Bills Digest no. 127 2014–15
PDF version [609KB]
WARNING: This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.
Les Nielson
Economics Section
19 June 2015
Contents
The
Bills Digest at a glance
Purpose of the Bill
Structure of the Bill
Background—tax offsets explained
Schedule 1—Seafarer tax offset
Schedule 2—Research and Development Tax Incentive
Policy Announcement
Committee consideration
Policy position of non-government parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human Rights
Key issues and provisions
Date
introduced: 27 May 2015
House: House of
Representatives
Portfolio: Treasury
Commencement: Sections
1–3 and Schedule 2 on Royal Assent and Schedule 1 on the day after Royal Assent.
Links: The links to the Bill,
its Explanatory Memorandum and second reading speech can be found on the
Bill’s home page, or through the Australian
Parliament website.
When Bills have been passed and have received Royal Assent, they
become Acts, which can be found at the ComLaw
website.
Purpose
This Bill repeals the seafarer tax offset and reduces the
rates of the research & development (R&D) tax incentive.
Structure
The Bill contains two schedules:
- Schedule
1 repeals the seafarer tax offset with effect from 1 July 2015 and
- Schedule
2 reduces the rates of the R&D tax incentive with effect from 1 July 2014.
Rational
The Government states that the seafarer tax offset has
been little used and that it has failed in its policy intent.[1]
It says both measures are being taken to achieve budget savings. These savings,
over the forward estimates period are:
- repeal
of the Seafarers Tax Offset (STO) – $12 million[2]
and
- reduction
in the R&D tax incentive rates – $620 million from 2014–15.[3]
Previous legislative action
These measures were previously rejected by the Senate on 2
March 2015 when Schedules 2 and 3 of the Tax and Superannuation Laws Amendment
(2014 Measures No. 5) Bill 2014 (the previous Bill) were deleted. The House of
Representatives passed the Bill with these amendments on 3 March 2015.[4]
Position of Major political parties
Both the Australian Greens and the Labor Party opposed
these measures during debate on the previous Bill.[5]
Would the Senate’s rejection of the current Bill give rise
to a Double Dissolution Trigger?
No: the previous Bill was passed by the Senate and
amendments to that Bill, which removed the changes made by this Bill, were
agreed to by the House of Representatives. Thus the constitutional requirements
for a double dissolution election do not arise in respect of the current Bill.[6]
This Bill amends the Income Tax Assessment Act 1997 (ITAA
1997) to:
-
abolish the seafarer tax offset (STO) and
-
reduce the rate of tax offsets available under the research and
development tax incentive (R&D tax incentive).
Consequential amendments are also made to the Shipping Reform
(Tax Incentives) Act 2012. The rationale for these changes is primarily to
reduce expenditure.[7]
The Bill contains two short schedules dealing with the STO
and the R&D Tax Incentive respectively.
A tax offset is another name for a tax rebate. It is
different from a tax deduction:
- a
tax deduction is a reduction in a taxpayer’s assessable income and
- a
tax offset (or rebate) is a reduction in the amount of tax the person has to
pay.
Tax offsets are available for a range of business expenditures.
Typically, expenditures are treated as deductions from assessable income to
arrive at taxable income upon which tax is levied at the company tax rate of 30
per cent.
Some expenditures are treated as being subject to a rebate
or offset instead, at a rate different from the company tax rate. This gives
the taxpayer greater benefit than if the expenditure were treated as a
deduction.
Example
A company has revenue
(assessable income) of $100,000 and has only one item of expenditure of
$40,000.
Treating that expenditure
as a deduction gives taxable income of $60,000 and a tax liability of $18,000
(30% of $60,000) giving an after tax income of $82,000.
If however, the
expenditure is subject to an offset of 40%, the company will not usually be able
to treat the expenditure as a deduction as well so its taxable income will be
$100,000 on which it will pay $30,000 tax giving an after tax income of
$70,000. However, it will be able to claim a rebate or offset of $16,000 (40%
of $40,000). With the rebate its overall after tax income is $86,000, so it is
$4,000 better off. |
Refundable v Non-refundable tax
offsets
Tax offsets or rebates can be refundable or
non-refundable. The distinction is relevant where the tax rebate exceeds the
amount of tax otherwise payable:
-
a refundable tax offset is one where the full amount of the
offset is paid, even if that amount exceeds the taxpayer’s tax liability and
-
a non-refundable tax offset or rebate is limited to the
taxpayer’s tax liability.
