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Monday, 13 February 2012
Page: 1009


Mr BUCHHOLZ (Wright) (16:36): Before I address the issues before us I will pick up on a couple of the issues raised by my good friend the member for Parramatta. The member for Parramatta spoke briefly about cost-of-living pressures. I am on record as saying that my electorate of Wright is one of the weathervanes of the nation. I have no linkages into the resources sector whatsoever, so my hypothesis is that it is only a matter of time before the pain we feel at the moment flows through to the rest of the market. I reassure my colleagues that the cost-of-living pressures that are out there at the moment are absolutely horrendous, and for this government to be dismissive of the idea that those pressures exist in my electorate is uncalled for.

The member for Parramatta went on to criticise the coalition for not giving support to the car industry or the aluminium sector. Today I had the opportunity to read a couple of documents. I was trying to get my head around this whole car industry manufacturing process. I read some comments from a Holden executive. He had some scathing comments, saying that up to a third of his workforce struggled to roll up to work, for one reason or another. He said his ability to respond to that was hampered by union intervention. He went on to speak about the lack of efficiency in the car industry. That is one argument, but I will put that aside for a moment. I do acknowledge the impact of the increase in the Australian dollar on the industry. That has an impact on anyone who is trying to export products out of this country.

We have a car manufacturing industry which is non-productive, so the government is throwing some subsidies at it to try and get them over the line. In addition, the government is then going to put its hand in its other pocket for the car industry—between 2012 and 2020, carbon credit payments to the car industry alone will be in the vicinity of $450 million. Notwithstanding that, in 2012, in the year that the carbon tax is introduced, for Alcoa, which has two sites, that payment will be $40 million, and it will increase exponentially as the carbon price of $23 per tonne increases. I thought I would put that on the table. I would be quite happy to take it up with the member for Parramatta at a later stage. It just bewilders me when we talk about supporting an industry on the one hand and then the government puts its hand into the pocket of the same organisation and calls it support.

The Tax Laws Amendment (2011 Measures No. 9) Bill 2011 makes the following changes to the taxation laws. It allows certain superannuation fund members to electronically request consolidation of their super funds through the Australian Taxation Office. It allows entities in a restructure to use shares or interest sales facilities without failing a requirement of certain capital gains tax rollovers. It provides capital gains tax demerger relief. It expands capital gains tax rollovers to entities changing their incorporation. It implements aspects of the Treasury's review of the GST financial supply provision. Additionally, it clarifies the GST treatment of new residential premises, adds the Rhodes Trust to the deductible gift recipients list and, finally, makes other minor and technical changes.

In Schedule 1 it allows certain superannuation fund members with lost super to more easily consolidate their funds through the use of one or more electronic portable forms. The form is submitted electronically at the ATO, which can then verify the status of lost money and the eligibility of the nominated receiving account. The coalition believes this to be a sensible initiative to streamline the process of re-uniting lost super funds with their owners. There would not be too many people in this room who, before either entering politics or working in the government, did not have some other forms of employment. In particular, our youth below the age of 25 change their jobs often. It used to be that we had five major career changes in our life. People below the age of 25 are already up to their third career change. They are not staying in the workforce as long as our fathers did. As a result this measure makes it easier for those people who have chopped and changed jobs to get access to their superannuation.

While we are on the issue of superannuation: the member for Blair spoke about the increase of super contributions from nine to 12 per cent. The government take the position that this is a wonderful initiative that they are putting in place. When I speak to my businesses they are horrified because they cannot see where the relief from the federal government is coming from to assist them with the increase in super from nine to 12 per cent. Yes, there is a one per cent reduction in their company tax rate from 30 to 29 per cent but, even when questioned in estimates, the Real Estate Institute of Australia indicated that the three per cent increase in superannuation contribution by the businessperson, by the small mum and dad, was not going to be covered by the one per cent. You cannot have your cake and eat it too. You cannot call this a Labor initiative and say that you are out there helping business when really, at face value, you are again putting your hands into the pockets of businesspeople, mums and dads, who are trying to employ people and you are asking them to pay for the increased contribution.

