Christine Milne (Tasmania, Australian Greens) Share this | Hansard source

I am delighted to hear from the government that we are finally going to have legislation on forestry managed investment schemes. I really look forward to it, because it is time we got rid of them completely. I am glad that we have been pushing and pushing this debate, as a collective in this chamber, and finally we will have legislation. I do recognise that this amendment deals with the four-year investment rule in terms of the tax benefit, and we have said we will support that. I am not concerned about that aspect of it. But this is one of those omnibus bills with a whole range of tax issues in it, so it is entirely appropriate that we bring in this amendment.

I want to go back to something that you did not respond to me on, Minister, and that is the role of the tax commissioner. I raised this yesterday in the second reading debate. In order to get the tax deduction from investment in a managed investment scheme—in other words, to offset your tax liability on another area of business, in order to get it through the managed investment scheme—the tax office had to determine that the investment you were making was commercial; so your investment in a managed investment scheme was commercial. It is implicit in the decision of the tax commissioner to allow you to have the offset that what you were investing in was commercial. That is my issue with the tax commissioner and managed investment schemes.

There is a huge amount of evidence out there that the schemes were never commercial, and the tax office had all that information. The tax office had more information than was in the prospectuses that went out to the average investor. The tax commissioner had more information than that. Therefore, why did the tax commissioner give the tick allowing the tax deduction to offset other tax liabilities through investment in managed investment schemes? Why was that allowed—unless the tax office had made a decision that it was a commercial investment? If it was a commercial investment, why have they all failed? Why have they been demonstrated to be exactly what we nailed them to be a long time ago—that is, Ponzi schemes? They borrowed from the investment from future years to pay the returns to previous years’ investors to make it look as if there was a rate of return similar to what had been claimed in the prospectuses, when in fact there was never that rate of return. And the tax office knew that—as did ASIC—rates of return were not there. They knew that for years and years and years. Yet they kept on approving it, and to this day they keep on approving a tax deduction into managed investment schemes in forestry. Allowing them to do that means that the tax office accepted that it was a viable commercial venture. Otherwise they would not have been allowed to make that offset. So I want to know what due diligence the tax office takes.

What responsibility does the tax commissioner now take for having used his discretion to allow this tax deduction to go in? Why did he do that when it was clear that they were not viable—they have all collapsed? People have a right to know: why did the tax office exercise its discretion in favour of the tick for commerciality, if you like, of these schemes when they were never any such thing?