Example
A company with revenue
(assessable income) of $50,000 has only one item of expenditure of $40,000,
rebateable at 40%.
The company’s tax
liability on $50,000 will be $15,000 (30% of $50,000).
The rebate on the $40,000
expenditure will be $16,000 (40% of $40,000).
If the offset is
refundable, the company will receive the benefit of the whole $16,000 rebate,
meaning its net after tax position will be $51,000 ($50,000 of assessable
income plus a $1,000 refund from the ATO). If the offset is non-refundable, the
rebate will be limited to the amount of tax otherwise payable - $15,000 -
meaning the company’s net after tax position will be $50,000. |
Background
What is the seafarer tax offset
This refundable tax offset started from 1 July 2012 for
employers of certain Australian seafarers. A company employing Australian
seafarers on prescribed overseas voyages made by certified vessels may be
entitled to claim the seafarer tax offset.
Section 61-710 of the ITAA 1997 specifies the amount
of this tax offset as 30 per cent of the gross payments made to the
seafarer(s).[8]
The seafarer does not benefit directly from this offset.
This offset was part of a package of measures implemented
by the previous Government to assist Australian shipping companies to compete
against their international rivals and to revitalise the Australian shipping industry.[9]
What use has been made of it?
An Australian corporation that employs at least one
Australian resident as a seafarer (that is, as a master, officer, engineer,
integrated rating et cetera) for a period of at least 91 days in an income year
to undertake overseas voyages on certified vessels is entitled to claim this
offset. The Australian Taxation Office (ATO) does not publish separate
statistics on the number of times this offset has been claimed, or the value of
such claims. The Explanatory Memorandum states that since its introduction this
offset has been claimed by fewer than five taxpayers.[10]
That observation made, some idea of the use to which this offset has been put
can be gained by observing the trends in the Australian trading fleet.
The number of Australian registered ships in the
Australian international trading fleet has declined from ten in 2007–08 to six
in 2012–13.[11]
The Australian Shipowners Association (ASA) has informally estimated that this
number has fallen to four, perhaps five.[12]
Under section 33A of the Shipping Registration Act 1981,
vessels may be included on the Australian International Shipping Register provided
that either the Master or the Chief Mate, and either the chief engineer or
first engineer, are Australian citizens or residents.[13]
Although the number of Australian seafarers working in the trade between
Australia and elsewhere is not available, the above information suggests that
this number is not large. The following provides some estimates of the number
of Australian seafarers working in the international shipping trade between
Australia and other countries.
In a 2014 submission to the Senate Economics Legislation
Committee the Maritime Union of Australia noted that each international
voyaging ship would engage approximately 34 seafarers (17 on a 2 crew
system=34) so six ships would employ approximately 204 seafarers.[14]
This would be a low estimate.
Industry sources suggested that about 300 Australian
seafarers are employed on Australian ships trading internationally. Further, the
Shipping Reform (Tax Incentives) Regulation 2012 requires that the company that
receives the Tax Offset ensures that, for each vessel operated by the entity,
training is being undertaken by at least one person (the trainee) in each of
the following three categories: Engineer officer training; Deck officer training;
and Integrated rating and steward training.[15]
Taking these factors into account an estimated number of Australian seafarers
affected by the repeal of this offset may be in excess of 330.[16]
This would be an upper estimate.
How effective has it been?
If the number of crew in respect of which the STO has been
granted is taken as a measure of effectiveness then this offset has not been
effective, as the number of crew in respect of which the STO can be claimed has
declined along with the number of Australian ships trading internationally. The
low number of companies claiming the STO is a consequence of the decline in the
number of Australian registered ships in these trades. But these measures may
not be appropriate for judging the effectiveness of the STO, as the aim of this
offset was to make Australian crews more competitive with crews sourced from
other countries.
