Steven Ciobo (Moncrieff, Liberal Party) Share this | Hansard source

In that respect—and I see, once again, he is pleased for me—I am pleased to note that this particular change will be for the benefit of small businesses. I look forward to educating the member for Lilley on the needs of small businesses and franchises so that the Australian Labor Party may better reflect their needs in its policy such that those small businesses and franchises will be able to go from strength to strength, as indeed they have done under the Howard government for the past 10 years.

The third schedule of the bill details measures to deter the promotion of tax exploitation schemes. This schedule is arguably the most important schedule in this particular bill. Effectively, this measure will deter the promotion of tax avoidance and tax evasion schemes and will protect the integrity of product-ruling systems administered by the Australian Taxation Office. Promoters will now be at risk of civil penalties imposed by the Federal Court in situations where their clients are already at risk of penalties under the tax laws for participation in tax avoidance schemes.

The Commissioner for Taxation will be able to seek injunctions and to enter into undertakings with promoters to stop the promotion of unlawful schemes. The question will be asked: in what way is it possible to obtain such an injunction? In order for an injunction or penalty to apply, there are five key elements that will need to be established. Promoters will need to: (1) have marketed the scheme or encouraged growth or interest in it; (2) have received consideration for that conduct; and, (3) have a substantial role with respect to marketing and encouragement. Implementers are only affected if they implement a scheme promoted on the basis of and conforming to a product ruling in a materially different way. A tax exploitation scheme is a scheme to reduce tax whereby, one, it is reasonable to conclude that participants would do so for the sole or dominant purpose of obtaining a scheme that has a tax benefit and, two, it is not reasonably arguable that a scheme benefit is available at law.

This is important, because there have been many instances in the past where, unwittingly, a number of Australians have fallen for mass marketed tax effective schemes that promoters have put forward. Whilst, arguably, there may be some coverage through the operation of the Trade Practices Act, it is important—and I welcome moves by this government—to very definitively outline that that kind of conduct is unacceptable. I welcome the fact that people will be able to go forward with strength and certainty, knowing that in fact adequate measures are being put in place to help crack down on those promoters who would otherwise give rise to people—unwittingly, perhaps, or even in some cases knowingly—being in breach of the Income Tax Assessment Act and not meeting their tax liabilities.

Certainly, it is the case that there are many examples where people have breached the act in the past, and I welcome this measure because often it has been as a consequence of promoters pushing schemes onto them. Although this does not excuse those who seek to evade their liabilities, it certainly should also sheet home to the promoters a requirement to ensure that they do the right thing and not promote schemes that would otherwise be in breach of the act. The final element of the bill deals with prepaid phone products, which is a technical amendment, as I discussed earlier, and I do not intend to deal with it. To facilitate the House, I commend the bill to the House and conclude my remarks.

Debate interrupted.

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