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Thursday, 23 August 2001
Page: 26456

Senator MURRAY (10:24 AM) —I think it is important that I add my words of support. I want to congratulate the government on taking the view they have, and I particularly want to congratulate the Labor Party on these amendments because I think it is an excellent improvement to the law. The managed investments scheme scandal has been an eye-opener for all parliamentarians who have taken an interest in the issue. I think what has not been well enough understood sometimes is that there is sometimes, too, a distance between the designer of the product, the producers of the prospectus, the owners of the product and the methods of selling that are used. In some cases the selling is outsourced, and then highly improper pressure selling techniques are used. The consequences for taxpayer investors is that they become victims.

The importance of that, in my view, is as follows. At present, the circumstance of a taxpayer having their tax deduction disallowed, as per their self-assessment, is being put into part 4A circumstances where they get up to a 50 per cent penalty tax imposition and there was up to a 14 per cent compound interest rate imposition. I accept that, in all cases where a self-assessed tax deduction is disallowable, it should be disallowed. That is quite clear on the face of the law and the interpretation of the law that the ATO apply. To my mind, it is absolutely appalling that somebody who is a victim of cold calling or pressure selling techniques—which essentially turn their situation of advice into a highly improper and, I think, sometimes fraudulent, misleading and deceptive circumstance—should, on top of having a tax deduction legitimately disallowed, then have to pay a penalty tax and a compound interest penalty as well. Therefore, the establishment of the circumstance whereby ASIC can identify persons subject to a particular scheme or mass market investment approach as having been victims of an improper and misleading circumstance should therefore allow a relay on to the tax office that in those circumstances, for that scheme, these people were victims of a scheme and that, whilst it is all right to disallow their tax deduction, they should not be hit with penalty taxes and compound interest. That is the route I would go with this and I think this is a very important improvement on the law. So, again, my congratulations to the Labor Party and to the government for adopting this approach.

Amendments agreed to.