Don Randall (Canning, Liberal Party) Share this | Hansard source

I am very pleased to speak on the Tax Laws Amendment (2006 Measures No. 1) Bill 2006. At the beginning, I would like to say that it is a historic day in this parliament. Today, being 2 March, is the 10-year anniversary of the Howard government. I am very pleased to stand here on this historic day to have a few words to say on this bill. I am pleased to be here because I did not serve the whole 10 years, as some people will know. I had a rest for three years and came back to represent another seat. I am very proud to represent the Howard government in my electorate of Canning. I am very proud also to be a member of such a successful government, led by arguably the best Prime Minister this country has ever seen.

That is why I find it almost amusing to see the member for Lilley having such a bellyache about the Treasurer having done such a terrible job. We have had eight surpluses, we have had incredible growth, we have low home loan mortgage rates and we have low inflation. All the fundamentals are right. The Australian economy is a model economy by world standards. And the member for Lilley has a diatribe bagging the Treasurer. As the Prime Minister has said, he is probably the best Treasurer that this country has ever seen. So we have the best Prime Minister and the best Treasurer, and long may they reign in their current positions. I am very proud to serve under them, and I hope it is for a long time.

Addressing the matters before us today, I would like to talk about the foreign income exemption for temporary residents. That is an excellent move, and this bill tidies up a number of issues. Providing this exemption sends a signal to quality executives that they will not be disadvantaged by bringing their excellent skills and abilities to Australia. In fact, in broad terms, the new rules will provide temporary residents with a tax exemption for most foreign sourced income, capital gains and interest withholding tax obligations associated with foreign liabilities. This is a significant departure from Australia’s current approach to taxation, and I endorse it. Obviously in some respects it addresses the brain drain, and that is a very good measure.

Another issue this bill covers is business related costs. The measure introduces a systematic treatment for businesses’ black hole expenditures, and it provides a new five-year write-off for business capital expenditures not taken into account and not denied deduction elsewhere in the income tax law. Capital expenditure incurred in relation to past, present and prospective businesses will be deductible to the extent that the business is, was or is proposed to be carried out for a taxable purpose. The final element is in relation to the GST on vouchers and prepaid phone products. The measure will ensure that prepaid phone products are treated as eligible vouchers for GST purposes and ensure that the GST is paid on the face value of the voucher when it is used.

Those are some of the measures in Tax Laws Amendment (2006 Measures No. 1) Bill 2006, but the main reason I rise today to speak to the bill concerns the measures to deter the promotion of tax exploitation schemes. This issue has been very much on my radar. It is an issue that I am very conscious of, and I have spoken many times about it in this House. These measures are well overdue. In fact, what has really happened in this debate is that the cart has been put before the horse. The Taxation Office, led largely by Mr Michael Carmody, persecuted the people involved in these schemes—those who were taken in by the schemes—but let the promoters off scot-free. So we had in many cases people who had entered into schemes—quite legitimately, they believed—offered by their accountants and by very sound advisers, and the people who promoted these schemes took the money and lived happily ever after. Then the poor people bound up in the scheme were persecuted for years by the Australian tax office.

To me, it has been one of the most galling episodes of maladministration of the Australian tax office we have ever seen because it had such a retrospective nature. Before the ROSA reforms, people were being pursued for more than six years by the Australian Taxation Commissioner. Of course, not only did that cause heartache but it caused businesses to go bankrupt, the break-up of families and, in many cases, suicides and untimely deaths of people who just could not take any more. Finally this issue is being addressed. I note that this legislation should have been in the House a long time ago, because it was originally proposed by Minister Coonan, then Assistant Treasurer, in 2003. Here we are in 2006, and it is finally getting up. Well done: we have finally got these effective measures in the House. They will deter the promotion of tax avoidance and tax evasion schemes and protect the integrity of the product ruling system administered by the ATO.

The ATO has had a sad history of rulings. You only have to look at the Petroulias affair and what a disgraceful performance that was. There was Mr Petroulias, the white-haired boy of Mr Michael Carmody, who handed out private rulings like confetti—and now he is in court with the Australian Taxation Office, largely because he fell out with his mate Michael Carmody. We know this case is continuing, so I will not say any more. But many of the people who entered into these schemes did so because they believed promoters when they told them they had a private binding ruling that applied to the scheme they were promoting. As we have since found out, it did not apply to that scheme at all; it only applied to the individual or the individual case and it was not able to be extrapolated to other schemes or programs. These poor people—mums and dads, small business people—invested heavily in these schemes, thinking they were quite legitimately offsetting their tax.

At the outset I will say that there is a complete misunderstanding in this country that, if you try to minimise tax, you are doing something wrong. It is your obligation under the law in this country to legally minimise your tax. It is ridiculous to be paying far more tax than you need to. Anyone with half a brain would try to keep as much of the money that they earn as they can rather than give it to the Australian tax office.

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