Thursday, 14 May 2020
Treasury Laws Amendment (2020 Measures No. 1) Bill 2020; Second Reading
That this bill be now read a second time.
I seek leave to have the second reading speech incorporated in Hansard.
The speech read as follows
This Bill contains two measures that maintain the integrity and efficient operation of Australia's tax system.
Schedule 1 to the Bill amends the Income Tax Assessment Act 1997 to extend the definition of a Significant Global Entity (SGE) to include members of large business groups headed by proprietary companies, trusts, partnerships, investment entities and individuals.
SGE is a concept to define, generally speaking, a group of entities under the control of a large multinational. Such groups are a key focus for tax authorities to prevent profit shifting.
Many of the significant measures undertaken by this Government to tackle multinational tax avoidance rely on the SGE definition. These include the Multilateral Anti-Avoidance Law, the Diverted Profits Tax, and penalties applying to false or misleading statements, late lodgement of documents or tax schemes. SGEs are also required to prepare and submit general purpose financial statements to the Australian Taxation Office.
Extending the definition will ensure that multinationals cannot structure to avoid our multinational tax integrity rules, which remain amongst the strongest in the world.
Schedule 2 to the Bill makes permanent the current temporary capital gains tax relief for merging superannuation funds, which is otherwise due to expire on 1 July 2020. The current arrangements remove unnecessary impediments that would otherwise apply to mergers by allowing superannuation funds to transfer revenue and capital losses to a new merged fund and to defer taxation consequences on gains and losses from revenue and capital assets.
Extending the relief will give fund trustees certainty when planning merger activity and will provide wider benefits to fund members and the superannuation system as a whole through increased fund scale and efficiencies.
The measure implements Recommendation 21 of the Productivity Commission's final report, Superannuation: Assessing Efficiency and Competitiveness.
Full details of the measures included in this Bill are contained in the Explanatory Memorandum.
This bill seeks to amend the Income Tax Assessment Act 1997. Schedule 1 of the bill expands the definition of a significant global entity. This measure will ensure that certain entities that are not captured by the definition, including trust partnerships and investment entities, are covered by particular reporting requirements and multinational tax avoidance laws. Schedule 1 also ensures that entities comply with Australia's international commitments as part of the OECD's base erosion and profit shifting action plan.
Schedule 2 of the bill amends various acts to make permanent certain forms of tax relief for merging superannuation funds—forms of relief that are currently temporary. This was a recommendation of the Productivity Commission's 2019 report into superannuation and will make mergers between superannuation funds simpler.
I rise to make the point that commitments to making multinationals pay their fair share of tax are immensely important. We welcome international companies operating in Australia. So many Australians benefit from their operations, receiving jobs. They're an important part of our economic infrastructure. But let's be clear that these same companies benefit a great deal from the government services that make it possible for them to hire well-educated and skilful staff; the government services that provide terrific transport infrastructure that allows product to be moved around the country; the government investment in infrastructure that means that telecommunications facilities are available; the government investment in health care and health infrastructure which has proven so important in COVID-19 and ensures that the Australian workforce is healthy. These things, alongside our legal system and the institutions that sit around that, absolutely support the economic activities of these companies. It is not unreasonable to ask those companies, when they are in Australia, to pay their fair share of tax. But the government really drags its feet on this. I note that many of the provisions in this bill have been the subject of repeated inquiry, investigation and recommendation by the Senate economics committee.
The average Australian worker pays 25 per cent of their income in tax, but it was reported in 2018 that one-third of large Australian companies paid no tax at all. Data issued by the Australian Taxation Office showed that 722 out of the 2,119 companies examined failed to pay any tax in the 2016-17 tax year, and the companies that paid no tax included 100 firms that reported more than $1 billion in total income. Those opposite voted against Labor's tax transparency laws in 2013—laws which would have enabled us to better understand the extent of tax avoidance. Everyday Australians pay their tax, and they expect large companies to be held to the same standard.