Referral of the inquiry
1.1
The Corporate Collective Investment Vehicle Framework and Other Measures Bill 2021 was introduced in the House of Representatives and read a first time on 25 November 2021.
1.2
On 2 December 2021, the Senate referred the provisions of the Corporate Collective Investment Vehicle Framework and Other Measures Bill 2021 (the bill) to the Senate Economics Legislation Committee (the committee) for inquiry and report by 3 February 2022.
Purpose of the Bill
1.3
The primary purpose of the bill is to establish a new type of corporate structure under Australian law, to be known as the Corporate Collective Investment Vehicle (CCIV). Amendments to Australian corporations, financial services and taxation law are included in the bill to give effect to the CCIV framework.
1.4
The key policy objective of developing the CCIV framework is to increase the competitiveness of Australia's managed fund industry through the introduction of internationally recognisable investment products.
The Hon. Michael Sukkar MP, Assistant Treasurer, stated in the bill’s second reading speech that the introduction of the CCIV regime aims ‘to enhance the international competitiveness of the Australian managed funds industry and attract greater levels of foreign investment into Australia's financial markets’.
1.5
In addition to the CCIV framework, the bill also contains several other measures addressing a range of taxation and superannuation matters, through amendments to various pieces of legislation. These include:
the extension of temporary loss carry back provisions for corporate tax entities;
additions to the statutory list of organisations with Deductible Gift Recipient status;
the introduction of a retirement income covenant; and
changes to employee share scheme arrangements.
Overview of the bill
1.6
The substantive provisions of the bill comprise ten schedules, with Schedules 1–5 dealing with amendments to establish the CCIV framework, and schedules 6–10 dealing with other matters:
Schedules 1–4 seek to amend corporate and financial services law to establish a CCIV as a new type of a company limited by shares that is used for funds management;
Schedule 5 seeks to amend taxation law to specify the tax treatment for CCIVs;
Schedule 6 seeks to amend income tax law to extend the loss carry back rules by 12 months, allowing eligible corporate tax entities to claim a loss carry back tax offset in the 2022-23 income year;
Schedule 7 seeks to amend the Income Tax Assessment Act 1997 (ITAA) to add and update a number of Deductible Gift Recipient (DGR) listings under that Act;
Schedule 8, titled ‘Minor and technical amendments Spring 2021’, seeks to make a number of miscellaneous and technical amendments to various laws in the Treasury portfolio;
Schedule 9 seeks to amend the Superannuation Industry (Supervision) Act 1993 to insert a new retirement income covenant, which would require trustees of Registrable superannuation entity (RSEs) to develop a retirement income strategy for beneficiaries who are retired or are approaching retirement; and
Schedule 10 seeks to amend the ITAA to remove cessation of employment as a taxing point for Employee Share Scheme interests which are subject to deferred taxation.
Commencement of the bill
1.7
Commencement dates for the various schedules of the bill are set out in proposed section 2 of the bill.
1.8
Provisions relating to the CCIV framework in Schedules 1–5 of the bill are intended to commence on 1 July 2022.
1.9
The loss carry back provisions in Schedule 6 would come into effect on ‘the first 1 January, 1 April, 1 July or 1 October to occur’ after the bill receives Royal Assent. The same commencement dates also apply to the DGR measures in Schedule 7 of the bill, and the Employee Share Scheme provisions in Schedule 10 of the bill.
1.10
The miscellaneous measures and technical amendments in Schedule 8 of the bill have various commencement dates.
1.11
The Retirement income covenant provisions in Schedule 9 of the bill are due to commence the day after the bill receives Royal Assent.
Provisions of the bill
1.12
This section provides an outline of the various schedules in the bill, including any relevant background and the stated financial and regulatory impact of these schedules.
