Mr ANOULACK CHANTHIVONG (Macquarie Fields) (11:04): I lead for the Opposition in debate on the State Revenue and Fines Legislation Amendment (Miscellaneous) Bill 2022.
Our taxation system is based on the public's confidence that every taxpayer is treated fairly and consistently, everyone plays by the rules and everyone pays their fair share of taxes owed to the public.
Our tax system is greatly undermined, however, if individuals or organisations engage in outright non-payment of their liable tax, apply aggressive tax avoidance schemes or work the system to receive concessions or exemptions to which they are not entitled.
We are a law‑abiding citizenry. Australians would be and are appalled by those who do not pay the fair share they owe to their fellow citizens through the taxation system.
The bill has been presented as an integrity measure to close tax loopholes and provide greater clarity in the current legislative framework.
Taking out the legislative ambiguity is aimed at preventing legal disputation and litigious actions for both the State and the individuals involved. Litigation is costly in time and finances for all parties involved, with the only winners being the legal fraternity and their increasing billable hours.
In addition, schedule 8 seeks to deter and "prohibit" individuals and organisations from the "promotion of tax avoidance schemes".
As verbally tempting as it is, I will not regurgitate the Minister's 28-page second reading speech, which was tabled, I might add, rather than read, as is traditionally required and expected.
However, a number of the integrity measures in the bill are worth pointing out.
I note, for example, that schedules 2 and 3 deal, among other things, with the removal of the power to enforce imprisonment of a fine defaulter. I am advised that such powers have never been exercised and are not likely to ever be exercised. Further, any enforcement of the imprisonment powers would disproportionately impact more socially and economically disadvantaged groups. Such punitive measures would be and are likely to be disproportionate to the offence of defaulting on a fine.
Individuals might be experiencing economic challenges at any point in time for a range of complex personal, employment, emotional or psychological reasons that would prevent them from meeting their infringement financial payments. The use of a supervised work and development scheme is a much more suitable, fairer and effective way for an individual to repay their fine if they are unable to meet the financial requirements.
For the vast majority of Australians, their first property is the biggest asset they will acquire in their lives and will take the longest time to pay off.
The First Home Owner Grant scheme assists first home buyers, who would predominantly be younger Australians, to enter the housing market and own their personal slice of Australia. Eligibility to receive duties concessions is based on the estimated value of the home or land being purchased.
To maintain the scheme's integrity, schedule 4 has been amended to ensure that eligibility is based on when a contract is completed, not when it is made. The semantic change from "a contract made" to "a contract completed" is significant. This measure prevents post-contract variations being made, which potentially result in the purchase price threshold being surpassed and thereby affect an applicant's eligibility for the grant. Applicants who have made post-contract variations that put their purchase values beyond the threshold and received the duties concession would be rightly required to pay it back.
Despite the positive measures and the bill's well-intended purpose as an integrity measure in closing loopholes and deterring tax avoidance activity, it should be recognised that sometimes, in drafting legislation, the intention does not always produce the required result.
An unintended gap can occur between the policy objectives and the way legislation can be interpreted, especially when ambiguity exists or at least is perceived to exist. Such a scenario could lead to increased litigation and disputation, which is opposite to the bill's original intention of providing greater clarity and consistency in the administration of duties, fines and revenue legislation.
In my consultation with stakeholders, I raised a number of issues to gain a better understanding on some sections of the bill that would be likely to cause greater debate. I was delighted to hear suggestions from stakeholders on how the bill could be interpreted and its potential impact, both intended and unintended, on taxpayers.
The concerns raised with me fall into three main categories. I will deal with them individually.
Firstly, I understand that the Duties Act 1997 amendments represent a material expansion and broadening of the tax base—that is, it would cover more transactions and taxpayers than originally envisaged.
I am advised that also applies, for example, to the Acknowledgement of Trust declaration now also being a dutiable transaction. The proposed changes in beneficiary ownership liable for duties represents a new category of dutiable transactions.
For example, property transactions covering the granting of options on a property or a lease or security interest, which are currently excluded from duties, may now become dutiable transactions. In addition, the excluded or exempted duties transactions list is at this stage incomplete and not detailed in the legislation. This scenario creates uncertainty as to what future transactions could now become dutiable. It would provide greater clarity if the legislation provided a much more explicit list of transactions that were exempt, rather than through the use of regulations.
The second issue relates to the use of regulation rather than the tabled legislation containing the details. Whilst regulation as a mechanism can provide great flexibility, it is this same flexibility that creates uncertainty and potentially increases administrative costs for taxpayers.
Regulation does not go through the same level of oversight, scrutiny and public or parliamentary debate as legislation. Any political change in government or ministerial responsibility could result in rapid regulation changes, which could catch taxpayers unaware.
