Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Hansard source

Labor supports the Treasury Laws Amendment (2018 Measures No. 1) Bill 2018. This bill deals with five relatively uncontroversial matters: an issue on regulatory reform, allowing the tax commissioner to pay certain superannuation amounts to individuals with a terminal medical condition; extending tax relief for merging superannuation funds; increasing the APRA levy to cover funding for SuperStream gateway governance; transferring responsibility for the early release of superannuation from the Department of Human Services to the Australian Taxation Office; and payment of GST on taxable supplies of certain real property.

Schedule 1, on regulatory reform, includes amending the superannuation laws to enable the tax commissioner to pay certain superannuation amounts directly to individuals with a terminal medical condition, rather than it needing to be paid to the fund, who then pays it to the person; amending the Corporations Act 2001 to modify the notification and reporting obligations applying to certain corporations that have property in receivership or property in respect of which a controller is acting; and repealing several inoperative acts as well as amending the taxation law to remove a number of inoperative or spent provisions.

Schedule 2 relates to extending tax relief for merging superannuation funds. The transfer of assets from one super fund to another leads to the realisation of capital gains and/or capital losses. This can act as an obstacle to a superannuation fund merging with another fund, because the trustee has to take into account a potential reduction in the superannuation interests of its members when considering a merger. Through a series of government decisions, tax relief has been extended to merging funds since December 2008. This bill will extend the relief further, to 1 July 2020. The measure was announced by the government in the 2017-18 budget.

Schedule 3 will amend the APRA Act to enable the government to recover the ongoing costs of the governance of the superannuation transaction network SuperStream from the supervisory levy. It was Labor that first introduced SuperStream, following on from the 2010 Cooper review. SuperStream transmits money and information consistently across the superannuation system between employers, funds, service providers and the Australian Taxation Office. Before it existed, many transactions were processed manually, and the cost could be $5 or $10 a transaction.

Nowadays, over 80 million transactions a year are processed in a standardised digital form connecting around 800,000 employers, 200 APRA-regulated funds and 350,000 self-managed superannuation funds. SuperStream allows employers to make all their contributions in a single electronic transaction, including to multiple superannuation funds. It allows contributions and rollovers to be processed faster, more efficiently and with fewer errors. And it allows people to be more reliably linked to superannuation, reducing lost superannuation accounts and unclaimed money. The review conducted last year into SuperStream found that it had led to lower costs, ease of operation in the superannuation system and increased retirement savings. Members could now complete a rollover in three days, compared to an average 45 to 60 days previously.

Schedule 4 to the bill transfers the regulator role for early release of superannuation benefits on compassionate grounds from the Chief Executive Medicare to the Commissioner of Taxation—that is, from the Department of Human Services to the ATO. Currently, the Department of Human Services has responsibility for early release of super. However, it does not administer any other program within the superannuation system and the program is not aligned with its core service delivery arrangements. The ATO administers several of the programs relating to the release of superannuation benefits. The transfer to the ATO is intended to build on this existing relationship and to streamline the process for the early release of superannuation benefits for both individuals and superannuation funds.

I turn now to schedule 5, which deals with phoenixing in development projects by amending the Taxation Administration Act 1953, the Income Tax Assessment Act 1997 and the GST act to require purchasers of new residential premises and new subdivisions of potential residential land to make a payment of part of the purchase price to the ATO. Currently, supplies of new residential premises are generally subject to GST. The supplier remits the GST to the ATO in the next BAS. This can be up to three months after settlement. The withholding tax being collected in this manner fits with existing conveyancing processes.

One of the main forms of noncompliance with these obligations involves developers selling properties for a purchase price that reflects the GST obligations but then dissolving their business before the next lodgement to avoid remitting the GST. This, of course, is a form of phoenixing. Phoenixing to avoid paying GST has grown significantly over the last decade. As at November 2017, the ATO had identified 3,731 individuals actively involved in this activity over the last five years. These individuals controlled over 12,000 insolvent entities responsible for $1.8 billion in debt that has been written off. These insolvent entities also claimed $1.2 billion of input tax credits between 2013 and 2017. The cost of phoenixing was estimated in 2012 at $3.2 billion annually. This is probably an underestimate. The government has received updated costs of phoenixing as at 2015 but has yet to publicly release them.

My colleagues in the other place moved a second reading amendment that makes clear that the government has been lax in its action on phoenixing activity more generally. Labor announced in May last year that we would crackdown on dodgy directors through putting in place, among other things, a director identification number. Despite the government announcing that it would introduce a director identification number, we are yet to see the government take action.

We have had a suite of organisations from across the political spectrum calling on this government to act urgently on a director identification number. When the Australian Institute of Company Directors, the Australian Small Business and Family Enterprise Ombudsman, the Productivity Commission, the Tax Justice Network, the Australian Chamber of Commerce and Industry, Master Builders Australia, the Australian Council of Trade Unions, the Australian Restructuring Insolvency and Turnaround Association, the Australian Institute of Credit Management, the Phoenix Project from the University of Melbourne's law school and Monash University's business school call upon the government to introduce a director identification number, you've got to wonder when they are finally going to act. If the Turnbull government had acted on director identification numbers when we called on them to do so in May last year, they would be law already and phoenix directors would no longer be engaged in the dodgy activity of burning their firms and hurting workers, taxpayers and honest small businesses.

While we support the government's measures on phoenixing by developers to avoid GST, we urge them to go further and crack down on phoenix activity, as the Australian community demands, and reduce the cost of this to the community and the heartache that it imposes on workers, taxpayers and honest businesses.