CCIV regulatory and tax framework (Schedules 1–5)
Background to the development of a CCIV regime
1.13
The idea of introducing a CCIV structure in Australia has been proposed for over a decade. It was suggested by the Australian Financial Centre Forum in its report Australia as a Financial Centre: Building on Our Strengths (the Johnson Report) in 2009, as one of several recommendations aimed at increasing Australia’s cross-border trade in financial services and improving the competitiveness and efficiency of the financial sector.
1.14
The Johnson Report found that Australia’s managed funds sector could become more competitive if it offered a funds management vehicle that is commonly used overseas. It argued that Australia needed a collective investment vehicle with a corporate structure that provides flow-through tax treatment, maintains investor protection, and is more internationally recognisable than the Managed Investment Scheme (MIS), which is Australia’s current trust-based investment vehicle. The report recommended that the Board of Taxation review the scope for providing a broader range of collective investment vehicles that would be subject to flow-through taxation.
1.15
This Board of Taxation Review reported in December 2011, and recommended the creation of new collective investment vehicles that provide tax neutral outcomes for investors.
1.16
The Johnson report also recommended the introduction of an Asia Region Funds Passport (ARFP) regime, which was implemented in Australian legislation in 2018. The CCIV regime proposed in the bill would work in concert with the ARFP.
1.17
The Australia Government’s intention to create a CCIV regime was first announced in the 2016-17 Budget as part of the Ten Year Enterprise Tax Plan. Treasury released several tranches of draft legislation from late 2017 to early 2019 for public consultation, covering different dimensions of the CCIV proposal. The project was then paused ‘due to competing priorities including the government’s response to the Financial Services Royal Commission, and emergency measures for bushfire relief and the COVID-19 pandemic’.
1.18
The Senate Select Committee on Financial Technology and Regulatory Technology considered issues relating to collective investment vehicles in its September 2020 interim report. The report found that Australia's current set of collective investment vehicles were not structured in a globally recognisable way and recommended that the government ‘implement a Limited Partnership Collective Investment Vehicle and a Corporate Collective Investment Vehicle regime to drive inbound capital investment for Australian start-ups’.
1.19
In the May 2021 Budget, the Australia Government announced its intention to finalise the implementation of a CCIV regime with a start date of 1 July 2022.
1.20
On 27 August 2021, the Australian Government released exposure draft legislation for the implementation of the tax and regulatory components of the proposed CCIV regime, with the public consultation period on the exposure draft legislation closing on 24 September 2021. Treasury received 11 submissions in response to the consultation, including four confidential submissions.
1.21
Schedules 1 to 5 to the bill ‘fully implement the measure included in the 2021‑22 Budget’ relating to the establishment of a CCIV structure.
Schedules 1 to 4 of the bill – CCIV regulatory arrangements
1.22
Schedules 1 to 4 to the bill seek to establish the regulatory framework for the Corporate Collective Investment Vehicle (CCIV) regime.
1.23
A CCIV will be a new type of corporate structure for funds management, featuring an umbrella company operated by a single corporate director with all its assets and liabilities segregated into one or more 'sub-funds'. It is designed to be an alternative to the commonly used trust based Managed Investment Scheme.
1.24
The CCIV structure will be constituted as a company limited by shares, ‘so that it is recognisable to offshore investors and fund managers’. The corporate director of a CCIV must be a public company that holds an Australian Financial Services License (AFSL) authorising it to operate the business and conduct the affairs of the CCIV.
1.25
A CCIV is an umbrella vehicle that is comprised of one or more sub-funds, with each sub-fund able to offer investors a different investment strategy.
1.26
The Explanatory Memorandum (EM) states that a CCIV will generally be subject to the ordinary company rules under the Corporations Act 2001 (Corporations Act) unless otherwise specified. Features of the MIS regime have also been incorporated into the design of CCIVs ‘to the extent that they are consistent with the policy objective’:
In doing so, regulatory parity is maintained (to the extent possible) between the existing MIS framework and the CCIV framework. This will ensure efficient operation of the domestic funds management industry and ease of adoption for fund managers wishing to establish a CCIV.