In its submission to the Senate Economic Legislation
Committee’s inquiry into the previous Bill (see below) the ASA, which is the
major employer body in the industry, stated that:
The Seafarers Tax Offset provides a rebate to the employer of
Australian staff for part of the income tax withheld while working in
international trades, thereby making the employment costs more comparable with
international seafarers.[17]
Previous legislative action
The Government has previously attempted to abolish the
STO. Schedule 2 of the previous Bill, introduced into the House of
Representatives on 4 September 2014 sought to abolish the offset. This schedule
was deleted by Senate amendment on 2 March 2015. The House of Representatives
agreed to this amendment (amongst others) on 3 March 2015.[18]
Background
The current R&D tax incentive came into effect on 1
July 2011. The R&D tax incentive assists businesses to offset some of the
costs of doing R&D and aims to promote innovation. The program is
administered jointly by AusIndustry (on behalf of Innovation Australia) and the
ATO.[19] The
R&D tax incentive replaced the previous R&D tax concession.[20]
The R&D tax incentive operates by enabling companies
to receive a tax offset for eligible R&D expenditure, rather than claiming
R&D expenditure as a normal expense. As explained in the Background of this
Digest, above, a tax offset reduces the amount of income tax payable, after
calculating the basic income tax liability.[21] If a company claims an item under the R&D
tax incentive, it cannot also claim it as a normal business expense.
Because the rate of the offset (currently 40 or 45 per
cent) is greater than the company tax rate (currently 30 per cent), companies
have an additional incentive to engage in research and development.
If a tax offset exceeds the tax otherwise payable, the way
that the excess is treated depends on whether the tax offset is refundable or
non-refundable. A non-refundable offset that exceeds tax otherwise payable can
be carried forward to future income tax years. A refundable tax offset that
exceeds tax otherwise payable may be refunded to the entity (subject to certain
rules).[22]
Additional background on the R&D tax incentive can be
found in the recent Parliamentary Library Bills Digest on the previous Bill.[23]
Previous legislative action
Schedule 3 of the previous Bill contained all but identical
measures to those in Schedule 2 of this Bill. As with the proposed amendments
to the STO the proposed changes to the R&D tax incentive were deleted from
the previous Bill by Senate amendment. Again, these particular changes were
agreed to by the House of Representatives on 3 March 2015.[24]
Current costs of R&D tax
incentives
Currently the R&D tax concession is given at two
rates, 40 and 45 per cent:
-
the 2013–14 ATO Annual Report states that for the 40 per cent non-refundable
tax offset: there were 1,780 claims worth about $15.2 billion and
- there
were 8,200 claims worth about $4.4 billion for the 45 per cent tax offset.[25]
Briefly, the 45 per cent rate is applied to companies with
a turnover of less than $20 million. Thus the majority of the benefits are
going to companies whose turnover exceeds this figure.[26]
Previous Senate Inquiry
Almost identical provisions to those in Schedules 1 and 2 were
in the previous Bill which was subject to a recent inquiry by the Senate
Standing Committee on Economics, chaired by Senator Edwards. The Committee
recommended that the Bill be passed.[27]
However, in their dissenting report, Labor Senators opposed the abolition of
the STO and the reduction in the R&D tax incentive rates.[28]
Both these measures were first announced in the 2014–15 Budget.[29]
As at the date of writing, the Bill had not been referred to
a Parliamentary Committee.
Seafarers Tax Offset
During debate on Schedule 2 of the previous Bill, the Shadow
Treasurer, Mr Bowen stated that the Labor Party would oppose the repeal of the
STO, and noted that the ASA had stated that:
The Seafarers Tax Offset was a key element of the 2012 reforms
which helped to reduce the operating costs of Australian vessels, increased the
competitiveness of Australian shipping and provided significant opportunity for
employment of Australians in international trades ... the impact [of abolition]
is severe with regard to future opportunity.[30]
In the Senate, during the second reading speech on the
previous Bill, Senator Rice flagged that the Australian Greens would seek to
amend it in relation to the STO, stating that:
This tax incentive goes a long way to ensuring workers on
overseas journeys can get a decent pay and it keeps their jobs viable, and it
costs us the measly sum of $2 million a year. For the sake of $2 million a
year, the government is continuing to apply measures that are going to be
making it more and more difficult to employ Australian workers on our seas and
to have Australian-flagged ships plying our coast.
