The Nazi salute won't be included in a federal ban of hate symbols under new laws, sparking criticism from the opposition.
Laws being debated in parliament would result in people facing up to a year in jail for displaying symbols such as the Nazi swastika or an SS symbol.
But the Nazi salute would not be included in the list of symbols being banned, due to it falling under the jurisdiction of states and territories.
A parliamentary committee report said while there was condemnation for those who performed the salute, the federal police were not best placed to deal with enforcing such a ban.
However, coalition MP and committee deputy chair Andrew Wallace said such claims were "nonsensical".
"The government has not gone far enough in addressing the issue, the scourge of anti-Semitism, which is furthered by some members of our community when they conduct themselves with gestures such as the Nazi salute," he told parliament on Wednesday.
"Coalition members feel very strong that (the Nazi salute) should also be prohibited under the bill."
Mr Wallace said a ban was needed following recent demonstrations where people were performing the Nazi salute in public to intimidate.
"Sickening scenes in our own backyard recently demonstrate we're not immune from hate and anti-Semitism here in Australia," he said.
States such as Victoria have implemented their own bans on the Nazi salute.
The parliamentary committee into the hate symbol laws recommended the a six to 12-month window for the changes to come into effect so collectors could dispose of items that contained the symbols.
The Islamic State flag will also be removed from the list of banned hate symbols, with the committee urging a separate offence be created that would ban the display of symbols associated with terrorist organisations.
Committee chair Peter Khalil said the flag had misappropriated key tenets of the Islamic faith.
"The intent of the bill ... may be better achieved by an approach that prohibits symbols associated with all prescribed terrorist organisations, rather than targeting Islamic state flag in isolation," he said.