1.27
The EM provides a diagram outlining the components of the proposed regulatory framework for a CCIV, shown at Figure 1.1.
1.28
The Australian Securities and Investments Commission (ASIC) would be responsible for administering the regulatory framework for CCIVs.
1.29
Schedule 1 of the bill contains the main amendments to the Corporations Act needed to establish the CCIV regulatory framework. This includes the insertion of a new proposed chapter, Chapter 8B—Corporate collective investment vehicles, into the Corporations Act. This proposed chapter in the Corporations Act includes:
Rules for registration of CCIVs (proposed new Part 8B.2), including requirements for registering the sub-funds of a CCIV;
Corporate governance rules for CCIVs (proposed new Part 8B.3);
Corporate finance and financial reporting for CCIVs (proposed new Part 8B.4), including rules governing the issuance of shares and debentures in CCIVs, and rules income and capital distribution;
Arrangements for operating a CCIV (proposed new Part 8B.5), covering rules relating to the operation of sub-funds within a CCIV;
Rules relating to external administration and deregistration (proposed new Part 8B.6), which provides powers for a CCIV sub-fund to be wound up in certain circumstances and procedures for CCIV sub-funds to be deregistered;
provisions that relate to obligations regarding takeovers, compulsory acquisitions and buy-outs, as well as rules assigning responsibility for conduct, financial services licensing and disclosure for financial products (proposed new Part 8B.7); and
provisions enabling ASIC to make exemption and modification orders relating to CCIVs via subordinate legislation, and a broad power to modify the operation of the chapter by regulations (proposed new Part 8B.9).
1.30
In relation to the subordinate legislation, the EM states:
Certain matters may be prescribed in regulations where provided for in Chapter 8B. Regulations may also modify the operation of Chapter 8B, or the Corporations Act, for its application to CCIVs. In addition, ASIC may make exemption orders and modification declarations in relation to specified parts of Chapter 8B.
1.31
Schedule 2 of the bill contains a range of proposed amendments to other areas of the Corporations Act, including: updating relevant definitions throughout the Act; enabling CCIVs to be covered under the ARFP scheme; and updates to a series of miscellaneous sections in Chapter 9 of the Corporations Act, including relating to registers, auditors, penalties and offences, ‘to ensure that these administrative provisions work appropriately in relation to CCIVs and corporate directors’.
1.32
Schedule 3 of the bill consists of proposed amendments to the Australian Securities and Investments Commission Act 2001 (ASIC Act), designed to ‘ensure that the definition of financial services in the ASIC Act applies correctly, and that ASIC can exercise its powers and functions effectively in relation to CCIVs’. The schedule also includes an amendment to the Personal Property Securities Act 2009 to bring into effect winding up provisions relating to CCIVs.
1.33
Schedule 4 of the bill contains several proposed contingent amendments to the Corporations Act. These amendments will commence on 1 July 2022 only if the Corporations Amendment (Meetings and Documents) Bill 2021 has received Royal Assent and commenced prior to that date, otherwise they will not commence. The Explanatory Memorandum explains:
The Corporations Amendment (Meetings and Documents) Act 2021 facilitates the electronic execution of documents by a CCIV. These rules will apply to companies under the Corporations Act, including CCIVs. Schedule 4 to the Bill makes related contingent amendments to ensure the rules technology neutral signing and electronic provision of documents extends to CCIVs.
Schedule 5 of the bill – CCIV taxation arrangements
1.34
Schedule 5 to the bill will establish the tax framework for the Corporate Collective Investment Vehicle regime.
1.35
The general objective for taxation of the CCIV regime is that ‘the tax outcomes for an investor in a sub-fund of a CCIV align with the existing tax treatment for an investor in an attribution managed investment trust’ (AMIT).
1.36
A managed investment trust (MIT) is a type of trust in which members of the public collectively invest in passive income activities, such as shares, property or fixed interest assets. Eligible MIT’s can elect to into the new attribution regime for the taxation of MITs. Those who elect into this regime are known as AMIT’s.
