Wednesday, 19 September 2012
Tax Laws Amendment (2012 Measures No. 4) Bill 2012; Second Reading
The Tax Laws Amendment (2012 Measures No. 4) Bill 2012 contains yet another Labor Party grab for cash. There are three measures in this particular bill. It includes changes to the taxation treatment of living away from home allowances, it clarifies the GST rules applying to incapacitated entities and it ensures that the penalty and interest laws apply appropriately in the context of amendments due to the changed consolidation rights to future income law arrangements. The two latter measures can appropriately be described as largely technical tidy-ups. However, the first merger, the changes to the taxation treatment of living away from home allowances, is yet another Labor Party tax increase, this one to the tune of more than $1.8 billion.
To put a bit of context around the bill that is before us, this is a government that has stuffed up our public finances, as Labor in government invariably does.
This is a government which has spent too much, which is why it is always casting around for more cash either by jacking up taxes or by driving government debt up even further. This is a government that inherited a very strong budget position. It is a government which inherited a position with no government net debt, with a $22 billion surplus, with more than $70 billion invested in the Future Fund and with more than $70 billion worth of Commonwealth net assets. It is a story that Senator Conroy does not like to hear, because he knows that this government, which was elected on a promise of being economically conservative, has gone on spending spree after spending spree which, of course, has forced it to increase taxes by a very significant amount.
We have already had more than 26 new or increased taxes already and, despite the best terms of trade in 140 years for much of their period in government so far they have consistently been unable to balance the books, which is why we have had one new tax grab after another. We now have the Business Tax Working Group, which was asked to find ways of paying for a cut in the company tax rate by agreeing to increase taxes on other business activity. An agreement or not, according to business sources that are part of the consultations the government are going to introduce $6 billion in new taxes on top of all of the taxes that they have already introduced, with the targets to be, yet again, the resources industry and the superannuation entitlements of people who are doing the right thing and who are working hard to provide for their own self-funded retirement. This is a government that hates success and it is a government that has consistently come up with additional new taxes, targeting again and again those who aspire to help take our economy forward.
As if the $174 billion worth of accumulated deficits over the last four budgets is not enough, as if it is not enough that the government have already had to budget for almost $30 billion to pay for the interest to service the debts that they have so far accumulated in recent weeks, the Labor government have gone on one more spending spree after another. Even Senator Doug Cameron is asking: where is all the money coming from? Even he is now asking: how are you going to fund all of these spending commitments that you are putting out there?
When you get to a position where not even Senator Cameron has the trust in this government and the trust in the capacity of this government to pay for all of the promises that it has been making in recent weeks, you know that we well and truly have a problem.
We do know what the preferred way forward is for somebody like Senator Cameron and most of the people on the Labor Party side: invariably, it is to jack up taxes even further and expose the Commonwealth to more government net debt. And so it is with this measure here before us.
The government says in the budget paper for 2012-2013 that this is a measure to provide savings through the budget, but of course we do know that the use of the word 'savings' by this government, invariably, is code for tax increase. The government's handling of the changes to the living-away-from-home allowance, particularly its failure to consider the ramifications for 457 visa holders or to investigate more appropriate transitioning options is highly concerning. There are many people currently working in Australia on 457 visas who have made deliberate financial and career decisions to work here on the understanding and on the basis that they would be eligible for the living-away-from-home allowance under the existing taxation treatment. To remove this concession without warning will not assist in creating confidence amongst current and future temporary migrants.
The coalition recognises the impact of this bill on employers of local staff. The fact that the concession will be available only for 12 months will have an impact on domestic secondments, such as establishing business operations in a new location. The coalition believes the government should have been upfront and recognised that in many situations this bill will force employers to bear significant costs in order to offer competitive incentives to replace living away from home allowances. The impost on employers is substantial. This measure, according to the budget papers, will raise nearly $1.9 billion over the forward estimates period.
The coalition notes that the bill has been changed since its introduction. The current form of the bill reflects the careful input of coalition members of the review committee in the other chamber, with the result that the living away from home allowances and benefits are to be taxed only in the fringe benefits tax system without exposing employers and employees to potential compliance with the income tax law as well. The bill as originally introduced was further evidence that Labor's instincts are always wrong. They just do not get it when it comes to avoiding red tape. This is a government which is so out of touch with business and community organisations that last night yet again this government rammed a piece of legislation through the other place which will impose massive and significant additional red tape on our not-for-profit and charitable sector. This bill is really part of the same sort of agenda with a government that has already added more than 18,000 new regulations to the books since its election in November 2007.
