Legislative Council Wednesday 18 March 2020
Ms FORREST (Murchison) - Mr President, I support the overall intention, the introduction, as I did with the Foreign Investor Duty Surcharge last year. We would not be here today if more notice had been taken last time of key stakeholders like the Law Society and others involved in discretionary trusts, who clearly identified these issues as a problem. We were in such a rush to ram the legislation through before 1 July that we did that, and here we are trying to sort out what some lawyers would describe as an unholy mess because they knew it was coming.
I tried my best to alert members to that, including raising the issues we are now trying to fix. There is a lot of catch-up to do. This issue of retrospectivity the member for McIntyre talked about in a question during our briefing was because we rammed the legislation through. That is why there is retrospective nature to this. Some people have been required to pay the Foreign Investor Duty Surcharge when they were not likely to receive any financial benefit from a discretionary trust of which they were a member. Many of these discretionary trusts are so broad, they pick up almost anyone within a family. That could be anyone living outside Australia or New Zealand, or other charity organisations and things like that, which could be foreign-based.
Some people criticise lawyers quite a bit. The Treasurer had a bit of a whack at them when we raised this last year in budget Estimates, but they rightly picked up this problem. It was not only the lawyers, it was the accountants. The accountants deal with this all the time when advising their clients about their discretionary trusts, and here we are trying to fix an unholy mess.
It is going to take some sorting through. Having read through this legislation, I appreciate that the Leader organised a briefing for me on this last year. I felt I needed more time to consult with some of the others from the legal fraternity and accountants involved in dealing with discretionary trusts who raised these issues with me. Whilst they are content with this, because they were consulted this time, they were not last time. They were not consulted last year. I have a list of those who were consulted and it includes all these people who should have been included in the first round.
Predominantly, I believe they are reasonably confident this will address those issues and that, when people have paid a foreign investor duty, they will be able to apply and receive reimbursement. We heard in the briefing probably in the order of about $420 000 will need to be repaid. It is not a lot of money in the big scheme of things but it is all work for the SRO. I do not imagine the SRO has a lot of spare capacity with the efficiency dividends that everyone had to comply with. I feel for the SRO, the State Revenue Office, and the Commissioner, because they are under the pump financially as well trying to manage within their budgets, and here we are saying, 'Here is some more work for you to do - go and sort this lot out.'. Perhaps they could have reduced some of that by consulting when they looked at the legislation last year; that is a backhanded swipe the other way.
When I had the briefing last year, the member for Nelson joined me. We were informed that a total of 51 transactions related to discretionary trusts; 30 were residential, 18 were primary production; and two were both residential and primary production. One ex gratia payment had been made. It was commented that a couple of ex gratia payments may have been made in that period; perhaps the Leader could clarify that.
I understand the need for the provisions in the legislation to ensure those people received an ex gratia payment at the discretion of, I believe, at the Commissioner, not the Treasurer. Maybe the Leader could confirm who provided that discretion. The Treasurer paid it but did the Commissioner make the determination as to how many there were? It is important they cannot come back and ask for a refund again, when they have already been given an ex gratia payment.
It is important that foreign investors are charged an extra duty. This is Tasmanian land and Tasmanian property. We know full well the pressure that there is on our housing generally, our public housing and our access to housing for Tasmanians. With COVID-19, I feel desperately for homeless people. How the hell are they going to self-isolate if they need to? Where do they self isolate? It is separate to this bill, but these are the reasons I support this in principle and the need for this legislation to fix the problems created last year. It really is something we need to consider.
This bill will probably address the issues raised as a result of rushing it through last year, bringing in a sensible policy decision. Hopefully, it will sort it out completely. There will be some work to be done, but it will also require, as we heard in the briefing, that lawyers dealing with their clients with discretionary trusts make it clear and assist them to make sure their discretionary trusts are tight and do not necessarily drag them into this.
The other provisions relate to people who become Australian citizens or permanent residents within a six-month period; they can also apply for exemption from the duty or have it refunded. Those people may not be required to pay. Again, significant discretionary decisions can be made by the commissioner to address some of those matters.
I support the bill. I think it will achieve what it is intended to. The Leader is bringing in an amendment to try to further clarify a point, which is necessary. It is a lesson to us to be sure that we scrutinise things properly and listen to the key stakeholders who have more knowledge in these things than we do, or certainly more than I do. That is why they came to me to try to inform me. I raised those issues but they fell on deaf ears.Go Back