1.37
The EM states that rather than creating a new tax framework for CCIV’s, schedule 5 will leverage the existing trust taxation framework and the existing attribution flow-through regimes (i.e., MIT’s and AMIT’s).
1.38
The Explanatory Memorandum states that this objective will be achieved by:
Where a CCIV meets the AMIT eligibility criteria in respect of a sub-fund (which is a part of the CCIV), then the CCIV will be able to attribute amounts of assessable income, exempt income, non-assessable non-exempt income, and tax offsets derived or received by the CCIV to the relevant class of members of the CCIV. Those amounts will retain that character and be recognised (and taxed) in the hands of each member.
Where a CCIV does not satisfy the AMIT eligibility criteria in respect of a sub-fund for a particular income year, then the CCIV tax treatment will generally default to the general trust taxation framework for that year.
1.39
The Australian Taxation Office (ATO) would be responsible for administering the tax framework applying to CCIVs.
Draft CCIV regulations and rules
1.40
On 21 December 2021, the Australian Government released draft Corporate Collective Investment Vehicle (CCIV) regime regulations and rules for public consultation. The draft regulations and rules aim to support the framework established by the bill, by introducing details such as:
requirements for financial reporting, record‑keeping and custody of CCIV assets; and
arrangements for cross‑investment within CCIVs (including voting processes and restrictions on circular investment) and other rules for managing a CCIV’s share capital.
1.41
The draft regulations and rules ‘also include a suite of technical amendments to facilitate the broader CCIV regime, including the passporting of sub‑funds of retail CCIVs under the Asian Regions Funds Passport regime’.
1.42
Treasury’s public consultation process on the draft regulations and rules closes on 21 January 2022.
Financial and regulatory impact of the proposed CCIV regime
1.43
The EM states that the creation of a statutory CCIV regime ‘is estimated to result in an unquantifiable impact on receipts over the forward estimates period’.
1.44
The Regulation Impact Statement (RIS) for the CCIV measures in the bill states:
In relation to the quantifying the monetary value of what CCIVs will bring into the economy, this is difficult to estimate due to the number of variables involved, including the number of new entrants to the market, those that are converting from another investment product into a CCIV, and the investment strategies chosen. Assets vary in terms of investment strategy, such as long term and short term holds and performance outcomes. The global funds management industry also needs to be taken into consideration, such as performance in other jurisdictions and the products available. This makes it challenging to pinpoint the monetary value and net benefits.
1.45
The Regulation Impact Statement (RIS) for the bill estimates that these measures in Schedules 1 to 5 of the bill ‘are estimated to result in a total average annual regulatory cost of $1.2 million’, which is the estimated cost that would be borne by businesses in registering new CCIVs and converting existing investment vehicles into the CCIV structure.
Extension of loss carry back rules (Schedule 6)
1.46
Schedule 6 of the bill seeks to amend the Income Tax Assessment Act 1997 and the Taxation Administration Act 1953. The bills intention is to laws to extend the loss carry back rules by 12 months, allowing eligible corporate tax entities to claim a loss carry back tax offset in the 2022-23 income year.
1.47
The Minister’s second reading speech provides an overview of the intended purpose of schedule 6 of the bill, as follows:
The government implemented temporary loss carry-back in 2020 to promote economic activity by providing enhanced cash-flow support to previously profitable companies that fell into a tax loss position as a result of COVID-19.
The law currently allows eligible companies to carry back tax losses from the 2019-20, 2020-21 or 2021-22 income years to offset previously taxed profits in the 2018-19 income year or later income years. Passage of these amendments will allow eligible companies to carry back tax losses from the 2022-23 income year. Tax refunds are limited to earlier taxed profits and the carry-back of losses cannot generate a franking account deficit.
Companies with aggregated annual turnover of less than $5 billion are eligible for temporary loss carry-back on election when they lodge their 2020-21 and 2021-22 income tax returns and, with the passage of this bill, their 2022-23 income tax return.
