Labor’s former assistant treasurer David Bradbury guided the largely innocuous Tax Law Amendment Bill through the hung Parliament in June 2013.
The danger posed by the new law was to the most secretive elements of the business establishment – 1500-odd companies that have never had to lodge financial accounts despite calls from Treasury and the corporate regulator, the Australian Securities and Investments Commission, for the government to even the playing field in corporate Australia.
At the time, Bradbury said more transparency was needed due to the “apparent ease” with which some companies were avoiding tax in Australia.
“By increasing the transparency of our business tax system, the government will ensure that the public is well informed about the contributions made by large corporations. This is also intended to discourage aggressive tax minimisation practices by large and multinational businesses,” Bradbury told Parliament in 2013.
The transparency law contained one significant irritant for some of Australia’s wealthiest families and business people: From December 2015, the Australian Tax Office would be required for the first time to publish in a single list the tax paid by all companies over a certain size – initially set at revenue of more than $100 million.
For public companies, the impending requirement was water off a duck’s back. They already disclose the three simple revenue and tax liability numbers in their regular updates to the stockmarket.
And for large private companies incorporated after the mid-1990s, the same information can be obtained from their audited accounts lodged each year with ASIC and available for public scrutiny.
To understand where the real resistance to the new tax spotlight existed, one needs to understand the little-known “grandfathered list” of companies overseen by ASIC.
The list is basically a Who’s Who of the business establishment.
Companies owned by the Lowys, the Packers, the Myers and the Stokes, are grandfathered.
Harry Triguboff’s apartment empire, Meriton, Lindsay Fox’s trucking group Linfox and scandal-plagued Seven-Eleven are also on the exclusive list of 1500-odd privately held companies.
Australia’s richest person, Gina Rinehart, has argued unsuccessfully that her companies should be on the grandfathered list.
Until last week a company owned by Prime Minister Malcolm Turnbull called Turnbull & Partners Holdings Pty Ltd – originally established an investment bank but later used as a private investment vehicle – was on the grandfathered list.
The key benefit to being grandfathered is, unlike their rivals, grandfathered companies have never had to lodge audited accounts with ASIC. Private means ultra-private for the grandfathered cohort.
A list of submissions shows the department store-owning Myer family, Yalumba Wine, chicken king Bob Ingham and Kerry Stokes all fought for the exemption to be retained.
The Bradbury law would be the first time that many companies on the grandfathered list would have to divulge any financial details about their business.
The first sign that the Abbott government would roll back the Bradbury requirement for private companies came in March when then assistant treasurer Josh Frydenberg told the joint party room of a “real concern” that wealthy business owners would be targeted for kidnap if the public became aware how wealthy they were.
Frydenberg’s logic was described by University of NSW accounting lecturer Jeffrey Knapp as the “stupidest excuse for non-disclosure I’ve ever heard” and, in June, Fairfax Media revealed the government had sought no security advice to verify a kidnap risk existed.
A Senate inquiry established to scrutinise Frydenberg’s exemption bill only received one submission and when the government-dominated Senate committee delivered its report, backing the plan to shield private companies from disclosure, it relied heavily on the submission of a group called the Family Office Institute of Australia which had claimed the Bradbury law was “discriminatory” and would render Australia an “outlier” on global tax laws.
Earlier this month, Fairfax Media revealed the Institute was a blatant example of “astroturfing” – or the use of artificial grassroots to push a political agenda.
The institute had no members. It was established by a Canberra lobbyist and two tax lawyers from Speed & Stracey.
The firm boasts of representing BRW rich listers in their tax disputes with the ATO and its biggest client is Westfield billionaire Frank Lowy.
The revelation that the Senate had been “conned”, in the words of Greens senator Peter Whish-Wilson, led to a dramatic change of heart by Nick Xenophon and Ricky Muir. incensed at having been duped, they gave their support to a plan by Whish-Wilson to tie an amendment to the government’s multinational tax avoidance bill which would effectively abolish Frydenberg’s law and once again require $100 million private companies to disclose their tax paid.
Until Thursday – the last scheduled sitting day of Parliament – it appeared the crossbench, Labor and the Greens would hold tight and test whether Treasurer Scott Morrison was prepared to wait another year to raise more tax from multinationals and pass the bill with the exemption-ending amendment.
But in an 11th-hour deal, branded a “sellout” by Labor, Greens leader Richard Di Natale agreed a deal in which only private companies with revenues over $200 million would be forced to disclose their tax.
The tax affairs of up to 300 companies will be published later this month but 600 other business owners – many of who retain the privacy benefits of being grandfathered – breathed a sigh of relief as up to two-thirds of the targets of Bradbury’s Bill, in the end, escaped the transparency requirement.
Summary overview taken a post by Heath Aston http://www.smh.com.au/federal-politics/political-news/tax-disclosure-exemptions-for-australias-richest-preserved-in-11thhour-deal-20151203-gleqqc