You can see that there are all sorts of measures that are all
coming together to completely decimate the Australian shipping industry, and
that will be a disaster. It will be a disaster for the Australian workforce but
also a disaster for us having good work conditions and safe environmental
conditions for the ships that are in our waters. It is a tiny saving that the
government is trying to achieve, and for that it is going to ditch security for
workers and our shipping industry at the very time that they need our support.
We must not let it happen. Right now, what the Australian shipping industry
needs is certainty. The industry is awaiting the results of the minister's
options paper. The last thing it needs is to be forced to negotiate the storm
that abolishing this tax incentive would create.
The policy as it stands at the moment, which is going to be
abolished, also promotes professional development and training of workers by
including this in the period deemed to be on a voyage. This is an essential
measure to train up Australian shipping workers and give them the know-how to
maintain our status as a major shipping nation. It is a status that we do not
need to let go. We have options. There are constructive ways forward for us to
maintain a strong, healthy, viable Australian shipping industry with good
working conditions for the seafarers and with good environmental protections.
Perhaps most importantly, the Australian shipping industry
can be a shipping industry that is competitive with the rest of the world,
because it needs to be that. It truly is an international business. The
industry operates in a market that is largely tax free in international terms
and in which other players—seafarers on other countries' ships—are given
similar tax incentives. So to take away this benefit from our workers will be
putting them at a disadvantage to the rest of the world just when we need to be
doing everything we can in order to maintain their jobs.
The government argues that the seafarers tax offset has had a
low uptake. But, while uptake numbers might appear low at first glance, the
reality is that it reflects the small number of Australian ships operating
internationally. We need to be maintaining those ships and increasing the
number of Australian ships operating. At the moment we have a small number of
ships, but it is a vital industry and a tax measure that we must keep.[31]
Neither Labor nor the Greens have made any public
statement on the STO-related provisions of the current Bill.
R&D Tax Incentive
Mr Bowen stated that Labor would oppose the proposed
changes to the rates of the R&D tax incentive in the previous Bill and
observed:
A measure before the House here is a $620 million cut to the
research and development tax concession. I will say a number of things about
this. Firstly, the support given to research and development through the
incentive in the tax system has been very important in Australia's research and
development efforts. What the government is doing here is relinking the
concession to the corporate tax rate. The previous Labor government explicitly
delinked the corporate tax rate and the research and development incentive. We
did that to provide certainty so that Australian companies investing in risky
research and development ventures knew the sort of support they would receive
from the government when they were undertaking the difficult decision about how
much to invest. Some of these ventures will not pay off for the company and
most of them, if they do pay off for the company, will have spillover effects
for the entire economy. So that was the approach taken by the previous
government.
This government has taken the approach of relinking the
corporate tax rate with research and development incentives. I accept that
there is a legitimate debate to be had about that and that there could be good
arguments put on both sides. But the approach taken by the Labor Party in
office that we continue to defend, protect and promote is that it is important
that firms have certainty when it comes to investing in research and
development.[32]
Senator Rice, speaking for the Australian Greens on the
same set of proposed amendments noted that:
Schedule 3 of the Bill, of course, continues the Abbott
government's attacks on science and research and development. The Bill cuts 1½
per cent from the research and development offsets available to businesses and
rips $620 million out of research and development spending over the forward
estimates. This, again, is just what we do not need to be doing to have a
prosperous Australia. We know that increasing investment in science and
research is the way forward. We know that our wellbeing, our security and our
economic viability as a nation depend on this research and on our having an
innovative economy that is using our brains. That is where we are going to be
able to continue to compete on the world stage. The government tries to justify
this cut by saying it brings it into line with business tax cuts also outlined
in the budget, but this cut will occur a year before those possible tax cuts,
and the passage of those tax cuts through the Senate is, of course, by no means
certain.
