Thursday, 6 June 2013
Tax Laws Amendment (2013 Measures No. 2) Bill 2013; Consideration in Detail
I move government amendments (1) and (2) on sheet ME100 and (1) to (4) on sheet BF253 as circulated together:
(1) Schedule 10, item 6, page 100 (after table item 13.2.4), insert:
(2) Schedule 10, page 101 (after line 6), after item 10, insert:
10A Section 30 -315 (after table item 111A)
(1) Clause 2, page 2 (table items 6 to 8), omit the table items.
(2) Clause 2, page 2 (table item 9), omit the table item.
(3) Schedule 3, page 56 (line 1) to page 69 (line 7), omit the Schedule.
(4) Schedule 4, page 70 (line 1) to page 76 (line 5), omit the Schedule.
In moving these amendments, I reinforce the points made in the summing-up speech in relation to the importance of listing for Social Traders Ltd. I also recognise the fact that, given the opposition to schedules in relation to the Tax Agent Services Act, we will ensure that some additional consultation can occur in relation to those matters. But I reiterate the fact that the government remains committed to proceeding with what are essentially amendments that will ensure that financial planners engaged in the provision of taxation advice are subject to the same requirements of those elsewhere that are providing taxation advice.
I want to take the opportunity to speak briefly on these amendments and on the legislation, because they do provide important reform to infrastructure, including the new tax-loss incentive to major infrastructure projects introduced by schedule 2 of this bill. By removing tax disincentives this reform will support up to $25 billion in new private sector infrastructure spending. This important reform is yet another milestone in federal Labor's ambitious infrastructure agenda. We are delivering record funding for infrastructure investment, but we recognise that we need to mobilise private capital as well as direct government expenditure.
I congratulate the minister on this initiative, which arises from an announcement that we made in the 2012 budget and arises from the sort of work that the Infrastructure Australia Finance Working Group, chaired by Jim Murphy from Treasury, has done. We, of course, have funded all of the 15 projects deemed ready to proceed on the Infrastructure Australia National Priority List. Building on this, the Infrastructure Coordinator will designate projects eligible for the tax concession. To be eligible, projects need to be assessed as ready to proceed on the priority project list.
The tax loss incentive also complements our recent budget announcement for the transformational public transport projects—the Melbourne Metro and Brisbane Cross River Rail. Both of these projects have been identified as priority projects of national significance. They are critical in addressing capacity constraints and congestion in our major cities and will enhance productivity growth. They also are projects on a scale that requires private sector contributions. Therefore, we are taking a new, innovative approach which is structured around an availability payment model to attract private sector investment. The tax loss incentive will also encourage private sector investment for such projects by preserving the value of infrastructure project losses over time and exempting these losses from utilisation tests that normally apply.
This reform will support major transport projects that transform our cities and make our international gateways more competitive. This is an important piece of legislation. I commend the legislation as well as the amendments to the House. It is important that we continue to invest in both road and rail infrastructure in addressing congestion issues in our cities. Our approach is about delivering reforms that complement our nation-building investment program, such as this tax loss incentive.
I welcome the backdown from the government in relation to these amendments. Occasionally they do listen to the wise counsel of the coalition. On this occasion they have, appropriately, shelved schedules 3 and 4 and allowed for proper consultation.
I do not want to rub it in, but I do note the speech from the member for Lyne. I just cannot help but be reminded of his absolute, total hypocrisy in this place. The member for Lyne was a guy that said: 'Let the sunshine into the parliament. Let everyone have a good look. Let's have proper scrutiny and treat the chamber with the respect it deserves.' Yet he stood in this place not long ago and said: 'Don't worry, I have letters from ministers that assure me that this bill is not going to have what could be the impacts. We don't need to have a parliamentary inquiry. I've got—I, the member for Lyne, Rob Oakeshott—letters from ministers and I've got letters from these people. I'm satisfied. Therefore, no-one else needs to have the opportunity to consult. Because if you consult with me, Rob Oakeshott, that is all the consultation you need. Don't worry about the parliament. Don't worry about any committees of the parliament.' What a complete hypocrite this guy is. Seriously, every time we have tried to have additional scrutiny, the member for Lyne is in the way. Yet he goes out there and parades like some sanctimonious god of accountability. Frankly, he is a complete, damn hypocrite.
