Allegra Spender (Wentworth, Independent) Share this | Hansard source

by leave—I move amendments (1) to (4) on the sheet revised 28 May 2024, as circulated in my name, together:

(1) Page 3 (after line 8), after clause 3, insert:

4 Review of Schedule 1

(1) The Minister must cause an independent review of Schedule 1 to be conducted as soon as practicable after this Act receives the Royal Assent.

(2) The review must include a review of the impact, or potential impact, of Schedule 1 on the startup and high-growth sector.

(3) The persons who conduct the review must:

(a) consult with the public in conducting the review; and

(b) give the Minister a written report of the review in sufficient time to enable the Minister to comply with subsection (4).

(4) The Minister must cause a copy of the report of the review to be tabled in each House of the Parliament before 1 July 2025.

(2) Schedule 1, item 15, page 7 (line 11), before "The object", insert "(1)".

(3) Schedule 1, item 15, page 7 (after line 14), at the end of section 296-5, add:

(2) The Parliament intends that the approach in this Division of taxing unrealised gains is not to be used in the design or policy considerations of future amendments of this Act.

(4) Schedule 1, item 15, page 21 (after line 10), at the end of section 296-205, add:

Deferring when tax is payable

(3) Despite subsection (1), your *assessed Division 296 tax for the income year is due and payable at the end of the later day applying under the scheme mentioned in subsection (4) if, under the scheme:

(a) you choose for the scheme to apply for the income year; and

(b) you satisfy the conditions for the scheme to apply for the income year.

(4) The regulations must prescribe a scheme that allows entities to defer their *assessed Division 296 tax for an income year if the conditions provided for in the scheme are met.

(5) Without limiting subsection (4), the scheme must provide for:

(a) the length of the deferral, which must be for at least 5 years; and

(b) how an entity may choose for the scheme to apply for an income year; and

(c) any conditions that must be met for the scheme to so apply; and

(d) whether tax payable under the scheme can be paid in instalments; and

(e) whether a separate choice needs to be made, and conditions need to be met again, for each income year that an entity wishes the scheme to apply.

I am sympathetic to the government's objective of considering the taxation treatment of super and particularly about balancing the taxation of younger and older Australians more equitably. I note with real concern the increasing burden that the taxation system in its current form is placing on younger Australians. For example, I note that the share of income tax paid by older Australians has gone from 27 per cent to 17 per cent in one generation. I note that young Australians are not getting ahead in the way that previous generations did. I note that from 2004 to 2016 the average wealth of households of Australians over the age of 65 grew by 50 per cent while the average wealth of households under the age of 35 did not move. This change in the distribution of wealth and opportunity between generations does not bode well for our country and does not bode well for the opportunities that every single one of us wants to offer our children.

So I do think we need to consider the tax system more broadly, and, as I think many in this House know, I have long advocated for tax reform, including considering the tax system within the superannuation system. However, I am deeply opposed to the taxation of unrealised gains, which is why I'm putting forward a number of amendments. While I'm open to considering taxing large balances of super, I think the taxation of unrealised gains is extremely problematic. I'm also concerned that this increase in tax that the government is proposing is not being used to actually reduce tax burden, which is what it should be doing—reducing tax burden on young workers, because that is where that rebalancing should be.

Let me explain some of the concerns I have in relation to the taxation of unrealised gains. The first is on principle, which is that this is not money that anybody has. So, why the government should tax it is beyond me. As a principle of taxation, it is extremely problematic. I'm also concerned about how this plays out in practice, and I'm going to focus particularly on the venture and technology sector, which is a big part of my community and a sector that I'm really concerned about. Australia has lower investment in venture than other countries. We have about a third of the rate of investment in young, growing firms—venture capital—than the US, and about half that of the UK. We have a productivity hole. We know we need to grow it, and we know that young, growing firms drive productivity in this country.

So, we should be doing everything we can to support these companies. My biggest concern with this bill is that, according to the Tech Council, around 25 per cent of money that goes into venture comes out of self-managed super funds. Now, venture is volatile, and it is illiquid. Therefore, if we are going to be taxing unrealised gains on venture firms, which are both volatile and illiquid, there is a real danger that people in self-managed super funds are just going to move that money out of venture and into other areas—maybe the listed index. They are going to miss out from a returns point of view, and we as a country will also miss out, from the point of view of not having that investment in venture firms that is critical to future growth and productivity. That is my major concern with this issue and, frankly, I have not seen evidence that the government has engaged properly with the venture sector and with the technology sector to understand the impact of this legislation on those young and growing firms.

My amendments cover three elements of this. Firstly, I'm recognising that if you make an investment there's a very short period in which you're meant to pay this tax on unrealised gains. I've already noted that for venture, but it is also the case for land and for farms and businesses. You can't sell them on a dime. Therefore, one of my amendments is to ensure that a longer period is allowed for payment of this tax—over five years. That is a minimum requirement and I think a reasonable one.

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