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Tax and Superannuation Laws Amendment
(2014 Measures No. 1) Bill 2014
Portfolio:
Treasury
Introduced: House
of Representatives, 26 February 2014
Purpose
2.1
Tax and Superannuation Laws Amendment (2014 Measures No. 1) Bill 2014
sought to amend various taxation and superannuation laws.
2.2
Schedule 1 to the bill introduced penalties to deter and penalise
persons who promote the illegal early release of superannuation benefits.
2.3
Schedule 2 to the bill introduced administrative directions and
penalties for contraventions relating to self-managed superannuation funds
(SMSFs) including rectification directions; education directions; and
administrative penalties.
2.4
Schedule 3 to the bill sought to amend the Income Tax Assessment Act
1936 to phase-out the net medical expenses tax offset by the end of the
2018-19 income year. During the income years 2013-14 to 2018-19 the tax offset
will be subject to transitional arrangements.
2.5
Schedule 4 to the bill sought to amend the Income Tax Assessment Act
1997 to update the list of specifically-listed deductible gift recipients.
Background
2.6
The committee reported on the bill in its Third Report of the 44th
Parliament.
2.7
The bill was subsequently passed by the Parliament and received Royal
Assent on 18 March 2014.
Committee view on compatibility
Right to fair trial and fair
hearing rights
Civil penalty provisions
2.8
The committee sought clarification from the Treasurer as to why a
maximum penalty of $340 000 for an individual is considered to be appropriate
in these circumstances, and if not, whether sufficient provision has been made
to guarantee compliance with the relevant criminal process rights provided for
under the International Covenant on Civil and Political Rights (ICCPR), in
particular the right to be presumed innocent, the right not to incriminate
oneself and the prohibition against double jeopardy.
Parliamentary Secretary's response
All members who contribute to superannuation receive the same
substantial tax concessions, which are provided to encourage individuals to
save for their retirement. Whilst the structure of funds within the industry
differs, there is no maximum amount that an individual may accumulate within
their superannuation account and therefore the amount of benefit they may
receive from these generous tax concessions.
Specifically, in relation to the measure in Schedule 1 to the
Bill, the maximum penalty of $340,000 is considered appropriate to provide
sufficient deterrence to promoters involved in schemes aimed at facilitating
the illegal early release of several million dollars and targeting many
members.
As noted in the statement of compatibility, a court will
determine the appropriate amount of any monetary penalty, taking into account
the facts and circumstances of the case, which will include the size of the
superannuation fund, the value of the assets involved and the severity of the
contravention. Further information is provided in the statement of
compatibility.[1]
Committee response
2.9
The committee thanks the Parliamentary Secretary to the Treasurer
for his response and has concluded its examination of this matter.
Right to health
Phase-out of the net medical
expenses tax offset
2.10
The committee sought an explanation from the Treasurer as to whether any
limitations on the right to health that may result from the phasing out of the
NMETO are reasonable and proportionate to the achievement of the government’s
fiscal priorities.
Parliamentary Secretary's response
The NMETO has a number of shortcomings. First, it does not
provide financial assistance when the medical expense is incurred, therefore it
does not necessarily make the treatment more affordable for individuals on low
incomes. Secondly, only taxpayers who have a tax liability receive a benefit
from the offset, therefore individuals on low incomes with no tax liability do
not benefit from the offset, which undermines the principle of equity.
The phase-out and eventual repeal of this offset is aimed at
the objective of allowing for more effective, alternative mechanisms and
further funding of Government priorities, including health care. The Government
has determined that directing funding to health care through the indirect
method of the NMETO and the tax system is not the most effective way of
supporting the objective of funding Australia's health care system.[2]
Committee response
2.11
The committee thanks the Parliamentary Secretary to the Treasurer
for his response and has concluded its examination of this matter.
Rights of persons with disabilities
Phase-out of the net medical
expenses tax offset
2.12
The committee sought clarification from the Treasurer as to whether the
repeal of the NMETO is consistent with the rights of persons with disabilities,
including whether the National Disability Insurance Scheme and other relevant
supports will adequately compensate for any gap left by its abolition.
Parliamentary Secretary's response
The NDIS is expected to cover all related expenses previously
covered by the NMETO for those eligible for a funded plan from the NDIS and is
consistent with the rights of persons with disabilities.[3]
Committee response
2.13
The committee thanks the Parliamentary Secretary to the Treasurer
for his response and has concluded its examination of this matter.
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