As discussed here, the Senate Economics Legislation Committee concluded its 8 August 2017 report into the Treasury Laws Amendment (2017 Enterprise Incentives No. 2) Bill – aka the Safe Harbour legislation – with a recommendation that the bill be passed as tabled.
However, when debated in the Senate tonight there were two sets of proposed amendments.
First, the Government tabled amendments to the proposed ipso facto protections that were intended to strengthen the anti-avoidance regime, most notably measures intended to address ‘self-executing’ clauses – provisions that ‘can start to apply automatically.’ Those amendments were accepted by the Senate.
Secondly, the Opposition proposed their own amendments to:
- Change the nature of the safe harbour from a ‘carve out’ to a defence, putting the onus of proof on company directors, rather than on the liquidator. This proposal aligns to the position advocated by ARITA and recommended in the Productivity Commission report.
- Turn what were effectively best practice guidelines into mandatory requirements, only allowing the protection to those directors who:
- Keep themselves informed about the company’s financial position
- Take steps to prevent misconduct by officers and employees of the company
- Take steps to ensure the appropriate financial records were maintained.
- Obtain appropriate advice from an appropriately qualified adviser
- Take appropriate steps to develop or implement a plan to restructure the company to improve its financial position.
- Mandate a review of the effectiveness of the legislation after it has been in operation for two years.
The first two Opposition amendments were rejected, however the proposal for a two-year review was successful.
It appears that the Safe Harbour reforms are still ‘on course.’
Update: the amendments were passed in the lower house on 12 September 2017, the consolidated Bill is available here
Further Update: The Act received Royal Assent on 18 September – so the Safe Harbour is now available to directors.
There is more detail on the Safe Harbour legislation here.