Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Small Business, Competition Policy and Consumer Affairs) Share this | Hansard source

This composite bill, the Tax and Superannuation Laws Amendment (2013 Measures No. 1) Bill 2013 deals with a range of changes to the taxation and superannuation system. I can state at the outset that the coalition has reservations about a number of specific schedules contained in this bill. We will be moving to excise these schedules from this bill and, if our amendments to remove these schedules are unsuccessful, we will vote against the passage of this bill.

Schedule 1 of the bill contains amendments which relate to the government's ill-thought-through MYEFO budget measure which changed time limits on the transfer to the government of unclaimed moneys held in lost bank accounts of individuals and companies, as well as lost superannuation accounts, in order to keep alive the illusion of a budget surplus just that little bit longer.

This was a significant revenue measure for the government, bringing in more than $750 million over the forward estimates. The change in the schedule seeks to implement one of the recommendations made by the committee inquiring into this bill, which was to make the interest paid by the Commonwealth on unclaimed moneys from 1 July 2013 exempt from income tax.

Schedule 2 of the bill seeks to improve consistency across the fringe benefits tax law and to also reduce complexity of the law. Currently the taxable value of airline transport fringe benefit is its value less the employee contribution. For domestic flights this is broadly 37.5 per cent of the lowest publicly advertised economy air fare charged by the provider or a carrier where relevant at or about the time of travel over that route. For international flights this is broadly 37.5 per cent of the lowest fare published in Australia as charged by any carrier for travel over that route in the 12 months preceding the end of the year of tax.

Under the changes put forward in the schedule, the taxable value of an airline transport fringe benefit would be aligned with the in-house benefit valuation method. This would be calculated at 75 per cent of the standby airline travel value of the benefit less the employee contribution. Where the transport is on a domestic route the standby airline travel value is 50 per cent of the carrier's lowest standard single economy air fare for that route as publicly advertised during the year of tax. Where the transport is on an international route the standby airline travel value is 50 per cent of the lowest of any carrier's standard single economy air fare for that route as publicly advertised during the year of tax. These changes are technical and should act to simplify this particular area of taxation law.

Schedule 3 of this bill allows participants in the Sustainable Rural Water Use and Infrastructure Program to choose to make payments received under the program free of income tax, including capital gains tax. If this choice is made then expenditure related to infrastructure improvements under the program is non-deductible. Alternatively, the participant can decide to stay under the current rules—that is, the payments will continue to be taxed in the year they are derived but expenditure incurred on relevant works will be tax deductible only in future years. This program provides funding to irrigators to improve water efficiency. Some of the resulting water savings are then transferred to the government to be used for environmental watering. The current arrangement results in a cash flow gap between the timing of the tax liability and tax deductions. If chosen, the new arrangements remove this cash flow gap. The coalition has indicated that it is supportive of this change which was originally announced in February 2011.

Schedule 4 is where the coalition has a number of reservations. This schedule seeks to amend the Superannuation Industry (Supervision) Act 1993 to prescribe requirements for the acquisition and disposal of certain assets between self-managed superannuation funds and related parties. Where an underlying market exists, the proposed changes require that the transaction should be conducted through that market. Where such a market does not exist, a value must be sought from an independent qualified valuer. These changes seem to be an unnecessary regulatory burden. The government have not made the case about the evil they are supposedly trying to prevent with this measure. The Self-Managed Superannuation Funds Professionals' Association of Australia, for example, is concerned that the drafting is not clear regarding the evaluation of hard-to-value assets, such as frozen assets or assets for which there is not a readily available market. If these assets cannot be disposed of to a related party, for example a self-managed super fund member, then it is likely many SMSFs will not be able to be wound up.

In the evidence provided by SPAA to the inquiry it said:

… there are many types of assets held by SMSFs (many types of collectables for example), where no individual has the specific knowledge, experience and judgement necessary to be considered a qualified valuer. In these scenarios, the absences of a qualified independent valuer may result in the SMSF being unable to dispose of the asset which may then prevent the SMSF from being wound up even if it is clearly in the member's best interest to do so.

This would result in the ATO being required to still administered numerous legacy self-managed superannuation funds that have no functional purpose. This change is yet another example of the Gillard government's constant undermining through badly drafted regulation of the flexibility and the effectiveness of SMSFs. For example, in its submission SPAA stated that it was:

… concerned that the requirement to acquire listed securities from a related party (or to dispose listed securities to a related party) in a prescribed manner is limited to transactions involving SMSFs. Off-market transfers of listed securities also occur in the Australian Prudential Regulatory Authority (APRA) regulated sector of the superannuation industry, where they buyer and seller of the securities is essentially the same entity. This would suggest that similar integrity concerns regarding off-market transfers and the manipulation of transfer prices of listed securities would similarly arise in the APRA sector.

