Cosgrove Clayton: Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill — In CommitteeText is incorporated into the Bound VolumeCosgrove Clayton: Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill — In Committee[Sitting date: 01 December 2015. Volume:710;Page:8446. Text is incorporated into the Bound Volume.]Hon CLAYTON COSGROVE (Labour): I want to go straight to the Minister of Revenue’s amendments in Supplementary Order Paper 129 that pertain to GST and bodies corporate with reference to clauses 248 to 251 of the bill. It is worth just recalling the context for this. I think it was 19 October when we first debated this and I raised with the Minister of Revenue a major problem that he and his department had overlooked in respect of issues concerning GST on those small businesses that own premises in a building by way of a unit title interest in a body corporate.In essence without rehearsing those arguments again what was amazing about that—I know the Minister put in a Supplementary Order Paper after I wrote to him on the 20th and provided him with my amendment and they are very similar but I have got to raise two points. One is that I think the department—or certainly the Minister—knew about this problem for a very very long time. That is the advice I have. This had the potential to inflict a high degree of cost in terms of retrospectivity on small businesses throughout the country.The Minister after I wrote to him on the 20th providing him with an amendment has submitted one of his own and as I say I have put on record that in large parts it does meet the mark in terms of remedying this. What it appears to provide is a look-through rule—which is what was committed to by the Government the Minister and essentially the department prior to this bill’s introduction but then they changed their minds. What it appears to do is provide the look-through rule but only for supplies made on or before 26 February 2015 the date the bill was introduced.My amendment applies to supplies before 1 April 2016 by which time the bill will have been enacted and people—that is the businesses concerned: those individuals—will be able to make decisions as to whether they register or not based on the new clearer law. Because the Minister’s Supplementary Order Paper provides the date of 26 February 2015 it means that those small businesses that have incurred costs through an unregistered body corporate from 27 February on are still denied refunds and will still be double taxed under GST.The question is: why would you want to do that? The Minister of Revenue the Hon Todd McClay—I have got the dates and I can re-rehearse them again of course—announced in June 2014 the Government’s intention to change the law. The Government gave a series of commitments. The bill was introduced in February 2015 and instead of disallowing bodies corporate from registering for GST the bill then proposed that the registration be generally elective. No look-through rule was provided even though that commitment was made as far back as June 2014.The question is why would the Minister change the dates? Presumably the view is that when the bill was introduced on 26 February people had noticed that there would be no look-through rule as promised by the Minister in June 2014. They could then immediately have the body corporate registered for GST so they could get refunds to GST which all presupposes that small businesses are extremely conversant with the detail and the technical aspects of GST law. It presupposes that those small businesses understand intricately the process of parliamentary legislation-making. It presupposes that those small businesses will be hanging on to every word of Parliament as this bill is introduced right through and analysing every subtle nuance and every clause within the proposed legislation. That is just bunkum. Small businesses have got a lot more productive things to do. Their eye is on the ball of the small business. They cannot be expected to pick up on every little nuance of Parliament.So what we proposed in my amendment was that it apply to supplies before 1 April 2016. That gives people time to absorb the changes. It is a transitional provision and fairness prevails. So although I would say that we will be opposing the Minister’s Supplementary Order Paper 129 we will not be opposing it because we are against it in principle. We are opposing it and supporting my amendment because the Minister has left out a really important chunk in terms of those dates that has the ability to greatly disadvantage a whole series of parties and businesses that will still be liable for cost. We think it is inelegant. We think that this should have been brought to the Minister—well presumably the Minister knew. It should not have taken a letter from me on 20 October—months and months and months after the bill was introduced—for the Minister then to scurry around and go: “Oops there is a major flaw in the bill.” I am advised by some learned tax historians that we may have made a little bit of history because I think it has been a very very long time since an Opposition has actually been able to provide a major amendment to a piece of tax legislation that the Government has been forced to pick up.But the big question I would like to ask the Minister—and it worries the living daylights I think out of the industry and many practitioners—is why are these mistakes continually being made? If you go back—and I will not labour the point—to the Peter Dunne carpark tax and the Peter Dunne computer tax all these sorts of things that were rubbish right out of the Finance and Expenditure Committee when they came through and they were dealt to the Government was forced to then back down and say that this is just crazy. But I have got to say this: it is not a political comment. It is not a comment about which political party is in Government but I know that when we were in Government the quality of advice that Ministers were receiving was I think bluntly world class—absolutely world class. People like Robin Oliver and other people who—apart from David Bennett who I do not think was employed in the department but no doubt feels he is a guru on tax matters—had been around for years and years and yearsand were part of the Inland Revenue Department furniture. A number of these proposals would never find their way to a Minister’s desk or if they did you had Ministers whose eyes were on the ball and who would say “No no this is crazy. We are not doing it.”This particular piece of ineptitude had the ability to impact on thousands of small businesses all around the country. I give the Minister his due when we raid—Andrew Bayly: I think that’s pretty harsh Clayton.Hon CLAYTON COSGROVE: No it is a fact though. If the member actually reads it—and I will tell you why it is a fact. It is because his own Minister has amended it. So if he reads his own Minister’s Supplementary Order Paper 129—Ministers are not in the habit of doing things on a whim—it actually remedies a major problem. My point to that member over there is this: it should not have taken an Opposition without an Inland Revenue Department behind it to raise the issue with the Minister. To his credit he amended it because it was going to provide a major hole and a major impact on small businesses. If the member in the back row had read the bill or maybe even read the Minister’s letter with the explanation he may know why. He purports to stand up for small businesses.Chris Bishop: That’s right.Hon CLAYTON COSGROVE: So why did that member and Mr Bishop not pick up on this an issue that would impact huge cost on those small businesses retrospectively. They are in Government. They have got all the resources and they blew it and they missed it. Even the Minister himself did not even pick it up. I will give him his due. As I have said often before he is the guy with the shovel behind the elephant post-Peter Dunne. Peter Dunne was asleep at the wheel and Mr McClay has had to come in and clean it up. But it is a worry that Opposition members and others—and through the good grace of experts outside this place—have managed to pull this one out for the Government and managed to write to the Minister and say: “Here is a Supplementary Order Paper. This will fix the problem.”To the Minister’s credit he has delivered one back in his own name but still there is an inequity and a gap because the dates in my view are wrong. The 1 April 2016 date as I understand it was the one that was promised the one that was committed to and the one that will ensure that there is no inequity or an unfairness. As I say if this is not corrected what it means is that those small businesses that have incurred costs through unregistered bodies corporate from 27 February on are still going to be denied refunds and will still be double taxed under GST. I do not know what the member whose name I cannot recall in the back row thinks of that. Does he think that is a problem for small business? Does he think that is OK? He is a guru. Does he worry about these things? Does it keep him awake at night if he purports to support small business?We are going to support the bill but we think there is still an inadequacy in the Minister’s Supplementary Order Paper 129. He has gone 90 percent of the way there but there are still businesses and individuals that are going to be impacted on.