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Monday, 11 February 2013
Page: 669


Mr BILLSON (Dunkley) (16:38): by leave—I move amendments (1) and (2) circulated in the member for North Sydney's name:

(1) Clause 2, page 2 (before line 1), at the end of the table, add:

4. Schedule 4

The day this Act receives the Royal Assent.

(2) Schedule 1, page 16 (after line 15), at the end of the Bill, add:

Schedule 4—Excess contributions tax

Income Tax Assessment Act 1997

1 Subsection 292 -465(3)

   Repeal the subsection, substitute:

(3) The Commissioner may make the determination only if he or she considers that:

   (a) both of the following apply:

      (i) there are special circumstances;

      (ii) making the determination is consistent with the object of this Division; or

(b) the taxpayer has made an inadvertent error that caused them to have *excess concessional contributions or *excess non-concessional contributions for the relevant *financial year.

2 Subsection 292 -465(4)

   Omit "In making the determination", substitute "In making a determination for the purpose of paragraph 292-465(3)(a)".

3 After subsection 292 -465(6)

   Insert:

   (6A) In making a determination for the purpose of paragraph 292-465(3)(b), the Commissioner may consider the following circumstances when considering whether the taxpayer made an inadvertent error:

   (a) whether the taxpayer has more than one employer;

   (b) whether contributions were made by the taxpayer's employer, at a time that was earlier than the time that the taxpayer expected;

(c) whether contributions were made by the taxpayer's employer, at a time that was later than the time that the taxpayer expected;

   (d) whether the taxpayer received an unexpected bonus payment that had an impact upon the amount of his or her contributions;

(e) whether the taxpayer received a redundancy payment that had an impact upon the amount of his or her contributions;

   (f) whether the amount of the *concessional contributions caps changed at a time after the taxpayer had entered into a salary sacrifice arrangement;

(g) whether the taxpayer's contributions for a *financial year were processed by the *complying superannuation plan at a time after the end of the financial year;

   (h) whether the taxpayer received incorrect advice from a *recognised tax adviser or other professional adviser on whose advice it was reasonable for the taxpayer to rely;

(i) any other circumstance that the Commissioner considers appropriate.

As I outlined in my second reading speech contribution, whilst the coalition is supportive of the measures contained within this bill, we have sought to highlight a particular area of concern that relates to excessive penalties that may arise from inadvertent breaches of some of the rules we have debated in these bills. The Australian Tax Office argues that it does not have the discretion to allow taxpayers to correct inadvertent errors which lead to the breaching of either concessional or non-concessional superannuation contribution caps. Breaches of such caps attract large penalties, and we outlined the significant effective rate of penalty in my second reading speech which highlighted the potentially disproportionate nature of these penalties. Some Australians are being forced to pay an effective tax rate of up to 93 per cent at times, because of actions taken by others completely out of their control. Today the coalition is looking to address this problem and I urge all members in the House, particularly the crossbench members of the House, to embrace this very constructive and positive initiative.

I am moving these amendments as they seek to give the Commissioner of Taxation discretion in a range of circumstances where individuals have clearly made inadvertent errors. I am hopeful my colleague, the member from Tasmania, is listening intently to this very persuasive contribution about why he should support the government's amendments. The member for Denison would be very interested to know that these inadvertent errors include where an individual has multiple employers and the cap is breached without any possibility of rectification; where an employer contribution is a few days earlier or later than expected; where unexpected bonus payments or redundancy payments impact on their contributions; or where salary sacrifice arrangements have not had caps altered or changed in time. Also, examples include where a late voluntary contribution is not processed until the following financial year, or where a taxpayer has received incorrect advice from recognised tax advisers or other professional advisers where it was reasonable for the taxpayer to rely on such advice.

I have spoken in this House previously about the unusual nature where the contribution caps operate for a financial year. Yet, in the case of a small business or an employee wishing to make voluntary contributions, they might need to wait to see what their end-of-year financial position is and therefore their capability to contribute for the financial year in question, only to find that the actual payment happens in the subsequent financial years. Therefore, accrual accounting applies to the calculation of their ability to contribute, but cash accounting applies to the date on which that payment is made. I have had examples of this very case in my electorate where—much to the chagrin of the tax commissioner and the government minister responsible for this area—there has been some hand wringing about an inability to vary the penalties that were applied where an individual, through no mischief or intent to do the wrong thing, simply got caught up in this difference between accrual and cash accounting and has been hit with substantial penalties and a real disincentive for them to do the very thing we are trying to encourage, which is to make provision for their own retirement.

The government should not be profiting from Australians who have made inadvertent errors. It serves no good purpose and has no policy justification in terms of enforcement or in term of some kind of punishment that would cause people to behave differently when the behaviour was quite inadvertent in its own right. I am sure the member for Denison has found these arguments absolutely compelling and I urge him on behalf of his voters to join with the coalition on these measures. Taxpayers in this situation who are doing the right thing by saving more to achieve a self-funded retirement and take the pressure of the public purse are currently being unfairly and disproportionately penalised. All we are asking is that the tax commissioner have the discretion to take into account the various factors outlined in the amendment.

I wonder whether the minister in all good conscience could stand up and say it is appropriate to take money from people that have made an inadvertent mistake in seeking to do what we encourage them to do, and that is to provide for their own retirement. I move the amendments circulated in Mr Hockey's name and urge the House to embrace these very constructive and positive amendments to these bills before the House.