House of Representatives

Explanatory Memorandum

(Circulated by authority of the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP)

General outline and financial impact

Schedule 1 - Assisting businesses to meet their record-keeping obligations

Outline

Schedule 1 to the Bill amends Schedule 1 to the TAA 1953 to empower the Commissioner to direct an entity to complete an approved record-keeping course where the Commissioner reasonably believes the entity has failed to comply with its tax-related record-keeping obligations as an alternative to existing financial penalties.

Date of effect

The amendments made by Schedule 1 to the Bill commence on the first 1 January, 1 April, 1 July, or 1 October to occur after the day the Bill receives Royal Assent.

The Commissioner will be able to issue a tax-records education direction to an entity three months after the day the Bill receives Royal Assent.

Proposal announced

Schedule 1 to the Bill implements the Black Economy - Assisting businesses to meet their reporting obligations measure from the 2019-20 MYEFO.

Financial impact

The 2019-20 MYEFO estimated the measure Black Economy - Assisting businesses to meet their reporting obligations - would have a small but unquantifiable gain to the budget over the forward estimates period.

Human rights implications

Schedule 1 to the Bill does not raise human rights issues. See Statement of Compatibility with Human Rights - Chapter 6.

Compliance cost impact

Negligible.

Schedule 2 - Sharing economy reporting regime

Outline

Schedule 2 to the Bill amends Schedule 1 to the TAA 1953 to require electronic platform operators to provide information on transactions made through the platform to the ATO. This measure implements a recommendation of the report of the Taskforce.

Date of effect

The amendments made by Schedule 2 to the Bill commence on the first 1 January, 1 April, 1 July, or 1 October to occur after the day the Bill receives Royal Assent.

The amendments made by Schedule 2 to the Bill apply from 1 July 2023 for transactions in relation to the supply of taxi travel and short-term accommodation and from 1 July 2024 for all other transactions.

Proposal announced

Schedule 2 to the Bill implements the measure Black Economy - introducing a sharing economy reporting regime from the 2019-20 MYEFO with a one-year delay.

Financial impact

The measure is estimated to have a cost to the budget of $8.2 million over the forward estimates period

All figures in this table represent amounts in $[m].

The measure also includes an estimated increase to GST payments to the States and Territories of $13.5m over the same period.

Regulation impact statement

Impact

The measure is estimated to result in a total average annual regulatory cost of $0.022 million.

Main points:

•

The Government is implementing a reporting regime for the sharing economy that will require operators of electronic distribution platforms to report information to the ATO relating to transactions made through their platform.

•

As found in the Final Report of the Taskforce, some sharing economy participants may not be aware of the tax obligations flowing from sharing economy activity and consequently, may not be meeting their obligations.

•

The reporting regime enhances Australia's tax reporting requirements to help ensure sellers are meeting their tax obligations and help ensure a level playing field with similar activities undertaken elsewhere in the economy.

•

Consistent with the Government's Regulation Impact Statement requirements, the Taskforce Final Report has been certified by the Department of the Treasury as meeting the requirements of a Regulation Impact Statement.

•

The reforms are expected to result in an overall compliance cost to business, arising from changes to platforms' systems to collect and report the required information.

•

The executive summary of the report and relevant chapter in relation to the sharing economy reporting regime are attached at the end of this explanatory memorandum.

Human rights implications

Schedule 2 to the Bill does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 6.

Compliance cost impact

Minimal.

Schedule 3 - Removing the self-education expenses threshold

Outline

Schedule 3 to the Bill removes the $250 non-deductible threshold for work-related self-education expenses by repealing section 82A of the ITAA 1936.

Removing the $250 non-deductible threshold reduces compliance costs for individuals claiming self-education expense deductions and simplifies the tax return process.

Date of effect

The amendments made by Schedule 3 to the Bill commence on the first 1 January, 1 April, 1 July, or 1 October to occur after the day the Bill receives Royal Assent.

The amendments to the ITAA 1936 and ITAA 1997 apply to assessments for the 2022-23 income year and later income years. The amendments to the FBTAA 1986 apply to the FBT year starting on 1 April 2023 and to later FBT years.

Proposal announced

Schedule 3 to the Bill fully implements the measure Reducing compliance costs for individuals claiming self-education expense deductions from the 2018-22 Budget.

Financial impact

Schedule 3 to the Bill is estimated to have a negligible impact on receipts over the forward estimates period:

- Nil

.. Not zero, but rounded to zero

Human rights implications

Schedule 3 to the Bill does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 6.

Compliance cost impact

Schedule 3 to the Bill is expected to reduce compliance costs for individuals claiming self-education expense deductions.

Schedule 4 - Increased Tribunal powers for small business tax decisions

Outline

Schedule 4 to the Bill amends the TAA 1953 to enable small business entities to apply to the Small Business Taxation Division of the AAT for an order staying, or otherwise affecting, the operation or implementation of decisions of the Commissioner that are being reviewed by the AAT.

Date of effect

Applications for review made on or after the day after Royal Assent.

Proposal announced

Schedule 4 to the Bill fully implements the measure Increased powers for the Administrative Appeals Tribunal in relation to small business taxation decisions from the 2018 - 22 Budget.

Financial impact

It is estimated that the proposal will have a small but unquantifiable cost to cash receipts.

Human rights implications

Schedule 4 to the Bill does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 6.

Compliance cost impact

This measure is estimated to have a minor impact on compliance costs.

Schedule 5 - Expanding eligibility for downsizer contributions

Outline

Schedule 5 to the Bill amends the ITAA 1997 to allow individuals aged 55 and above to make downsizer contributions to their superannuation plan from the proceeds of selling their main residence.

Date of effect

The amendments made by Schedule 5 to the Bill commence on the first 1 January, 1 April, 1 July, or 1 October to occur after the day the Bill receives Royal Assent and will apply to downsizer contributions made on or after the commencement of this Schedule.

Proposal announced

Schedule 5 to the Bill partially implements the Helping homeowners who want to downsize commitment announced by the Government on 15 May 2022 during the 2022 Federal Election.

Financial impact

Schedule 5 to the Bill is estimated to decrease receipts by $20.0 million over the forward estimates.

- Nil

.. Not zero, but rounded to zero

Human rights implications

Schedule 5 to the Bill raises human rights issues. See Statement of Compatibility with Human Rights - Chapter 6.

Compliance cost impact

This measure is estimated to have a low impact on compliance costs.