House of Representatives

Treasury Laws Amendment (Mutual Reforms) Bill 2019

Explanatory Memorandum

(Circulated by authority of the Assistant Minister for Treasury and Finance, the Hon Zed Seselja)

General outline and financial impact

Overview

This Bill gives effect to recommendations 5, 8 and 9 of the Hammond Report to:

introduce a definition of a mutual entity into the Corporations Act;
remove the uncertainty for transferring financial institutions and friendly societies in respect of the demutualisation provisions in Part 5 of Schedule 4 of the Corporations Act; and
expressly permit mutual entities registered under the Corporations Act to issue equity capital without risking their mutual structure or status.

Date of effect: The amendments in the Bill take effect from the day after Royal Assent.

Proposal announced: The Government announced that it would implement all the recommendations from the Hammond Report on 8 November 2017.

Financial impact: This implements elements of the reforms announced in the 2017-18 MYEFO measure Debt-Equity rules - allowing debt tax treatment for Tier 2 capital issued by customer-owned banks, estimated to have an unquantifiable cost to revenue.

Human rights implications: This Bill does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 2, paragraphs 2.1 to 2.14.

Compliance cost impact: Negligible.


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