Barnaby Joyce (Queensland, National Party) Share this | Hansard source

A tax barrister then. We have also now clearly established that land is not a depreciable asset. From the acknowledgement of Senator Conroy himself, we have established that land is a capital asset. The amendment says:

You can deduct amounts for capital expenditure—

and we have now determined that land is capital expenditure—

incurred for establishing trees—

if you buy the land to put the trees on, that is exactly why you did it—

that meet the requirements for constituting a carbon sink forest.

They are the words in the legislation, not mine.

We now have a huge hole. Those who now support this support that hole and the effects that it will have on our budgetary position. If you support this, you support the hole in the Treasury figures. This is an issue that has progressed even tonight. The smart money would say that if you were fiscally responsible—on either side of this chamber—you would not support this. Some people have interjected: ‘Land is not a depreciable asset.’ We have determined that. That is what this whole thing swings off—it is not a depreciable asset. It is depreciable assets that are right for the exclusion. This is a capital asset; therefore, as a capital expense, it stands. It is capital in nature. If you depreciate an asset it goes on to income. In fact, depreciation recouped is on an income account; above that it is on a capital account. Land itself is pure and simply on the capital account. If I look at 40-1000 of the primary section of the guide to subdivision 40-J, without a shadow of doubt I can deduct amounts for capital expenditure. The first question I would ask is, ‘Is land capital expenditure?’ Yes, it is. The amendment says ‘incurred for establishing trees’. Did you buy the land to put trees on it? The company would obviously say, ‘I absolutely had no interest in buying that land except that I was going to put trees on it.’ There is not a shadow of a doubt. There is the nexus between my expenditure and the purpose. I have now defined my two arms. Then I go to the final wording of whether it was for the ‘requirements for constituting a carbon-sink forest’ to establish the nexus between the establishment of the trees and the trees for the carbon-sink forest. Game, set, match—I win.

The purpose of the court is to interpret the legislation in the form provided, not to interpret the musings of an extraneous and inferior body to this chamber. We all know that there is a hole in this. It is just bizarre in the extreme that, knowing that the hole exists, we are now going to vote for it. That means we are all fools. Even if you want to pass this thing—and I do not—I think that the advice that Senator Boswell gave you is good advice. I would park this and go away and get some competent advice, which for the life of me I cannot work out why you do not already have, because we have been flagging this thing all the way back to Senate estimates. I can put you in touch with whoever you want and you can do the same. What worries me is that the people who lobbied you to do this know exactly what they were up to. Why do we not just do the sensible thing, which is what the Australian people would expect, and spend 24 hours to close a loophole that will otherwise make you look like a complete and utter fool when this legislation appears in its first case with someone against the tax department? The plaintiff will win on this one hands down.