Sharon Grierson (Newcastle, Australian Labor Party) Share this | Hansard source

I think the previous bill had that element in it. Schedule 3 builds on the amendments contained in schedule 2 of the bill and changes the way in which gains and losses on disposal of specific investments by Australian managed investment trusts are taxed from the financial year ending June 2009 onwards. The bill also clarifies the position of the law with respect to the disposal of eligible assets by managed investment trusts. The current arrangement was developed under the auspices of the common law and is at present unclear and unnecessarily complex. Under the current law, gains and losses may be recorded on revenue or capital accounts, depending on the circumstances, including the nature of the business or investment activity. The bill provides certainty to Australian managed investment trusts and allows eligible managed investment trusts to make an irrevocable choice to apply the capital gains tax provisions as the primary code for assessing gains and losses on disposal of eligible assets. This is a bill that will assist investors, and of course very many investors at the moment are trying to recover from their losses and plan for their retirement and their future.

Schedule 4 amends the Income Tax Assessment Act 1997 to introduce an income test threshold into the entrepreneurs tax offset, with a view to facilitating small business growth. The amendment targets the benefits of the offset for small businesses that do not earn additional income not referable to the relevant small business. It does this by beginning to phase out the tax offset on a graduated scale at an aggregated turnover of $50,000, and the entrepreneurs tax offset ceases at an aggregated turnover of $75,000. By restricting the eligibility of single individuals whose income is over $70,000 and members of families whose incomes are over $120,000, the entrepreneurs tax offset builds on our government’s commitments to means testing.

Schedule 5 similarly amends the Income Tax Assessment Act 1997 in response to practical issues arising from the implementation of the consolidation regime since its introduction in 2002. This schedule has the explicit support of business and professional groups seeking greater certainty in the consolidation regime. Several of the amendments will improve the cost effectiveness of the restructuring of consolidated groups into multiple entry consolidated groups and vice versa. In particular, the amendments minimise the tax consequences of restructuring and clarify the operation of the tax cost-setting rules which apply when an entity joins or leaves a consolidated group.

Schedule 6 includes miscellaneous amendments which remove anomalies arising from implementation and correct drafting defects. These amendments stem from feedback from tax professionals and the general public provided through the Tax Issues Entry System.

When I spoke to the House on the financial services committee’s report on agribusiness I commented that I hoped the matters raised would result in a regulatory framework that puts more emphasis on consumer protection, and I think this bill does that. I congratulate the minister for that, and of course the committee chair, Bernie Ripoll. It does show that we are committed to improving processes and making sure that there is clarity and that investors have confidence and certainly will not be in a situation, as we have recently seen, of great loss. The amendments do illustrate the government’s commitment to the continual process of review and modernisation of the Australian tax system.

Another inquiry held by the Joint Parliamentary Committee on Corporations and Financial Services is of relevance too—its inquiry into the operation of Australia’s franchising code of conduct last year. I note that Australian franchises employ more than 400,000 people and turnover is around $130 billion a year. However, some elements of the code, in particular its provisions on unconscionable conduct, in some cases failed to stop unethical conduct by big businesses and franchisors towards small businesses and franchisees. This week the Minister for Small Business, Independent Contractors and the Service Economy, the Hon. Craig Emerson, announced sweeping changes to that code in light of this committee’s inquiry as well as a number of other inquiries that have been held by the states. It is good to see that this government is serious about making sure we respond to the needs of business and the needs of investors as well. These are people who put their income and their future on the line.

I have also talked in the House about issues around phoenix companies. We have had a quite distressing experience in Newcastle. Another important announcement affecting small business was made in November of last year by the Assistant Treasurer, Senator Nick Sherry, who released a package of proposals that aimed to crack down on businesses who rip off their workers and the general taxpaying community. This has been an issue of particular relevance in my electorate of Newcastle and the surrounding region. Too often, particularly in the construction and development industry, there have been examples of companies engaging in questionable and dishonest behaviour, leaving former employees being owed considerable amounts of back pay and superannuation, and causing misery to contractors, suppliers and other workers on those sites. This government certainly is very serious about its commitment to corporate responsibility. It is committed to clearly defining the roles and responsibilities of the key players in the corporate and commercial sectors, and giving some confidence that a framework is in place to protect investors and other people involved.

At the same time, the Rudd government understands that it is vitally important to maintain conditions that allow businesses to prosper of their own accord, that reward entrepreneurship and that foster economic wealth. Catering for the demands of two considerations is not always easy, but they are not mutually exclusive. With legislative amendments like the ones before the House today, we can strike a balance between accountability and prosperity. The Rudd government understands how important its role is in attending to the care and maintenance of tax laws. They do need intervention if they are left too long—the complexities grow and the uncertainty grows. We are committed to assisting compliance cost savings, with a strong financial and taxation framework. I commend the bill to the House.

Debate (on motion by Mr McMullan) adjourned.

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