Companies that do not elect to carry back losses under this temporary measure can still carry losses forward as normal.
Extending temporary loss carry back is estimated to deliver $2.8 billion in tax relief to companies over the forward estimates.
1.48
The loss on carry backs measure interacts with the JobMaker Plan—the temporary full expensing to support investment measure. This aims to allow new investment to generate significant tax losses which can then be carried back to generate cash refunds for eligible businesses.
Financial and regulatory impact of extending the loss carry back rules
1.49
The EM states that the compliance cost impact for Schedule 6 is ‘low’. Additionally, it states the estimated to have the following receipts impact over the forward estimates period ($m):
Table 1.1: Financial impact
Source: Explanatory Memorandum, p. 3.
1.50
The EM does not have a regulatory impact statement for schedule 6.
Deductible Gift Recipient listings (Schedule 7)
1.51
Schedule 7 of the bill proposes to amend the Income Tax Assessment Act 1997 (ITTA Act) to:
specifically list the Greek Orthodox Community of New South Wales Ltd, Australian Associated Press Ltd, Virtual War Memorial Limited and SU Australia Ministries Limited as deductible gift recipients;
extend the deductible gift recipient specific listings of Cambridge Australia Scholarships Limited and Foundation 1901 Limited; and
remove the deductible gift recipient specific listing of the East African Fund Limited (with the fund remaining endorsed as a deductible gift recipient under another category).
1.52
Under the ITTA Act, income tax deductions are allowed for taxpayers who make donations of $2 or more to deductible gift recipients. The be a deductible gift recipient, an organisation must fall within a general category set out in division 30 of the ITAA Act or be specifically listed in that division. The Explanatory Memorandum states that becoming a deductible gift recipient helps organisations to attract public financial support.
Financial and regulatory impact of changes to the DGR listings
1.53
The EM states that specifically listing of the Greek Orthodox Community of New South Wales Ltd is estimated to have a total cost to revenue of
$0.7 million from 2018-19 to 2022-23.
1.54
In addition, the EM states that specifically listing SU Australia Ministries Limited, Australian Associated Press Ltd, Virtual War Memorial Limited, and extending the specific listings of Cambridge Australia Scholarships Limited and Foundation 1901 Limited, and removing the specific listing of the East African Fund Limited is estimated to decrease receipts by $7.5 million from 2020-21 to 2024-25.
1.55
The EM does not have a regulatory impact statement for schedule 7.
Minor and technical amendments (Schedule 8)
1.56
As part of a usual periodic process to maintain and improve quality of tax law changes, Schedule 8 makes a number of miscellaneous and technical amendments to various laws within the Treasury portfolio.
1.57
The EM states that the nature and purpose of these technical and minor amendments are to correct typographical and numbering errors, repeal inoperative provisions, remove administrative insufficiencies, address unintended outcomes and ensure the law delivers on the policy intent.
1.58
The amendments apply to the following Acts and regulations:
Australian Prudential Regulation Authority Supervisory Levies Determination 2021;
National Consumer Credit Protection Act 2009;
Foreign Acquisitions and Takeovers Act 1975;
Income Tax Rates Act 1986;
Payment Times Reporting Act 2020;
Taxation Administration Act 1953;
Income Tax Assessment Act 1997;
Taxation Administration Act 1953;
National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009;
Income Tax Assessment Act 1936; and
Taxation Administration Act 1953.
Financial and regulatory impact of minor and technical amendments
1.59
The EM states that the amendments within schedule 8 are estimated to have small but unquantifiable impact on receipts over the forward estimates period and unlikely to have more than a minor impact on compliance costs.
1.60
The EM does not have a regulatory impact statement for schedule 8.
Retirement income covenant (Schedule 9)
Background to the introduction of a retirement income covenant
1.61
The Australian Government committed to introducing a retirement income covenant in the 2018—19 Budget following the government’s response to the 2014 Financial System Inquiry, in which the government committed to develop legislation to allow funds to provide pre-selected products at retirement and guide members at retirement.
