economics legislation committee · 'broadcasting and content reform package—funding for...

The Senate

Economics Legislation Committee

Treasury Laws Amendment (Tax Integrity and Other Measures No. 2) Bill 2018 [Provisions]

June 2018

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Senate Economics Legislation Committee Committee members Senator Jane Hume (Chair) Victoria, LP Senator Chris Ketter (Deputy Chair) Queensland, ALP Senator David Bushby Tasmania, LP Senator Amanda Stoker Queensland, LP Senator Jenny McAllister New South Wales, ALP Senator Peter Whish-Wilson Tasmania, AG

Secretariat Mr Mark Fitt, Secretary Ms Ashlee Hill, Senior Research Officer Ms Hannah Dunn, Administrative Officer PO Box 6100 Ph: 02 6277 3540 Parliament House Fax: 02 6277 5719 Canberra ACT 2600 E-mail: [email protected]

mailto:[email protected]

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Table of Contents Membership of the Committee ........................................................................ iii

Chapter 1.............................................................................................................. 1

Introduction .............................................................................................................. 1

Conduct of the inquiry ............................................................................................ 2

Overview of the bill ................................................................................................ 2

Financial impact ..................................................................................................... 6

Compatibility with Human Rights ......................................................................... 7

Chapter 1.............................................................................................................. 1

Introduction .............................................................................................................. 1

Conduct of the inquiry ............................................................................................ 2

Overview of the bill ................................................................................................ 2

Financial impact ..................................................................................................... 6

Compatibility with Human Rights ......................................................................... 7

Additional Comments from Labor Senators .................................................. 15

Appendix 1 ......................................................................................................... 17

Submissions and additional documents ................................................................ 17

Chapter 1 Introduction

1.1 On 9 May 2018, the Senate agreed that all bills introduced into the House of Representatives after 10 May 2018 and up to and including 31 May 2018 that contain substantive provisions commencing on or before 1 July 2018 be referred to committees for inquiry and report by 18 June 2018.1 1.2 On 24 May 2018, the Senate referred the provisions of the Treasury Laws Amendment (Tax Integrity and Other Measures No. 2) Bill 2018 (the bill) to the Economics Legislation Committee for inquiry and report by 18 June 2018. 1.3 As outlined by the Hon Michael Sukkar MP, Assistant Minister to the Treasurer, in his second reading speech, the bill seeks to implement a range of measures including:

…the OECD hybrid mismatch rules, which are designed to strengthen the integrity of the tax system, continuing the Turnbull government's work on combating multinational tax avoidance. It also includes an amendment to strengthen the Producer Offset and encourage filmmakers to employ Australian cast and crew, as well as measures to provide tax exemptions to support the International Cricket Council to hold the World Twenty20 in Australia and an update to the registered list of Deductible Gift Recipients.2

1.4 The bill contains 5 schedules: • Schedules 1 and 2 pertain to the Tax Integrity Package measures from the

2016–17 and 2017–18 Budget and the 2017–18 MYEFO, which seek to amend the Income Tax Assessment Act 1997 (ITAA 1997) and the Income Tax Assessment Act 1936 (ITAA 1936) to implement part of the OECD hybrid mismatch rules.3

• Schedule 3 seeks to implement part of the 2017–18 Budget measure—'Broadcasting and Content Reform Package—funding for Australian film and television content and SBS'—by amending the ITAA 1997 to limit what is qualifying Australian production expenditure under the producer offset.4

• Schedule 4 seeks to support to the International Cricket Council in staging the ICC World Twenty20 in Australia in 2020 by amending the ITAA 1997 and the ITAA 1936 to provide an income tax exemption for the ICC Business Corporation FZ-LLC (IBC). Schedule 4 also provides an exemption from

1 Journals of the Senate, No. 96, 9 May 2018, p. 3069.

2 The Hon Michael Sukkar MP, Assistant Minister to the Treasurer, House of Representatives Hansard, 24 May 2018, p. 17.

3 Explanatory Memorandum, pp. 3–5.

4 Explanatory Memorandum, pp. 5 and 120.

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interest, dividend and royalty withholding tax liability for amounts paid to the IBC.5

• Schedule 5 seeks amend the ITAA 1997 to list Melbourne Korean War Memorial Committee Incorporated as a deductable gift recipient (DGR).6

Conduct of the inquiry 1.5 The committee advertised the inquiry on its website. It also wrote to relevant stakeholders and interested parties inviting written submissions by 8 June 2018. The committee received five submissions, which are listed at Appendix 1. 1.6 The committee would like to thank all the individuals and organisations that participated in the inquiry.