Of course, these cuts to research and development also come
on top of the cuts to the R&D tax offset that targeted large company
investment that recently passed the Senate. This is insanity—it is totally the
direction that we should not be going. The insanity of these cuts is reinforced
and underlined by the government's own figures on science expenditure. Just as
we know that science increasingly needs to underpin our future as a nation, we
are set to spend less on science and research this year than we did in 1979. We
know that, over the past few decades, science and research has become
increasingly important to our society and economy. The rot began under Labor in
2012, but Tony Abbott is taking spending on science and research to the equal
lowest level since records began. We have had cuts to CSIRO. CSIRO scientists
have been taking voluntary redundancy packages across the country. CSIRO
scientists who have been working for decades are no longer going to have their
contribution to our country used and valued. We have seen cuts to clean energy
programs, and the cuts to tax concessions for R&D such as the cuts in this Bill
have contributed to this woeful result of spending on science and research
being at its equal lowest level since records began.
We will never be able to compete with China or India on
wages, but we have the potential to be stronger on research and innovation.
That needs secure and significant public investment, something that other
countries have certainly twigged to. We are trailing way behind countries that
are our competitors in the world—countries like Germany, the UK and US—and we
are outspent by key trading partners like Korea and Japan.[33]
Seafarers Tax Offset
The Author’s personal contact with the ASA confirms that its
previous opposition to repealing this tax offset remains unaltered.[34]
Further, the ASA noted that it had nothing to add to its previously stated
reasons for opposing the repeal of this offset, as follows:
-
the budget impact of abolishing this measure is miniscule however
the consequential impact is that it decimates any possibility of a company
investing in a ship that would operate under the Australian International
Shipping Register (AISR)
-
the AISR was created to increase Australia’s participation in our
international trades which would add significant value to the national economy,
create jobs and which is strongly in Australia’s strategic interest
-
for the AISR to work, it needs certainty around the continuance
of supporting measures such as the Seafarers Tax Offset. It has only been in
operation for two years, much of which has been shrouded in policy uncertainty
and
- very
real potential exists for the AISR to add value to Australia and it should be
given a chance to work.[35]
The Maritime Union of Australia (MUA) has also confirmed
that it opposes the repeal of this tax offset.[36]
In a recent private briefing paper the MUA gave five reasons why this
particular offset should not be repealed:
... it would be premature abolish one of a package of four
taxation incentives to support Australian shipping in advance of a Government
decision on shipping reform being considered in response to stakeholder
comments on Minister Truss’s Options Paper on the regulation of coastal
shipping in Australia.[37]
What the industry requires is policy certainty and in particular certainty
about passage of any consequential amending legislation that arises from
Government consideration of responses to the Minister’s Options Paper
...although the Government has foreshadowed substantial
deregulation of coastal shipping through a substantial winding back of the
Coastal Trading (Revitalisation of Australian Shipping) Act 2012, no
legislation has yet been introduced into the Parliament.
The Seafarer Tax Offset is consistent with the rules for
exempting certain overseas employment income in s23GA of the ITAA 1936
and addresses an anomaly whereby up until July 2012, service on a ship in
international waters was not considered to be foreign service because
international waters do not form part of the territory of a foreign country,
thereby creating an anomaly for this category of overseas employment.
Notwithstanding reforms to the s23AG provisions in 2009, seafaring is a truly
international occupation, and employers of Australian national seafarers should
retain access to the tax offset to ensure Australian shipping remains
internationally competitive...
The tax measure is an important part of a package of measures
to help ensure the competitiveness of Australian shipping in a global
marketplace where all other seafaring nations provide a similar tax exemption...
The Budget saving is extremely modest with the Budget papers
saying that in underlying cash terms, the saving is $8.0 million over the 4 year
forward estimates period, or $2 million per annum (see p. 212 of Budget Paper
No. 2 of 2014-15) and
...it helps stimulate the training of Australian seafarers,
which remains an important outcome given that Australia is such a major
shipping nation.[38]
R&D Tax Incentive
As at the date of writing there has been little, if any,
reaction to the possible repeal of this incentive. But the identical provisions
of the previous Bill were the subject of some comment:
RSM Bird Cameron wrote that while the reduction would reduce
government support for R&D, the reduction was not significant. A KPMG summary noted that it was ‘disappointed’
with the cut in the 2015–16 financial year, and that while the reduction in
company tax rate would match the reduction in the offset, that cut in company
tax would be offset by the proposed paid parental leave levy for companies with
taxable income over $5 million. One
industry member commented that the reduction was ‘sending a clear message that
innovation is not a priority’.