For example, the lack of a completed exempt transaction list in the legislation means that regulation can be used to amend the list, and of particular concern is the expansion of newer dutiable transactions. Such a scenario adds heightened market risk for property-related transactions and compliance administrative costs for taxpayers.
It has been suggested to me that if the bill was never intended to cover specific property transactions, then it is better to have those detailed in the legislation rather than through regulation. This will provide greater clarity and will limit any potential unintended overreach of the bill.
The last major concern relates to how the Taxation Administration Act 1996 amendment could potentially capture professional tax advisers who are not involved in actively promoting a tax avoidance scheme but merely providing commercial transaction advice.
I understand that the removal of the words "artificial, blatant or contrived" requirements from the Duties Act significantly expands the scope of professional advice activities, which could potentially come under tax avoidance provisions. That could also result in penalties being imposed.
It could be difficult for professional advisers to define and navigate the difference between advising about a scheme, versus promoting a scheme. The former activity could lead to a professional adviser being inadvertently captured as promoting tax avoidance, despite that not being the original intention of the advice.
Further, defining a scheme to include in section 106H (1) (b) "a scheme, plan or proposal whether implemented or not" has the potential to restrict discussion, debate and advice on property proposals or transactions with potential tax implications. However, I acknowledge that section 106N (3) provides that a person is not considered a promoter of a tax avoidance scheme if a person provides advice or distributes information or material about the scheme prepared by another person.
Nevertheless, there is certainly some debate and contestability about the untested definition of what constitutes advice or promotion that has caused angst amongst some stakeholders. The consequence is that professional advisers would be reluctant to provide efficient, clean sign off on transactions, creating market inefficiencies and delays and add additional compliance and administrative costs to the taxpayer.
In light of my comments and discussions with stakeholders I believe it is worthwhile for a 24-month statutory review of the proposed amendments in the bill. This will ensure that the policy and legislative intentions are one and the same. The review need not cover all legislation in the bill, only the Duties Act 1997.
I add that within the Duties Act the focus is on the change in beneficial ownership and the declaration of trust. It does not necessarily need to review, for example, the ambulance or pet insurance surcharge, because they are not really areas of contention. It is those two in particular within the Duties Act, and also the Tax Administration Act, which covers the points around tax avoidance that I have commented on.
Labor does not oppose the bill but will move an amendment for a statutory review on those two areas of legislation.
I thank all stakeholders, the Minister's office — which helped coordinate some of the amendments that Labor is proposing — and his staff, in particular Rebecca Kazzi, who has given up her time.
At the conclusion of the debate I look forward to moving the amendments for the statutory review.
Mr ANOULACK CHANTHIVONG (Macquarie Fields) (12:27): By leave: I move Opposition amendments Nos 1 and 2 on sheet c2022-042B in globo:
No. 1 Statutory review—Duties Act
Page 8, Schedule 1. Insert after line 43—
[28A] Section 317
Omit the section. Insert instead—
317 Review of amendments by State Revenue and Fines Legislation Amendment (Miscellaneous) Act 2022
(1) The Minister must review the amendments made to this Act by theState Revenue and Fines Legislation Amendment (Miscellaneous) Act 2022 to determine—
(a) whether the policy objectives of the amendments remain valid, and
(b) whether the terms of the amendments remain appropriate for securing the policy objectives.
(2) The review must be undertaken as soon as possible after the period of 2 years from the date of assent to theState Revenue and Fines Legislation Amendment (Miscellaneous) Act 2022.
(3) The Minister must table a report on the outcome of the review in each House of Parliament within 12 months after the end of the period of 2 years.
No. 2 Statutory review—Taxation Administration Act
Page 28, Schedule 8. Insert after line 40—
[9A] Section 128
Omit the section. Insert instead—
128 Review of amendments by State Revenue and Fines Legislation Amendment (Miscellaneous) Act 2022
(1) The Minister must review the amendments made to this Act by theState Revenue and Fines Legislation Amendment (Miscellaneous) Act 2022 to determine—
(a) whether the policy objectives of the amendments remain valid, and
(b) whether the terms of the amendments remain appropriate for securing the policy objectives.
(2) The review must be undertaken as soon as possible after the period of 2 years from the date of assent to theState Revenue and Fines Legislation Amendment (Miscellaneous) Act 2022.
(3) The Minister must table a report on the outcome of the review in each House of Parliament within 12 months after the end of the period of 2 years.
I refer to my comments in my contribution to the second reading debate.
The DEPUTY SPEAKER: The question is that the amendments be agreed to.
Amendments agreed to.