Overview of the bill Schedule 1: OECD Hybrid Mismatch Rules 1.7 Schedule 1 of the bill contains two parts: • Part 1 of Schedule 1 seeks to amend the ITAA 1997 to implement part of the

OECD hybrid mismatch rules by preventing entities that are liable to income tax in Australia from being able to avoid income taxation, or obtain a double non-taxation benefit, by exploiting differences between the tax treatment of entities and instruments across different countries.7

• Part 2 of Schedule 1 seeks to amend the ITAA 1936 to implement part of the OECD hybrid mismatch rules by: limiting the scope of the exemption for foreign branch income; and preventing a deduction from arising for payments made by an Australian branch of a foreign bank to its head office in some circumstances.8

Hybrid mismatch arrangements 1.8 The explanatory memorandum explains the circumstances in which hybrid mismatch arrangements arise:

In broad terms, hybrid mismatch arrangements arise where entities exploit differences in the taxation treatment of an entity or instrument under the laws of at least two tax jurisdictions to defer or reduce income tax. This can result in double non-taxation, including long term tax deferral.9

1.9 There are two types of hybrid mismatch arrangements; deduction/deduction mismatch arrangements and deduction/non-inclusion mismatch arrangements:



7 Explanatory Memorandum, p. 9.



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• A deduction/deduction mismatch occurs when a business receives a deduction in two countries for the same payment.

• A deduction/non-inclusion mismatch occurs when a deduction is provided for a payment in one country, but the corresponding income is not included as assessable income in the recipient country.10

1.10 Hybrid mismatches pose a significant problem for the tax system when an arrangement involves related parties or is deliberately structured to result in a mismatch because it provides an opportunity to eliminate taxes that would otherwise be payable on business income unrelated to the arrangement. Hybrid mismatch arrangements can reduce the collective tax base of countries around the world.11 1.11 Hybrid mismatch rules aim to neutralise the effects of hybrid mismatches so that unfair tax advantages do not accrue for multinational groups as compared with domestic groups.12 Background 1.12 In 2015, as part of the OECD/G20 Base Erosion and Profit Shifting Project, the OECD released the report, Neutralising the Effects of Hybrid Mismatch Arrangements (OECD Action 2 Report), which made recommendations to neutralise the effects of hybrid mismatch arrangements.13 1.13 In the 2015–16 Budget, the government asked the Board of Taxation to consult on the implementation of the OECD hybrid mismatch rules. The Board of Taxation completed its Report to the Treasurer—Implementation of the OECD Hybrid Mismatch Rules—in March 2015. 1.14 The hybrid mismatch rules inserted into the ITAA 1997 by Part 1 of Schedule 1 to the bill implement the recommendations made in the OECD Action 2 Report, taking into account the recommendations made by the Board of Taxation. These measures were announced in the 2016–17 Budget.14 1.15 In 2017, the OECD released the report, Neutralising the Effects of Hybrid Mismatch Arrangements (OECD Branch Mismatch Arrangements Report), which made recommendations to neutralise the effects of branch mismatch arrangements.15 1.16 In the 2017–18 MYEFO, the government announced an extension of the OECD extension of the OECD hybrid mismatch rules to implement the







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recommendations in the OECD Branch Mismatch Arrangements Report. Part 2 of Schedule 1 to the bill implements Recommendations 1 and 3 of that report.16 1.17 The OECD hybrid mismatch rules will apply to income years starting on or after 1 January 2019.17

Schedule 2: OECD Hybrid Mismatch Rules—Branch mismatch arrangements 1.18 As previously noted, in the 2016–17 Budget, the government announced that it would implement the recommendations made in the OECD Action 2 Report, taking into account the recommendations made by the Board of Taxation. 1.19 Consistent with Recommendation 2 of the OECD Action 2 Report, Schedule 2 of the bill seeks to implement part of the OECD hybrid mismatch rules by modifying domestic income tax law to: • deny imputation benefits on franked distributions made by an Australian

corporate tax entity if all or part of the distribution gives rise to a foreign income tax deduction; and

• prevent certain foreign equity distributions received, directly or indirectly, by an Australian corporate tax entity from being non-assessable non-exempt income if all or part of the distribution gives rise to a foreign income tax deduction.18

1.20 In the 2017–18 Budget, the government further announced that it would eliminate hybrid tax mismatches that occur in cross border transactions relating to Additional Tier 1 regulatory capital. Transitional rules for Additional Tier 1 capital instruments issued before 9 May 2017 were also announced.19 1.21 The Explanatory Memorandum outlines the application of these transitional rules:

