Shayne Neumann (Blair, Australian Labor Party) Share this | Hansard source

Listening to the previous speech I was reminded of the time some years ago when an American missionary who did charity work came to my home town of Ipswich and I took her to watch an AFL game. The Brisbane Lions were playing St Kilda. As she watched the game she could not quite understand what was going on. At the end of the match we went down on the field, as you do, and ‘Aka’ was doing his handstands. It was a great time—the Brisbane Lions had won, we all sang their song and it was terrific. As we were going away she said to me, ‘Wasn’t that a great soccer match!’ I said to her, ‘Well, you know, it really isn’t soccer, it’s AFL.’ And as I was listening to the previous speaker, the member for Bowman, I was wondering whether he had actually been there last night when the Treasurer gave his speech. So I am going to go home and scan the ABC footage to see whether he was there, because I do not think he understood anything of what was said last night. I am not sure whether the Liberal Party has a national secretariat, as we on this side of the House do, but I was wondering whether his speech was faxed over to him this morning and so he said: ‘Right, I’m going to make this speech that is completely irrelevant to the bill that is before the House; I’m just going to wing it’—and that is what he has done. My background is as a litigation lawyer, and if I had got up and made a speech like that in these circumstances a judge would have told me, ‘Mr Neumann, you’d better get back on track.’ That was an extraordinary speech by the previous speaker. Mr Deputy Speaker, I am actually going to address the bill before the House. It may be shocking, it may surprise those opposite, but I am actually going to address the bill, which is all about good government.

I speak in support of the Tax Laws Amendment (2008 Measures No. 2) Bill 2008. This bill covers a broad range of areas by schedule, and I want to address four in particular that show that this government is pro business, pro market and pro working families. The extension of the late payment offset, which will allow employers to use a late contribution to offset part of their superannuation guarantee charge liability, is the first point. The second point is the provisions to ensure the market value substitution rule does not apply where a capital gains tax event C2 occurs in relation to a widely held company or a unit in a widely held unit trust. The third point is exempting the first $1,000 of an early completion bonus paid to an apprentice from income tax and the fourth point is the amendments to the uniform capital allowance and capital gains tax provisions in circumstances where amounts are misappropriated by an employee or agent. The previous speaker, I note, did not address any of those topics.

Firstly I want to speak about the extension of the late payment offset to allow an employer to use a late contribution to offset part of the superannuation guarantee charge liability. This bill is an important part of the Rudd government’s plan to reduce the burden on small business. As someone who worked for 21 years in small business, I am pleased to support it. It will allow fairer treatment to employers who make contributions after the due date. It amends the previous act to further extend the period within which an employer can make the required superannuation guarantee contribution after the formal due date and still be eligible to use the superannuation guarantee late payment offset.

The current act prescribes a minimum level of superannuation support that all employers are required to pay for eligible employees into a complying superannuation fund. Otherwise the employer will incur liability to pay the superannuation guarantee charge. The purpose of this bill is to remove the anomaly in the system which imposes harsh penalties on well-meaning employers who pay their superannuation contributions late. The bill extends the late payment offset for employers and ensures that late contributions are still counted towards the required superannuation guarantee payments of an employee. The implication is that employers will no longer be required to pay the same amount twice. It reduces the burden financially as well as in a regulatory way. Currently, if employers fail to make the required contribution within 28 days of the due date, they must make the payments through the superannuation guarantee charge and make them payable to the Australian Taxation Office. Many employers I have spoken to do not understand this and, unfortunately, make the payments to the employees’ superannuation fund. Under the pre-existing legislation that payment is not taken into account and they are forced to pay twice thus increasing their financial burden.

The law currently says that from 1 January 2006 an employer who makes a late payment within one month after the due date can use that late payment to offset their superannuation guarantee charge for the quarter—the payment is quarterly. However, if they make it after that one month, they are unable to use the offset under the current law, so it is an impost upon them and a burden. It is a double payment rule, effectively, for those who unintentionally miss their quarterly superannuation payments. The truth is that those who deliberately avoid making contributions to their employees’ superannuation are not likely to be caught by that because they simply will not do it, and the Australian Taxation Office must adopt a very strenuous and tough approach in that regard.

In opposition we called upon the former coalition government to fix this harsh treatment of employers. However, it was not corrected in 11½ years. It is disappointing that Labor’s calls for this fell on deaf ears, although, in fairness, it must be said that the former government were proposing to do it before the lapse of the last parliament. It is a constant complaint from employers and it is good that the current Rudd Labor government has listened to employers as part of its consultation with all segments of the community. In line with our commitment to reducing red tape for small business, we are taking this early action to show employers that we are fair dinkum about listening to their concerns and complaints. Our priority is to help small business because small business is the engine driving economic productivity and growth in this country. Profitable businesses mean high wages, highly skilled employees and helps working families in our community.

Currently there is a disproportionate penalty imposed on employers who pay that late superannuation contribution, and we want to change it. This initiative will be welcomed in my community of Blair, which takes in all the Lockyer Valley, part of the old Boonah shire and two-thirds of the city of Ipswich. There are many business people who work hard in my community. They have profitable businesses making contributions not just in terms of the work they do on a daily basis but also in terms of their community’s life as well. I am pleased with the philanthropic type provisions that we see in this current legislation as well. This legislation will end, once and for all, the possibility that employers find themselves with additional costs. As someone who was running a business and who built it up from scratch, I know that you need all the help you can get. This will be helpful to those who are struggling. There are significant incentives—and they will remain—to ensure employers make their contributions for their employees. Penalties and interest can be imposed by the Australian Taxation Office on employers for late payments—and so they should. I believe this bill is part of the Rudd Labor government’s pro-market, pro-business and pro-working families agenda.