In its submission to the inquiry on the previous Bill,
PricewaterhouseCoopers (PwC) expressed concern that the proposed changes to the
offset rates will give rise to undesirable and unintended consequences and
therefore diminish the support for research and development that the R&D
tax incentive currently provides.
Redarc Electronics stated that it was deeply concerned that
the R&D measures in the Bill are ‘ill-conceived and will adversely impact
on [the company’s] ability to utilise the benefits of the incentives in
furthering [its] R&D and its commercialisation’.[39]
There is nothing to suggest that these views have changed
since the time of the Senate Economics Legislation Committee Inquiry into the
previous Bill.
As indicated above, the Government’s position is that
financial considerations are the main reason for repealing the STO and lowering
the rates for the R&D tax incentive. This makes the financial implications
of the Bill particularly relevant. These implications are shown in the following
table:
Table 1: Financial implications, $m
|
Year
|
2014–15
|
2015–16
|
2016–17
|
2017–18
|
Totals
|
|
Repeal of STO
|
|
4
|
4
|
4
|
12
|
|
Reduction in R&D Tax Incentive Rates
|
70
|
160
|
200
|
190
|
620
|
|
Totals
|
70
|
164
|
204
|
194
|
632
|
Source: Explanatory Memorandum, Tax and Superannuation Laws
Amendment (2015 Measures No. 3) Bill 2015, pp. 3–4.
As can be seen the overwhelming majority of the expected
savings in this Bill come from the lowering of the R&D tax incentive rates.
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the
Bill’s compatibility with the human rights and freedoms recognised or declared
in the international instruments listed in section 3 of that Act. The
Government considers that the Bill is compatible.[40]
Would the Senate’s rejection of the
current Bill give rise to a Double Dissolution trigger?
As indicated above, the measures in the current Bill were
deleted from the previous Bill on 2 March 2015. These amendments were agreed to
by the House of Representatives on 3 March 2015. In light of the Senate’s
treatment of the previous Bill, would the Senate’s rejection of this Bill give
rise to the necessary conditions to allow a double dissolution election?
Under section 57 of the Constitution, a number of
steps are necessary for a double dissolution trigger to become available. The
preliminary steps are:
-
firstly, the House of Representatives passes a proposed law,
which occurred with the previous Bill on 24 September 2014 and
-
secondly, the Senate must reject or fail to pass the proposed
law, or pass it with amendments to which the House of Representatives will not
agree.
This second condition was not satisfied in relation to the
previous Bill, as the Senate passed the previous Bill with amendments which
were agreed by the House. Therefore rejection of the current Bill by the Senate
would not be a double dissolution trigger.
Repeal of the Seafarers Tax Offset
Item 2 of Schedule 1 repeals Subdivision 61-N of
the ITAA 1997.[41]
This Subdivision contains the main provisions governing the operation of the
STO.
Item 5 of this Schedule applies these amendments to
tax assessments from the 2015–16 income year. That is, the proposed measure is
to start on 1 July 2015.
Reduction in R&D tax incentive
rates
Items 1 to 3 of Schedule 2 amend the Table
in subsection 355-100(1) of the ITAA 1997 to reduce the R&D tax incentive
rates.
Item 1 of the Table provides that an R&D
entity, to which item 2 of the Table does not apply, is entitled to a
R&D tax offset of 45 per cent of the expenditure on eligible R&D
activities, if its aggregated turnover for an income year is less than $20
million. Item 1 of Schedule 2 reduces this rate by 1.5 per cent
to 43.5 per cent.
Item 2 of the Table in subsection 355-100(1) will
apply to the company where two or more exempt entities, irrespective of their
relationship, beneficially own interests in the company carrying more than 50
per cent of the voting rights or rights to a distribution of income or capital. Item 2 of Schedule 2 reduces the
rate of R&D tax offset applying in these circumstances by 1.5 per cent to
38.5 per cent.
