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

I am happy to criticise the government if it is wrong and, in this case, the government is, as I have said, acting—albeit slowly. But one of the great defences is: ‘The Australian Taxation Office is an independent statutory authority. We cannot attack it; we have got to let them administer themselves.’ I am sorry, but I think that is wrong. In the case of the Australian Taxation Office, maybe more of the decisions, particularly legislative changes, should come back to this parliament before the Australian Taxation Office decides that they are going to make changes. We have seen this so many times. When some of the changes were made, having decided that a scheme had become far too unwieldy and had to be retrospectively dealt with, how did Mr Michael Carmody deal with it? He would put out a press release or put it in a speech. That was supposed to be the signal to everybody out in the community that the Taxation Office had made a ruling—a press release or a speech to some luncheon group. Get off it!

We have to try and give people some real direction in their business affairs in this country rather than the slapdash method that Michael Carmody offered. I notice that he is no longer there. He is off trying to fix up the Australian Customs Service, which is in a mess too. Goodness knows where the containers will end up! You can see that I have a very dispassionate view of Mr Michael Carmody, because he basically screwed the Australian Taxation Office and the people whom he was presiding over.

Let us get to some of the elements of this measure to deter promoters. I want to give one example before I continue to demonstrate how innocent some of these people were who got involved in these mass marketed schemes. A couple, who were on a very low income, came into my office. The gentleman was a gardener at the local school and his wife was a cleaner. They borrowed $12,000 to take half a unit of Budplan and half a unit of lemongrass—I think that is what it was called—and, as a result, their liability through penalties and interest was $40,000. They had borrowed the $12,000 to go into these two stupid schemes and they had a liability of $40,000, which of course they could not pay. They were about to lose their house until I was able to make representation to the minister for a compassionate waiver. How many other couples are there in the country like this couple who need compassionate consideration? They were sucked into a scheme which was quite ridiculous and which they could not afford.

Just for the sake of informing the House in this debate, I will outline the definition of a promoter:

(1)

An entity is a promoter of a tax exploitation scheme if:

(a)

the entity markets the scheme or otherwise encourages the growth of the scheme or interest in it; and

(b)

the entity or an associate of the entity receives (directly or indirectly) consideration in respect of that marketing or encouragement; and

(c)

having regard to all relevant matters, it is reasonable to conclude that the entity has had a substantial role in respect of that marketing or encouragement.

(2)

However, an entity is not a promoter of a tax exploitation scheme merely because the entity provides advice about the scheme.

(3)

An employee is not to be taken to have had a substantial role in respect of that marketing or encouragement merely because the employee distributes information or material prepared by another entity.

That is the long-winded definition of what a promoter is. The definition of a tax exploitation scheme is:

... if … it is reasonable to conclude that an entity that … entered into or carried out the scheme did so with the sole or dominant purpose of … getting a scheme benefit from the scheme ...

Those definitions are now on the record. Let us look at what the bill does to deter the promoters of these exploitation schemes. There will be civil fines up to a maximum of $550,000 or twice the fees a promoter earns from the scheme. How is the $550,000 arrived at? It is 5,000 penalty units, and a penalty unit is $110 per unit. So that is the maximum penalty for promoters of these schemes.

Lawyers and accountants have had a little trouble with this legislation. They were very concerned that their professional advice may see them caught up in the penalties and sanctions under these amendments. They obviously lobbied pretty hard because they ended up getting their way. In some respects, I have a bit of a problem with that, because they are paid for their advice. It was deemed that unless they were seen as promoters—other than their giving advice—they would be exempt from this legislation. As I said, I am not totally comfortable with that decision. However, I will move on.

See this speech in context