Second Reading Speech
Mr JONES (Whitlam - Assistant Treasurer and Minister for Financial Services)I move:
That this bill be now read a second time.
The bill reflects the government's commitment to ensuring fairness and integrity in our tax system while fostering a cleaner, more sustainable future.
It addresses two key areas: incentivising the transition to electric vehicles with targeted tax concessions and strengthening the integrity of our tax system to ensure it does not reward those who are doing the wrong thing.
Schedule 1 of this bill updates the definition of a fuel-efficient vehicle under the luxury car tax.
From 1 July 2025, vehicles will need to be genuinely fuel efficient and produce low emissions to access the higher concessional threshold. That is, they must not use more than 3.5 litres of fuel per 100 kilometres to qualify. This is down from the current rate of seven litres per 100 kilometres.
This change ensures that only the most fuel-efficient and low-emission vehicles - like electric and plug-in hybrids - can access this benefit.
It delivers on our commitment to support the uptake of EVs and to help Australians drive cars that are cleaner, cheaper to run and aligned with a more sustainable future.
We also adjust how the LCT thresholds are updated for inflation, preventing the gap between standard and fuel-efficient thresholds from shrinking over time.
These changes align with the government's National Electric Vehicle Strategy and our broader goal to reduce emissions in the transport sector.
Schedule 2 amends the Income Tax Assessment Act 1997 to remove income tax deductions for amounts of general interest charge (GIC) and shortfall interest charge (SIC) incurred on or after 1 July 2025.
These penalties apply when tax payments are late or incorrectly self-assessed.
Removing their deductibility ensures they remain an effective deterrent, encouraging businesses and individuals to meet their obligations on time.
At the same time, we do recognise that life can be unpredictable. The Commissioner of Taxation will retain his current discretion to remit or partially remit GIC and SIC - that is, the general interest charge and the shortfall interest charge - in appropriate cases - for example, when taxpayers are affected by natural disasters, sudden illness or a financial hardship.
The ATO remains committed to working with businesses and individuals who are struggling to meet their tax obligations, offering tailored solutions and support. However, it is vital that businesses engage early rather than ignore their responsibilities.
This measure is about leveling the playing field. It ensures that taxpayers who do the right thing are not disadvantaged while we continue to uphold the integrity of the tax system.
I turn to schedule 3, which extends the time the Commissioner of Taxation has to notify taxpayers about retaining a BAS statement - that is, a business activity statement - refund from 14 to 30 days.
This extension addresses challenges encountered during periods of increased fraudulent activity, such as those identified during the recent Operation Protego.
With Operation Protego, criminal groups lodged thousands and thousands of fake BASs claiming refunds for non-existent expenses.
These fraudulent claims had to be processed before proper scrutiny could be applied, costing taxpayers millions of dollars.
We're changing the law to reduce the chance that this thing happens again.
Extending the notification period gives the ATO the time needed to properly investigate high-risk claims, ensuring fraudulent activity doesn't undermine the system.
I want to assure members of the House that for the vast majority of businesses, this change will have no impact. In 2022-23, 90 per cent of refunds were processed within 14 days. This will continue.
Where refunds are held longer for review, the ATO will pay interest if there wasn't any fraud, ensuring compliant businesses are not disadvantaged.
This measure strengthens protections for honest taxpayers and maintains public confidence in the integrity of our tax system.
I commend the bill to the House. Full details of the measure are contained in the explanatory memorandum.
Debate adjourned.