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senate vote 2015-12-03#9
Edited by
mackay staff
on
2015-12-18 18:30:16
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Title
Bills — Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill 2015; in Committee- Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill 2015 - in Committee - Remove 'grandfathering' provisions
Description
<p class="speaker">Ricky Muir</p><p>I move the amendment on sheet 7833, which is a further amendment to the bill consequential of the House's rejection of the Senate's amendments:</p><p class="italic">(1) Page 17 (after line 3), at the end of the Bill, add:</p>- The majority voted against [an amendment](http://www.openaustralia.org.au/senate/?gid=2015-12-03.197.1) introduced by Victorian Senator [Ricky Muir](https://theyvoteforyou.org.au/people/senate/victoria/ricky_muir), which means it was unsuccessful.
- ### What was the amendment?
- The amendment would have removed the [grandfathering provisions](https://en.wikipedia.org/wiki/Grandfather_clause) from the [bill](http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id:legislation/billhome/r5549). These provisions mean that the old compliance system continues to apply to particular companies - in this case, some 1500 companies.
- Western Australian Senator [Mathias Cormann](https://theyvoteforyou.org.au/people/senate/wa/mathias_cormann) [explained](http://www.openaustralia.org.au/senate/?gid=2015-12-03.201.1) the reason for the grandfathering provisions:
- > *The grandfathering of exempted proprietary companies was done to avoid disrupting businesses which would have established themselves under other business forms, if they had known that they would have had additional compliance and reporting requirements which might be subsequently introduced.*
- However, those who supported Senator Muir's amendments argued that the grandfathering provisions were meant to be temporary and that the time has come to remove them (read the [whole debate](http://www.openaustralia.org.au/senate/?id=2015-12-03.146.2) after 7:28pm).
- These grandfathering provisions are [one of the most controversial aspects](http://www.abc.net.au/news/2015-12-03/coalition-and-greens-strike-deal-on-multi-national-tax-avoidance/6997328) of the bill.
- ### What does the bill do?
- The [bill](http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id:legislation/billhome/r5549) strengthens the laws against [tax avoidance](https://en.wikipedia.org/wiki/Tax_avoidance) for certain multinational entities. It introduces anti-avoidance measures to deal with companies with annual global income of more than $A1 billion that use schemes to avoid having a taxable presence in Australia.
- To learn more about the bill, see the [bills digest](http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/bd/bd1516a/16bd045).
<p class="italic">Schedule 5—Transparency</p><p class="italic">Part 1—Repeal of instrument</p><p class="italic"> <i>ASIC Corporations (Exempt Proprietary Companies) Instrument 2015/840</i></p><p class="italic">1 The whole of the instrument</p><p class="italic">  Repeal the instrument.</p><p class="italic">Part 2—Grandfathered exemption</p><p class="italic"><i>Corporations Act 2001</i></p><p class="italic">2 Subsection 1408(6) (table item 7)</p><p class="italic">  Repeal the table item.</p><p class="italic">Part 3—Application</p><p class="italic">3 Application</p><p class="italic">(1) This item applies to a company if, immediately before the commencement of this item, the company was exempted from complying with subsection 319(1) of the <i>Corporations Act 2001</i> by the <i>ASIC Corporations (Exempt Proprietary Companies</i>) <i>Instrument 2015/840</i>.</p><p class="italic">(2) Despite the amendments made by Parts 1 and 2, that exemption continues to apply to the company in relation to the 2015-16 financial year.</p> <p class="speaker">Jacqui Lambie</p><p>I would like to add to the debate. I do not think Senator Muir has anything more to say. The rowdy debate today and the chaos which has descended on the chamber backs up my call for drug and alcohol testing in this parliament. That would be the first thing. The Senate had a chance to get rid of a loophole which allowed almost 1,500 companies to remain on a secret list, which did not have to report to ASIC. The Greens deal with the government today and the level of political donations by people on the secret tax list and from the Chinese government to Australian political parties show just how corrupt our political system is. It is disgusting, absolutely disgusting.</p><p>A royal commissioner has said that there is a grave threat to the power and authority of Australians, and today I think we are on the tip of the iceberg of why—Merry Christmas and goodbye to the chance for ordinary Australians, who do not make big political donations, having their voice heard and valued in this place today.</p><p>So, Senator Cormann, through the Chair, I would like to know: out of these people who are exempt, how many of them are your political donors, and how much do they give in donations to the Liberal Party? Let's go.