Second Reading Speech
The Minister assisting the Treasurer The Hon Peter Morris, M.P.I move that this Bill be now read a second time.
This Bill will amend the Income Tax Act 1986 to formally impose the rates of income tax payable by individuals and trustees generally for the 1988-89 and 1989-90 financial years.
It will also impose for the same period the rates of tax payable by companies, registered organizations and unit trusts treated as companies.
In addition, it will impose rates of tax on superannuation funds, ineligible approved deposit funds and certain other trusts.
The rates to be imposed by the measures in this Bill are those declared in the Income Tax Rates Act 1986. The personal rates for 1988-89 remain unchanged but, as announced by the Treasurer in the 1988-89 Budget Speech, reductions will be effected from 1 July 1989.
A four step tax scale currently applies.
At the lower end of the scale for resident taxpayers, no tax is payable on taxable incomes up to $5,100. On taxable incomes in the range $5,101 to $12,600 the rate is 24 per cent. In the range $12,601 to $19,500 the rate is 29 per cent.
For income in the range $19,501 to $35,000 the rate is 40 per cent, and the top marginal rate is 49 per cent for income in excess of $35,000.
These general rates also apply to non-residents who receive Australian Social Security and repatriation pensions that are taxable in Australia, or who were residents at any time during the income year.
For all other non-resident taxpayers, the rate of 29 per cent applies to incomes up to $19,500 and the general rates apply to income above that level.
For 1988-89 a rate of 49 per cent applies to all unearned income of resident minors, subject to shading-in arrangements for such income just over $416.
The rate of tax on trustees assessed under section 99A of the Income Tax Assessment Act, and on other categories of income subject to anti-avoidance provisions of that Act, is 49 per cent in 1988-89.
The company tax rate payable in respect of 1987-88 income will remain at 49 per cent. As announced in the May 1988 Economic Statement, a lower rate of 39 per cent will apply to 1988-89 income .
The rates of tax, payable in respect of 1987-88 income, for unit trusts treated as companies and registered organisations will remain at 49 per cent and 20 per cent respectively.
Of course, when decisions are taken as to the reduced personal tax rates to apply in 1989-90 and any other tax rate changes, legislation amending the Income Tax Rates Act 1986 which declares the various income tax rates that I have just outlined for 1988-89 will be put before the Parliament.
The provisions of the Bill are explained in detail in the Explanatory Memorandum that accompanied the Taxation Laws Amendment Bill (No.4) 1988 I have just introduced.
I commend the bill to the house.