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Thursday, 13 September 2018
Page: 15


Senator BROCKMAN (Western Australia) (11:12): I will just start by responding to some of the things Senator Cameron put before the chamber. I think the Australian people very well remember the Rudd-Gillard-Rudd years and the true rabble they were and the economic mess that we inherited from that government. The 2014 budget and the governments the coalition have led have done an absolutely magnificent job of putting the budget back on track and getting the economic circumstances in Australia back on a positive note. The Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018 does represent an ongoing effort from this government in the space of the black economy and in the space of those who aren't paying their fair share of tax that all Australians require of both the business community and individuals. Everyone has to make a contribution under the law, and this bill reflects that fact. It reflects an ongoing commitment from the Prime Minister in this area as well.

I will bring us back to the 2018 budget. Senator Cameron said we had done nothing in this space. But then-Treasurer Morrison announced a number of changes in this area: new phoenixing offences, to target operators who conduct or facilitate phoenixing activities; changes preventing directors from being able to improperly backdate resignations to escape liability; changes limiting the ability of directors to resign, if resignations would leave the company with no directors; changes restricting the ability of related creditors to vote on appointing, removing or replacing external administrators; and changes extending the director penalty regime. This bill represents a step in an ongoing process of making sure that everybody—businesses and individuals—pays their fair share of taxation. This is never something that reaches a finishing point. We always see technological change, particularly—and other things, but technological change, particularly—as being one of the ways in which some people in society seek to avoid paying their fair share of tax. That is what this bill addresses.

The government is committed to a fair taxation environment for businesses to ensure that all businesses are compliant with the law. This is absolutely critical to fairness in society. Government has announced these measures to address a growing issue in the black economy, and this is particularly in relation to deliberate tax fraud carried out through interference with point-of-sale technology. The measures in this bill form one part of a broader suite of reforms that the government is progressing through its response to the Black Economy Taskforce final report.

So what does this bill do? It bans the manufacture, distribution, sale and use of sales suppression technology in Australia. This is technology with no purpose other than to facilitate tax fraud by allowing businesses to conceal their income by manually altering sales figures. It extends the taxable payments reporting system to two industries that present tax compliance risks, and they are the cleaning and courier businesses. This is to ensure that payments made by businesses to contractors in these industries are reported to the Australian tax office.

Schedule 1 deals specifically with the electronic sales suppression tools. The schedule creates a number of new offences pertaining to the manufacture, distribution, possession, sale and use of electronic sale suppression tools for the purposes of not disclosing business income. This technology is used solely for the purpose of tax evasion; it has no other reason for being on somebody's computer. The new offence will restore integrity to the tax system. There is evidence that the prevalence of this technology is on the rise globally, with a number of international jurisdictions taking similar actions to crack down on this activity.

This is where the government's involvement in international forums that deal with these sorts of issues is so important, because we see these practices spread out globally. Often, the software is not developed in the domestic context; it's developed overseas, and these matters often appear in other jurisdictions first. By being involved in those forums we are able to get advanced warning that this may be coming our way and be able to take action in a timely fashion. But, as I said, this is an arms race. Our legal system as it stands is never going to be able to take into account what may come next year, or in five years or 10 years, so this place and the government need to be responsive to these changes. And that's what this government has been.

The sales suppression software comes in the form of a physical device or program, or some other thing capable of manipulating or destroying records that an entity is required to keep or make. As I said earlier, there is no legitimate use for these tools. Their only purpose is to erase the transaction records from point-of-sale or accounting systems, leaving no audit trail. Common techniques include the reclassification of GST taxable sales to GST non-taxable sales, or reducing the amount that the sale was for. This is done in such a way that there is no evidence trail of the changes made, making prosecution or recovery very difficult for the ATO.

It is important to note that, while these practices are already illegal, this bill seeks to criminalise the software and devices which allow businesses to evade detection for these offences easily. Obviously, some of these things are very hard to track down—particularly when these pieces of software and devices are specifically designed to erase all records. That's why it's very important that we actually ban the tools themselves and not merely the practice. The offences being introduced by the government are subject to strict liability and heavy penalties to deter the use of this technology and to clamp down on these practices.

Schedule 2 involves third-party reporting. The second schedule implements the third-party reporting requirements for businesses in the courier and cleaning industry. This is in response to evidence that there is significant underreporting of income in these sectors as identified by the Black Economy Taskforce and the Australian tax office.

We're ensuring that we do have a fair taxation system. The government is committed to making sure everyone pays their fair share of tax. But this is also about making sure that taxes are as low as possible. If everyone pays their fair share, then taxes do not need to be in any way artificially high. We need to maximise the revenue under the current system, not seek to impose new taxes on people. Individuals and businesses engaging in illegal tax avoidance undermine the integrity of the entire system and unfairly shift the burden onto law-abiding Australians, which we must always remember is the vast, vast majority of Australians. The vast majority of Australian businesses and the vast majority of Australians are not involved in these kinds of practices, and we cannot tar all industries and all businesses with the same accusation or brush. We don't want to think that every business is involved in this activity. It's simply not true. We know that the vast majority of businesses do pay their fair share of tax. However, those who don't unfairly shift the burden onto those who do.

Just as we have delivered on our plan to crack down on multinational tax avoidance by introducing new laws to close loopholes and ensure that profits are taxed in Australia, as they should be, we're also ensuring that Australian businesses are paying their tax according to the law in this particular area. These measures form part of the government's commitment to cracking down on tax avoidance so that we can continue to deliver to all Australians the services that are essential and so that we can afford to deliver our agenda on tax relief for hardworking Australians. So, we can continue to do all the things that a government does that are worthwhile for people. However, we also need to recognise that business plays a fundamental role in employing and that contracting is not something that is illegal or that should be in any way restricted in our society. It's a very important tool for business. It's a very important way for people to gain jobs, Senator Cameron.

Senator Cameron: Seven bucks an hour. Seven bucks an hour.

Senator BROCKMAN: It's a very important way for people to get a job. All businesses should comply with the law, but it is a very important way in which people find employment, and employment is a source of worth. It is a source of dignity. It is the best thing that we can do for people, and it is certainly far, far better than any form of welfare. So I commend this bill, and I certainly hope that we see it through this parliament.