Jane Prentice (Ryan, Liberal Party) Share this | Hansard source

I rise to speak on the Tax Laws Amendment (2013 Measures No. 2) Bill 2013. This 118-page bill contains a range of tax changes in 11 schedules. They are very complex changes that require careful consideration and proper parliamentary scrutiny, as outlined by my colleague the member for Moncrieff. However, at this stage this will not occur because the Labor government are ramming this bill through parliament before the election, irrespective of its incredibly complex consequences for industry and the Australian economy. We saw a similar process occur when this government rammed through the Future of Financial Advice (FoFA) legislation.

The bill was introduced just last Wednesday, on 29 May, after which the bill was appropriately referred to the Joint Committee on Corporations and Financial Services and then passed off to the House Standing Committee on Economics. That Labor dominated committee since decided that such complex changes do not warrant any scrutiny, declaring:

... due to the urgency of the bill and the need to resume the second reading debate there is insufficient time to undertake an inquiry.

It is the view of the coalition that this is simply not acceptable. As the coalition members of the House Economics Committee indicated in their dissenting report:

Coalition members of the committee recognise the importance of parliamentary scrutiny of executive government. The decision of the committee to reject an inquiry into the Tax Laws Amendment (2013 Measures No. 2) Bill 2013 due to "insufficient time" represents arrogance from Labor members.

This bill significantly increases government revenue (in other words—higher tax receipts) by nearly one billion dollars in schedule 1 alone.

The fact relevant government agencies, as well as the public and key stakeholders were denied an opportunity to inform the committee of the consequences of this decision by the Gillard Labor government underscores the shambolic and reckless approach to policy development by Labor.

Allowing the debate on the second reading today does not give important stakeholders any opportunity to consider and comment on the proposed changes, which could have huge ramifications in their industries.

First, I will address schedules 3 and 4 of this bill which respectively extend the regulatory framework for tax and financial advice services and make other amendments to the Tax Agent Services Act 2009. Schedule 3 amends the Tax Agent Services Act 2009, TASA, so that tax advice given by practitioners in the course of giving advice that is usually provided by financial services licensees falls within the regulatory regime administered by the Tax Practitioners Board, TPB. TASA introduced a national regulatory regime for tax agents and business activity statement agents to ensure that providers of tax agent services to the public meet appropriate so-called professional and ethical standards. TASA introduced this regulatory regime based on three elements: the definition of what constitutes a tax agent service, the registration requirements for the code of professional conduct that applies to registered tax agents, as well as civil penalties that could apply to unregistered tax agents. As outlined in the explanatory memorandum to this bill, TASA generally requires entities that provide tax agent services to register with the TPB.

At the time of that legislation, there was a recognition of the fine line between whether an entity is merely providing general information about the tax implications of particular financial products or whether it is giving tax advice that could reasonably be expected to be relied on and therefore a tax agent service. Therefore, it was decided to exempt tax agent services provided by financial services licensees and their authorised representatives from TASA. This is set to expire on 30 June 2013.

This means that there will be a new regulatory regime within TASA for entities in the financial services industry which give tax advice. It does this by creating a new type of regulated service—that of a 'tax (financial) advice service'. The definition of a 'tax (financial) advice service' would comprise two elements: that of providing a tax agent service and providing that service in the course of giving advice that is of a kind usually given by a financial services licensee or an authorised representative. Therefore, providers of tax (financial) advice services from July 1, 2013 would need to register with the Tax Practitioners Board and meet the requirements of the legislation.

There has already been strong feedback from the industry about these changes. The Association of Financial Advisers has called this legislation 'rushed and flawed', which has been brought forward 'without due process or adequate consultation'. As they have highlighted, 'there is a serious risk that the legislation will result in significant unintended consequences' because of the 'lack of detail and regulation or guidance'. The latter characteristics are symptomatic of most of the legislation put up by this Labor government

There are several other outstanding issues raised by these changes, including, but not limited to, the lack of clarity of which types of financial advisers will be captured under the act such as stockbrokers, insurance brokers or mortgage brokers. Questions remain about whether all financial advisers will have to be registered and, furthermore, what will this legislation mean in terms of further training for financial advisers and how will the interactions evolve between the registration of financial advisers with changes already passed in the rushed and highly complicated FoFA legislation? Lastly, what are the implications of this bill in terms of the interaction between the TPB and the Australian Securities and Investments Corporation, who are both regulators in this area, and who will take precedence where there are inconsistencies?

Those FoFA changes were debated in this House in March 2012 following an inquiry process which actually did occur. At that time, the Parliamentary Joint Committee on Corporations and Financial Services was advised time and time again that FoFA would result in huge additional costs, reduce employment levels in the financial industry and reduce the availability and access to quality advice. The Gillard government did not listen and passed that complicated legislation, which the coalition strongly opposed and voted against. Although they will not allow this legislation to be referred to a committee, I remind the Gillard government that the financial services industry is already trying its hardest to implement FoFA by 1 July this year, and these changes to TASA have the potential to further hurt the financial services industry.