These changes, as drafted, are unnecessary regulatory burdens. The government have not made the case about the evil they are supposed to be trying to prevent. The coalition does not support this schedule and will be moving amendments to excise it from the bill. If our amendments to excise this schedule are not successful then the coalition will vote against the bill.

Schedules 5 and 6 of this bill seek to implement the loss carry-back for small and medium enterprises. This expenditure is linked to the proceeds of the government's ill-fated minerals resource rent tax. This measure will cost the budget $700 million over the forward estimates. This is the failed mining tax that is fundamentally flawed and has raised next to no revenue. The coalition opposes all elements of the MRRT, including all measures linked to and supposedly funded by the MRRT. The exception is the increase in compulsory superannuation, which we continue to support with a delay to the increase by two years, given the budget emergency which we face in light of the deficits delivered a fortnight ago.

The government cannot afford to implement costly measures supposedly paid for by the MRRT that raises next to no revenue. The original resources superprofit tax was estimated to bring in $37 billion over the next four-year period, from 2012-13 to 2015-16. The redesigned mining tax, which was then rebadged as the minerals resource rent tax, was estimated to bring in $22.5 billion over the same four-year period, a $14.5 billion write-down. These estimates were then revised down in the 2012-13 budget, with a forecast to bring in $13.4 billion over the same four-year period. Again, in the 2012-13 MYEFO a further write-down to $9.1 billion over the same four-year period was booked. Then in the budget handed down for 2013-14 the government revised the mining tax receipts down even further, to just $3.3 billion over the same four-year period.

This tax went from supposedly collecting $37 billion to $22.5 billion to $9.1 billion and then to just $3.3 billion over a four-year period. That is a $33.7 billion write-down since its inception. The government negotiated the design of the MRRT exclusively and in secret with the managing directors of Australia's three biggest mining companies. As well as excluding any other mining industry stakeholder and state governments, they also excluded all Commonwealth officials from the negotiating process. The coalition has said for some time that Labor's MRRT was a fiscal train wreck in the making. Treasurer Wayne Swan overestimated the gross revenue from the MRRT and underestimated the costs of the various concessions he and Prime Minister Gillard made in their MRRT heads of agreement with the three mining executives.

The government has spent all the money that they expected to raise from the mining tax and more, much more, through the linking of various expenditure measures, including loss carry-back to the mining tax. The government simply cannot afford to continue adding to the $192 billion in accumulated deficits over the last four years with another large budget deficit forecast for 2012-13. In any case, the government's change to allow loss carry-back ignores the fact that only one-third of small- and medium-sized enterprises are actually incorporated and therefore two-thirds are not able to benefit from this measure. This is because only businesses with franking accounts can avail themselves of this measure. Unincorporated businesses that must compete with those using carryback will be handed a competitive disadvantage by this measure.

The government seem to persist in overstating the benefits of this measure. I draw their attention to comments from the Institute of chartered accountants whose Yasser El-Ansary said:

The institute estimated that while there are 2.8 million small businesses, only 400,000 were incorporated and even fewer would swing from profit to loss in the way needed to gain the carry back benefit.

He said:

The likelihood that there are going to be an awful lot of businesses that benefit from this is very, very slim.

The coalition will be moving amendments to exclude schedules 5 and 6 from this bill. Schedule 7 of the bill makes miscellaneous amendments to taxation laws, almost all of them in relation to and attempting to fix problems with the government's failed mining tax. In fact, of the 48 pages in this schedule, 39 comprise amendments that correct 'minor technical errors'—which is clearly an understatement of some significance—in what has proven to be substandard drafting of the MRRT law. Only nine of these pages are devoted to correcting minor amendments in other parts of the tax law.

As stated, the coalition will be moving amendments to excise schedule 4, which relates to related party transactions between self-managed super funds, as well as schedules five and six, which relate to the government's underfunded tax measure of tax carry-back losses. If the government amendments to excise these three schedules are not successful then the coalition will oppose the bill's passage through the parliament. We will move our amendments in detail at that stage of debate, but I ask the parliament to consider those thoughtful contributions to the debate on this measure.

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