Barnaby Joyce (Queensland, National Party) Share this | Hansard source

Helen of Troy, Mary’s sister. That is a confusion; it is obviously the Irish in me today! We now have Mary of Troy—it might be to do with our notice of motion later on. It is the Trojan Horse for a greater desire to move towards entity taxation at a later stage.

There will be people driving off the road in boredom as they listen to this but it is important. In subsection 272-80(5B) of schedule 2F, item 2 of schedule 2 will be repealed. This is to do with the test individual. The test individual is the person who the trust is associated with—who is the determinant of the trust. In the past, for a very good reason you could have a one-off change. That has predominantly been knocked out. That can cause a huge problem when the test individual dies. It could be through an accident—and I am thinking of one specifically—such as a plane accident. This can have unnecessary ramifications on the holding of that asset. So on a technical basis it is bad legislation because it does not take into account the unforeseen ramifications that could well come about in so many of these areas. Trusts are an overwhelmingly widely used vehicle.

The other thing about the change in the test individual is that, because we have already made the change and people have already structured themselves into this change, it becomes slightly retrospective in its effect and in how it is dealt with. That is always a bad precursor to any piece of tax legislation. It is a real pain in the neck when the government starts retrospectively changing tax laws, because you have to pull out all your files of your client base and start going back through them all to see what advice you have given, what structure you have put them into and what changes therefore need to be brought about. Not only is it retrospective but, because of your diligence to your client base, it causes you to have to go through everyone—every file—to find out what the ramifications are. People do not like being pulled into the office and being charged a fee, not because of anything you deliver but because of a change the government has made. It becomes completely nauseating when you tell them that in the prospective window of revenue for the government we are looking at approximately, at best—their own figures—$19 million over four years. That is hardly a reason to change the legislation unless you have another idea sitting behind what you are doing.

Using the government’s figures, if we manage to exclude schedule 2, what is the government losing? It is losing nothing; in fact, it will probably save revenue. The administration of it, I suggest, will be far in excess of the revenue it gains. What is its effect on the Australian people? If we knock out schedule 2 we remain with the status quo which gives some certainty to the family trust structure, which is the owner of the assets. If we knock out schedule 2, what else do we do? We maintain a position that has been held in this nation for a long period of time and we will not be moving towards entity taxation rules. If we progress towards entity taxation rules, and this is the first step towards it, we are only fooling ourselves. If a little old bush accountant from St George can suggest how you can get out of tax by just restructuring your affairs through a trust based overseas, where they do have them, then I am sure that far smarter people than me will be doing exactly the same thing. All we are doing is creating a schism where the discerning and those who are willing to pay more will, once you get diminution in the effect of trusts, start to move the controlling mechanisms of their assets overseas. Only those who cannot afford that advice and that restructuring will keep those mechanisms here. I would suggest that, because of our changes to capital gains tax exemption for nominal property assets, which would include choses in action, that is happening right now. In fact I cannot think of any reason why we would have passed that piece of legislation before except on the prompting of certain exceptionally well-connected lobbyists who managed to get the support of both sides of the House on that issue.

Why would we go down this path, which is an attack on the general ownership structure of Australian assets held by Australians, and then put up the idea that the reason is to maintain revenue, whilst in the same breath have a hole in it that you could drive a Mack truck through because of the flow of funds out of our Treasury coffers overseas by reasons of capital gains taxation exemption on nominal property assets? We must look after the structure that is inherent in Australia at the moment—that is, the trust structure. This bill, in its initial form, is an attack on the structure of so many assets, especially rural assets held by people in regional areas. When we decide to move away from this, we move away from the inherent belief—and I think it is a noble and correct belief—that the idea of a trust is that something is held for you in trust; it is not yours. You are the beneficiary of the asset, but it is not yours to dispose of; it is for you to hand on. The custom and the practice is that you hand on that asset. I think that is also, in the psyche of the nation, a noble attitude for people to have. Even on a philosophical level, I would hate to see a movement away from trusts because it is a movement away from an idea that you do not just live for yourself; you live for those who come after you.