A huge lot of very rich businessmen in Australia are seemingly getting a special privilege to be exempted from laws that require other large Australian enterprises to file financial records that are otherwise available to the public.
A seemingly overlooked loophole had been put to vote to be shut down, after Labor’s shadow assistant minister for treasury, Andrew Leigh, called it a “cloak of invisibility” for the government mates. Amongst the four sittings, each time the motion was denied and voted down.
Strangely, the government wishes to protect these decade old companies from disclosing their financials and this no-tell club continues to exist. According to the Guardian Australia, the no-tell club is made up of companies that were already large in 1995 but did not have to file accounts with the Australian Securities and Investments Commission under the law at that time.
The rule of disclosure seems to only apply to startups and newer companies while many of these members of the club have substantial turnovers. Submitting a paper by treasury officials demanding submissions to a review of the loophole in2006 said, “The relief granted to grandfathered exempt proprietary companies creates an inconsistent regulatory framework for proprietary companies that potentially gives grandfathered exempt proprietary companies an unfair competitive advantage.”
The inconsistency and partial behaviour still remains. While abolishing grandfathering was party policy before the 2007 elections, Labour did not abolish it when it was in power between 2007 and 2013.
Within the club, there are now issues. Over the past decade, the value of membership of the grandfathers’ club has been eroded by transparency measures including the corporate tax disclosure laws and the introduction of a new rule requiring extremely large companies, known as “significant global entities”, to file public financial reports.
Not remaining in the limelight is not looking like an easy luxury to have after all. While the Australian government says that it is committed to corporal transparency, it still has to respond on this tax loophole in the system. It says it intends to respond to this recommendation in due course as part of its response to the Senate Economics Committee’s corporate tax avoidance report. Till then, this club continues to exist and its abolishment is under debate.
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