I cannot wait for the day that he is not in this place so that we can have someone who actually is consistent representing Lyne. The previous member for Lyne was a man of great integrity. This current member for Lyne—I do not know what he is possibly thinking when he gets up here in this rather droll way and says: 'Don't worry, I've consulted and therefore we should all be satisfied. Everything is okay as long as I'm satisfied.' Whereas, actually, nearly half the House, on this side, are not satisfied—and now the government themselves are saying they are not satisficed—with the proper level of scrutiny of those schedules to the bill. So the overwhelming majority now in the chamber want further consultation in relation to the schedules. But for the member for Lyne, because he is satisfied everyone else should be satisfied. Anyway, common sense has prevailed and we welcome just a little sliver, a glimpse, of common sense from the government.
Question agreed to.
by leave—I move opposition amendments (2) and (5), as circulated in my name, together:
(2) Clause 2, page 2 (table item 10), omit "5", substitute "6".
(5) Schedule 5, page 77 (line 1) to page 83 (line 11), omit the Schedule.
Confidentiality of taxpayer information is fundamental to the administration of taxation law, and confidentiality is protected because ensuring the privacy of sensitive information, including commercial information, goes to public confidence in the system of tax. The minister for superannuation, the member for Maribyrnong, has said as much himself. He said:
Taxpayers provide personal information to the Tax Office expecting it to be kept confidential.
The public release of taxpayer information, therefore, needs compelling justification. What have the government said? They have said they are going to reveal taxpayer information for two reasons. The first is, as the Assistant Treasurer says:
… more transparency around the levels of tax being paid by large and multinational businesses in Australia to allow an informed debate about the efficiency and equity of our tax system.
Schedule 5 requires the commissioner of tax to release information to the public that is disclosed in the taxpayer's tax return—namely, the entity's total gross income, its net taxable income and its income tax payable. It only applies to companies if their total income is $100 million or more. So multinational groups, such as Google, Amazon or Starbucks, which may have minimal income sourced in Australia, will not be affected, I understand.
I welcome clarification, but that is my understanding. Instead, this measure, as I understand it, will potentially provide reputational risk to privately owned entities and shareholders, so private companies. In their submission to the Treasury discussion paper of April 2013, Godfrey Hirst Australia Pty Ltd, Australia's largest carpet manufacturer that has a base in Geelong and has a turnover exceeding $300 million, noted that the disclosure relates only to companies and stated:
… for those which are privately and closely held it will be an easy task for commentators to apply the tax paid (or not paid) to the owners. Publication of the data would give information that could be detrimental to shareholders, including to their safety.
How will that allow for better informed debate?
Reconciling total income to taxable income is set out in the tax return and provided to the ATO. The reconciliation contains numerous adjustments, each of which is allowed under the tax law and reflects established tax policy, and can include: dividends from tax sources overseas that are exempt when they get to Australia, so it is all additional income; dividends from taxed Australian sources that have franking credits attached; prior year losses which are offset against taxable income; as well as tax incentives such as the R&D offset, which the government ripped $1.1 billion out of this year apparently. An Australian group with major operations in overseas subsidiaries would have a large total income but a comparatively small taxable income because of exempt dividends. So that information may well be used by other countries to punish Australian entities operating in their countries. Why would you want to do that? Why would you want to make it harder for Australian exporters operating in other jurisdictions to deal with those jurisdictions by publishing this information in Australia about how well they are doing in other jurisdictions when they do not do that with us? This government feels the need to lead in every regard, no matter what the cost is to Australian employers.
Without additional guidance the information that the bill compels the commissioner to make available to the public may well be grossly misleading. Far from improving transparency, public release of the information referred to in proposed section 3C of the Tax Administration Act is likely to reduce transparency. It misleads unless there is additional context. So, no doubt, companies will be required by the activism of advocacy groups to explain the apparent disconnect between the tax they have paid and their income. Let it be done if that is the government's view, but it is an additional significant cost and it is additional significant regulation and it makes us less competitive. The government always feels the need to make us less competitive, because of its unintended— (Extension of time granted)
Secondly, the Assistant Treasurer's second reading speech contends that the increased transparency is intended to discourage aggressive tax minimisation practices by large and multinational businesses. I have no issue with making life extremely difficult for those who break the law and I want the tax office to go after them with the full force of all the available resources, but I make this point: do not make it too hard to do business in Australia by imposing regulation on businesses that are complying with the law because they may then find that this additional regulatory burden in Australia just makes it too hard to stay here.
