Katy Gallagher (ACT, Australian Labor Party) Share this | Hansard source

I rise to make a few comments on the Treasury Laws Amendment (2017 Measures No. 1) Bill 2017. The bill contains two schedules of changes, both of which are limited in their respective scope.

Schedule 1 of the bill will give effect to minor technical changes to income tax law, with the aim of ensuring that measures in the Tax Laws Amendment (Tax Incentives for Innovation) Act 2016 operate in accordance with their original policy intent. The Tax Laws Amendment (Tax Incentives for Innovation) Act 2016 passed late in the 43rd Parliament, containing two tax measures that seek to encourage investment in our science and innovation sectors. The first of these two measures provides concessional tax treatment for investments in innovative, high-growth potential start-ups—the tax incentives for early stage investors measure. The second measure is reformed tax arrangements for venture capital limited partnerships in order to improve access to capital and make the regime more user-friendly and more internationally competitive—the venture capital investment measure.

Under the arrangements put in place with the passage of that bill, however, those who invest through an interposed trust—investment trusts operated through an intermediary—have not been able to access the capital gain concessions provided by these two measures. It was intended that these incentive measures would apply to these types of investors. The changes in schedule 1 of this bill will ensure those investors who have made their investments through an interposed trust will be able to access the capital gain concessions provided by those tax incentives for early stage investors and venture capital investment measures, as originally intended. This is achieved by ensuring the same CGT outcome arises for the investors in an early stage innovation company, regardless of whether they invest directly or indirectly, such as through a fixed trust.

Schedule 2 of the bill makes amendments the Australian Securities and Investments Commission Act 2001. Broadly, the changes contained in schedule 2 will streamline ASIC's ability to share confidential information with the Commissioner of Taxation, mirroring the existing arrangement for sharing information between ASIC, the Reserve Bank of Australia, APRA and the responsible minister. Simplifying the information-sharing process will enable both agencies to ensure compliance with the law and also to more effectively identify patterns of noncompliance. In practical terms this will enable more timely collaboration during investigations into illegal or high-risk activities.

As Australia's corporate, markets, financial services and consumer credit regulator, ASIC has been granted extensive information-gathering powers by the parliament that are essential for ASIC to fulfil its mandate so that Australia's financial markets operate fairly and transparently. As is appropriate, there are strict confidentiality rules about the use and disclosure of the information ASIC obtains. It can only share this information with a limited group of prescribed individuals and entities, such as those I cited earlier.

At present, in order for ASIC to be able to share information with the Commissioner of Taxation, the ASIC chairperson, or their delegate, must be satisfied that doing so would enable or assist the Commissioner of Taxation to perform or exercise their functions or powers. This is in addition to the Commissioner of Taxation being satisfied that they have the authority to receive and utilise the information. This process contains inefficiencies and hampers effective collaboration between the agencies in ensuring compliance and investigating potential illegal activity. As a result of the changes contained within schedule 2, ASIC will be authorised to provide the Commissioner of Taxation with information it holds that is protected or that is given to it in confidence in connection with the performance of its functions or exercise of its powers. With regard to privacy protections, any information that is shared between ASIC and the commissioner remains subject to strict confidential protections.

We are satisfied that the key issues and provisions contained within this legislation have been sufficiently vetted by the processes of the parliament and that adequate consultation with interested parties and stakeholders has been conducted.

I commend the bill to the Senate.