Michael Keenan (Stirling, Liberal Party, Shadow Assistant Treasurer) Share this | Hansard source

The Tax Laws Amendment (2008 Measures No. 3) Bill 2008 comprises four schedules. Two of these cover highly technical amendments: these are schedule 1, shareholder and unitholder rights, and schedule 2, restriction on GST refunds and time limits for recovery and refund of indirect tax. Both of these schedules should be referred properly to the Senate Standing Committee on Economics for inquiry. The remaining schedules—schedule 3, income tax treatment of rent assistance to Austudy recipients, and schedule 4, income tax treatment of the carer adjustment payment—are not technical in nature. The opposition supports these schedules. The opposition is concerned about the potential impact of schedule 1 and schedule 2. As I said, we will seek to refer these to the Senate economics committee. Even though we support their intention we are worried about whether or not that intention will be met by the constraints of the drafting. There is some concern within the stakeholder communities about both of those schedules, and it would make sense for those issues to be ventilated appropriately in the Senate economics committee.

Schedule 1 is in response to the 2007 High Court decision that is known as McNeil’s case. The decision effectively reversed the long-held approach to the taxation of rights issues—namely, that in the great majority of cases taxation arose on realisation of the rights not the mere granting of those rights. The decision naturally caused a lot of concern amongst Australia’s corporates and amongst Australia’s tax advisers. I have some commentary here from Taxpayers Australia. I will not go into it but the chamber will get the general idea that they are an organisation, along with other organisations, that were concerned about the implications of this particular High Court decision. Shortly after the judgement in McNeil’s case, the Australian Taxation Office was asked to rule on the taxation implications of proposed rights issues, including a specific issue raised by Hutchinson Telecoms. Again, I have some commentary about the specific issues that were raised within the tax and the legal professions but, in the interests of House efficiency, I will not read it all out. The House can be assured that there was much concern amongst those two communities.

It was against this background of uncertainty that the then minister, the Assistant Treasurer, announced the coalition’s response to McNeil’s case. This occurred in June 2007 when the coalition government announced that it would provide certainty to this type of capital raising and would remove doubts surrounding the potential retroactive application of McNeil’s case. The then minister for revenue and Assistant Treasurer stated:

... Instead, the long-standing position to treat rights issues on capital account will be maintained ...

…            …            …

“These amendments will provide certainty for taxpayers by restoring the taxation treatment of rights issues that existed before the decision of the High Court of Australia in Commissioner of Taxation v McNeil ...

“The bring-forward of a tax liability under McNeil’s case would impose unnecessary compliance costs on companies and their shareholders.”

The amendments will apply from the 2001-02 income year.

I think that is very significant. The measure in this bill copies the start date of 2001-02, which reflects the coalition’s decision to give taxpayers greater certainty to take up new shares and also greater certainty for past years. In relation to this measure in schedule 1 of the bill, I note that shareholders and unitholders will not be assessed on the value of rights to take up new shares or units. Shareholders and unitholders will not have an income tax liability at the time of the grant—instead the stated intent is that the longstanding position to treat rights issues on capital account will be maintained. In relation to tradeable put options the market value of the options will be assessed at the time of the grant. However, stakeholders have questioned whether this legislation actually achieves this policy intent, an intent that is supported by the coalition.

As a result of events we have seen in this chamber, with 22 bills being rushed through, there are obviously significant problems with the drafting. Already the government need to amend bills that have not yet even been debated in the House, which I find extraordinary. There are some concerns about the drafting of this bill. I do not think that is at all surprising given this government’s approach to the legislative process. My office has been contacted by industry groups and taxation experts who were actually approached for comment on the measures contained within this bill. They were given three days, which is really not a particularly satisfactory time frame, to comment on complex tax legislation. Then they found that their comments were completely ignored anyway. In fact, the Taxation Institute of Australia has described the government’s cursory consultation process as a ‘tick the box’ process. The government are just going through the motions, pretending to consult and then ignoring anything that comes out of that consultation. Once again we see this government desperate to be seen to be doing something but not necessarily aware of the consequences of what they do.

Last August the coalition endorsed the recommendations made by the Board of Taxation in its report Improving Australia’s tax consultation system. The board’s recommendation 11 stated:

Government should allow at least a six-week period for external stakeholders to provide input into consultations on significant measures to ensure the community has maximum opportunity to participate ...

Of course with this measure instead of six weeks we have seen three days, even though the Assistant Treasurer at the time was very keen to claim that the new government would do things differently and would actually genuinely consult with stakeholders. Again what we find is this yawning gap between what is said and what actually happens.

Schedule 2 of this bill deals with collection and administration of indirect taxes. The measure within this bill will amend the GST legislation. The amendment concerning refunds of overpaid GST is in response to a Federal Court decision, known as Kap Motors, handed down in February this year. Pursuant to that decision, in some limited situations refunds could be made of overpaid GST without there ever having to be a reimbursement of the GST. The amendment will confirm that refunds of GST will not be made until the person claiming the refund—the person who sold the goods or services—reimburses the corresponding amount to their customers. This is the mechanism enabling entities who actually paid the GST to be reimbursed.

In relation to part 2 of this schedule, I note that there is also a four-year time limit on the Commissioner of Taxation to recover GST wine equalisation tax, luxury car tax and fuel tax credits. The measure will ensure that the four-year limit on the recovery of taxpayers’ liabilities applies irrespective of how those liabilities arose.

Obviously, by the very nature of these measures, they are quite complicated. In this House we do everything to improve the legislative process, and I do not think the government should be afraid of that. Hasty drafting will inevitably lead to the need for urgent amendments. We have already seen that in the House this week. I remind the House again about the minister’s recent need to amend the excise legislation affecting condensate. This happened a matter of just weeks after the bill’s introduction. Apparently, though, the government already thought that bill was ready for introduction. I am aware that the business of the House has been moving quickly today and I do not want to labour these points.

In summary, I think it is appropriate that some of the concerns that have been raised about the first two schedules of this bill have the chance to be aired at the Senate Standing Committee on Economics, even though the intent of those measures is supported by the opposition. As I have said, we do wholeheartedly support schedules 3 and 4 and we have had some conversations with the government about making sure that they can speedily pass through the legislative process. Therefore, I move the following amendment:

That all words after ‘That” be omitted with a view to substituting the following words:While not declining to give the bill a second reading, the House records its concerns at the haste with which this bill is to be dealt with and calls for the bill to be referred to the Senate Standing Committee on Economics for review, which will allow those with practical expertise and interest in these proposals to have an input.

I would like to say to the government that they do not need to fear the legislative process. Parliament is actually an important part of that process. I urge them to stop this arrogant idea that somehow parliament has no contribution to make to the improvement of their legislation. I urge them to give this amendment some consideration.

Finally, and very briefly, if the House will bear with me I want to note that this speech, like a lot of other speeches that have been made by coalition ministers in the economic portfolios, was prepared with the assistance of somebody in my office named Phil Lindsay, who finishes on Friday after 10 years of service to the coalition, firstly to the then Treasurer, Peter Costello. In 1998 he came up here to assist the government with the fundamental tax reform that was taken then. Ever since, he has been advising Treasurers and Assistant Treasurers, and now he is advising he shadow Assistant Treasurer. He has done so with incredible professionalism and his services will be sadly missed, although I am sure that everybody on this side of the House and indeed in the whole parliament will wish him well in his new endeavours.

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