Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Hansard source

I would ask you, Deputy Speaker, to support me in that regard. We are focused on the concerns expressed by a number of individuals and corporations about whether the ATO is properly using its powers in relation to deterring abusive tax arrangements. In the Australian Financial Review this year, an article said that draft change to part IVA, on which the amendments in this bill are closely based, would 'determine whether a company is guilty of avoiding tax by looking at how else it could have done a deal if tax implications were not considered'. There is an extraordinarily large disconnect between the way in which business is properly conducted and the way in which the government, the Treasury and the Australian Taxation Office would require business to be conducted.

To taxpayers, profit after tax is a crucial metric. Suggesting otherwise introduces a sense of artificiality, even unreality. This point was made by the Corporate Tax Association, which said:

The reality is that business and individuals operate in an after-tax world, and from a practical and corporate governance perspective, it would be highly problematical to ask board members to put their minds to what the company would have done in the highly artificial world where tax is assumed not to matter.

Similarly, the Law Council of Australia observed 'Ordinary taxpayers, small business and large corporations will be required to assess their tax obligations by reference to the tax which would have been paid if they had done something that in reality they never would have done.' This bill is going to overlay complexity and compliance costs onto normal commercial transactions, whether business transactions, new investments or corporate restructures.

We really must start this debate by asking whether these amendments are required at all. Submissions to the Economics Committee from pre-eminent professional and industry groups whose members have deep expertise in taxation law argue that these amendments are just not necessary. For example, the Corporate Tax Association states:

… we have consistently maintained that the proposed changes represent an over-reaction to the Taxation Office losing a number of court decisions that have quite limited application.

CPA Australia made a related submission:

… we believe that the proposed amendments to Part IVA contained in Schedule 1 of the Bill are confusing and deficient and do not result in an anti-avoidance regime which is comprehensible to tax practitioners let alone the broader community.

From the Tax Institute:

The Courts have applied the current rules appropriately to find that a tax benefit exists in only those cases where the taxpayer's actions have resulted in a loss to revenue. Recent cases have not resulted in the effectiveness of Part IVA being compromised and as such the amendments in the Bill are an unnecessary overreaction.

I repeat: an unnecessary overreaction. More red tape for business—when is it ever going to stop? More compliance costs for business—when is it ever going to stop? I only wish the Labor Party would have the same tough structure for itself that it is trying to apply to people who work hard and earn a buck—the same corporate government procedure in itself and within the Labor Party, particularly New South Wales and particularly the New South Wales Right. I wish they would do that instead of just applying to everyone else a higher standard than they are prepared to apply to themselves.

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