Transitional rules apply to Additional Tier 1 capital instruments issued by ADIs [authorised deposit-taking institutions], general insurance companies and life insurance companies before 9 May 2017. Under these transitional rules, the amendments to deny imputation benefits do not apply in relation to distributions on the instrument that are made before the first available call date of the instrument that occurs on or after 9 May 2017.20

1.22 Subject to the transitional rules detailed above, the amendments to deny imputation benefits and to make foreign equity distributions assessable apply in relation to distributions made on or after 1 January 2019.21







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Schedule 3: Strengthening the integrity of the film producer offset 1.23 Schedule 3 of the bill seeks to amend the ITAA 1997 to limit what is qualifying Australian production expenditure (QAPE) under the producer offset. The principal objective of the proposed amendment is to ensure that the producer offset is better targeted at supporting the Australian film industry when an offshore location is used for principal photography.22 1.24 Currently under the ITAA 1997, companies are entitled to a producer offset for QAPE incurred for a film with significant Australian content. Where the subject matter of a film reasonably requires principal photography in a location outside Australia, a company may claim towards the producer offset expenditure incurred for the purchase of services performed in that location from a company or permanent establishment that has an Australian Business Number (ABN).23 This provision in the ITAA 1997 is often referred to by the industry as the 'Gallipoli Clause'. 1.25 The amendment to the producer offset proposed in the bill imposes an additional Australian residency requirement on individuals that perform services outside Australia through a company or permanent establishment if a film reasonably requires a foreign location to be used for principal photography.24 1.26 The amendment applies to expenditure incurred in relation to films that commenced principal photography on or after 1 July 2017. The explanatory memorandum explains that retrospective application 'is necessary as the amendment is an integrity measure designed to ensure that the scope of the producer offset is appropriate and targeted to supporting the Australian screen industry'.25

Schedule 4: Income tax and withholding exemptions for the ICC World Twenty20 1.27 Schedule 4 to the bill seeks to amend the ITAA 1997 and the ITAA 1936 to provide an income tax exemption for the IBC, and also an exemption from interest, dividend and royalty withholding tax liability for amounts paid to the IBC.26 1.28 The income tax law exempts the ordinary and statutory income of a number of categories of organisations from income tax liability. Payments of interest, dividends and royalties made to non-residents by residents are not subject to withholding tax in some circumstances if the non-resident is exempt from income tax.27 1.29 The objective of these amendments is to provide support to the International Cricket Council in staging the ICC World Twenty20 in Australia in 2020.28

22 Explanatory Memorandum, p. 119–120.

23 Explanatory Memorandum, p. 119–120.




27 Relevant exemptions are principally contained in Division 50 of the ITAA 1997 and subsection 128B(3) of the ITAA 1936 respectively. Explanatory Memorandum, p. 123.


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1.30 The amendments apply on and from 1 July 2018 to 30 June 2023 inclusive to income derived by the IBC and interest, dividend and royalty withholding tax obligations for payments to the IBC.29 Schedule 5: Deductible Gift Recipients 1.31 Schedule 5 to the bill seeks to amend the ITAA 1997 to list Melbourne Korean War Memorial Committee Incorporated as a DGR.30 1.32 The income tax law allows income tax deductions for taxpayers who make gifts of $2 or more to a DGR. DGRs are entities which fall within one of the general categories set out in Division 30 of the ITAA 1997 or are specifically listed by name in that Division.31 1.33 The proposed amendment ensures that Melbourne Korean War Memorial Committee Incorporated receives appropriate support through the Commonwealth tax system for building a memorial in Melbourne honouring Australians who served in the Korean War.32 1.34 The amendment applies to gifts made to Melbourne Korean War Memorial Committee Incorporated between 1 January 2018 and 31 December 2019 inclusive.33

Financial impact 1.35 The package of OECD hybrid mismatch reforms, contained in Schedules 1 and 2 of the bill, is expected to have an unquantifiable gain to revenue over the forward estimates.34 1.36 The estimated financial impact of the producer offset amendments set out in Schedule 3 is a reduction in expenditure of $6 million over the forward estimates as follows: Table 1: Financial impact—Strengthening the integrity of the film producer offset35