Remember, Mr Acting Deputy President, that at a time far away and a long time ago we had a Prime Minister by the name of Kevin Rudd and he went to the 2007 election promising that he would cut red tape, that for every new regulation that was coming onto the books he was going to take one regulation off the books. It was the one-in, one-out policy so-called. But what we have had from this government is more than 18,000 new regulations which have been added to the books since its election in 2007.
The transitional rules to 30 June 2014 in this bill for employees with arrangements in place prior to 8 May 2012 have been clarified as a result of representations by coalition members to make certain that only a material change to the employment arrangement will cause employees to lose the benefit of the transition. The ATO's 2011-12 compliance program identified an increase in the use of remuneration by way of living away from home allowances. The 2012-13 compliance program will focus on assisting the community to understand the changes made in schedule 1 of this bill, which is something we do welcome.
The first of the other two schedules of this bill makes changes in relation to GST supplies by representatives who are creditors. The schedule to the bill amends the A New Tax System (Goods and Services Tax) Act 1999 to ensure that in circumstances where a representative of an incapacitated entity is a creditor of that entity, the correct provision of the GST Act is applied. This measure was announced in the 2011-12 budget and will start from the first quarterly tax period on or after royal assent.
The background to schedule 2 lies in a court decision in 2008. The court held that a company in liquidation and not the liquidator was liable for GST arising from a transaction made during the period of the liquidator's appointment. As a consequence of the court's decision, amendments were made to the GST Act. However, in given circumstances those amendments created more uncertainty in relation to the registration and reporting obligations of a mortgagee or other holder of a security interest. There was an overlap of two different sets of provisions which schedule 2 is intended to remove. Specific provisions will apply where a creditor is the holder of property given a security by the incapacitated entity and where a secured property is sold by the holder of the security in satisfaction of the debt owed by the incapacitated entity the holder will not be required to register for GST purposes in respect of each sale made under their power as mortgagee. Finally, the holder would report any GST payable on the sale of mortgage property in their usual business activity statement.
Schedule 3 relates to consolidation arrangements and amends schedule 3 to the Tax Laws Amendment (2012 Measures No. 1) Act 2012 to ensure that no interest is receivable if an overpayment of income tax arises because of a deduction under the prerules in part 1 of schedule 3 to that act, and also to ensure that no shortfall interest or administrative penalty is payable if additional tax becomes payable because an amendment to an assessment is made to the extent that the amendment is attributable to a deduction under the prerules in part 1 of schedule 3 of that act, until the interim rules in part 2 of schedule 3 of that act, et cetera.
The various dates specified refer to the period in which relevant corporate acquisitions happened. In relation to corporate acquisitions in the period between 12 May 2010 and 30 March 2011, I put the reasonable question on the record as to why these amendments made by schedule 3 were not included in Tax Laws Amendment (2012 Measures No. 2) Bill 2012, which controversially amended the tax consolidation cost-setting rules through retrospective legislation?
Schedule 3 will commence from 20 June this year under this bill, that being the day of Royal Assent of the Tax Laws Amendment (2012 Measures No. 2) Act 2012. In relation to overpaid tax, if an assessment is amended, say, to allow a deduction, the amendments in schedule 3 are aimed at denying the taxpayer any entitlement to interest from the Australian Taxation Office under refund of tax.
In his second reading speech the Assistant Treasurer made this point that also created uncertainty for some taxpayers:
… taxpayers who get deductions as a result of those changes to the consolidation regime do not receive interest in respect of tax they had previously overpaid. However, where interest has already been received by a taxpayer, the taxpayer will not need to pay back the amount received in most cases.
What does 'in most cases' mean? Perhaps in his short contribution to this debate Senator Conroy might be able to clarify that particular aspect of what the Assistant Treasurer has said? It is the only question I have put on the record here for you, Senator Conroy, so I hope that the officers here are able to assist you with this.
I observe that the hallmark of this government, through its incompetence and unpredictability, is to inflict uncertainty upon business investors and the Australian public. Whilst the coalition would not have undertaken the measures, and particularly the first measure, contained in this bill in the way the government has in the current political and economic environment, and in the current fiscal environment created by this government, the coalition will not oppose these changes.
I thank the senator for his contribution. I am just checking if we have any information that we can give you on that matter. It may require me to talk a little longer than we would perhaps have expected while I am seeking that information. I am sure you will be understanding, Senator Cormann. I am sure you do not want me to start talking about the football on Saturday night, but I could not possibly let the opportunity pass to draw to your attention the result of the Collingwood-West Coast Eagles match, and wish you commiserations on an excellent season.
I am advised that if the interest they receive rightly relates to the changes made by the previous bill they will be entitled to keep it; if unrelated, they will not. I hope that rests your concern. Having passed on that information, I commend the bill to the chamber.
Question agreed to.
Bill read a second time.