Item 3 of the Table provides that in any other
case, not covered by items 1 and 2, the R&D entity is entitled to a R&D
tax offset of 40 per cent of the expenditure on eligible R&D activities. Item
3 of Schedule 2 reduces this rate to 38.5 per cent.[42]
Item 5 of Schedule 2 applies these rates to
assessments for income years commencing on or after 1 July 2014. Although
assessments for this tax year take place after 1 July 2015, companies would
have been planning their affairs on the expectation of the current rates
applying throughout the 2014–15 year.
Members, Senators and Parliamentary staff can obtain
further information from the Parliamentary Library on (02) 6277 2500.
[1]. Explanatory
Memorandum, Tax
and Superannuation Laws Amendment (2015 Measures No. 3) Bill 2015, paragraph 1.6,
accessed 17 June 2015.
[2]. Ibid.,
p. 3.
[3]. Ibid.,
p. 4.
[4]. Parliament
of Australia, ‘Tax
and Superannuation Laws Amendment (2014 Measures No. 5) Bill 2014 homepage’,
Australian Parliament website, accessed 9 June 2015.
[5]. Ibid.
[6]. Constitution,
section 57.
[7]. J
Frydenberg, ‘Second
reading speech: Tax and Superannuation Laws Amendment (2015 Measures No. 3)
Bill 2015’, House of Representatives, Debates, 27 May 2015, pp.
20–22, accessed 11 June 2015.
[8]. Income Tax Assessment
Act 1997, accessed 17 June 2015.
[9]. Further
details of this package can be found in M Brennan and L Nielson, Shipping
Reform (Tax Incentives) Bill 2012 [and] Tax Laws Amendment (Shipping
Reform) Bill 2012, Bills digest, 146, 2011–12, Parliamentary Library,
Canberra, 2012, accessed 11 June 2015.
[10]. Explanatory
Memorandum, Tax
and Superannuation Laws Amendment (2015 Measures No. 3) Bill 2015, op.
cit., p. 6.
[11]. Bureau
of Infrastructure, Transport and Regional Economics, Australian
sea freight 2012–13, Statistical report, ‘Table 5.1 – number of
ships in the Australian trading fleet’, p. 61, accessed 9 June 2015.
[12]. Australian
Shipowners’ Association, telephone call from Author, 9 June 2015. Four of the
ships are the very large Liquefied Natural Gas Tankers trading between Asia and
Australia.
[13]. Shipping Registration
Act 1981, accessed 17 June 2015.
[14]. Maritime
Union of Australia (MUA), Submission
to the Senate Standing Committee on Economics, Inquiry into the Tax and
Superannuation Laws Amendment (2014 Measures No. 5) Bill 2014, 13
October 2014, paragraph 4.14, accessed 17 June 2015.
[15]. Shipping Reform (Tax
Incentives) Regulation 2012, accessed 17 June 2015.
[16]. That
is, 300 seafarers and 3 trainees per crew per Australian ship, assuming six Australian
ships trading internationally (300 + 36 trainees).
[17]. Australian
Shipowners Association, Submission
to the Senate Standing Committee on Economics, Inquiry into the Tax and
Superannuation Laws Amendment (2014 Measures No. 5) Bill 2014, 9
October 2014, paragraph 3.6, accessed 11 June 2015.
[18]. Parliament
of Australia, ‘Tax
and Superannuation Laws Amendment (2014 Measures No. 5) Bill 2014 homepage’,
op. cit.
[19]. Australian
Government, ‘R&D
tax incentive’, business.gov.au, accessed 17 June 2015.
[20]. For
a discussion of the process leading to the current arrangements, see J Murray, Tax
Laws Amendment (Research and Development) Bill 2010, Bills digest, 165,
2009–10, Parliamentary Library, Canberra, 2010, accessed 17 June 2015.
[21]. Income Tax Assessment
Act 1997, subsection 4-10(3), method statement, Step 4, accessed
15 June 2014.
[22]. Australian
Taxation Office (ATO), Research
and development tax incentive – refundable and non-refundable tax
offsets, Fact sheet, ATO website, October 2011, accessed 17 June
2015.
