Judi Moylan (Pearce, Liberal Party) Share this | Hansard source

I am very pleased to have the opportunity to speak on this bill. As the member for Blair said, it is a bill that is supported by both sides of this House. The Tax Laws Amendment (2008 Measures No. 6) Bill 2008 has the primary function of precluding taxpayers from inadvertently obtaining a tax benefit from capital gains tax rollovers where the transaction was a restructure rather than a takeover. That is one of the main aspects of this bill, but there are some other important changes too.

Tax law is extremely complicated. I remember studying it quite a few years ago and thinking, ‘I think what we should do is put it all in a great big pile, burn it and start from the ground up again,’ because it is extremely confusing and difficult for many people out there in the community. From time to time, when legislation is passed in this place, loopholes are found. If we want to maintain the integrity of the tax system then it is our responsibility to make sure that appropriate amendments are made as we see those needs arise.

This is one of those situations where we are trying to ensure the integrity of the taxation system. If we do not do that and corporates can escape their responsibilities and the legitimate intent of these bills, it means that the average taxpayer out there has to pick up the slack. We do have a considerable responsibility and obligation at all times to make sure that there is clarity within the tax system, that the integrity of the tax system is maintained, that it is fair to everyone in the community—this is most important—and that everyone is pulling their weight.

The first schedule to this bill modifies the capital gains tax rules to prevent entities from perhaps avoiding tax under certain circumstances. This is where they would use a market value cost base for acquired interests following scrip for scrip rollover that is considered to be a restructure. The schedule amends the scrip for scrip CGT rollover provisions related to the cost base valuation for restructures. There are some rules around this. The new provisions will apply under the following conditions: that it is reasonably expected that a scrip for scrip rollover will be obtained, that the common stakeholder test is satisfied and that the acquisition arrangement is deemed to be a restructure. An arrangement is deemed to be a restructure if the market value of the scrip issued by the acquiring entity to the stakeholders in the target entity is more than 80 per cent of the market value of all interests on issue by the acquiring entity after the arrangement takes place. As I said, this is to ensure that the original intentions of the tax laws are adhered to in order to maintain the integrity of our tax system and of these measures in particular.

Schedule 2 of the bill amends the Taxation Administration Act 1953 with regard to issues with the assistance of collection provisions. The provisions of interest were enacted by the International Tax Agreements Amendment Bill (No. 1) 2006 and enabled the Commissioner of Taxation to collect or conserve tax debts that an individual or company may owe in foreign jurisdictions where they are resident in Australia or where they have resources that are located in Australia. Currently, the debt that is recorded on the foreign claims register that is removed or reduced is deemed as ‘never to have been payable’. According to the explanatory memorandum, this could ‘significantly frustrate any proceedings that the commissioner has commenced or finalised to collect the debt’. Rather than being deemed ‘never to be payable’, debt that has been removed or reduced will, under this bill, be treated as a credit. This schedule will also clarify that the role of the foreign claims register is to transform foreign debt into Australian tax debt.

Schedule 3 of the bill amends the Superannuation Guarantee (Administration) Act 1992 with regard to the late-payment offset and should be of benefit to many of those small and medium enterprises that are out there, some of which are doing it tough in the current financial difficulties. This amendment will, according to the explanatory memorandum:

… vary the period within which an employer can make a superannuation contribution after the due date for a quarter and still elect to use the late payment offset to reduce their superannuation guarantee charge liability for the quarter.

Currently, an employer is required to pay the prescribed superannuation contribution on a quarterly basis to avoid paying superannuation guarantee charges. An employer that has not paid superannuation on time is currently allowed to make a late payment at any stage before the superannuation guarantee charge is payable and then claim a late payment offset against their superannuation guarantee charge. So it is a bit of a convoluted kind of process. I guess the intent of this is to try to streamline it a bit. Further, it provides no incentive for an employer to pay the superannuation as close as possible to the original due date. The bill will amend the period in which late superannuation can be paid while still claiming a late payment offset to provide such an incentive.

Now to what is perhaps one of the most pressing aspects of the bill: the measures contained in schedule 1 to do with the CGT—that is quite a mouthful. These amendments were first proposed under the former government, and there were some criticisms levelled at the coalition by the then opposition, who alleged that some aspects of it caused uncertainty. That really is a bit of hypocrisy at its worst, because this government unleashes uncertainty on the Australian business community almost as readily as it breaks election promises. I suppose nothing could be more obvious than the confusion unleashed on small businesses in particular because of the original decision to provide unlimited bank guarantees, in a knee-jerk reaction to the international financial crisis. We all know that it is a very serious matter and governments do have to act, but that was a rather rash decision made in haste, and it has caused a lot of difficulty for the business community out there trying to raise loans to keep their businesses running. We have seen references to this in recent times on Four Corners. To level this criticism about creating uncertainty at the coalition is pretty hypocritical.

The part that I suppose has been a bit controversial was raised by Mr Davidson, a partner at PricewaterhouseCoopers, in an article in the Australian Financial Review:

“So people could be doing deals thinking we’re safe,” Mr Davidson said, “but all of a sudden we’re caught by these provisions.”

He was actually talking about the first measure that I discussed, which was schedule 1 of this bill. This is exactly the confusing behaviour that businesses do not need. In fact, industry can now be satisfied that the matter is clarified. What caused the confusion was that on 13 May there was an announcement that these changes to the capital gains tax scrip for scrip rollover provisions would apply to takeover arrangements entered into after 13 May. The government published an explanatory memorandum and the ATO website reiterated this position. Then the draft bill was released and the wording relating to takeover bids was changed slightly. The change to the bill would apply to those listed companies who conducted a takeover that was completed after 13 May rather than entered into after 13 May. We do not have a problem with this. It needed clarity; there is clarity now, and I think Mr Davidson can be satisfied that this matter has now been made quite clear to Australian businesses who might be caught up in this provision.

I was pleased to hear both the member for Casey and the member for Blair mention, and also to see the media release by the Assistant Treasurer announcing, that donations to the 2009 Victorian bushfire appeal would also be affected by an amendment to this bill so that they would not have their current tax concessional status affected by those monies that are used for longer term recovery and reconstruction. We on this side certainly welcome the addition of this amendment to the bill, should it be agreed to by this House. As both the member for Casey and the member for Blair have said, many organisations and people have raised a considerable amount of money to assist those people caught up in these terrible fires in Victoria, and this amendment will give greater clarity to the tax treatment in this case. We need to ensure that the Australian Taxation Office is in a position to make sure that these donations are not caught up and taxed inadvertently.

This piece of legislation will also provide greater clarity for the status of organisations collecting donations in response to a disaster. There may be other disasters that take place, but it will certainly apply to the 2009 Victorian bushfires. The mechanism will provide a means to ensure that donations to organisations in support of victims of such disasters can be used for immediate relief or for reconstruction. Like the member for Blair, I would also like to take the opportunity to pay tribute to the incredible work of many organisations; for the moral, physical and practical support that they have offered and also for their tremendous fundraising efforts. We have seen this incredible outpouring of generosity from the community and we know that the Red Cross has been at the very forefront of that. We appreciate the work that they do and the last thing that any of us in this place would want to see is those donations, and the ability for those donations to help rebuild people’s lives, interfered with or detracted from by having them taxed. I think this is a welcome amendment to this bill.

There is a fourth schedule, but it is a bit of housekeeping, so I am happy to say that we can support the measures in this bill.

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