House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Josh Frydenberg MP)

Chapter 9 - Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Schedule 1 - Accelerating the Personal Income Tax Plan

9.1 Schedule 1 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

9.2 Schedule 1 to the Bill amends the income tax law to:

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bring forward the legislated changes to remove the existing low income tax offset and replace it with a new low income tax offset so that these changes apply for the 2020-21 income year and later income years;

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retain the low and middle income tax offset for the 2020-21 income year, with the offset now ceasing to be available in the 2021-22 income year and late income years; and

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bring forward the changes to the income tax thresholds (currently legislated to apply to the 2022-23 income year and later income years) to the 2020-21 income year and later income years.

9.3 Together, these changes reduce the income tax burden for taxpaying individuals and are intended to support the economic recovery from the impacts of the Coronavirus on the Australian economy by boosting consumption.

Human rights implications

9.4 Schedule 1 to the Bill does not engage any of the applicable rights or freedoms. While the provisions relating to the low income tax offset and the changes to the tax rates and thresholds apply retrospectively, they do so in a way that is wholly beneficial for affected entities.

Conclusion

9.5 Schedule 1 to the Bill is compatible with human rights as it does not raise any human rights issues.

Schedule 2 - Temporary loss carry back

9.6 Schedule 2 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

9.7 Schedule 2 to the Bill amends the income tax law to allow corporate tax entities with an aggregated turnover of less than $5 billion to carry back a tax loss for the 2019-20, 2020-21 or 2021-22 income year and apply it against tax paid in a previous income year as far back as the 2018-19 income year.

Human rights implications

9.8 Schedule 2 to the Bill does not engage any of the applicable rights or freedoms.

Conclusion

9.9 Schedule 2 to the Bill is compatible with human rights as it does not raise any human rights issues.

Schedule 3 - Increasing the small business entity turnover threshold for certain concessions

9.10 Schedule 3 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

9.11 Schedule 3 to the Bill makes amendments to enable eligible entities with an aggregated turnover threshold of $10 million or more and less than $50 million to access the following small business tax concessions:

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a simplified accounting method for the purposes of GST, if determined by the Commissioner;

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the ability to defer excise-equivalent customs duty to a monthly reporting cycle;

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the ability to defer excise duty to a monthly reporting cycle;

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a fringe benefits tax exemption in relation to small business car parking;

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a fringe benefits tax exemption in relation to the provision of multiple work-related portable electronic devices;

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an immediate deduction for certain prepaid expenses;

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a two year amendment period in respect of amendments to income tax assessments;

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an immediate deduction for certain start-up expenses;

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the simplified trading stock rules; and

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the ability to calculate their PAYG instalments based on GDP-adjusted notional tax.

Human rights implications

9.12 Schedule 3 to the Bill does not engage any of the applicable rights or freedoms.

Conclusion

9.13 Schedule 3 to the Bill is compatible with human rights as it does not raise any human rights issues.

Schedules 4, 5 and 6 - Enhancing the R & D Tax Incentive

9.14 Schedules 4, 5 and 6 to the Bill are compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

9.15 Schedule 4 to the Bill reforms the R & D Tax Incentive to better target the program, and improve its effectiveness and integrity.

9.16 Schedule 5 to the Bill enhances the integrity of the R & D Tax Incentive by ensuring R & D entities cannot obtain inappropriate tax benefits and by clawing back the benefit of the R & D Tax Incentive to the extent an entity has received another benefit in connection with an R & D activity.

9.17 Schedule 6 to the Bill improves the administrative framework supporting the R & D Tax Incentive by making information about R & D expenditure claims transparent, enhancing the guidance framework to provide certainty to applicants and streamlining administrative processes.

Human rights implications

9.18 Schedules 4, 5 and 6 to the Bill do not engage any of the applicable rights or freedoms.

Conclusion

9.19 Schedules 4, 5 and 6 to the Bill are compatible with human rights as they do not raise any human rights issues.

Schedule 7 - Temporary full expensing for depreciating assets

9.20 Schedule 7 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

9.21 Schedule 7 to the Bill amends the income tax law to allow businesses with an aggregated turnover of less than $5 billion to deduct the full cost of eligible depreciating assets that are first held, and first used or installed ready for use for a taxable purpose, between the 2020 budget time and 30 June 2022. Businesses are also able to deduct the full cost of improvements to these assets and to existing eligible depreciating assets made during this period.

9.22 Schedule 7 to the Bill also amends the income tax law to extend the time by which assets that qualify for the enhanced instant asset write-off must be first used or installed ready for use for a taxable purpose until 30 June 2021.

Human rights implications

9.23 Schedule 7 to the Bill does not engage any of the applicable rights or freedoms.

Conclusion

9.24 Schedule 7 to the Bill is compatible with human rights as it does not raise any human rights issues.