1.62
The idea of a retirement income covenant was highlighted and explored in the Australian Government’s release of its Retirement Income Review (the Review) in November 2020. The Review used a consultative approach with key stakeholders, to present evidence on the retirement income system—specifically how it operates, and the outcomes it delivers. One of the observations made by the Review is that the retirement phase of superannuation is underdeveloped and that higher retirement incomes could be achieved through using superannuation assets more efficiently.
1.63
The Review noted that most people do not seek advice about retirement income planning due to high cost and unclear benefits, and their distrust of the financial advice industry. The Review highlighted the importance of a retirement income covenant in improving retirement outcomes.
1.64
The EM echoes the findings of the Review and states that the rationale for the implementation of such a covenant is that existing legal obligations on superannuation trustees focus primarily on the accumulation phase rather than the needs of beneficiaries in retirement. The retirement income covenant seeks to address this gap.
1.65
The Department of Treasury (Treasury) released for consultation, a Position Paper in July 2021 and an Exposure Draft Legislation in September 2021. Within the consultation period of exposure draft, a number of key stakeholders made submissions to Treasury. Of the 32 public submissions received by Treasury, the overwhelming consensus was broad support for a principles-based covenant.
1.66
Schedule 9 of the bill is a replica of the exposure draft, with the exception of including proposed subsection 52(8B). The EM states that this subsection provides that trustees of registrable superannuation entities (RSE) that exclusively provide members with benefits relating to death, permanent or temporary incapacity are not required to develop a retirement strategy as they do not provide retirement benefits.
Schedule 9 - retirement income covenant
1.67
Schedule 9 of the bill seeks to insert a covenant in the Superannuation Industry (Supervision) Act 1993 (SIS Act) that would require trustees of registrable superannuation entities (RSEs) to develop a retirement income strategy for beneficiaries who are retired or approaching retirement.
1.68
The EM states that the retirement income covenant requires trustees to have a strategy to assist beneficiaries to achieve and balance the following three objectives:
maximising their expected retirement income;
managing expected risks to the sustainability and stability of their expected retirement income; and
having flexible access to expected funds during retirement.
1.69
To meet these three objectives, the bill outlines that trustees will be required:
to take reasonable steps to gather the information necessary to inform the formulation and review of the strategy;
as part of the strategy, record in writing the following:
each determination made by the trustee for the purposes of the strategy;
the steps taken to gather information;
each decision the trustee considers to be significant in the process of formulating, reviewing, or giving effect to the strategy; and
the reasons for those determinations, steps and decisions; and
Make a summary of the strategy publicly available on the RSE’s website.
1.70
The amendments to the SIS Act apply the day after this Act receives Royal Assent, in relation to all retestable superannuation entities (inclusive of those in existence prior to the commencement).
1.71
The bill stipulates that despite the commencement date of the bill, a trustee of an entity is not required to have formulated a retirement income strategy or published a summary before 1 July 2022.
Financial and regulatory impact of establishing the retirement income covenant
1.72
The EM states that Schedule 9 of the bill was estimated to have nil impact on receipts over the forward estimates at the time of the 2020—21 Budget.
1.73
The EM states that the average annual regulatory cost of the amendments in Schedule 9 of the bill is estimated at $20.2 million. The EM states that this regulatory burden is small in comparison to the existing administrative costs of the Australian superannuation system.The estimated $20.2 million burden will be on Businesses such as superannuation funds, rather than individuals and community organisations and that this will be mostly in the formative years whilst setting up the RIS.
The quantification of costs is based upon the assumption that the development of a retirement income strategy would require the following steps:
Data collection and analysis of a fund’s membership
Formulating a retirement income strategy
Publication of the strategy
Implementation of the retirement income strategy across a fund’s operations
An annual and three yearly review of the fund’s retirement income strategy.