The basis of our legal system is summed up by the Tax Institute in its submission to a Treasury discussion paper released in April. They said:
… a taxpayer's obligation to pay their “fair share” of tax in Australia cannot be imposed via any means other than clearly defined laws, as made by the Australian Government. Taxpayer obligations should begin and end with compliance with the tax law.
I agree. In recent years the ATO's risk assessment practices have expanded to include a number of tools that help the ATO determine how compliant particular corporate groups may be. New methods of risk determination include prelodgement, review of the tax return, the reportable tax position schedule and the international dealings schedule. The question is: have the ATO got sufficient powers? I would contend that yes, they have. Of course they have. If they have not then let them prove their case.
What I am saying is that you do not just give the ATO more powers, and you do not just give everyone unfettered access to everyone else's information without having proper accountability. I would say to the government: think carefully before you do this stuff. Do not go down the path, time and time again, of knee-jerk reactions to populism like the member for Lyne. Think carefully about what needs to be done. But, most importantly, think carefully about what our competition is doing, because there are other places to invest in other than Australia.
If foreign corporations operating in Australia feel as though Australia is simply picking them out when no other jurisdiction, other than Denmark, is going down this path, then it is easy for them to move out, and that just costs jobs. And it could be the difference between a major operation continuing to manufacture in Australia or moving their operations overseas. It could be that little bit extra that makes it just a little bit harder to do business in Australia and tips the board to decide that it will go to New Zealand or South Africa or China or the United States or any other jurisdiction. This added burden of regulations, added burden of red tape—it just keeps adding, adding, adding to the difficulties of doing business in Australia. That is why we are sticking with our commitment to move amendments (2) and (5) as circulated in my name.
Just a couple of quick points. The member opposite began by saying that he had concerns for Australian businesses and how these transparency measures would impact on them. But then in the course of his discussion he quickly moved on to saying that if larger multinational businesses felt that they were somehow being discriminated against then they would not invest in the country. I think he should work out his line: whether he is here protecting small Australian companies that might inadvertently get caught in this measure, as he was suggesting, or whether he is talking about larger multinational companies.
One reason why this is important—the member for North Sydney talks about regulatory impact and the disincentives for businesses to come and set up here in Australia. One way you can discourage businesses to set up is to slug them with a big tax, a $20 billion paid parental leave tax.
It is relevant because one of the threshold tests for that tax is that you have to have a $5 million taxable income. As the member for North Sydney scurries out of the chamber, what he will not do is tell the Australian people who are the 3,000-plus companies that will be stuck paying that levy. In fact, he cannot tell the Australian people who they are because we do not actually know who they are. We do not know who the companies are that are going to be slugged with that tax. He came in here and said he is concerned about reputational damage to companies, yet he went through and named a handful of companies. If he is fair dinkum, his paid parental leave tax will slug businesses. We do not even know who is on that hit list. Who are those 3,000-plus companies? I tell you what: the Australian people deserve to know. They deserve to know when it comes to transparency.
Mr Deputy Speaker, I rise on a point of order going to relevance. Looking at amendments (2) and (5), I see no indication or relevance at all to paid parental leave schemes in relation to where the amendments to this bill are going.
Mr Deputy Speaker, I am being absolutely relevant. This is about tax transparency. They have a new tax they want to slug people with, and it goes to the question of eligibility. You pay that paid parental leave tax if you have a taxable income of $5 million or more. Now we do not know who those companies are, and maybe that is why the opposition are opposed this measure because they do not want the hit list of companies that they are going to slug with their paid parental leave tax to be known.
I can tell you that on the question of $5 million taxable income there will be multinational companies that do not qualify to pay paid parental leave tax, and there will be lots of small- and medium-sized Australian companies that will get slugged with this $20 billion tax. It is no wonder they are going to great lengths to try to conceal the identity of the 3,000-plus companies that will be on their hit list for their paid parental leave scheme. I reiterate the point I made earlier: do not come into this place and say, 'We want evidence that we need new powers for the tax commissioner to crack down on corporate tax loopholes,' and when we try to come up with a means of demonstrating that there is base erosion and profit shifting going on then say, 'Oh no, we don't think we can support this amendment.' They are not fair dinkum when it comes to tackling these corporate loopholes. We have brought measures into the parliament, they have opposed them every time. I am not surprised that they come in here again to oppose these measures once more.