Cory Bernardi (SA, Australian Conservatives) Share this | Link to this | Hansard source

The question is that opposition amendment (1) on sheet 8437 be agreed to.

Question agreed to.

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

I move opposition amendment (1) on sheet 8452:

(1) Schedule 3, page 10 (after line 29) after item 3, insert:

3A At the end of Subdivision 118-F Add:

118-455 Impact Assessment of this Subdivision

(1) As soon as practicable after 24 months after the Treasury Laws Amendment (Tax Integrity and Other Measures) Act 2018 receives the Royal Assent, the Minister must cause an impact assessment of the operation of this Subdivision and other related tax concessions to be conducted.

(2) The impact assessment must:

(a) examine the operation of the tax concession regime for:

  (i) investments made through a *VCLP, *ESVCLP or *AFOF; and

  (ii) investments made directly by foreign residents registered under Part 3 of the Venture Capital Act 2002; and

(b) be conducted by the Department and Innovation and Science Australia; and

(c) make provision for public consultation.

(3) For the purposes of conducting the impact assessment, the reference to Innovation and Science Australia in item 6 of the table in subsection 355-65(4) of Schedule 1 to the Taxation Administration Act 1953 is taken to include the Secretary of the Department.

(4) The Minister must cause a written report about the impact assessment to be prepared.

(5) The Minister must cause a copy of the report to be tabled in each House of the Parliament within 15 sitting days of that House after the day on which the report is given to the Minister.

This amendment requires the minister to instigate an impact assessment of the venture capital tax concession provisions overall, including the measures in schedule 3 to this bill, to ensure they're operating as intended. This impact assessment would be conducted by Treasury and by Innovation and Science Australia, and would be required to commence 24 months after this bill receives royal assent. Labor's position strikes the right balance in supporting this particular measure but also requires the government to conduct a comprehensive, transparent review of the venture capital tax concession framework.

Zed Seselja (ACT, Liberal Party, Assistant Minister for Treasury and Finance) Share this | Link to this | Hansard source

The government will be supporting this amendment. Schedule 3 of this bill delivers on a key commitment in the government's FinTech statement. It clarifies that early stage venture capital limited partnerships and venture capital limited partnerships can invest in innovative Australian FinTech businesses.

The opposition's amendment would require Treasury and Innovation and Science Australia to conduct an impact assessment of the operation of the tax concession regime in relation to venture capital investment. This would be undertaken 24 months after the bill receives royal assent and would include consultation. The report on the impact assessment would be tabled in parliament.

The government is willing to support the amendment proposed by the opposition, despite the likely limited benefit a further review would have. We've already made changes as part of our National Innovation and Science Agenda to the tax treatment of ESVCLPs to make them more internationally competitive, to attract greater levels of venture capital investment and to incentivise investors to support early-stage innovation companies. This bill highlights the government's commitment to support innovative businesses in Australia and build a culture of entrepreneurship and risk-taking. Passing this bill will provide greater certainty to venture capital investors, improving access to capital for innovative Australian fintech businesses so that they can grow and succeed.

Question agreed to.

Tim Storer (SA, Independent) Share this | Link to this | Hansard source

I move amendment (1) on sheet 8454:

(1) Schedule 2, item 2, page 6 (line 12), omit "either:", substitute "if you do not satisfy the maximum net asset value test (see section 152-15)—either:".

Through discussions with Business SA, and as per the discussions of their members with Treasury, my amendment deals with a mischief that the bill intended to address where a tax-paying individual shareholder in a company with significant assets and turnover does not satisfy the maximum net asset value test but qualifies for the small business CGT concessions under the $2 million turnover test. This might be achieved where a shareholder carries on a business in their own right that has a turnover not exceeding $2 million and that is entirely independent of the business of the object company—essentially, the taxpayer starting unrelated small businesses to access the concessions. However, the proposed changes in the bill go too far and include taxpayers who should sit outside the group of taxpayers the government wants to tighten integrity measures for.

While there may be outcomes under existing law which are inequitable, the proposed changes punish the many for the sins of the few. This mischief identified could be easily overcome without creating a disincentive for collaborative investments by requiring that the shareholder satisfies the maximum net asset value test and cannot rely on the $2 million turnover test. This is a simple way of addressing this mischief without it creating unintended consequences. Therefore, my amendment on sheet 8454 is a simple omission in schedule 2, item 2, page 6, line 12 of 'either' and substituting it with 'if you do not satisfy the maximum net asset value test (see section 152-15)—either:'. These new restrictions mean that they do not apply to genuine small businesses that do satisfy the maximum net asset value test. Therefore, I seek the Senate's approval of this amendment.

Zed Seselja (ACT, Liberal Party, Assistant Minister for Treasury and Finance) Share this | Link to this | Hansard source

The government won't be supporting this amendment moved by Senator Storer. The government announced, in the 2017-18 budget, an integrity measure to ensure that the small business CGT concessions are appropriately targeted to genuine small businesses. Senator Storer's amendment would mean that taxpayers with less than $6 million in net assets could still benefit from the CGT small business concessions for the disposal of their interest in large businesses. Therefore, the government does not support this amendment, which is inconsistent with the policy intent of the small business CGT concessions. These concessions provide genuine small businesses with valuable relief from taxation on capital gains on the disposal of assets related to their business, allowing them to reinvest and grow as well as contribute to their retirement savings.

The government's bill will ensure that these concessions can only be accessed in relation to assets used in a small business or ownership interests in a small business. Ensuring that the concessions are appropriately targeted ensures that they can continue to be provided to those businesses that need them the most—genuine hardworking small businesses—and, for those reasons, the government can't support this amendment.

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

Labor also opposes Senator Storer's amendment. As noted earlier in the debate on schedule 2, stakeholders have informed Labor that the additional conditions for eligibility for the capital gains tax concessions are detailed in a way that makes the changes more akin to a policy change than an integrity change and, as such, catches taxpayers who engaged in good faith according to the intent of the concessions.

We believe that the amendment to move the start date to 8 February 2018 deals with unintended consequences that arose when the exposure draft was released—that is, we accept the interpretation of many stakeholders that this went beyond just an integrity measure and had elements of policy change, capturing those who structured their affairs before the exposure draft and in good faith.

By removing retrospectivity, as the change in the start date does, we are comfortable with the bill passing. Nonetheless, I do want to note that Senator Storer and his staff engaged with us on this matter in a considered, thoughtful and constructive manner.

Labor is sympathetic to some of the broader concerns that this measure and the intent of Senator Storer's amendment has raised—that is, what can be seen as a policy change as put forward just as an integrity measure. That does raise broader issues on how government and parliament address process issues around what defines an integrity measure. So, while we won't support the senator's amendment today, I think it's important to reflect on the broader issues that Senator Storer is addressing, and we thank him for his constructive approach.

Question negatived.

Bill, as amended, agreed to.

Bill reported with amendments; report adopted.