1.75
Despite this estimated burden, the EM assures that through the Treasury consultation process, stakeholders did not express significant concern on these costs on their business or the costs that would be passed on to their members.
Employee share scheme taxation (Schedule 10)
Background of the Employee Share Schemes: Removing Cessation of Employment as a Taxing Point
1.76
Issues surrounding Employee Share Schemes were thoroughly canvassed in the House of Representatives Standing Committee on Tax and Revenue’s report Owning a Share of Your Work: Tax Treatment of Employee Share Schemes, published in August 2021.
1.77
Schedule 10 of the bill is implementing recommendation 9 of the Tax and Revenue Committee’s report, which is specific to the cessation of employment as a taxation point:
The Committee recommends that the Government remove the taxation point on the cessation of employment by removing sections 83A-115(5) and 83A-120(5) of the Income Tax Assessment Act 1997.
1.78
The Tax and Revenue Committee made this recommendation due to the evidence that they received that Australian firms were being disadvantaged when competing for global talent, as the point at which ESS interests are taxed were ‘no longer best practice’ and less favourable than arrangements overseas.
Schedule 10 - Employee share scheme taxation
1.79
Schedule 10 of the bill seeks to amend the Income Tax Assessment Act 1997 (ITTA Act) to remove cessation of employment as a taxing point for Employee Share Schemes (ESS) interest which are subject to deferred taxation.
1.80
An ESS provides employees (as broadly defined in the ESS rules) with a financial interest (ESS interest) in the company they work for through the granting of shares or rights to shares in that company. Employers use ESS to attract, retain and motivate staff by issuing ESS interests to employees, usually at a discount.
1.81
Generally, any discount to the market value of ESS interests in shares or rights are taxed up-front, and the market value of the discount must be included in the employee’s assessable income for that income year.
1.82
However, an employee can access deferred taxation on a discount if the ESS is under the following conditions:
at a real risk of forfeiture or loss (other than by disposal) under the conditions of the scheme; or
obtained under a salary sacrifice arrangement, and the ESS interest acquired does not exceed $5,000 in an income year; or
in the case of a beneficial interest in a right, the ESS genuinely restricts the immediate disposal of the right and the ESS rules expressly provide that Subdivision 83A-C applies to the scheme.
1.83
The EM states that the removal of the cessation of employment taxing point for tax-deferred ESS will support Australian businesses to attract and retain the talent they need to compete on a global stage.
Financial and regulatory impact of changes to ESS taxation
1.84
The EM states that Schedule 10 of the bill has ‘low’ compliance cost and is estimated to have the following impact on the underlying cash balance over the forward estimates period($m):
Table 1.2: Financial impact
|
|
|
|
|
|
|
0.0
|
0.0
|
0.0
|
-345.0
|
-205.0
|
Source: Explanatory Memorandum, p. 8.
1.85
The EM does not have a regulatory impact statement for schedule 8.
Legislative scrutiny
1.86
The Parliamentary Joint Committee on Human Rights stated in its Report 15 of 2021, that it did not have any comments on the bill as it either did not engage or only marginally engaged in human rights; promote human rights; and/or permissibly limit human rights.
Conduct of the inquiry
1.87
The committee advertised the inquiry on its website and wrote to relevant stakeholders and interested parties inviting written submissions by 7 January 2022.
1.88
The committee received 18 submissions as well as answers to questions on notice, which are listed at Appendix 1.
1.89
The committee held one public hearing for the inquiry, on 17 January 2022 in Canberra. The names of witnesses who appeared at the hearing can be found at Appendix 2.
Acknowledgements
1.90
The committee thanks all individuals and organisations who assisted with the inquiry, especially those who made written submissions and participated in the public hearing.
Notes on references
1.91
In this report, references to the Committee Hansard are to the Proof Hansard and page numbers may vary between Proof and Official Hansard transcripts.
Structure of report
1.92
Chapter 1 of this report has provided relevant background and an overview of the bill.
1.93
Chapter 2 discusses the views on the bill raised in evidence to the committee.