House of Representatives

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)

Chapter 7 - Statement of Compatibility with Human Rights

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

Schedule 1 - Fringe benefits tax exemption to support retraining and reskilling

7.1 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

7.2 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.

Human rights implications

7.3 Schedule 1 to the Bill does not engage any of the applicable rights or freedoms.

Conclusion

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

Schedule 2 - Junior minerals exploration incentive extension

7.5 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

7.6 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.

Human rights implications

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

Conclusion

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

Schedule 3 - Exempting granny flat arrangements from CGT

7.9 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

7.10 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 agreements under which an older person or a person with a disability acquires, varies or disposes of a granny flat interest.

7.11 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.

Human rights implications

7.12 Schedule 3 to the Bill engages the following human rights:

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Article 11 of the International Covenant on Economic, Social and Cultural Rights, the right to an adequate standard of living;

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Article 26 of the International Covenant on Civil and Political Rights, the right to equal protection and non-discrimination under law;

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Article 16 of the Convention on the Rights of Persons with Disabilities, the right to protection for people with disabilities from exploitation, violence and abuse; and

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Articles 5 and 19 of the Convention on the Rights of Persons with Disabilities, the rights for people with disabilities to the equal protection and benefit of the law, and to live independently and with full inclusion in the community.

7.13 Tax consequences can be an impediment to parties formalising granny flat arrangements in writing. Without having a record of their arrangement, the person relying on it for their accommodation and living support may be left in a vulnerable position in the event they need to establish, assert or enforce their rights under the arrangement.

7.14 The intention behind the targeted exemption provided in Schedule 3 to the Bill is to remove the tax impediments from having a formal arrangement in place and encourage people to formalise their granny flat arrangements. This is intended to provide greater security and certainty to the vulnerable parties to the arrangements, allowing them to better establish, assert and enforce their rights under the arrangement.

7.15 Article 11.1 of the International Covenant on Economic, Social and Cultural Rights recognises the right of all people to an adequate standard of living, including adequate housing and living conditions.

7.16 Older people and people with disabilities are often in a vulnerable position in relation to their living conditions as their need for higher levels of care and facilities is often greater, but their ability to independently achieve those needs is constrained by their circumstances.

7.17 Schedule 3 to the Bill promotes this right by removing tax impediments to people having formalised arrangements that provide secure accommodation and living support to older people or people with disabilities.

7.18 By encouraging people to formalise such arrangements, it is intended that there will be an improvement in the certainty of the rights of older people and people with a disability having secure and appropriate accommodation and living support.

7.19 Under Article 26 of the International Covenant on Civil and Political Rights, laws cannot apply differential treatment among persons or groups that result in a person being treated less favourably than others based on a prohibited ground, including age or disability.

7.20 Schedule 3 to the Bill may limit the rights to equality and non-discrimination because the exemption it provides is only available to people who meet the requirements of age or disability and those who enter into granny flat arrangements with them.

7.21 The UN Human Rights Committee has recognised that not all differential treatment will constitute impermissible discrimination if the criteria for such differentiation are reasonable and objective and the differential treatment is done for a legitimate purpose.

7.22 The purpose of Schedule 3 to the Bill is to protect the rights of older people and those with disabilities by encouraging the use of formal granny flat arrangements. This is achieved through the provision of a tax benefit when formal granny flat arrangements are created, varied or terminated. The limitation on the people who can access the exemption operates to appropriately focus the benefits to the intended group of particularly vulnerable people, allowing them to better establish, assert and enforce their rights under a granny flat arrangement.

7.23 The differential treatment under the measure is objective as it applies to all people within the specified ranges of age or duration of disability and is for the legitimate purpose of protecting the rights of particularly vulnerable people. The limitation on the right to equality and non-discrimination is, therefore, reasonable and objective and done for a legitimate purpose that the legislation aims to achieve.

7.24 The right of all people with disabilities to protection from violence, exploitation and abuse is recognised by Article 16 of the Convention on the Rights of Persons with Disabilities. Measures that help ensure appropriate assistance and support for people with disabilities and their caregivers, are a means by which States can provide this protection.

7.25 Schedule 3 to the Bill helps promote this right by removing perceived impediments to entering into arrangements that provide secure and appropriate living conditions for people with disabilities and similarly improve the ability to establish, assert or enforce their rights.

7.26 In relation to Articles 5 and 19 of the Convention on the Rights of Persons with Disabilities, a person with a disability that impairs their ability to live completely independently, may benefit greatly from the opportunity to live in a residence under an arrangement whereby they obtain ongoing care, support and housing from a relative or other trusted person.

7.27 Schedule 3 to the Bill promotes the right for people with disabilities to live independently and protects their rights to accommodation by encouraging the formalisation of arrangements. This is achieved by removing tax liabilities as an impediment to formalising arrangements, thereby helping to improve the opportunities for persons with disabilities to obtain secure rights to accommodation that is safe and appropriate to their needs.

7.28 A person's disability has to last for at least 12 months and be such that the person requires assistance in carrying out most day to day activities (see new section 137-10(2)(b) inserted by item 1 of Schedule 3). This means that not all people with disabilities who enter into granny flat arrangements will be eligible for the CGT exemption.

7.29 The purpose of the measure is to protect the rights of particularly vulnerable people by encouraging the use of formal granny flat arrangements. This is achieved through the provision of a tax benefit when formal granny flat arrangements are created, varied or terminated.

7.30 Limiting access to the scheme to people with a disability that is to last for at least 12 months and is such that they require assistance in carrying out most day to day activities, operates to appropriately focus the benefits to the intended group of particularly vulnerable people, allowing them to better establish, assert and enforce their rights under a granny flat arrangement. This limitation is, therefore, reasonable and proportionate to achieving the objectives of the measure.

Conclusion

7.31 Schedule 3 to the Bill is compatible with human rights. While it engages with certain human rights, the Schedule is consistent with and promotes these rights.

Schedule 4 - Amendments to product intervention regime

7.32 Schedule 4 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

7.33 Schedule 4 to the Bill makes amendments to 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 by a retail client or consumer to the financial or credit product provider (or its associate) in relation to a financial product or a credit product.

Human rights implications

7.34 Schedule 4 to the Bill does not engage any of the applicable rights or freedoms.

Conclusion

7.35 Schedule 4 to the Bill is compatible with human rights as it does not raise any human rights issues.

Schedule 5 - New Zealand sports teams members and support staff

7.36 Schedule 5 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

7.37 Schedule 5 to the Bill amends the International Tax Agreements Act 1953 to disregard days NZ sportspersons on teams participating in cross-border competitions and their support staff spend in Australia due to COVID-19 in determining whether income derived from such competitions or supporting activities is taxable in Australia.

Human rights implications

7.38 Schedule 5 to the Bill does not engage any of the applicable rights or freedoms.

Conclusion

7.39 Schedule 5 to the Bill is compatible with human rights as it does not raise any human rights issues.

Schedule 6 - Low and Middle Income tax offset

7.40 Schedule 6 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

7.41 Schedule 6 to the Bill amends the income tax law to retain the low and middle income tax offset for the 2021-22 income year.

Human rights implications

7.42 Schedule 6 to the Bill does not engage any of the applicable rights or freedoms.

Conclusion

7.43 Schedule 6 to the Bill is compatible with human rights as it does not raise any human rights issues.