2017–18 2018–19 2019–20 2020–21

- -$2m -$2m -$2m

- Nil








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1.37 The income tax and withholding exemptions measure in Schedule 4 is estimated to have an unquantifiable impact on revenue over the forward estimates.36 1.38 The cost to revenue of the deductible gift recipient measure in Schedule 5 was estimated in the 2017–18 MYEFO to be $1.1 million over the forward estimates as follows: Table 2: Financial impact—Deductible Gift Recipients37

2016–17 2017–18 2018–19 2019–20 2020–21

- - -$0.4m -$0.5m -$0.2m

- Nil

Compatibility with Human Rights 1.39 As required under the Human Rights (Parliamentary Scrutiny) Act 2011, the government has assessed the bill's compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The government considers that all schedules in the bill are compatible.38




Chapter 2 Views on the bill

2.1 This chapter summarises the views held by stakeholders on the bill and its effects. 2.2 The bill contains 5 schedules. A total of five submissions were received for the inquiry. The submissions from the Tax Justice Network Australia (TJN-Aus) and the Australian Securitisation Forum (ASF) commented only on the measures pertaining to the OECD hybrid mismatch rules set out in Schedules 1 and 2 of the bill. The remaining three submissions commented only on the producer offset measure contained in Schedule 3 of the bill. As such, this chapter will examine the evidence received in relation to the measures in Schedules 1 to 3.

Support for hybrid mismatch rules—Schedules 1 and 2 General comments 2.3 TJN-Aus were welcoming of the measures in the bill to address the problem of hybrid mismatches and their misuse by some corporations to avoid paying taxes in the places where business is really being conducted.1 2.4 TJN-Aus observed the substantial loss to governments due to base erosion and profit shifting (BEPS), noting that the OECD has estimated global revenue loss 'to be conservatively between US$100 billion and US$240 billion a year'.2 2.5 TJN-Aus cautioned the committee of the risk that there will be attempts to circumvent the hybrid mismatch rules through 'the design of more elaborate hybrid mismatches'. Expanding on this point, TJN-Aus submitted that:

The hybrid mismatch rules will require constant monitoring to ensure proper application. Resolving the arbitrage questions raised by hybrid payments, entities, and transfers is easier said than done. The complexity comes from attempts to narrow the range of transactions covered.3

2.6 TJN-Aus also expressed its specific support for a number of aspects of the hybrid mismatch reforms proposed in the bill, including, but not limited to: • '…that the hybrid mismatch rules will apply regardless of whether the hybrid

mismatch scheme was entered into or carried out in Australia or outside Australia or partly in Australia and partly outside of Australia'.4

• '…that a structured arrangement be assessed on the basis of if it is reasonable to conclude the hybrid mismatch is a design feature of the scheme which the

1 Tax Justice Network Australia, Submission 3, p. 1.




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payment was made, rather than the much higher bar test to try and prove the tax payer intended the hybrid mismatch'.5

• '…the amendments to limit the scope of the exemption for foreign branch income and to prevent a deduction from arising for payments made by an Australian branch of a foreign bank to its head office in some circumstances'.6

Exemption for securitisation vehicles 2.7 The ASF raised specific concerns regarding the effect of the bill on the Australian securitisation industry. The ASF highlighted that both the OECD Action 2 Report and the Board of Taxation Report had recommended that the hybrid mismatch rules include a specific exemption for securitisation vehicles.7 2.8 The ASF explained that the Australian financial services sector is heavily reliant on securitised funding and that, without an exemption, ordinary securitisation transactions could be adversely affected by the proposed hybrid mismatch rules:

If securitisation vehicles are unexpectedly subject to taxation as a result of the existence of a hybrid mismatch there is a risk that they will lose their credit ratings, and new securitisation vehicles may be unable to obtain credit ratings, since the applicable credit rating methodologies require tax neutrality in the vehicle. This would have serious implications for the certainty and credibility of the Australian securitisation market.8

2.9 According to the ASF, Treasury has indicated that the proposed legislation is not intended to disrupt securitisation transactions or the financial services market more broadly. Despite the repeated efforts of the ASF to raise this issue, the draft bill was not amended before being introduced into Parliament.9 2.10 The ASF considered that it was important that the explanatory material provided clear guidance on the issue for the Australian Taxation Office when it looks to prepare its own guidance. To this effect, the ASF suggested that the following additional text should be added to the Explanatory Memorandum:

It would not be expected that payments made upon tranches of debt issued by a bona fide securitisation vehicle (for example, a vehicle engaged in "securitisation" transactions as defined in the Prudential Practice Guide APG 120 released by APRA) would be regarded as having been made under a "structured arrangement" for the purposes of section 832-210. For example, if payments on certain tranches of notes issued by the securitisation vehicle were taxed at a later time in the noteholder’s country of residence than when a deduction is allowed in Australia, and it would not be reasonable to conclude that the issuer had regard to the hybrid tax