Part 2 of the schedule is about the share sales facilities. These are entities used in dealing with foreign interests during the sale or restructuring of a company. The foreign interest holds ownership and transfers to the share sales facility, which deals with the holdings during the sale or the restructure and then returns the cash or the new assets for the foreign interest holder. The share sales facility is primarily used to avoid complex foreign tax laws and unintended taxation consequences in restructuring companies. The existing owners are given significant capital gains rollover relief where a structure results in those owners holding substantially the same interest in the new entity. However, where there is a sale facility that is required to be used, the CGT rollover is not available to the foreign interest holders because the actual sale or the restructure was completed by the facility rather than by the foreign interest holder. This has acted as an impediment to restructuring and what would otherwise have been of benefit to the company and its shareholders. The change in this bill will allow foreign interest holders, who are otherwise eligible for capital gains rollover, to relief. With the restructure of the company, where the share sale facility has been used to effect the actual restructure, the law will treat the share sale facility to track the actual ownership before and after the restructure.

Under the capital gains tax demerger relief in schedule 2, part II, taxpayers can choose to obtain a capital gains tax rollover for a capital gain or capital loss that arises in their interest as a company or trust, because of the demerger of an entity from the group of companies. This is not a bad one. Basically, when you speak about a merger, you have two entities that may have separate assets but for argument's sake may have a combined balance sheet. When those companies decide to demerger it allows ease for the capturing of the capital gain. It is not susceptible at that point. The main part of the business that is retaining the assets does not have a huge bill as part of their operational cost. That one does make sense.

Schedule 2, part III, 'Capital gains tax business restructures', will allow the Indigenous bodies to incorporate under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 without immediate capital gains tax consequences for the body members. As part of the Economics Committee we last year toddled up to the north of Queensland and caught up with a number of Aboriginal communities. It is hard to get them all in the one spot at the one time. They have different asset groups. This bill did not come as a result of that trip but I can assure you that this part of the legislation will assist those communities in trying to be more of a united front with reference to how they present themselves as a community. There is resistance in the north for that to happen at this point in time. There are some significant assets held by different communities and under the current taxation rulings transferring assets from one body to another does include some capital gain. This gives the capacity to merge those assets without any unintended consequences.

Schedule 3, the GST financial supply provision, increases the first limb of the financial acquisition threshold from $50,000 to $150,000. This increases the dollar value of the tax input credits available for acquisitions related to the making of financial supplies. The schedule includes financial supplies consisting of borrowings that are made through a provision of the deposit account from an ADI and the current concession for borrowing. The schedule allows taxpayers who account on a cash basis to claim input tax credits for acquisitions made under a hire purchase agreement upfront. This removes the distortion that currently exists between hire purchase and other forms of financing. Predominantly it is just the difference between a chattel mortgage and an HP. One of them provides you with access to draw back down after your first payment—your GST credit. Small businesses often use that as cash flow to pump back through the business. It is a bit of a false economy because you are virtually still financing your business on borrowed coin, and there is a cost associated with it. I assumed they looked at this because of title or the ownership of a lease—whether it be a truck or any type of unit such as that. If title is with the business holder then there is the capacity for depreciation to be claimed back immediately. If it is with HP or a lease, title remains with the financier and those incentives are not available.

Schedule 4, the GST treatment of new residential premises, seeks to ensure that the sales of long-term leases of new residential premises by a registered entity are a taxable supply, subject to the GST at the time of sale. For that sale—or long-term lease for residential premises, other than new residential premises—input tax applies and it is therefore not subject to GST at the time of the sale under the goods and services tax. The changes clarify the intent of the law after the full Federal Court's decision in Commissioner of Taxation versus Gloxinia Investments (Trustee), which found that the sale of the new residential premises using a development lease arrangement should be treated as input tax. This is not subject to GST. These outcomes are contrary to the general policy intent in relation to the taxation of property under the GST Act.

Schedule 5 speaks about the adding of the Rhodes Trust to the list of deductible gift recipients. The Rhodes Trust raises funds to augment the existing Rhodes Scholarship Program at Oxford. All monies are used to provide scholarships to Australians to study at Oxford University. The member for Parramatta also said that basically any donation that is given to that trust becomes tax deductable under the bill, and that is a good thing. Schedule 6 is just a rats and mice one—miscellaneous amendments to the tax laws.

The bill makes technical corrections and other minor and miscellaneous amendments to the taxation laws. The coalition sees no serious issues with this legislation and does not intend to oppose it. I believe the provisions of the bill are to be applied as of 1 July 2012, and I am pleased to associate myself with the bill.