Malarndirri McCarthy (NT, Australian Labor Party, Assistant Minister for Indigenous Australians) Share this | Hansard source

Firstly, I'd like to thank those senators who've contributed to this debate. Schedule 1 to the bill will reduce the risk of inadvertent breaches of the law if a financial adviser is authorised by more than one licensee. Schedule 1 also allows the Australian Securities and Investments Commission, ASIC, to use assisted decision-making processes to deliver a high standard of service in an effective and efficient manner. Schedule 2 to the bill is an important step towards delivering the government's commitment to ensure that large businesses provide Australians and investors with greater transparency and accountability when it comes to their climate related plans, risks and opportunities. This measure lays the necessary foundations to allow the development and implementation of sustainability reporting standards in Australia to meet this commitment. These amendments will facilitate the development of sustainability standards while longer term governance arrangements for sustainability related financial reporting, including climate disclosure, are developed and implemented.

Schedule 3 to the bill amends the Tax Agent Services Act 2009 to increase the independence and effectiveness of the Tax Practitioners Board, ensure high standards of ethics and competency in the tax profession and streamline the regulation of tax practitioners. I take this opportunity to thank the Australian Greens, and Senator Barbara Pocock in particular, for their constructive engagement on this bill. The government was outraged by the revelations about PwC's misuse of confidential information, and we are glad to be supporting amendments to strengthen the TPB's powers, improve its make-up and place new obligations on tax and BAS agents to report suspected breaches of the Code of Professional Conduct. These changes will uphold confidence and support high standards in the tax profession. The government also proposes minor amendments to schedule 3 to change the commencement date, given the bill has remained before the Senate beyond 1 July 2023.

Schedule 4 to the bill will continue to enhance the integrity of the tax system by aligning the tax treatment of off-market share buybacks undertaken by listed public companies with the tax treatment of on-market share buybacks. Off-market share buybacks will continue to be available to companies as a capital management option, but the tax outcomes will now be the same as for on-market share buybacks. Listed public companies will no longer be able to buy back their own shares at a discount subsidised by Australian taxpayers. In recent years, the incidence of off-market share buybacks has been irregular, but the value of shares purchased has been large. Since announcing this measure, we've been pleased to see that large corporates are choosing to shift to on-market share buybacks, acknowledging that the main rationale for off-market was a tax loophole. The government proposes minor amendments to schedule 4 to change the start date in relation to selective reductions of capital.

Schedule 5 to the bill prevents companies from making franked distributions funded by capital-raising for no commercial purpose. The distributions of concern occur on an ad hoc basis outside established business or industry practice. The government is also proposing to make changes to schedule 5. The government's amendments remove retrospectivity. As a result, the measure will apply from the day after royal assent. Our amendments also add a test for substantiality. A distribution will be considered to have been funded by capital raising if that capital raising funds at least a substantial part of the distribution, rather than any part of the distribution. Furthermore, we're adding a proportionality effect so that only the portion of the distribution that is funded by the capital raising will be unfrankable. We are confirming that responses to regulation aren't affected. So where an equity issue is in response to a regulatory requirement, directive or recommendation, that distribution will not be unfrankable merely because of the amendments in schedule 5.

The government notes the recommendations made by the Senate Economics Legislation Committee and expects that the proposed amendments will ensure that schedules 4 and 5 to the bill appropriately address feedback provided to the committee. The government also thanks Senator David Pocock for his engagement on the bill. We have amended the explanatory memorandum and supported your second reading amendment to confirm that ordinary family or commercial dealings in private companies, such as succession planning and shareholder exits, will not be affected by this measure. We've listened to the views put forward during the Senate inquiry, and we've worked constructively with the crossbench and made amendments to address that feedback. I commend this bill to the Senate.