7 Australian Securitisation Forum, Submission 5, [p. 1].

8 Australian Securitisation Forum, Attachment 2 to Submission 5, [pp. 1 and 4].


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outcome in the pricing and marketing of those notes, then in the absence of any other indicia the requirements of section 832-210 should not be satisfied.10

2.11 In layman's terms, the clarification requested by the ASF could otherwise be expressed as:

The "structured arrangement" definition is not intended to impinge upon ordinary commercial transactions, including ordinary bond issuances and securitisation transactions, where, although participants would reasonably be expected to take into account the tax treatment of the investment in making their investment decision, it would not be reasonable to conclude that the issuer had regard to the availability of hybrid tax outcomes in the pricing and marketing of those notes.11

Changes to the producer offset—Schedule 3 2.12 As outlined in Chapter 1, Schedule 3 of the bill seeks to amend the Income Tax Assessment Act 1997 (ITAA 1997) to limit what is qualifying Australian production expenditure (QAPE) under the producer offset. Specifically, the bill imposes an additional Australian residency requirement on individuals that perform services outside Australia through a company or permanent establishment if a film reasonably requires a foreign location to be used for principal photography.12 2.13 The principal objective of the proposed amendment is to ensure that the producer offset is better targeted at supporting the Australian film industry when an offshore location is used for principal photography.13

Industry consultation 2.14 Some submitters expressed concern that the amendment to the producer offset has progressed to legislative enactment without sufficient industry consultation. 2.15 For example, the Media, Entertainment & Arts Alliance (MEAA) noted its concern that the measure 'has been developed without any apparent consultation with industry participants'14, further contending that:

We can see no evidence for Treasury's claims that the amendment will ensure that the producer offset is 'better targeted at supporting the Australian film industry' and that '[existing] expenditure does not directly support the Australian screen industry'. A proper process of consultation would enable all parties to test these assertions.15





14 Media, Entertainment & Arts Alliance, Submission 1, [p. 1].


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2.16 Screen Producers Australia (SPA) also noted a lack of industry consultation as a preliminary concern with the bill, and argued that while the policy argument for the change is the 'integrity' and 'strength' of the Australian film industry, there is 'no clearly articulated evidence provided of the problem that needs to be fixed'.16

Implications for the Australian film industry 2.17 Submitters disagreed with the objective of the amendment as set out in the explanatory memorandum to the bill, and expressed concerns that, if enacted, the proposed changes could damage the reputation, operation, and competitiveness of the Australian film industry.17 2.18 For instance, SPA contented that, if implemented, the bill will 'reduce Australia's competitiveness in the global market for finance, talent and audience'. Elaborating on this point, SPA explained that:

These three market forces are linked: talent attracts finance, which goes into producing high-quality Australian content that attracts audiences locally and internationally. Any restrictions on access to production talent (directors, actors and crew), affects access to finance. The proposed Bill creates a disincentive to include foreign locations in Australian productions, thereby limiting international sales and audiences.18

2.19 Matchbox Pictures (Matchbox) also considered the effect of the bill with regard to the ability to attract talent to Australian productions. Matchbox took the view that '[w]e must not be penalised for attracting international talent to our productions'.19 2.20 Matchbox argued that:

We expect talent with an international profile will be increasingly necessarily to finance our productions at a level that will be competitive with the high-end productions coming out of North America, the United Kingdom and the rest of the world. It is necessary to attach international talent to finance higher budget programs – the types of programs that have the highest cultural impact and generate the most local economic activity.20

2.21 MEAA characterised the proposed producer offset measure as leaving the sector 'with the incongruous situation whereby non-resident wages on Australian locations are eligible for offsets, while non-resident wages incurred by Australian productions in offshore locations will not'.21 MEAA further submitted that:

16 Screen Producers Australia, Submission 2, [p. 2].

17 See, for example, Media, Entertainment & Arts Alliance, Submission 1, [p. 2]; Screen Producers Australia, Submission 2, [p. 2].

