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Wednesday, 9 November 1983
Page: 2475


Mr LUSHER(12.04) —I want to contribute to this debate because the provisions contained in the clauses of this Bill are of significant concern to me. I am especially concerned at this time about two clauses in this Bill. One involves the removal of sub-section 3 (12). The Bill seeks to ensure that the recoupment will not be avoided because a tax avoidance scheme which was related to the sale proved to be unsuccessful. The second concern I wish to address at this time is the fact that the clauses of the Bill seek to remove the necessity that a scheme or an arrangement had to be involved before recoupment liability could be established. That is the so-called stripping amendment. I want to make it totally clear that the attitude of the Opposition in relation to this matter is that we hold very firmly to the position we held when we were in government. The legislation introduced by the then Treasurer in 1982 was deliberately restricted. It was deliberately limited so that it would recover unpaid company tax from vendor-shareholders who had received a financial benefit because of the non-payment of the company tax. That was what that legislation was designed to do, and that is the position we continue to support in the debate on the clauses of this Bill.

The 1982 legislation achieved that position without creating any penalties and without creating any situation of discrimination between taxpayers. The position we adopted was totally clear: If there was no benefit, there was no assessment. The position we adopted in 1982-which we hold to-was that the benefit that came to a vendor-shareholder had to have been derived from an illegal act which was designed to render the company concerned unable to meet its taxation liability. That is a very important position of principle to adopt and to hold to because if one does not hold to that principle a whole range of other things can become covered by the legislation. In fact, the amendments to the clauses in this Bill before the Committee at the moment have that effect. That is what concerns me. I repeat that our position was that there had to have been a benefit which resulted from an illegal act designed to render the company concerned unable to meet its taxation liability. The clauses in this Bill remove that provision so that people who acted totally legally can suddenly find themselves the subject of this legislation. That is of serious concern to me and ought to be of concern to everybody in this Parliament who is concerned about any sort of justice, equity and fairness in relation to taxation.

Let me talk about this sub-section 3 (12) matter. The Bill seeks to ensure that the recoupment will not be avoided because a tax avoidance scheme that related to the sale of the company proved to be unsuccessful. The reason the then Government put in sub-section 3 (12) was to ensure that companies which did not go to the bottom of the harbour would not be caught in the legislation. That is an entirely proper position to have adopted. As I said in my preliminary remarks in relation to this matter, we were concerned to pick up those people who had received a benefit from the fact that a company had been rendered unable to meet its taxation liability through some totally improper transaction. That provision was included to ensure that a company that was rendered unable to meet its taxation liability for some reason other than being sent to the bottom of the harbour would not be caught in the legislation. As far as I am concerned the Government has not justified why there needs to be some change to that. I want to know whom the Government is after and whom it is seeking to bring into the net.


Mr Robert Brown —The beneficiaries.


Mr LUSHER —The beneficiaries of what?


Mr Robert Brown —Of the arrangements.


Mr LUSHER —Of what arrangements? Of legal arrangements? The Minister Assisting the Treasurer (Mr Hurford) is saying that this is designed to bring into the net people who received some benefit from a legal arrangement.


Mr Hurford —I did not say that.


Mr LUSHER —The Minister did say that. That was what he said and that was what the honourable member for Hunter (Mr Robert Brown) said. The honourable member for Hunter is saying now that the Government is trying to pick up people who are involved in totally legal taxation arrangements. That is what it is all about and that is why the Opposition is concerned about it. I want to know what the estimates are. The Treasurer (Mr Keating) in his second reading speech said that the strengthening provisions are designed to pick up another $40m. I ask the Minister Assisting the Treasurer to explain to this Committee in the course of the debate on these clauses how that $40m is made up. Who is the Government picking up for entering into arrangements which were perfectly legal at the time and which, I suggest, are perfectly legal even today? People receiving a benefit under such arrangements today, even if the company concerned has not gone to the bottom of the harbour, will be picked up in the scenario of this legislation. That is the sort of rubbish we are asked to deal with. How is that $40m made up? I ask the Minister Assisting the Treasurer to explain to this chamber who is being picked up to provide the Government with this additional $40m, if that is the figure that relates to the strengthening provisions.

This legislation is viciously retrospective, and it is newly so. It is not retrospective in the same way as the original legislation was. The Government is picking up people who were not picked up in the legislation introduced by my colleague the honourable member for Bennelong (Mr Howard) when he was the Treasurer. This did not appear until this legislation came before the House this year. It is newly retrospective and it ought to be seen as such. The Government ought to be nailed to the wall for what it is doing in relation to this legislation.

The benefit accrued to vendor-shareholders not because a company was rendered unable to pay its tax liabilities; the benefit came through the use of quite legitimate arrangements, most of which still exist. If a company, for argument's sake, was involved in some sort of a water scheme or a film scheme there could have been a benefit to vendor-shareholders which resulted from a quite legal arrangement, and the Government is trying to pick that up now and include it in the legislation. That is what I challenge the Government on and that is what I am concerned about in respect of this legislation. Government members have to stand up and be counted.

The second point that concerns me is the intention of the Bill to remove the necessity that a scheme or an arrangement has to be involved before a recoupment liability can be established-that is, what we call in this debate the stripping amendment. This amendment seeks to weaken the qualification that is necessary before a person can be picked up by this legislation. When we were in government we were quite specific about what companies and what benefit would be the subject of the recoupment legislation. This amendment broadens the number of cases that could be covered. It opens up all sorts of avenues that the Government has not considered or explored and certainly has not explained to this Parliament.

The Minister Assisting the Treasurer has argued that the test is unnecessary because three other tests ensure that the only cases picked up are bottom of the harbour cases. My colleague the honourable member for North Sydney (Mr Spender) outlined the absolutely ridiculous nature of the suggestion that because of these three tests to which the Minister referred no other cases can be picked up if this stripping amendment is accepted. The fact of the matter is that other cases can be. The amendment opens up a whole class of new taxpayers who can be the subject of this legislation and who were never intended to be the subject of the legislation.

That brings in another element of retrospectivity; people who were not involved in a scheme or an arrangement can now be picked up by this legislation. Those people are retrospectively being confronted with the possibility of being assessed for some liability. That again is retrospective, and it is newly so. It is not part of anything that was put before this House in the earlier legislation. The Minister now seeks to say: 'We are taking that provision out because there are these other three tests'. Each one of those three tests has been demolished by the honourable member for North Sydney. The Government must justify its stance and argue why the honourable member for North Sydney is wrong . The Government must justify-at least to satisfy me-why it is necessary for this stripping provision. Taxpayers who previously were not covered by this legislation will now be covered. I shall refer back to some of these matters before this debate is over.