House of Representatives

Second Reading Speech

Mr Morrison (Cook-Treasurer)

I move:

That this bill be now read a second time.

This bill implements two government initiatives to encourage innovation in Australia.

This is another example of the Turnbull government pulling back the red tape and outdated tax settings that hold back Australian start-ups and innovators, and ensuring our tax system is fit for purpose in the modern economy.

Schedule 1 of this bill amends the A New Tax System (Goods and Services Tax) Act 1999to change the GST treatment of digital currency to be like money.

The bill delivers on the 2017-18 budget commitment to remove the double taxation of digital currency from 1 July 2017.

The bill ensures that GST will no longer be charged on purchases of digital currency. As announced in the 2017 budget, the bill has a retrospective start date of 1 July 2017.

Currently, consumers who use digital currency can effectively bear a GST burden twice: once on the purchase of the digital currency and once again on its use in exchange for other goods and services subject to the GST.

The current GST treatment of digital currency is an obstacle to the growth of the financial technology or 'fin-tech' industry in Australia.

This government bill removes this GST obstacle.

Schedule 1 of the bill will introduce a definition of digital currency into the GST law. The definition is based on principles to ensure that digital currency that operates like money is treated like money for GST purposes. The bill will apply to all digital currencies that meet this definition.

The government has worked with the fin-tech sector to ensure that the definition of digital currency to be included in the GST law can support rapidly evolving technology.

The fin-tech sector has enthusiastically supported the measure. The bill will make it easier for new innovative digital currency businesses to operate in Australia.

fin-tech is about stimulating technological innovation so that financial markets and systems can become more efficient and consumer focused.

The measure to remove the double taxation of digital currency is an important step to creating an environment for Australia's fin-tech sector where it can be both internationally competitive and play a central role in aiding the positive transformation of our economy. This will be one of the big productivity drivers over the next generation.

The government continues to deliver on its fin-tech agenda by commencing work on an enhanced package of further reforms to be implemented this year.

The government will make it easier for new innovative start-ups to access funding and the investors they need. We will support fin-tech businesses to test innovative financial services to facilitate more innovation, promote greater competition and increase choice for Australian customers.

The government is making real progress. We are taking action now when it comes to realising the opportunities of fin-tech for the Australian economy and the jobs and the growth that will flow from that.

Schedule 1 of this bill, to remove the double taxation of digital currency, proves yet again that the government is backing fin-tech with tangible initiatives.

Schedule 2 of this bill amends the Income Tax Assessment Act 1997 to include the Centre for Entrepreneurial Research and Innovation on the list of deductible gift recipients. Deductible gift recipient status allows members of the public to receive income tax deductions for the donations they make to the centre.

The Centre for Entrepreneurial Research and Innovation is a registered charity based in Western Australia that works with universities, research institutes, government, private enterprise and industry to promote entrepreneurialism and commercialisation of innovative ideas.

The centre's mission to encourage the take-up of innovative ideas by start-ups in Australia, rather than moving overseas, is a core theme of the government's innovation agenda. Forging stronger connections between researchers and the private sector is important in enhancing the new sources of growth which will deliver the next age of economic prosperity in Australia. It is key to the collaboration agenda that was set out in the National Innovation and Science Agenda by the Prime Minister in late 2015.

Granting deductible gift recipient status for the Centre for Entrepreneurial Research and Innovation will assist the organisation with fundraising for this very important cause.

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

Debate adjourned.