House of Representatives

Second Reading Speech

Mr Shorten (Assistant Treasurer and Minister for Financial Services and Superannuation)

I move:

That this bill be now read a second time.

This bill amends various taxation laws to implement recent disaster related initiatives and improvements to Australia's tax laws.

Schedule 1 makes exempt from income tax, the disaster income recovery subsidy payments made to victims of the recent floods and Cyclone Yasi.

The payments provided much needed financial assistance to employees, small business owners and farmers who experienced a loss of income as a direct consequence of the flooding that commenced on or after 29 November 2010 and which affected Queensland, New South Wales, Western Australia, Victoria and South Australia, as well as Cyclone Yasi, which recently devastated Queensland.

Schedule 1 also exempts from income tax the ex gratia payments to New Zealand special category visa holders who were affected by a disaster in 2010-11, but due to their visa status were ineligible for a tax-exempt Australian Government Disaster Recovery Payment. These ex gratia payments are made for disasters where the Australian Government Disaster Recovery Payment has been activated, and are of an equivalent amount.

By exempting these disaster relief payments from income tax, the maximum amount of assistance is provided to affected individuals. A tax exemption for these payments is also consistent with the exemption provided for equivalent payments made in response to other disasters, such as the devastating Black Saturday Victorian bushfires.

Schedule 2 provides an exemption from income tax for category C payments made to flood-affected small businesses and primary producers under the Natural Disaster Relief and Recovery Arrangements. This measure recognises the hardship suffered by small businesses and primary producers in affected areas, and provides certainty for recipients in terms of tax treatment at a time when they should not have to worry about these tax matters.

Schedule 3 increases the flexibility of first home saver accounts. Money in a first home saver account will be able to be paid into a genuine mortgage after the end of a minimum qualifying period, should the account holder purchase a home prior to the release conditions being satisfied.

Currently, if a first home is purchased before certain minimum release conditions are met, the first home saver account must be closed, and the money in the account must be paid to the individual account holder's superannuation or retirement savings account.

First home saver accounts are designed to encourage individuals, through tax concessions and government contributions, to save for their first home over the medium to long term, and have been available since October 2008.

The new law will allow the money in a first home saver account to be paid to a genuine mortgage after the end of a minimum qualifying period, should the account holder purchase a dwelling in the interim.

This change will further assist aspiring home buyers by increasing flexibility through allowing people to purchase a home earlier than planned and still be able to put the money towards their new home, should their circumstances change.

This measure will apply for houses purchased after royal assent.

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

Debate (on motion by Mr Pyne) adjourned.