Stephen Jones (Whitlam, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

by leave—I move:

That this bill be now read a third time.

I would like to thank the members who have been contributing to the debate. I would also like to take the time to respond to some of the issues that have been raised by the opposition.

Schedules 4 and 5 to the bill will enhance the integrity of the tax system and close tax loopholes that allow companies to allocate franking credits to shareholders in a way that is outside of the intent of the system. This is hurting the budget bottom line, and it's hurting taxpayers. The coalition used to believe in these things, and that's why the coalition wanted to do it first. On capital raisings in the 2016-17 MYEFO, the then Treasurer Scott Morrison announced:

The Government will introduce a specific measure preventing the distribution of franking credits where a distribution to shareholders is funded by particular capital raising activities.

On off-market share buybacks, the then Liberal Treasurer Josh Frydenberg said on 26 August 2019:

… share buybacks and capital returns are becoming increasingly prominent …

…   …   …

A more positive approach to investment and growth by Australian corporates would not only lead to a stronger economy but would contribute to the goal of capital deepening.

So one of these measures is theirs and one of them was supported by them. That just shows what rank opportunism we're seeing from an opposition desperately trying to whip up hysteria about one practice that has almost completely stopped since the then Treasurer announced it but will almost certainly start again if we don't close the loophole and about another that makes up less than two per cent of franking credit distributions.

These are measures we've consulted on, and we've responded to the consultation. Can I in particular make note of a large number of submissions that say we should not backdate the capital raising measure to the day that Scott Morrison first announced it back in 2016. In response to those submissions, we've made a change. We listened and we made a change: the measure will no longer be retrospective to previous financial years. These measures are targeted at big companies finding loopholes in our tax system, big companies that are getting discounted share buybacks paid for or subsidised by Australian taxpayers. Those opposite knew it. Let me say it again: these changes will have absolutely no impact on the franking credit distribution to everyday Australians. They know it. It will have absolutely no impact on the franking credit distribution to everyday Australians. And if your constituents are asking you this question, just ask them how many off-market share buybacks have you done in the last 12 months? The answer will be zero. How many of off-market share buybacks have mum and dad investors done in the last 12 months? The answer will be zero. They know it. The Australian people know it. Let's get on with making the system stronger and making the system operate in the terms that it was intended.

Franking credits were a Labor invention. We introduced them under the Hawke and Keating government. It ensures that we have an imputation system to save investors from double taxation. It's a system we believe in and we stand by. We commend the bill to the House.

Question agreed to.

Bill read a third time.