Legislative Council Fifty-First Parliament, Second Session (51-2) 51 2 Parliament of South Australia Legislative Council published Bills Stamp Duties (Trusts) Amendment Bill STAMP DUTIES (TRUSTS) AMENDMENT BILL Committee Stage Committee Stage In committee. Clause 1. The Hon. R.I. LUCAS Legislative Council The Hon. R.I. LUCAS: I thank the Leader of the Government for the answers he provided at the end of the second reading debate. There are a number of questions that arise as a result of those responses that I want to clarify with the minister and his advisers. I asked the question: on what date after 28 September 2005 did the Crown Solicitor advise the Commissioner of Revenue SA of the concerns in relation to that particular matter raised in the High Court case of September 2005? The answer was that the Crown Solicitor's advice was provided to RevenueSA on 29 August 2006, and the Treasurer was advised in September 2006. If the Treasurer was first advised of this issue in September 2006, which is almost two years ago, can the minister indicate why there was a delay of almost two years in introducing the legislation? Without repeating it all, because this is not a second reading contribution, I refer the minister to the comments that I made in the second reading debate where he, as the minister, and the Treasurer were critical of the former government's delay of about 14 months in terms of introducing correcting legislation. The Hon. P. HOLLOWAY Legislative Council The Hon. P. HOLLOWAY: The advice given to me during the second reading response last evening was that exhaustive consultation was needed to be undertaken with industry on this matter. In fact, it is that detailed consultation that has been responsible for the delay in relation to bringing this bill before parliament. In the answers provided to honourable members' questions during the debate on the bill last night, in the penultimate question the date of the Crown Solicitor's advice was said to be May 2002. However, on reviewing the file, RevenueSA has advised the date of the first advice received in this regard was in fact 19 August 2001, and the May 2002 advice was a supplementary advice to the original advice. The Hon. R.I. LUCAS Legislative Council The Hon. R.I. LUCAS: Is the Leader of the Government now acknowledging that on these issues consultation sometimes does take some time, and does he withdraw the criticism that he made of former governments that took a shorter period (14 months) to bring complicated legislation to the parliament to correct these particular issues? The Hon. P. HOLLOWAY Legislative Council The Hon. P. HOLLOWAY: I do not know how helpful it is to try to compare this bill with that of two years ago. I concede it is important that with any major change to taxation legislation there be adequate consultation. Whether it be 14 months or a couple of years, I accept it is important to consult with industry on important amendments. The Hon. R.I. LUCAS Legislative Council The Hon. R.I. LUCAS: It was not as genuine an apology as we have just passed in relation to another much more important issue, but it is probably the best we will get from the leader—and I am sure we would not get even that from the Treasurer, who can never admit he has made a mistake. I will not delay the committee, but I did highlight that in my second reading contribution. The minister referred to extensive consultation. Somewhere in the second reading explanation or in the Treasurer's explanation in the House of Assembly there was an explanation that because of the particular nature of some of these amendments there had not been any consultation for fear of the industry taking advantage of certain issues. Will the minister clarify that issue? The Hon. P. HOLLOWAY Legislative Council The Hon. P. HOLLOWAY: It was in relation to one issue only, which was the exemption 26 issue. The Hon. R.I. LUCAS Legislative Council The Hon. R.I. LUCAS: As I understand it, there are principally only two issues in this bill—exemption 26 and the land rich issue. The exemption 26 issue is a significant part of this legislation. The minister has confirmed that there was no consultation on the exemption 26 issue. The minister is saying that the extensive consultation that was occurring was only in relation to the other aspects of this legislation and did not include the exemption 26 issue at all. The Hon. P. HOLLOWAY Legislative Council The Hon. P. HOLLOWAY: My advice is that there are three main features of the bill. The first is the response to the 2000 amendments where there were two unintended consequences as a result of that legislation. One of those was the exemption 26. It is important I put on the record that the reason for consultation in relation to that is that it was, quite clearly, a loophole in the legislation. The second point was the response to the CPT case. The third point is that two extra exemptions were included in the act. The Hon. R.I. LUCAS Legislative Council The Hon. R.I. LUCAS: In relation to the first point raised by the minister, namely, the two unintended consequences of the 2000 amendments, the minister is saying that the second unintended consequence was not consulted on with industry, which is the exemption 26 issue, but is he saying that the first unintended consequence (which is highlighted in the second reading and which we have debated) was consulted extensively with industry? The Hon. P. HOLLOWAY Legislative Council The Hon. P. HOLLOWAY: My advice is that it was extensively consulted on from 2002 onwards. The Hon. R.I. LUCAS Legislative Council The Hon. R.I. LUCAS: I understand the minister is now saying that late in the term of the former government and very early in the term of the new government in May 2002 the government