Treasury Laws Amendment (Delivering an Efficient and Trusted Tax System) Bill 2026
Senator DARMANIN (Victoria—Deputy Government Whip in the Senate) (11:48): At first glance, the Treasury Laws Amendment (Delivering an Efficient and Trusted Tax System) Bill 2026 contains a number of technical amendments across Australia's taxation laws, but collectively these reforms tell a much bigger story. They're about ensuring Australia's tax system keeps pace with the modern economy.
They're about making our laws simpler, more efficient and more responsive to changing technology. They're about reducing unnecessary compliance while strengthening public confidence that taxpayer support is directed where it delivers the greatest benefit. And they are about this government's broader agenda to build a stronger, more productive economy after a decade in which productivity growth stalled and too many reforms were simply put in the too-hard basket.
It is about reforming the small frictions that accumulate over time and about making government systems work better. They are not isolated changes. They are part of a systematic effort to lift productivity across the economy.
One of the clear lessons from the past decade is that complexity has a real cost. It slows decision-making, it increases compliance burdens and it diverts time and resources away from productive activity. This bill contains four separate measures that improve the operation of Australia's taxation and regulatory framework.
While each schedule addresses a different issue, together they modernise aspects of the tax system that have not kept pace with changes in technology, simplify administrative processes, reduce unnecessary compliance and ensure that public support is directed towards activities that deliver the greatest economic and social benefit. These are practical reforms, but they are also part of a broader agenda to improve Australia's productivity and strengthen confidence in our taxation system.
One of the consistent findings of the Productivity Commission, and of other economic reviews over time, is that productivity is affected not only by major structural reforms but also by the cumulative impact of unnecessary regulation, outdated administrative processes and legislation that no longer reflects the way Australians live and do business. Small inefficiencies can impose significant costs when they're repeated across millions of taxpayers, businesses, charities and advisers across the economy.
Requirements that duplicate information, rely on outdated reporting systems or fail to take advantage of technological advances increase compliance costs without improving regulatory outcomes. Improving productivity, therefore, requires governments to continually review existing legislation, modernise administrative systems and remove barriers that no longer serve a useful purpose.
It complements the government's broader regulatory reform agenda, including more than 60 regulatory reform measures, reductions in unnecessary tariffs, improvements to financial sector reporting and continued investment in modernising government services. I turn now to schedule 1. In 2022-23, around 4.4 million Australians claimed tax deductions totalling $2,260 million for gifts or donations to deductible gift recipients.
That level of generosity is significant, but the government has set an ambitious goal: to double philanthropic giving by 2030. To achieve that, we need to make it easier for Australians to give in ways that reflect how people live and transact today. The first schedule contributes to that goal by removing the longstanding requirement that a tax deductible gift must have a value of at least $2 before a taxpayer can claim a deduction.
Under Australia's income tax laws, donations to deductible gift recipients are generally tax deductible, provided that they meet certain criteria—including, until now, that the gift be worth at least $2. That threshold has been in place for almost a century. It was introduced in 1927, when charitable donations were processed manually, receipts were handwritten and record keeping imposed a far greater administrative burden than it does today.
When Australia adopted decimal currency in 1966, the existing threshold of one pound was simply converted to $2, where it has remained ever since. The way Australians support charities has changed considerably over that time, along with many other things. Increasingly, donations are made through digital platforms, mobile applications and electronic payment systems.
Many Australians now choose to round up purchases at the supermarket checkout, or contribute small amounts through online transactions. These forms of microgiving have become commonplace, but the law has not kept pace with that. Removing the $2 threshold updates the tax system to reflect how Australians give today and removes an outdated restriction on charitable giving.
Importantly, this measure implements recommendation 4.1 of the Productivity Commission's Future foundations for giving report, which concluded that the threshold no longer serves its original purpose and should be abolished. The commission recognised that advances in technology have significantly reduced compliance costs associated with issuing receipts and administering small donations and that removing the threshold would better support modern forms of philanthropy, including recurring digital donations and 'round up' fundraising initiatives.
This reform also builds on the government's broader work to strengthen Australia's charitable sector, including streamlining the DGR system; establishing a new 'community charity' category; expanding the ACNC Advisory Board; and lifting distributions from giving funds, to give more support to charities sooner. The government greatly appreciates the important work and contributions made by charities and not-for-profit organisations across the country and will continue to support the sector by making it easier for Australians to give.
This reform builds on that foundation by supporting the government's goal of doubling philanthropic giving by 2030, including making it easier to recognise small, everyday acts of generosity. Just as this change updates the system to reflect how Australians give today, the next schedule focuses on ensuring our tax administration systems keep pace with how Australians earn and report income.
