to implement its election commitments.

The government's $20-billion Rewiring the Nation election commitment will modernise Australia's electricity grids. It will help to put downward pressure on the cost of electricity bills, lower the cost of electricity bills for consumers, help manage the electricity system and increase renewables in the grid.

This measure is a significant step in the government's plan to reduce Australia's emissions by 43 per cent on 2005 levels by 2030 and to net zero by 2050.

This will have the potential to accelerate Australia's transition to net zero emissions by 2050.

Schedule 9 to the bill will ensure that veterans affected by the Full Federal Court decision in Commissioner of Taxation v Douglas will not face worse income tax outcomes as a result of the court's decision. The government's objective is that nobody is worse off. The legislation will preserve the preferable tax and outcomes for affected veterans as a result of the decision.

To do this, this measure introduces a new non-refundable tax offset for members of the Military Superannuation and Benefits (MSB) and Defence Force Retirement and Death Benefits (DFRDB) schemes that ensures that individuals who would face adverse tax outcomes as a result of the court's decision will not pay higher taxes on their superannuation invalidity benefit. This offset will also apply to spouse and children's pensions paid to a spouse or child following the death of a member of a scheme affected by the Douglas decision.

This measure will also ensure that any benefits that the Douglas decision may apply to beyond the MSB and DFRDB benefits, will continue to be taxed as superannuation income streams, by amending the legislative definition of superannuation income streams. The measure also includes a transitional provision to ensure that certain non-military invalidity benefits that received lump sum status prior to the Douglas decision are not disturbed by this reversal, while the government considers the appropriate future treatment of these pensions.

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

Debate adjourned.