Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Hansard source

The Tax Laws Amendment (2006 Measures No. 6) Bill 2006 is a non-controversial bill that extends deductible gift recipient status to certain organisations that are not currently eligible under the normal application procedures of the Australian Taxation Office. This allows donations of over $2 to those organisations to be tax deductible. I will list them for the benefit of the House: the Don Chipp Foundation Ltd, from 27 June 2006; the Lingiari Policy Centre, from 26 July 2006; Nonprofit Australia Ltd, from 29 June 2006 until 28 June 2009; Playgroup SA Inc., from 6 August 2006; Point Nepean Community Trust, from 27 June 2006 until 10 June 2009; St Mary’s Cathedral Restoration Appeal Inc., from 27 April 2006 until 26 April 2007; and the Ranfurly Library Service Inc., from 3 May 2006.

Some other organisations have also had their DGR status extended: the Bowral Vietnam Memorial Walk Trust Inc., until 15 August 2006; the Dunn and Lewis Youth Development Foundation Ltd, until 31 December 2006; the St Paul’s Cathedral Restoration Fund, until 22 April 2008; and the Yachad Accelerated Learning Project Ltd, until 30 June 2008. There is a cost to revenue of almost $10 million over the period of the forward estimates, and Labor supports the measures proposed.

The bill also corrects a number of errors in the legislation. Labor accepts that inevitably there will be some errors in legislation over time and the need to correct typographical errors through amendments. However, a number of errors corrected in this bill are much more than typographical—in particular, the removal of redundant material, the correction of technical drafting errors, missing consequential amendments, and the correction of some definitions.

I identify for the House that this bill is another admission by the minister that the error rate in legislative drafting has been very high in the last few years. This adds to compliance costs for business and makes the tax system less effective and efficient. Again I call on the minister to deal with this issue—after all, we have now had a Federal Court judge, the Inspector-General of Taxation and even the minister himself indicate that there are problems in the drafting and interpretation of tax laws. The problem has become endemic in recent years and is reaching crisis proportions, which is why we have so much public debate on the issue at the moment.

For the benefit of the House, I will quickly run through some examples: in February, we had a tax law amendment bill on retirement villages which had errors corrected after the bill was introduced; in February, there was another tax law amendment bill on the GST non-reviewable contracts, for which the minister had to accept Labor’s amendment; again in February, we had TLAB7, when the government amended its own bill in the House to change time frames for provisions relating to non-commercial loans; in May 2005, for TLAB1, the government had to rewrite schedules on the GST as it applies to foreign tour operators; in June 2005, for TLAB2, the government had to withdraw provisions on the GST margin scheme; in June 2005, in TLAB3, there was a major mistake on an international tax bill which had to be corrected in schedule 2; since 2000, we have had at least 12 changes to the consolidation bills; and in December 2005 there was a debacle over the loss recoupment measures. Labor’s amendment was rejected in the morning, and by the afternoon the government was announcing that the policy would be reviewed. In June 2006, tax law amendment bill No. 3 had errors in item 4 of schedule 7, which related to the superannuation funds reporting to the ATO; and, again in June 2006, Tax Law Amendment (2006 Measures No. 3) Bill had problems in the drafting of the legislation. That bill clarified that the repeal of the six-year amendment period for general anti-avoidance amendments only applied to assessments for the 2004-05 income year and later income years, as originally intended. In December 2006, for TLAB4, there was a need for a market cost base to be adjusted for the bills to apply prospectively; and, again in December 2006, for TLAB6, there were numerous technical corrections.

That is a long and disappointing list that must be of great concern to those who have to deal with the interpretation and implementation of Australia’s taxation laws on behalf of the people they represent. As I said earlier, this adds significantly to business costs and compliance costs, particularly for small business, which simply does not have the resources to deal with such uncertainty in the area of taxation law.

The bill before the House deals with the tax treatment of income earned by individuals while serving overseas, and good examples are our Defence Force personnel and people working on aid projects. I want to turn to one other example of how this area of tax law is applied and has been applied. I want to refer specifically to the case of Mr Trevor Flugge and his association with the Australian Wheat Board. Some time ago I asserted in this House that Mr Flugge had paid no income tax on the money he earned while serving overseas for the Australian Wheat Board, which was in the order of a million dollars, as we understood it. Sources are now confirming that that was indeed the case, and Mr Flugge has passed up every opportunity to deny that it was the case that he had paid no income tax on that million or so dollars that he earned overseas.

This all happened despite objections about a conflict of interest from US wheat farmers, based on Mr Flugge’s former role as chairman of the AWB. Upon his appointment, Mr Flugge was told that he would be exempt from Australian tax as Iraq had an income tax system and he would not need to be taxed twice.

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