Schedule 2 focuses on improving the administration of Australia's tax system by simplifying reporting obligations by closely held trusts. Under the current arrangements, trustees are required to separately report the tax file numbers of beneficiaries to the Commissioner of Taxation. This duplicates information that is closely connected to the trust's annual tax return and creates an additional administrative process for trustees and their advisers.
This bill removes that duplication by requiring beneficiary tax file numbers to be reported through the trust tax return itself. This change also forms part of the government's broader Modernisation of Tax Administration Systems program. Historically, trust income reporting has lagged behind individual and company tax systems with limited prefiling and more manual processing.
By integrating this information into the tax return itself, we are moving towards a more automated system—one that reduces duplication, shortens processing times and improves the accuracy of assessments. It is a practical step but one that will deliver real benefits at scale across the system. Although this is a relatively modest administrative change, it forms part of the government's broader program to modernise tax administration systems.
Improved reporting will expand the Australian Taxation Office's prefiling capabilities, improve data quality, reduce manual processing and lower compliance costs for trustees, beneficiaries and tax practitioners. It will also assist the commissioner in ensuring that the correct amount of tax is assessed while making compliance simpler for taxpayers who are already meeting their obligations.
Modern tax administration should reduce unnecessary paperwork, make greater use of digital technology and allow taxpayers to meet their obligations as efficiently as possible. These reforms contribute to that objective. Schedule 3 makes a series of minor and technical amendments across Treasury portfolio legislation.
These amendments do not introduce new policy. Rather, they ensure existing legislation continues to operate as parliament intended by correcting drafting issues, addressing unintended outcomes and improving the operation of existing laws. Good legislation requires ongoing maintenance.
As financial markets evolve and legislation interacts with other acts over time, technical amendments become necessary to ensure the law remains clear, consistent and fit for purpose. Among other changes, the bill enables a public trustee acting on behalf of a client with a self-managed superannuation fund to approve the appointment of a trustee or director where appropriate.
The schedule also makes several technical amendments across Treasury legislation that improve its operation without altering underlying policy settings. These are sensible housekeeping measures that contribute to a more effective legislative framework. Finally, schedule 4 amends the research and development tax incentive to exclude activities related to tobacco and gambling from eligibility.
This exclusion will apply broadly across all forms of gambling, whether digital or in person, and across all tobacco related products. This is a clear and deliberate policy choice. The research and development tax incentive represents a significant investment of public funds designed to support innovation that lifts productivity, strengthens competitiveness and delivers long-term economic benefit.
It is therefore appropriate that this support be directed towards activities that generate positive public value. Tobacco and gambling are associated with well-established health and social harms. This bill ensures that taxpayer support is not used to subsidise research that expands or enhances those activities.
Tobacco use remains one of the leading causes of preventable illness and death, placing significant pressure on individuals, families and the health system at large. Gambling harm, if too widespread, is deeply damaging, contributing to financial stress, relationship breakdown and serious mental health impacts. These are not emerging or uncertain risks; they are well-established harms felt in communities across the country.
This bill ensures that taxpayer support is not used to subsidise research that expands or enhances those activities. More broadly, this reform reflects a principle that runs throughout this bill—that public investment should be targeted, sustainable and align with long-term outcomes for the Australian community. Importantly, the bill preserves support for research-undertaking solely for harm minimisation purposes, including efforts to reduce smoking and gambling harm.
That strikes the right balance—supporting innovation where it improves outcomes while ensuring public funding is not directed towards activities that undermine them. In doing so, this measure ensures that the research and development tax incentive continues to support innovation that contributes to a stronger, healthier and more productive economy. Taken together, the measures in this bill improve the efficiency of Australia's taxation system, reduce unnecessary compliance, modernise legislation to reflect technological change and ensure public resources are directed towards activities that strengthen the economy and benefit the community.
That is how you build confidence in the tax system, improve productivity and make governments work better for the people that serve them. These reforms, as I mentioned, also sit alongside the government's broader tax agenda—an agenda that has delivered tax cuts for every Australian taxpayer in our first term, this year and next. That includes introducing a $1,000 instant tax deduction to simplify the system and provide cost-of-living relief to around 5.7 million Australians.
It includes strengthening multinational tax integrity through measures like public country-by-country reporting and the introduction of a global and domestic minimum tax; reforming the petroleum resource rent tax to ensure Australians receive a fair return from our natural resources; and better targeting tax concessions, including in superannuation, to ensure they remain sustainable over the long-term.
Good tax policy is not just about raising revenue; it is about building a system that is fair, efficient and trusted—a system that reflects today's economy and supports the one we are building for the future as well. This bill is a practical step in that direction, and I commend the bill to the Senate.