18 Screen Producers Australia, Submission 2, [p. 2].

19 Matchbox Pictures, Submission 4, [p. 1].



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This seems to punish Australian productions while providing a 'rails run' for major international studios. Some might rightly claim that this measure sends a message that the Australian government actively prefers foreign studios over innovative Australian producers.22

Retrospective application 2.22 The retrospective application of the producer offset measure proposed in the bill to expenditure incurred on or after 1 July 2017 (see paragraph 1.26) was raised as a matter of concern by some submitters. 2.23 MEAA strongly opposed this retrospective application and warned that it 'could only have a negative impact on affected projects'.23 Additionally, MEAA highlighted its concern regarding implications for production continuity 'if personnel changes are caused mid-production due to what can and cannot be claimed against QAPE'.24 2.24 Similarly, Matchbox also expressed concern regarding the retrospective application of the proposed changes, noting that it has 'not been able to calculate any potential effect on our business'.25

Committee view 2.25 The committee notes that the hybrid mismatch rules implemented by this bill build upon previous action taken by the government on tax avoidance. As a result of these rules, multinational companies will no longer gain an unfair advantage over their solely Australian based counterparts. The committee considers that the hybrid mismatch rules, together with other measures in the government's comprehensive Tax Integrity Package, will ensure that Australia continues to be at the forefront of global efforts to address multinational tax avoidance. 2.26 The committee notes the concerns raised by the ASF regarding the potential unintended consequences of the hybrid mismatch rules on securitisation transactions and more broadly on the market. The committee notes that the Australian Taxation Office is able to provide clarity on whether ordinary securitisation transaction vehicles will not be caught under the proposed structured arrangement definition. 2.27 The committee is cognisant of the mobile nature of international film and television production and acknowledges the concerns raised by submitters with regard to the amendment in Schedule 3 of this bill to limit what is qualifying Australian production expenditure under the producer offset. 2.28 However, the committee is confident that by encouraging the employment and use of Australian cast and crew at all stages of production, the proposed measure will





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support the Australian screen industry and maintain its well-renowned reputation for high quality content.

Recommendation 1 2.29 The committee recommends that the bill be passed. Senator Jane Hume Chair

Additional Comments from Labor Senators 1.1 Labor Senators support the following schedules:

(a) Schedule 1—OECD Hybrid Mismatch Rules (b) Schedule 2—Other effects of foreign income tax deductions (c) Schedule 4—Income tax and withholding exemptions for the ICC World

Twenty20 (d) Schedule 5—Deductible gift recipients

Schedule 3: Strengthening the integrity of the film producer offset 1.2 Labor Senators note comments by the Media Entertainment and Arts Alliance (MEAA) that there was a lack of consultation on this measure and the measure will be applied retrospectively:

MEAA is concerned that this measure has been developed without any apparent consultation with industry participants. We are also aware that the measure will have retrospective application. MEAA opposes changing the rules mid-stream. It is the epitome of bad faith and could only have a negative impact on affected projects.1

1.3 Screen Producers Australia (SPA) made similar comments: SPA has two preliminary concerns with the Bill as proposed:

• the absence of any precise identification of a problem that needs to be

fixed, and

• a lack of industry consultation..

…

3) Retrospective application: The Bill commences on 1 July 2017. This raises constitutional problems through potential acquisition of property and interfering with the value of contracts entered into in good faith. This leaves the Commonwealth potentially liable to pay “just terms” for any property acquired.2

1.4 Matchbox Pictures also made the point that a Regulatory Impact Statement (RIS) has not accompanied this measure:

The proposed amendments do not appear to be supported by a regulatory impact statement; and may have significant unintended consequences. We are especially concerned that these changes could have retrospective application and have not been able to calculate any potential effect on our business.3


2 Screen Producers Australia, Submission 2, [pp. 1–2].

3 Matchbox Pictures, Submission 4, p. 1.

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1.5 Given the evidence received, Labor Senators believe that the bill should be amended to remove the retrospective application of Schedule 3 and that the government consider a post-implementation review of Schedule 3 in order to evaluate the impacts of the integrity measure.

Recommendation 1 1.6 That the bill be amended so that the start date for the Schedule 3 measure, relating to strengthening the integrity of the film producer offset, is 1 July 2018 in order to remove retrospectivity. Recommendation 2 1.7 That consideration be given to a post-implementation review of the Schedule 3 measure at the earliest appropriate time. Recommendation 3 1.8 That the amended bill be passed. Senator Chris Ketter Senator Jenny McAllister Deputy Chair Senator for New South Wales

Appendix 1 Submissions and additional documents

Submissions

1. Media, Entertainment & Arts Alliance (MEAA) 2. Screen Producers Australia 3. Tax Justice Network Australia 4. Matchbox Pictures 5. Australian Securitisation Forum

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