was advised of significant problems. What was the advice that the government is now saying it received from 2002 onwards? The Hon. P. HOLLOWAY Legislative Council The Hon. P. HOLLOWAY: It was in relation to the first issue only, which was the section 71(5)(e) issue. The Hon. R.I. LUCAS Legislative Council The Hon. R.I. LUCAS: This becomes more serious and more curious. The minister is now confirming that Treasurer Foley was advised two months after he became Treasurer—more than six years ago—of this significant problem in terms of unintended consequences, and the minister is saying that for six years he did nothing. The Hon. P. HOLLOWAY Legislative Council The Hon. P. HOLLOWAY: My advice is that in practice there has been no impact in relation to this matter because the commissioner has continued to provide the exemption in the circumstances intended by parliament; and that was addressed in the second reading response last evening. The Hon. Gail Gago said: ...that is, the status quo position prior to the decision in the MSP case. That is, the Commissioner has interpreted the relevant section broadly in favour of taxpayers pending legislative clarification of the issue. In the intervening period, further issues have arisen in relation to the operation of the private unit trust provisions and the government considered it was better to deal with them in the same bill at one time. The Hon. R.I. LUCAS Legislative Council The Hon. R.I. LUCAS: I am happy for the minister to take this question on notice and give an undertaking that he will provide by way of correspondence to me from the Treasurer the government's advice from the commissioner. What statements in the preceding parliamentary debate did the commissioner take to be the intention of the parliament? Is he is referring to statements that former treasurers made, or is he talking about specific provisions? I assume that it would have to be statements that the former treasurer made or, indeed, statements he perhaps made as commissioner. I do not want to delay the bill today. If the minister is prepared to give a commitment that he or the Treasurer will write to me on that issue, I am happy to accept that commitment. The Hon. P. HOLLOWAY Legislative Council The Hon. P. HOLLOWAY: We will seek to get that response for the honourable member. The Hon. R.I. LUCAS Legislative Council The Hon. R.I. LUCAS: I thank the minister for that. What we have now as a result of these questions is confirmation that Treasurer Foley knew from May 2002 (more than six years) that there was a significant problem in relation to the Stamp Duties Act and did nothing. As discussed over the last two days, this provision means that RevenueSA and the Treasurer had been told by the Crown Solicitor that the act did not give the legal authority for the commissioner to provide exemptions in the way he had been providing. The government's response is, 'Well, we continue to provide the exemptions with our interpretation of what the intention of the parliament was.' We are now, more than six years later, correcting this. But let us be clear that what we now know is that Treasurer Foley was told that the commissioner and RevenueSA were acting not in accordance with the stamp duties legislation in relation to this issue and for six years did nothing about it. That is an extraordinary situation. Earlier I was making criticism of a two-year delay in terms of correcting other aspects of the legislation, but we have a situation where, for six years, the Treasurer was aware of significant breaches of the stamp duties legislation and did nothing about it. I ask the minister why we have arrived at a position where, for six years, the Treasurer of the state did nothing, having been advised by the commissioner that there was a problem in relation to the 2000 legislation? The Hon. P. HOLLOWAY Legislative Council The Hon. P. HOLLOWAY: All I can say is that the commissioner has interpreted the legislation as intended by parliament. In other words, the exemption was granted. The Hon. R.I. LUCAS Legislative Council The Hon. R.I. LUCAS: The Crown Solicitor told him he was wrong. The Hon. P. HOLLOWAY Legislative Council The Hon. P. HOLLOWAY: Well, I think he told the honourable member he was wrong back in 2001-02. The point is that it was able to be interpreted in such a way that the intention of parliament was given effect to; and, obviously, now, with its coming in, this bill is the opportunity. It was important, I guess, to consult widely in relation to this, and as a result that bill is before us now. The important thing is that I gather no-one has challenged any of those issues in the intervening period. The Hon. R.I. LUCAS Legislative Council The Hon. R.I. LUCAS: That is an extraordinary proposition which, I guess, needs to be taken up with the Treasurer in another place, that is, that he has done nothing for six years despite having been advised. I am happy for the leader to take this on notice, but he did make the statement in the chamber that the Crown Solicitor had advised me in August 2001. I do not have a recollection of having received the Crown Solicitor's advice in 2001, but can I seek a commitment from the minister to indicate whether the Commissioner for Taxation, the Crown Solicitor or both conveyed to me in August 2001 that there was a significant problem in relation to this issue? We can pursue that at another stage. Certainly, there would have been only one brief sitting period after August 2001 which, I think, went through until November or December. I suspect there is a reasonable chance that the commissioner was commencing his consultations in late 2001, particularly if he then went back and got further advice in May 2002. I also seek an undertaking from the minister