Mitch Fifield (Victoria, Liberal Party, Shadow Parliamentary Secretary for Disabilities, Carers and the Voluntary Sector) Share this | Hansard source

The current law contains a CGT exception for assets that are transferred from one trust to another where the beneficiaries and terms of the trust are the same. This is known as trust cloning. One of the great joys of non-controversial legislation, Mr Acting Deputy President, is that you are always learning something new. I was previously completely oblivious to the concept of trust cloning. I do not know how I got by without having that knowledge, but I feel the better for it at this time. I do not have a lot of personal experience with trusts. I know there are many opposite who have far greater experience of trusts of one kind or another than I do, so this may have greater personal meaning for them. If that is the case, I hope this is of interest and assistance to them.

This bill will remove the CGT trust cloning exception to CGT events E1 and E2. However, the schedule will introduce a limited CGT rollover provision for the transfer of assets with the same beneficiaries and same interests in each trust. It does not remove the other exception to CGT events E1 and E2 for taxpayers who are the sole beneficiary of a trust that is not a unit trust and are absolutely entitled to the asset. Under these amendments changing a trustee of a single trust will continue to not trigger a CGT liability. I note that the Treasury has undertaken an extensive consultation on the removal of the exception and it appears there is general agreement that the original provisions were too broad, which opened the prospect of some avoidance of CGT.

The other main section of this bill, schedule 2, seeks to remove income tax impediments to mergers between superannuation funds by allowing the rollover of capital losses and the transfer of revenue losses. Generally, when superannuation funds merge, the assets of one fund are transferred to another. If the transferring fund has a capital loss, then the loss would not be able to be transferred. This was creating a situation where the merged entity would not be able to use the losses to offset against future capital gains. This measure was originally announced as a short-term measure with an expiry date of 1 July 2010 but has now been extended to 30 June 2011. Many in the industry would perhaps like this to be extended again, but the government has decided to stick to the sunset clause because it wants to review this measure after it has considered the findings of the Henry review. How much of the public policy consideration of this nation is currently awaiting the findings of the Henry review.

Through the consultation process and during a Senate inquiry the superannuation industry has been broadly supportive of this measure. However, we on this side of the chamber are concerned that we do not know whether this measure will continue or not and that we will only find out when the government stops dragging its feet on its response to the Henry review. We on this side of the chamber believe that could act as a disincentive for any mergers that superannuation companies might be considering. I might make a prediction. I could well be wrong—and, indeed, I hope I am wrong—but the Henry review will probably not see the light of day until the budget is delivered. We may well get a release of the Henry review and the government’s response to it at that time. If that were to be the case, that would be quite a cynical approach on the part of the government to try and bury that document and its response in the context of the budget. I am sure that the government would not want to do that with something which was to be a root-and-branch reform of the tax system. I do hope that I am proved wrong and the government is not that cynical.

The third schedule in this bill is intended to clarify the rules relating to income derived from exempt annuity businesses of life insurance companies. An annuity business is a business that supports life insurance policies that are payable. As the life insurance policy holder is liable for income tax on the annuity they receive, the life insurance company is exempt from income tax to prevent double taxation. The schedule seeks to ensure the intended operation of the original provisions and also updates the language of the tax law to reflect the significant reforms made to the superannuation regime by the former coalition government.

Schedule 4 of this bill is one which I think we are all fairly familiar with. It updates the deductible gift recipient list to include two new entities—two very happy and grateful new entities, I am sure—and to reflect the name change of an entity already on the list. The two new entities are the United States Studies Centre, which I am sure we are all very well aware of, at the University of Sydney. The second new entity is one which I was not previously familiar with—the Green Institute Ltd. I am a naturally curious person, so when I read something about an organisation of which I was previously unfamiliar I do what most of us do and google it. So I googled the Green Institute and found that it is an organisation which undertakes what you would call green advocacy and green activism and also some green workshops. There are some interesting titles for the green workshops undertaken by the Green Institute, which I am sure that Senator Bushby would find particularly interesting given his interest in economics. One of the workshops available through the Green Institute is called ‘Prosperity without growth’. I think they must have discovered a new economic theory that allows you to have prosperity without growth. That would certainly be an interesting one to attend. Another of the workshops is called ‘Gender, climate and the green new deal’. You never know quite where you are going to uncover gender aspects in public policy, but clearly there is a gender aspect to climate and the new green deal.

Mr Acting Deputy President, I do not know how you would take to this but the next workshop is called ‘How to eat your way to an equitable, cool and ecologically appropriate society’. I am not sure if they mean cool as in the concept of being funky or cool as in a globe with a lower temperature, but that is another interesting one. The next workshop, which DGR status will be helping to support, is entitled ‘Inclusiveness now! Practical ways to reach working class voters’. It goes on to explain:

With climate disaster on our doorstep, can we afford to keep green politics trapped in a middle-class inner-city terrarium?

I should actually have checked what a terrarium is. I failed to do that, so I cannot—