[23]. B
Pulle, T Kryger and D Weight, Tax
and Superannuation Laws Amendment (2014 Measures No. 5) Bill 2014,
Bills digest, 41, 2014–15, Parliamentary Library, Canberra, 2014, accessed 9
June 2015. I am indebted to these Authors for much of this section.
[24]. Parliament
of Australia, ‘Tax
and Superannuation Laws Amendment (2014 Measures No. 5) Bill 2014 homepage’,
op. cit.
[25]. Australian
Taxation Office (ATO), ‘Administered
programs 2013–14’, ATO website, accessed 12 June 2015.
[26]. Australian
Tax Office, (ATO), ‘Research
and Development Tax Incentive’, ATO website,
accessed 19 June 2015.
[27]. Senate
Economics Legislation Committee, Inquiry
into the Tax and Superannuation Amendment (2014 Measures No. 5) Bill 2014,
The Senate, 28 October 2014, p. 15, accessed 12 June 2015.
[28]. Ibid.,
p. 17.
[29]. Australian
Government, ‘Part
1: revenue measures’, Budget measures: budget paper no. 2: 2014–15,
‘R&D tax incentive’, p. 18; and ‘Part
2: expense measures’, Budget measures: budget paper no. 2: 2014–15,
‘Abolish the Seafarer tax offset’, p. 212, accessed 6 June 2015.
[30]. C
Bowen, ‘Second
reading speech: Tax and Superannuation Laws Amendment (2014 Measures No. 4)
Bill 2014, Tax and Superannuation Laws Amendment (2014 Measures No. 5) Bill
2014’, House of Representatives, Debates, 24 September 2014, p.
10358, accessed 12 June 2015.
[31]. J
Rice, ‘Second
reading speech: Tax and Superannuation Amendment (2014 Measures No. 5) Bill
2014’, Senate, Debates, 2 March 2015, pp. 886–887, accessed 12
June 2015.
[32]. C
Bowen, ‘Second reading speech: Tax and Superannuation Laws Amendment (2014
Measures No. 5) Bill 2014’, op. cit., p. 10357.
[33]. J
Rice, ‘Second reading speech: Tax and Superannuation Amendment (2014 Measures
No. 5) Bill 2014’, op. cit., p. 887.
[34]. B
Pulle, T Kryger and D Weight, Tax
and Superannuation Laws Amendment (2014 Measures No. 5) Bill 2014, Bills
digest, op. cit., p. 7.
[35]. Australian
Shipowners Association, Submission
to the Senate Standing Committee on Economics, Inquiry into the Tax and
Superannuation Laws Amendment (2014 Measures No. 5) Bill 2014, op.
cit., executive summary.
[36]. Author’s
telephone call to both the ASA and MUA, 9 June 2015.
[37]. Australian
Government, Options
paper: approaches to regulating coastal shipping in Australia, April
2014, accessed 12 June 2015. See also W Truss (Minister for Infrastructure
and Regional Development), Shipping
to cast off red tape and set sail for productivity boost, media
release, 8 April 2014, accessed 12 June 2015.
[38]. MUA,
Background brief for Politicians, Opposition to repeal of Seafarer Tax Offset,
June 2015. This paper was kindly provided to the author by the MUA on request.
The MUA published a parliamentary briefing note in relation to the previous
Bill. See MUA, Parliamentary
Brief - Seafarers Tax Offset, accessed 19 June 2015.
[39]. B
Pulle, T Kryger and D Weight, Tax and Superannuation Laws Amendment (2014
Measures No. 5) Bill 2014, Bills digest, op. cit., p. 9.
[40]. The
Statements of Compatibility with Human Rights can be found at pages 7 (repeal
of the STO) and 13 (reduction in R&D tax incentive rates) of the
Explanatory Memorandum to the Bill.
[41]. Income Tax Assessment
Act 1997, accessed 17 June 2015.
[42]. I
am indebted to B Pulle, T Kryger and D Weight, Tax and Superannuation Laws
Amendment (2014 Measures No. 5) Bill 2014, Bills digest, op. cit., p.
11 for this explanation.
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