to indicate, having received advice in 2001, why the commissioner was seeking further advice in May 2002, and was the advice received in May 2002 any different from the advice received in August 2001? I seek an undertaking from the minister as to whether he is prepared to request from the Treasurer and the commissioner a clarification of the statement he made quite unequivocally that I was advised on this issue in August 2001. The Hon. P. HOLLOWAY Legislative Council The Hon. P. HOLLOWAY: I will just reread the advice because I think it really answers most of the points. The advice states: In the penultimate question, the date of the Crown Solicitor's advice was said to be May 2002. However, on reviewing the file, Revenue SA has advised that the date of the first advice received in this regard was in fact 19 August 2001 and the May 2002 advice was a supplementary advice to the original advice. I think that clarifies the situation. The Hon. R.I. Lucas interjecting: The Hon. P. HOLLOWAY Legislative Council The Hon. P. HOLLOWAY: Yes. The Hon. R.I. Lucas interjecting: The Hon. P. HOLLOWAY Legislative Council The Hon. P. HOLLOWAY: I do not know what we will achieve. The Hon. Mr Lucas has made his point about the delay; but, if we can, we will see whether we can get any more information. The Hon. R.I. LUCAS Legislative Council The Hon. R.I. LUCAS: I am happy to accept that. I just want to clarify whether or not the minister's statement was accurate, that is, that the advice had been provided to me in August 2001. To clarify the other issue, in relation to objections that have or have not been lodged, the minister's answers were, 'I am advised that there have been no objections lodged in relation to the CPT case, but there have been 25 objections lodged in relation to exemption 26.' I clarify that in relation to all aspects of the amending legislation there were no other objections in relation to any other aspect covered by this amending bill. The Hon. P. HOLLOWAY Legislative Council The Hon. P. HOLLOWAY: My advice is that that is correct. The Hon. R.I. LUCAS Legislative Council The Hon. R.I. LUCAS: I have two other points of clarification, one not having been responded to. Has there been a change of policy from the commissioner in relation to consultation? The answers are now on the record with some clarification, which says that he consulted with significant parts of this legislation but that there was one issue in relation to exemption 26, where he did not consult with the industry. Is that a change of policy in recent years from the commissioner or does he maintain that it has always been the position in relation to issues like exemption 26 that they have never been consulted within industry? The Hon. P. HOLLOWAY Legislative Council The Hon. P. HOLLOWAY: My advice is that it does not represent a change of policy and that RevenueSA will consult on the details of any changes but, if there is a serious threat to revenue as a result of an anomaly that is found to have arisen, obviously that is where the commissioner will seek to act urgently in the interests of protecting the revenue. The Hon. R.I. LUCAS Legislative Council The Hon. R.I. LUCAS: Finally, the minister's answer in response to some of my questions was that in relation to the High Court decision aspect of the legislation the Treasurer was first advised on 1 December 2006, and a commissioner's circular announced in December 2006 the intention for retrospective legislation to be enacted. To refresh my memory, given that I am six years out of date: with regard to the commissioner issuing a circular saying that there will be an intention for retrospective legislation (and I should not think there would be a problem in my getting a copy of the commissioner's circular of December 2006), what is the process the commissioner goes through? Does he have to get authority from the Treasurer or cabinet to issue a commissioner's circular saying, 'Hey, there's going to be retrospective legislation on this; you'd better start conducting your tax affairs in a certain way'? The Hon. P. HOLLOWAY Legislative Council The Hon. P. HOLLOWAY: My advice is that it was approved by cabinet. The Hon. R.I. LUCAS Legislative Council The Hon. R.I. LUCAS: What date did cabinet approve it? The Hon. P. HOLLOWAY Legislative Council The Hon. P. HOLLOWAY: It was 11 December 2006. The Hon. R.I. LUCAS Legislative Council The Hon. R.I. LUCAS: Can I take it that the answer is that, as a rule, before the commissioner issues such a circular to the industry, there is a requirement on the commissioner that he must receive cabinet approval before he issues such a circular? The Hon. P. HOLLOWAY Legislative Council The Hon. P. HOLLOWAY: It is a cabinet decision whether legislation is approved, and that generally would be the case, as all legislation has to be approved by cabinet. The Hon. R.I. LUCAS Legislative Council The Hon. R.I. LUCAS: I accept that, but I am clarifying that the commissioner does not have the authority or power to in essence say, 'Hey, I'm the commissioner and it's my intention that there ought to be retrospective legislation introduced to amend this particular provision.' Clearly, the minister is saying in relation to this case that that was not the case, as he went to cabinet and got approval, but I am confirming that the general modus operandi of the commissioner vis-a-vis Treasury and cabinet is that, before any of these circulars can be issued, there has to be cabinet approval before that occurs. The Hon. P. HOLLOWAY Legislative Council The Hon. P. HOLLOWAY: My advice is that that is correct. Clause passed. Remaining clauses (2 to 4), schedule and title passed. Bill reported without amendment. Third Reading Third Reading Bill read a third time and passed.