</p> <p class="speaker">Mathias Cormann</p><p>What I would say to Senator Lambie is that, truthfully, I do not know and I do not care. We determine public policy by what is in the public interest. What the government is doing here today is legislating a very robust multinational tax avoidance scheme which will ensure that multinational companies generating profits in Australia pay their fair share of tax in Australia.</p><p>This legislation, which hopefully will be passed tonight, will see the tax commissioner being given appropriate powers to be able to see through a whole range of contrived arrangements that are in place in relation to some of these companies from time to time.</p><p>So the bill in front of us today is a serious measure to combat multinational tax avoidance. These measures will force multinational companies with significant activities in Australia to pay their fair share of tax and level the playing field for all taxpayers. It will ensure that the Commissioner of Taxation can force multinationals that have significant activities in Australia to pay tax on profits from economic activities undertaken here. Multinationals will no longer be able to justify using contrived schemes to avoid paying tax.</p><p>This rule will strengthen our anti-avoidance rules for multinationals by catching arrangements that are designed to obtain both Australian and foreign tax benefits to stop companies claiming they are only seeking to avoid foreign tax and by lowering the purpose test from sole or dominant purpose to one of the principal purpose, making it easier to apply.</p><p>Where the scheme is captured, the Commissioner of Taxation will be able to look through the contrived scheme and apply the tax rules as if the multinational company had booked the profit from Australian sales here in Australia. Furthermore, penalties for larger companies that enter into tax avoidance or profit-shifting schemes will be doubled. This means that they will now pay tax on profits and they will pay more tax on profits, if they have sought to avoid paying tax.</p><p>Country-by-country reporting will require large multinationals to report additional information to the ATO. These are significant improvements in transparency that will help the ATO undertake targeted assessments of transfer-pricing risk.</p> <p class="speaker">Jacqui Lambie</p><p>Big companies were told nearly 20 years ago that they would get two or three years on these grandfather clauses. We are 20 years down, and nobody has the guts in this chamber to remove them because they are special. The Australian people want to know what makes these companies so special that they are exempt. You explain that to me and the Australian people now, because I want to hear it. I am looking forward to watching you tap-dance.</p> <p class="speaker">Mathias Cormann</p><p>In the spirit of Christmas and of helpfulness, I have actually addressed this particular question before in response to the amendments flagged by Senator Muir.</p><p>The government does not support the amendments in relation to grandfathering arrangements. The government does not support the longstanding grandfathering of proprietary companies from complying with certain ASIC reporting requirements which have been considered extensively in the past. The grandfathering of these entities has been a policy that had bipartisan support for decades because, without it, the new disclosure rules at the time would have disrupted commercial activities. The grandfathering of exempted proprietary companies was done to avoid disrupting businesses which would have established themselves under other business forms, if they had known that they would have had additional compliance and reporting requirements which might be subsequently introduced.</p><p>The removal of the exemption for the large exempt proprietary companies was considered in 2001 by the Joint Parliamentary Committee on Corporations and Securities and again in 2006 by the Parliamentary Secretary to the Treasurer. The government does not support revisiting this issue on the fly as is suggested in this amendment. We want to move ahead and get on with legislating this critical piece of tax integrity legislation. This is an issue that has been extensively considered in the past, and we believe that the principle of not making these sorts of changes retrospectively is a very important principle that ought to be upheld.</p> <p class="speaker">Nick Xenophon</p><p>I indicate that I will be supporting this amendment. There are 1500 companies that have been part of this grandfathering arrangement, so-called. My understanding is that Treasury looked into this back in 2006. It reported, I think, at the end of 2006-07. There was a media release, as I understand it, on the Treasury website that has now been removed. It no longer exists. It has disappeared from the website. I would like to find out what that release said.</p><p>My understanding is that it actually supported the removing of these amendments. Furthermore, ASIC in their submission to the Senate inquiry into multinational tax avoidance in February 2015—chaired by Senator Dastyari at the time—said that this particular exemption could be removed. They did not put up any obstacles towards its removal.