Other constituents in my electorate who are financial advisers have also contacted my office to highlight the important work of financial advisers, who help 'workers, retirees and their families in Queensland achieve their financial objectives and be independent in retirement'. They have outlined their concerns about this 'costly duplicative regulation'. They are concerned that the TASA changes 'will make the cost of doing business prohibitive, meaning job losses and financial advice becoming more expensive and less accessible around the country'. These constituents and stakeholders deserve to have their voices heard and their questions answered during a parliamentary inquiry. Ultimately, all these unanswered questions mean the potential for uncertain increases in compliance costs for financial advisers.

The coalition therefore seeks to excise these schedules from the bill. We do not believe that the government should be proceeding with changes to TASA; instead, we should extend the transitional arrangements already in place—which exempt tax agent services provided by financial services licensees—to ensure consultation can be brought to a judicious conclusion.

If this means deferring these changes through the committee process and beginning anew after the next election, then so be it. The time line of an election of this parliament does not negate the need for proper parliamentary processes, nor should it impact on the passage of poorly designed legislation.

Further, schedule 5 involves amendments to the Taxation Administration Act 1993 to change the rules regarding Australia's business tax system. There are three primary changes. Firstly, there is the imposition on the tax commissioner to make public certain information obtained from the tax returns of corporate tax entities with a total income of $100 million or more in a financial year. This imposition will also involve the publication of an entity's final annual amount payable under the minerals resource rent tax or petroleum resource rent tax, regardless of its total income.

Secondly, the new law will allow the publication of aggregate tax information, irrespective of whether such disclosure is reasonably capable of being attributed to a particular entity, unless that entity is an individual. The third measure increases information sharing between government agencies, as the explanatory memorandum states, 'involving information to the Secretary of the Treasury, for the purposes of briefing the Treasurer in relation to a decision that may be made under the Foreign Acquisitions and Takeovers Act 1975 or Australia's foreign investment policy'.

As I previously mentioned, the coalition did attempt to refer this bill to the House economics committee, but Labor rejected that. Therefore, the coalition will seek to excise this schedule from the bill. We do so because of concerns particularly with the imposition on the tax commissioner to make public the tax affairs of corporate tax entities with reported total income over $100 million and the relation to payments through the mining tax and PRRT.

The intention for these amendments was announced in February 2013 by the Labor government—after the government attempted to hide the failure of its mining tax by refusing to release those revenue figures in the Mid-Year Economic and Fiscal Outlook. At the time, the government claimed it could not release the figures because it could potentially identify the tax information of specific corporate entities. The coalition did not believe this assessment at the time, which is why in the end the government indeed released the mining tax revenue receipts; because the Treasurer's confidentiality arguments could not be sustained.

So what is the government's legislative response? It is now actually imposing on the tax commissioner to release information about the liability of companies under the mining tax and PRRT and allow the publication of tax information, even if it does attribute that information to a particular entity. The coalition believes that is a massive overreach by this government; just as it would be if the government were to make public tax information relating to an individual.

Furthermore, schedule 1 of this bill amends the tax laws to require certain large companies to pay their PAYG, pay as you go, tax instalments monthly rather than quarterly or annually. Under current law, all entities are liable for PAYG instalments quarterly unless they are eligible to become an annual or biannual payer. Under the new law, entities will be liable for monthly PAYG instalments if they exceed certain thresholds, which are 'base assessment instalment income in a particular financial year'.

The threshold will begin at $1 billion for corporate tax entities from 1 January 2014 and subsequently lower to $100 million from 1 January 2015 and to $20 million from 1 January 2016. From that date, all other entities with a base assessment income threshold of $1 billion, including superannuation funds, trusts and individuals, will be required to pay monthly PAYG instalments, reducing to $20 million the year after.

The government claims that this change will not increase the overall tax burden on a corporation or other entity. However, for those entities affected, this change does amount to a very significant one-off bringing forward in their tax and could potentially result in perpetually tighter cash flows and slimmer operating cash buffers. I do note that the reduction in payments to monthly is intended to bring in $10.15 billion to the government over the forward estimates.

I do not have the time now to go through every single measure in today's bill. This bill involves extremely complicated changes which would be best left to be further considered by the oversight of a parliamentary committee, as the coalition has recommended. This would allow parliament to fully scrutinise the intended consequences and, more importantly, the unintended consequences of the measures and allow the relevant stakeholders to have their say about what these changes mean for them.

In relation to schedules 3 and 4, as I have highlighted, this opportunity is particularly important for the financial services industry, who are already struggling with the implementation costs of this Labor government's FoFA legislation. Complex changes require careful consideration. The failure of this government to put forward this legislation with full scrutiny is yet another reason why Australians simply cannot trust this Labor government.

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