Graham Perrett (Moreton, Australian Labor Party) Share this | Hansard source

I rise to address the Tax Laws Amendment (2008 Measures No. 6) Bill 2008, and would like to begin by endorsing the generous words of the member for Pearce, especially with regard to the bushfire situation and the generosity of Australians. It is commendable, and I would particularly like to note those people in Far North Queensland who were undergoing their own difficult circumstances with the floods but who were still able to support the Victorian bushfire victims.

That is obviously a common-sense amendment in terms of looking after those donations, and this bill before the House is all about common sense. It contains lots of common-sense amendments to three areas of tax law. Firstly, it adjusts the capital gains tax provisions for corporate restructures, which is very timely and necessary in the current climate after the global financial crisis; secondly, it amends the provisions enabling collection of tax debts owed in another country; and, finally, it improves the late payment offset for superannuation guarantee contributions.

Deputy Speaker Burke, I do not intend to dwell on any of these amendments in any great detail. I know that will disappoint you and the member for Corio, because I know about the enthusiasm that you and the member have for complex areas of tax law. Instead, I am just going to go over a couple of other things. Nonetheless, I will look firstly at the changes to capital gains tax rollovers for corporate restructures.

Back in 1999, then Treasurer Peter Costello introduced scrip for scrip rollover provisions as part of the New Business Tax System (Capital Gains Tax) Bill 1999. Under the scrip for scrip rollover system, if you are an investor and the company in which you own shares is taken over and you receive new shares in the takeover company, you are entitled to roll over capital gains. In other words, the rollover allows the taxpayer to disregard the capital gains from the original shares, and the replacement shares are considered to have been acquired for the cost of the original interest. Surprise, surprise—some people have exploited that situation. Unfortunately, under the member for Higgins’s system, these provisions were exploited by some companies for tax minimisation. I have no problem with lawyers and accountants finding ways to be gainfully employed—obviously those private school fees do not pay themselves—but this is a common-sense amendment. Some companies were able to gain significant tax benefits through restructures where an original company joins a new holding company to attract the scrip for scrip rollover without any significant change in the ownership of the assets.

This bill will prevent companies from obtaining a market value cost base for shares and certain other interests acquired in another entity under an arrangement that is taken to be a restructure. A takeover or a merger that meets certain criteria will be considered a restructure and the cost base for membership interests will reflect the cost bases of the underlying net assets of the original entity. This measure is about ensuring companies are not able to shirk their tax obligations. As I said, it is a common-sense approach to the exploitation of a Higgins loophole. Australian workers who flog their guts out to pay off their mortgage, care for their families and pay their taxes are fed up with wealthy companies ripping off the tax system under the veil of tax minimisation. The government should act to close these loopholes, and I am pleased that this bill will restore greater integrity when it comes to these capital gains elements of tax law. This measure will not impact genuine commercial transactions and will deliver on the original intent of the provisions, which was, as Peter Costello said in his second reading speech, to ‘free up the market for competitive takeovers’.

This bill also amends the Taxation Administration Act 1953 to improve the administration of the collection of tax debts owed in another country where the debtor resides or has assets in Australia. Particularly, these amendments will address a number of issues which affect the commissioner’s ability to collect tax debts. They will also ensure Australia can meet its treaty obligations relating to mutual assistance in collection of tax debts. This bill clarifies that the role of the foreign claims register is to transform foreign tax debts into Australian tax debts. This enables the commissioner to engage in debt collection and make the payments to the foreign country.

Finally, this bill amends the Superannuation Guarantee (Administration) Act 1992. It places a time limit on the period in which an employer can offset any contribution to an employee’s late superannuation guarantee against part of their superannuation guarantee charge liability. The charge liability is paid if employers do not pay the superannuation guarantee on time. However, there is currently no specified time limit in which an employer is required to make the contribution. Employers will be able to use the offset if they make the contribution before they are assessed for the superannuation guarantee charge liability. The inclusion of a time limit will encourage employers to more quickly make their contributions to take advantage of the offset. These measures are expected to achieve about $25 million in savings for the ATO. The Assistant Treasurer consulted widely and this measure has been positively received by genuine, good corporate citizens. I commend the bill to the House.

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