</p><p>As far as this grandfathering amendment—these 1500 grandfathered companies—it is time these 1500 grandparents got a bit of sunshine. That is what I think we should do and why I support this amendment very strongly.</p> <p class="speaker">Sam Dastyari</p><p>I did flag this earlier: Labor will be supporting this amendment. I think this is a timely measure. I think we have to be fairly honest and not pussyfoot around this issue. This has been a very vexed and difficult matter over many years. The 1500 companies we are talking about—these private companies—do represent some of the wealthiest, most powerful and influential Australians. This is a provision that was given initially on a temporary basis. I think it is the right time and the right move for it to be remove I think the community out there desperately wants more information and more transparency, and I believe it is difficult to explain why particular companies are treated one way simply because of a grandfathering that was initially designed as a temporary provision and are treated differently from other companies. I think the arguments fall flat, especially the transparency arguments or even the privacy arguments or the other arguments, when you realise that there are a certain number of companies that get this special treatment and nobody else gets that same treatment. It is the inconsistency that I believe is really at the heart of it.</p><p>I note that the list that was produced by ASIC—and I think <i>The Guardian</i> ran the entire list online—had on it one of the Prime Minister's companies, Turnbull and associates. The Prime Minister rightly contacted ASIC and had himself removed from the grandfather list. How that process is undertaken is really a matter for them. We will find out at estimates. I want to point out that, when you have a situation where it is such a bad look that even the Prime Minister himself realises that being on this list is so toxic that he has to remove himself immediately from being notified by the media that he is on this list, you have to question why 1,497 companies remain on that list. That is the 2011 list; a few people may have been moved since then.</p><p>I believe it is an important, timely matter. I believe there has previously been a lot of lobbying for the maintenance of these kinds of grandfathering exemptions. I think it is right for the Labor Party to be voting to remove the grandfathering provision. I believe that we did many, many great things in the area of disclosure and transparency in the last Labor government. Again, I have extensively gone through that in this chamber in previous speeches.</p><p>As I said earlier—and there are more senators here, so I want to say it again—I believe, Senator Muir, that this is a good amendment. This is an important measure. This is increased transparency. Perhaps, had you been in the last parliament and had the balance of power to help hold political and major parties to account as you are able to do in this parliament, you would have been able to improve some of that legislation, which was great legislation. These are the types of measures with which we would all have been better off had you brought them into the parliament. So I want to congratulate you for this amendment.</p><p>I have to say that the Greens political party have made it clear—and I raised this with them this morning—that they will not be supporting this amendment. I believe that is a real disappointment. The logic that has been presented both to me and in the media is this: 'Oh, that's okay. We can come back to this amendment. We can come back. There's nothing stopping the Senate having a private member's bill, and there's nothing stopping the Senate from passing this later.' That is absolutely baloney when you come to the reality.</p><p>Let us be clear about the leverage. The government's position, in fairness, has not been inconsistent on this front. They have actually been incredibly consistent. The government's position has been that they do not support grandfathering. What the government needed to get passed and wanted to get passed was the Joe Hockey legacy bill which we are debating today, which we are amending at the moment. As we have said repeatedly, it is not a bad piece of legislation; it just does not go anywhere near far enough. Adding grandfathering as part of the disclosure requirements would have simply improved that bill. Frankly, without the support of the Greens political party, it is unlikely that the amendment will pass in this chamber. The leverage to get that big change, to get that important change, to get these 1,497 companies in that disclosure, is about to be lost. On the idea that there could be some private member's bill and that we pass them all the time in this chamber: as senators know, we have great debates, and unfortunately we know where private members' bills go unless you have the leverage. The leverage was here. The leverage was attaching it to this bill, and the Greens sold it out.</p> <p class='motion-notice motion-notice-truncated'>Long debate text truncated.</p>
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