The second area also helps those who received no capital gain but in fact are stuck in circumstances where they end up having to pay capital gains tax on unrealised gains. This bill will ensure that the market value substitution rule does not apply when a capital gains tax event C2 occurs in relation to companies and unit trusts. The bill amends the tax laws to ensure that the market value substitution rule does not apply where a capital gains tax event C2 occurs. Taxpayers will now be treated fairly; they will only be taxed with capital gains tax on the amounts they actually receive in their pockets.

The former coalition government received serious representations from shareholders in companies, particularly shareholders in listed companies, who were adversely affected by the operation of the market value substitution rule. But that fell on deaf ears as well. Eventually, they wanted to change it right before the election, and parliament lapsed. Often, shares are cancelled at a price set in advance and there is an upward movement in the share price by the time the cancellation actually occurs. In these cases shareholders are unfairly subject to capital gains tax on unrealised gains. I am pleased for the provision of equity that this change will take place.

This rule was originally designed to prevent people from manipulating capital proceeds arising from a capital gains tax event which occurred when they were not dealing at arms length. But it has resulted in an injustice to shareholders. The existing tax law means that people pay tax on capital gains when they should not. We should reduce the burden on working families in this community. I am pleased to support this. It is good for my community and the hardworking businesses in my area. This turning off of the market value substitution rule is a good thing in terms of justice, equity and fairness to business.

The third issue was really a Queensland issue. Like on a lot of things, we are ahead of the pack in Queensland. This third thing is exempting from income tax the first $1,000 of early completion bonuses paid to apprentices. This schedule amends the Income Tax Assessment Act 1997 so that the first $1,000 of an early completion bonus paid to an apprentice by a state or territory government will not be subject to income tax. Queensland is ahead of the pack on this. This will put more money in the pockets of apprentices. Generally speaking, the apprentices in my constituency are not well paid. They have made personal sacrifices to complete their education and training. We need to encourage them to complete their apprenticeships.

Putting more money back into the pockets of low-paid apprentices to meet their daily needs by reducing their income tax is the fair thing to do. It is good policy in terms of encouraging people to undertake their apprenticeships more quickly. It is good for apprentices and it is good for business. We cannot have apprentices dropping out of courses. We need a well-trained and highly paid workforce. Productive employees cause by their efforts productive businesses. We need to do everything we can to reward hard work and effort. Completion bonuses are a way to do it and tax relief concerning early completion bonuses will help.

Currently, only Queensland pays a bonus to apprentices who have completed their training contract in an identified skills shortage occupation. If they are full-time apprentices, they must complete their apprenticeship at least six months early; however, if they are a part-time apprentice they need to complete it at least 12 months early. I hope the other states and territories will follow Queensland in this regard. I hope that this will encourage apprentices to quickly complete their training. It is good policy.

The final issue that I want to talk about is amounts misappropriated by employees or agents. The changes here will overcome a technical problem in the tax laws which prevents amounts misappropriated by employees or agents not being deductible and taken into consideration for capital gains tax purposes. As an employer, I have been in circumstances where an employee has misappropriated money from me, so I am pleased to be able to talk about this. It is a difficult area to cope with. There is a sense of betrayal, and then you find that, even though the money is not available to you, you have to pay tax on it.

Capital gains tax from asset sales are taxable for other CGT purposes or under the uniform capital allowance provisions. The uniform capital allowance provisions apply to business operations and allow ongoing deductions for capital expenditure. However, the CGT often only applies in the circumstances of the disposal of assets. The current tax laws do not acknowledge that amounts misappropriated by employees and agents following an assets sale should be taken into consideration. It is right that these misappropriated amounts reduce the termination value of an asset, the disposal of which is assessed under CGT provisions. Under the uniform capital allowance provisions, the amount of income misappropriated is included in working out the tax consequences. It is appropriate that the amount misappropriated is also recognised as loss when the malfeasance occurs.

These tax law amendments by schedule are about helping business. They are about helping shareholders. They are about cutting red tape. They are about fairness and equity. I am pleased that they follow on the Treasurer’s speech last night. If the member for Bowman needs a copy of it, I am happy to provide one for him. If he wishes to come to my electorate office in the Brassall shopping centre, I would be happy to sit down, have a cup of coffee with him and explain it to him. We build on a Labor budget. Unfortunately, the born-to-rule mentality of the previous speaker must go. From time to time we win elections, and from time to time we deliver Labor budgets. I am pleased that the Treasurer has delivered for my electorate. I look forward to the Building Australia Fund financing critical infrastructure in my area, I look forward to the Health and Hospital Fund helping Ipswich General Hospital and other places, and I look forward to the Education Investment Fund helping the universities in my area. I look forward to having the cup of coffee with the member for Bowman at Michel’s Patisserie at Brassall shopping centre, Hunter Street, Ipswich if he wishes to come and have a chat with me.

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