David Gillespie (Lyne, National Party) Share this | Hansard source

I rise to talk on the Tax and Superannuation Laws Amendment (2015 Measures No. 4) Bill 2015. This bill addresses very many important issues about the integrity of our tax system. For most of us, accounting—if you studied economics and accountancy in any shape or form in tertiary studies—is a pretty dry topic but, unfortunately, tax changes everything. Tax is what delivers the nation's finances, to pay for all our responsibilities, whether they be the Medicare system, hospitals, defence forces, roads—you name it. So we have to have a tax system that is (1) not punitive and (2) has its own essential integrity.

There are three issues in this legislation that we need to pay attention to, and I will take the third one first, because in my electorate and in my experience it is the one that affects most people. That is the small lost member account threshold. It is not uncommon for most employees in this day and age to move around many jobs in their careers. During that time, they are often signed up to industry default super funds or different funds from the ones in their previous employment, and many fail to have these funds rolled over into the next one or to have the new employer paid contributions put back into the existing superannuation fund. So it is not uncommon for many people to have several small superannuation funds, all being hit with fees and charges or having contributions deducted for insurance policies that many of them did not even know were part of their superannuation policy. As a result, these deductions amount to more than what is being accumulated or, in some cases, more than what is being contributed.

So I think this is a very wise manoeuvre for many people. It redefines an 'idle account' as one that has not been accessed for five years, and it facilitates rolling those idle funds into the tax department, where no fees and charges are levied. In fact, there will also be a portal where people can identify and get hold of these accounts and remove them from the tax office with interest paid, which is quite different from the 'trouser tax', where it was bank deposits that were being taken into the tax department. I think this is a sensible amendment, and people will really value it, particularly a lot of people with low wages who have many accounts lying idle just being eroded by interest charges, fees for management and, as I mentioned, the not uncommon occurrence of a super fund being associated with an insurance policy for people who do not know they are paying for it. This will be a big benefit.

The second matter is the scrip-for-scrip rollover provisions. These will be amended so that the tax liability for shares or interests, when traded in mergers or acquisitions, does not occur immediately. That is a bad thing. If a company is being taken over and there are shares being traded for new shares, there is a perceived financial benefit, but then, if the perceived benefit is put to the merged or acquired company straightaway, it can destroy the benefit of the merger altogether. But we do not want the other side of the coin, where the entity, the trust or the new company permanently avoids any tax liability, which is what our very clever accountants can sometimes do by issuing a large amount of debt or so-called thin capitalisation.

So this is another integrity measure. It does not sound very sexy, but it is really important because the amount of money that can be sheltered in these arrangements is huge. Most of the people in my electorate, who pay tax as they earn, get really annoyed when they see the use of thin capitalisation, transfer pricing or complex accounting manoeuvres to defer the liability of companies. Every company should pay its fair share, just like every citizen should pay their fair share. So a principle of keeping the integrity of our tax system in place is addressed through this.

The third issue is double taxation. Legislation introduced 70 years ago was put in place so that people do not pay tax overseas in one country and then have to pay it in Australia and vice versa, so they are not getting taxed twice. But there was a loophole where, if you were overseas working for the government for more than 90 days, not only did you miss out on being taxed doubly but the taxing did not happen at all. That was a very sweet spot for some individuals. This amendment will allow tax to be paid in Australia on your earnings and allowances if you are in that situation, working for the government, but it does not change it if you are an ADF member, a Defence Force person or a registered charity working overseas for the government.

So these are sensible amendments, which I commend to the House. But, before I finish, I would like to just make some comments on those made by the member for Fraser. The Labor Party's proposal is a tax on earnings above $75,000 at 15 per cent as they come out of a super fund, then changing the thresholds down to $250,000. I am very concerned by this because it just pinpoints the attitude of the other side towards superannuation. It is seen as a piggy bank to fix up all the problems that they have created by reckless fiscal abandonment of sound, sensible budgetary measures.

The superannuation holdings of Australian citizens should not be treated as a piggy bank for fixing debt and deficit problems. If you are going to tax superannuation payments, which have been taxed at either 15 or 30 per cent going in and then at 15 per cent during their earnings and accumulation phase, and if it is to be treated as a pension when you take it out, the logical progression from that is that you should also tax the pension. Or, if you put money into a bank deposit account or an interest-bearing account after you have paid your tax, which is pretty normal behaviour, when you take it out of a bank savings account, if you are taking more than $75,000, you should be taxed an extra 15 per cent on it—follow the logic of their argument.

People have paid tax. Superannuation contributions get a tax benefit because the nation has encouraged people to do it. That is why they have superannuation funds. It is a way of avoiding the government having to provide a pension. That is the whole aim of it. If you destroy the benefit and put another 15 per cent on it, the amount that people put into super will shrink. It then defeats the purpose for which it was created. As I mentioned, superannuation fund holdings of Australian citizens should not be treated as a piggy bank for the government to fix our debt and deficit problems. People have paid tax on it—yes, it is less than what the top marginal tax rate is, but it was created that way so that people would put money into it and would then look after themselves rather than turning to the pension.

I commend to the House the Tax and Superannuation Laws Amendment (2015 Measures No. 4) Bill 2015. There are three separate measures in it which make a lot of common sense. There is fairness and integrity at the very heart of these changes, and I commend them to the House.

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