Source: Prime Minister of Australia
ANTHONY ALBANESE, PRIME MINISTER: Good morning. On Budget Night we foreshadowed planned consultation on our tax changes with small businesses and startups. And today we’re announcing the next steps in the implementation details. This Budget, of course, delivers more tax cuts for every working Australian a fair crack at buying your own home for first home buyers. An economy that works for Australians, for small business and for future generations. Following the consultation that we flagged on Budget night, we are announcing details to allow more small businesses access to the capital gains tax concessions. Today, we’re announcing that we’ll increase the turnover threshold for existing small business 50 per cent active asset CGT concession from $2 million to $10 million. This is one of the four concessions that we have said would continue. It is the most widely used of those four CGT concessions used by small businesses. And obviously we’ll increase the new threshold by five times, bringing into line with the threshold for small business that’s there in a number of other features of the system. 2.7 million existing active small businesses will be eligible for this concession. We’re also proposing to introduce a new Innovative Business Tax Concession for startups.
And we’ll release the the consultation paper on the startup sector later this morning and that will allow for further detailed consultation on the basis of that. This comes on top of our extra tax cuts and making permanent our $20,000 Instant Asset Write-Off for small businesses. The permanent Instant Asset Write-Off and these important capital gains tax benefits being announced today are providing substantial support to Australian small businesses. Also today, we’re confirming the Government will exempt income from all types of discretionary testamentary trusts from the minimum tax, provided they are established for genuine testamentary purposes. We back Australian small businesses and the important role that they play in Australia. They’re the blood running through the veins of our local communities and they’re vital for our economy. We also back innovators and startups and we want them to thrive here and we’re certain that they can. There’s no place that’s better to engage in economic activity than Australia. I’ll hand over to the Treasurer who’ll go through the details of the announcements today and then we’ll take questions.
< JIM CHALMERS, TREASURER
Now, this is one of four next steps that we are announcing today because of all of the consultation that we have been doing. The first one is that one to increase the turnover threshold for the active asset CGT reduction from $2 million to $10 million. This is a much bigger increase than we would have seen had that threshold been indexed. The second one is, as the PM said, we’re releasing a consultation paper on the design of a new innovative business CGT concession. This would provide a 50 per cent CGT discount to early-stage investors, including founders and employee share scheme participants of innovative start up businesses. We’re also confirming that income from all types of testamentary trust will be exempt from the minimum tax, with implementation details, including the details around integrity, to be included in further consultation. And the fourth set of next steps which I’ll come to at the end, is about the Government’s legislative strategy. Which of this would be ready for amending the legislation currently in the Senate and which necessitates more consultation. So, for the small business concessions, as I said, maintaining all four of them, making one of them more generous, we will seek to amend the legislation currently before the Senate to give effect to that change. We consider that consultation to be complete on that aspect of these next steps.
On the consultation paper for start ups, we will put out later this morning a paper which sets out our preferred position when it comes to the next stage of consultation for start ups, making it clear, as we said in the Budget papers themselves and before that, privately, subsequently, publicly, that we do consider there to be a special case for businesses with low or no start up costs and that necessitates this different treatment in the tax system. We will put out a fair bit of detail on our position and we will be seeking feedback on that in the coming weeks. The next piece of next steps is obviously, as I said, when it comes to exempting all types of testamentary trusts from the minimum tax, we will release a consultation paper on the trust legislation. That’s obviously not part of this first tranche before the Senate. Now, it’s not unusual for there to be a number of pieces of legislation to give effect to major tax reforms and that’s what people should expect on this occasion as well. Now, the fourth category of things goes to how we will proceed now with the legislation before the Senate and subsequent pieces of legislation as well. So, some of this will be ready to make targeted amendments to the legislation currently before the Parliament. In some instances what we are trying to do is to take some areas where there are legitimately in the usual ways, so Ministerial discretion and to put that into the primary legislation where that is feasible. And so the amendments that we seek to move in the next sitting fortnight, subject to negotiations with crossbench in the Senate, it’s to legislate an amendment to give effect to the threshold change for small business. To ensure that deductible gift and donations reduce capital gains that are subject to the minimum tax, to maintain those incentives in relation to charitable giving. To provide the list of income support payments that qualify for an exemption from the minimum tax on capital gains, making clear, for example the family tax benefit paid parental leave and the like is in in terms of the exemption. We’ll also look to embed the calculation for the Working Australians Tax Offset in the legislation. And wherever we can, we will remove Ministerial powers that we no longer need to give effect to the Government’s policy intent. Now, once again, it’s not unusual for legislative instruments which are disallowable by the Parliament to be used, but where we can, we will put some of that into into the primary legislation. We’re also looking to do that with the two pieces of definitional work for housing, particularly when it comes to the definition of new builds. We’ve made clear in the papers in the Budget what we consider to be a new build and not. But there’ll be more consultation on that that won’t be ready for the next sitting fortnight. But if we can, we’ll put that in the primary legislation too. And similarly, when it comes to the types of housing investment which is exempt from the limits on negative gearing, including what you’ve seen in the Budget papers around affordable housing. So, we’ll do that in the primary legislation subject to a bit more consultation.
So, the last thing I’d say is that we’re really grateful to the individuals and organisations that have made time for us, made their views clear to us as we’ve gone through this consultation that we flagged in the Budget papers. As I said, our reform agenda is all about making it easier to buy a first home and to cut taxes for workers and better align the tax treatment of asset and labour income. It’s not unusual for big, ambitious tax reform like this to involve a lot of consultation to involve primary legislation for the core elements. Subsequent pieces of legislation as well. We’ve seen that in the past with governments of both political persuasions and that’s what is taking place as well. We understand that there’s never a unanimous view about economic reform, and particularly about tax reform. It’s always contested, it’s always contentious, but it will be worth it. We are delivering real change here and it means that the details that we have outlined today will provide a bit more clarity and confidence to investors, more support for small businesses, and also increase those incentives for innovation. And with that, we’re happy to take some questions.
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