Peter Dutton (Dickson, Liberal Party, Minister for Revenue and Assistant Treasurer) Share this | Link to this | Hansard source

I move:

That the amendments be agreed to.

The amendments provide for a cost base of market value for certain assets that would not have been subject to Australia’s CGT regime prior to this measure being introduced. This will ensure that all such assets held by foreign residents on the date of announcement of the measure, 10 May 2005, and which subsequently become subject to Australia’s CGT regime receive a cost base of market value as at that date. I can inform the House that the amendment has no financial impact.

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

For the benefit of the House, what we are debating today in the Tax Laws Amendment (2006 Measures No. 4) Bill 2006 is the proposal to exempt foreign residents from capital gains tax on all gains other than real property gains. This is not without controversy. The minister has pointed out that the amendment from the Senate effectively puts in a ‘reset the clock’ provision on the treatment of interposed entities, tidying up that area of the tax law. Labor have indicated that we will be supporting the bill, including the Senate amendment. We do so not out of any joy and are not particularly happy about the government’s approach to this bill. We are unhappy that the government still refuses to provide disaggregation of the costs of the bill. Over a four-year period the cost is something like $300 million, a not insubstantial amount of money. The bill contains two provisions: one is effectively a spending measure and one is a savings measure. The costs have been aggregated. On that basis, therefore, we do not know the exact cost of the capital gains tax exemption being extended to foreign residents. We maintain that it is appropriate for parliament to have that cost disaggregation so that the parliament has a full understanding of exactly the cost of extending this exemption to foreign residents. The government has indicated that it does have those costings—that is, the disaggregated costs—but it refuses to provide them to the House and to the Senate. I make another appeal to the minister to do so in the course of this debate.

Already, various experts are challenging the $300 million costings on the basis of the aggregated cost. They are just making an assumption about what the disaggregation may be. I have seen various figures bandied around, but some of them go well and truly beyond $300 million. Labor accepts that this is part of the government’s overall march towards the OECD Model Tax Convention on Income and on Capital. On that basis, having consulted various tax experts and business representatives, we are reluctant to oppose the bill. This would not be Labor’s priority in government.

The Treasurer has already indicated to the community generally that there will not be any room in next year’s budget for tax cuts for individuals. In various ways he has also indicated that he does not have in his mind any more generous tax arrangements for the country’s small businesses. Yet he can find $300 million or thereabouts—we do not know exactly how much it is because we cannot get the disaggregated costings—for extending a tax break to foreign residents which will not be available to Australian investors.

Having consulted the business community generally and having consulted tax experts, securing their view about the way in which this makes a contribution to aligning Australia with the OECD model tax convention, we will not be opposing the bill, but we want to state again that this would not have been a priority for a Labor government. I make another appeal to the minister to provide the parliament with those disaggregated costings.

Question agreed to.