Bill Shorten (Maribyrnong, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

I present a supplementary explanatory memorandum to the bill. I ask leave of the House to move government amendments (1) and (2) as circulated together.

Leave granted.

I move government amendments (1) and (2):

(1) Clause 2, page 2 (table items 3, 4, 5 and 6), omit the table items.

(2) Schedule 3, page 8 (line 1) to page 40 (line 16), omit the Schedule.

In response to a recommendation from the House of Representatives Standing Committee on Economics, the government has decided to remove schedule 3 to this bill, together with the Pay As You Go Withholding Non-compliance Tax Bill 2011. In their report of 3 November 2011, the committee recommended that the schedule be deleted so that more consultation could be devoted towards identifying additional defences that allow innocent directors to avoid exposure to the director penalty regime. I have asked Treasury to undertake further consultation to explore further defences. The government intends to bring these amendments back into the parliament in the next available sittings next year.

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

Hooray! The coalition called on the government to remove schedule 3 from this bill, and they are doing so. I congratulate the members for Casey, Higgins and Wright on their outstanding work in the committee, getting rid of this flawed schedule of the bill. It is a far-reaching change. It may be that directors who have innocently misunderstood the complex superannuation law or have inadequate management systems in place will potentially be exposed to liability for the superannuation guarantee. The issue of independent contractors versus employees could also cause difficulties, as this schedule of the bill exposes directors to personal liability for superannuation guarantee payments in respect of people who may have been treated as contractors for a long period of time. So the government was using a sledgehammer to crack a nut, and thankfully the nut has rebelled and they are removing this schedule from the bill. We support this amendment.

Question agreed to.

by leave—I move amendments (1) and (2) in my name:

(1) Clause 2, page 2 (before line 1), table item 2, omit “Schedules 1 and 2”, substitute “Schedule 1”.

(2) Schedule 2, page 6 (line 1) to page 7 (line 2), omit the Schedule.

As previously stated, the coalition strongly opposes this attempt by the government to retrospectively change the tax law. It is extraordinary that there is a case before the full bench of the Federal Court at the moment on this particular issue and the government is trying to introduce retrospective legislation to validate its position before the court, which effectively denies individuals the chance to take the Commissioner of Taxation to court and see the matter through to a final conclusion. This means that individuals are denied the right to challenge an interpretation of the tax laws by the Commissioner of Taxation without this government introducing retrospectivity. It is for these reasons that the coalition seeks the removal of schedule 2 from this bill.

Bill Shorten (Maribyrnong, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

In response to the opposition's proposed amendment to remove schedule 2 of the bill related to the PRRT taxing point, the government does not support removing schedule 2 from the bill. The PRRT has been operating this way for over 20 years. We are simply making sure that the PRRT continues to operate like it has since 1990. ExxonMobil's Bass Strait project came into the PRRT regime four years after it started, so it was clear how it would operate. This actually saved ExxonMobil significant costs at the time, at the cost of $700 million of foregone revenue to the government. There was an express agreement at the time that the kinds of deductions being pursued through the courts now, more than 20 years later, would not be deductible. They did not start legal proceedings until 2004, but they want tax they have paid since 1990 repaid to them. I can assure you from my dealings with ExxonMobile that it would not necessarily notice all of the money it got back because it is a very successful company all around the world.

This legislation will provide clarity to taxpayers and avoid potential time-consuming court cases in the future. The House of Representatives Standing Committee on Economics found:

… the committee believes that it is appropriate for the Parliament to affirm the policy intent of legislation as implemented in the Bills.

Leaving this to the courts would create risk and uncertainty for taxpayers. Thus, this schedule should not be removed.

Question put:

That the amendments (Mr Hockey’s) be agreed to.

The House divided. [18:21]

(The Speaker—Mr Harry Jenkins)

Question negatived

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

The question now is that this bill, as amended, be agreed to.

Question put.

The House divided. [18:26]

(The Speaker—Mr Harry Jenkins)

Question agreed to.