House of Representatives

Second Reading Speech

Mr Costello (Treasurer)

I move:

That this bill be now read a second time.

In 2003, in accordance with the government's aim of reducing complexity in tax laws, the Board of Taxation commenced a project to identify inoperative provisions and to repeal those parts of the taxation law which were no longer required. In October last year the Board of Taxation reported that it had identified about 2,100 pages of inoperative provisions in the income tax law and recommended that they be repealed. In November last year I accepted the recommendation of the Board of Taxation.

In April of this year, I released a draft of the present bill for public comment. Today I am pleased, after consulting in relation to the proposed bill, to present a revised version of the bill to the House.

The bill before the House repeals over 4,100 pages of inoperative tax law, including about 2,600 pages of income tax law. That amounts to almost a third of the income tax law and over half of the Income Tax Assessment Act 1936. The bill also repeals about 1,500 pages of other acts relating to taxation, including 48 sales tax statutes that are wholly inoperative. As such, this represents a major improvement in the shape of the tax law and a major reduction in the volume of the tax law.

Repealing inoperative material will significantly reduce the length of the law. It will make it easier to use and lower the compliance costs borne by those who use the tax law.

As well as repealing inoperative tax law, the bill also makes other improvements to the tax laws which will make them easier to use. For example, it replaces multiple definitions of some terms with a single definition. Rationalising definitions will bring greater consistency to the tax law and make it easier for taxpayers to understand and meet their obligations.

The bill also rewrites some remaining operative provisions from the 1936 assessment act into the 1997 assessment act or the Taxation Administration Act 1953. This allows us to incorporate those provisions into the more straightforward structure of those acts and to do so in the more contemporary language they use.

The flow-on effects of the repeal of inoperative provisions will provide further benefits for taxpayers and tax practitioners. The Commissioner of Taxation has advised that approximately 200 public rulings, which contain references to provisions which are being repealed, will be either revised or withdrawn. The commissioner is also working with tax professionals to improve the readability from the ATO's legal database of other public rulings affected by the bill.

Repealing the inoperative provisions and making these other improvements are important parts of the government's continuing efforts to reduce the complexity of the tax law. The government will look for similar opportunities in the future to improve the tax laws and reduce the regulatory burdens and compliance costs faced by business and other taxpayers.

Full details of the measures in this bill are contained in the explanatory memorandum.

I commend the bill to the House for its consideration.

Debate (on motion by Mr Edwards) adjourned.