TPRE 2020/D1 - Explanatory statement


COMMONWEALTH OF AUSTRALIA

Taxation Administration Act 1953

Explanatory Statement

General Outline of Instrument

1. This instrument is made under subsection 396-70(4) of Schedule 1 to the Taxation Administration Act 1953 (TAA).

2. This instrument exempts administrators of a payment system (within the meaning of the Payment Systems (Regulation) Act 1998) from having to include specified classes of transactions in reports prepared and lodged in relation to item 9 in the table in section 396-55 of Schedule 1 to the TAA.

3. Under subsection 33(3) of the Acts Interpretation Act 1901, where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by-laws), the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.

4. This instrument is a legislative instrument for the purposes of the Legislation Act 2003.

Date of effect

5. This instrument commences on 1 July 2020.

Repeal of previous instrument

6. This instrument repeals and replaces Instrument F2017L00629 Classes of Electronic Payment System Transactions Exempt From Providing Third Party Reports Determination 2017 registered on 2 June 2017.

What is this instrument about

7. Item 9 in the table in section 396-55 of Schedule 1 to the TAA requires an administrator of a payment system (within the meaning of the Payment Systems (Regulation) Act 1998) to report a transaction involving an electronic payment if the transaction is facilitated on behalf of an entity, and the administrator reasonably believes that the transaction was a payment to the entity, a refund or cash withdrawn by a customer of the entity, and is for the purpose of a business carried on by the entity.

8. Paragraph 396-70(4)(b) of Schedule 1 to the TAA allows the Commissioner, by legislative instrument, to exempt specified classes of transactions from being reported.

9. Paragraphs 5(a) to (d) of this instrument exempt specified classes of transactions from these reporting requirements.

The reporting exemption provided by paragraph 5(a)

10. Paragraph 5(a) of this instrument exempts administrators of a payment system from reporting transactions which have been initiated by another entity where that other entity is required by item 9 in the table in section 396-55 of Schedule 1 of the TAA to report the transactions to the Commissioner.

11. Paragraph 5(a) of this instrument continues the exemption in paragraph 5(a) of the repealed instrument. The exemption in paragraph 5(a) of the repealed instrument applies only to administrators of a payment system who are authorised deposit-taking institutions, for the purposes of the Banking Act 1959.

12. Paragraph 5(a) of this instrument also extends the exemption to all administrators of a payment system which are not authorised deposit-taking institutions, in relation to payments processed after 30 June 2020.

The reporting exemption provided by paragraph 5(b)

13. Paragraph 5(b) of this instrument exempts administrators of a payment system from reporting payments processed by Framework Participants under the High Value Clearing System governed by Australian Payments Clearing Association Limited.

14. Paragraph 5(b) of this instrument continues the exemption in paragraph 5(b) of the repealed instrument.

The reporting exemption provided by paragraph 5(c)

15. Subparagraphs 5(c)(i) to (vii) of the repealed instrument exempted administrators of a payment system from reporting the following classes of transactions:

(i)
Payments made to a carriage service provider (within the meaning of the Telecommunications Act 1997).
(ii)
Payments made to a utility for the provision of electricity, water, sewerage or gas.
(iii)
Payments made to a government related entity (within the meaning of section 195-1 of the A New Tax System (Goods and Services Tax) Act 1999).
(iv)
Payments made to a general insurer which are received in the course of the insurer's insurance business (within the meaning of the Insurance Act 1973).
(v)
Payments made to a life insurer which are received in the course of the insurer's life insurance business (within the meaning of the Life Insurance Act 1995).
(vi)
Payments made to a private health insurer which are received in the course of the insurer's health insurance business (within the meaning of the Private Health Insurance (Prudential Supervision) Act 2015).
(vii)
Payments made to a superannuation fund, approved deposit fund, or pooled superannuation trust (within the meanings of the Superannuation Industry (Supervision) Act 1993) or RSA provider (within the meaning of the Retirement Savings Accounts Act 1997).

16. The exemptions in subparagraphs 5(c)(i) to (vii) of the repealed instrument are continued in subparagraphs 5(c)(i) to (vii) of this instrument.

17. Subparagraphs 5(c)(viii) and (ix) of this instrument continue the exemptions provided by paragraphs 5(b) and (c) of legislative instrument F2017L00631 Classes of Electronic Payment System Transactions Exempt in Certain Years from Being Reported in Third Party Reports Determination 2017, which expires on 30 June 2020.

18. Subparagraph 5(c)(viii) of this instrument exempts the reporting of payments made as a Direct Entry Direct Credit processed through the Bulk Electronic Clearing System governed by Australian Payments Clearing Association Limited.

19. Subparagraph 5(c)(ix) of this instrument exempts the reporting of payments processed by New Payments Platform Participants using the New Payments Platform governed by NPP Australia Limited.

The reporting exemption provided by paragraph 5(d)

20. Paragraph 5(d) of this instrument adds further exemptions, in subparagraphs 5(d)(i) and (ii), applicable to payments processed after 30 June 2020.

21. Subparagraph 5(d)(i) of this instrument exempts the reporting of payments processed by an administrator, where the payer, the payee and the administrator (which may be the payer, the payee or neither) are all members of the same consolidated group (within the meaning of section 703-5 of the Income Tax Assessment Act 1997) and the same GST group (within the meaning of section 195-1 of the A New Tax System (Goods and Services Tax) Act 1999. This exemption applies in relation to payments processed after 30 June 2020. The reporting of these payments is exempted because such payments have no income tax or GST consequences.

22. Subparagraph 5(d)(ii) of this instrument exempts the reporting of loan repayments, chattel mortgage repayments, hire purchase payments and finance lease payments. This exemption applies in relation to payments processed after 30 June 2020. The reporting of these payments is exempted because such payments generally include a non-assessable repayment of principal.

Reporting transactions exempt from being reported by paragraphs 5(c) and (d)

23. If not reporting transactions exempted from the reporting requirement by paragraphs 5(c) or (d) of this instrument would increase the administrative burden on an administrator of a payment system, the administrator may, despite the exemption, report those transactions.

What is the compliance effect of this instrument

24. The list of exempted transactions provides certainty and a potential reduction in compliance cost for entities that may be impacted by the third party reporting legislation.

25. Compliance Cost Impact: Minor - there will be no or minimal impacts for both implementation and ongoing compliance costs. The legislative instrument is minor or machinery in nature.

Consultation

26. Subsection 17(1) of the Legislation Act 2003 requires, before the making of a determination, that the Commissioner is satisfied that appropriate and reasonably practicable consultation has been undertaken.

27. As part of the consultation process, you are invited to comment on the draft determination and its accompanying draft explanatory statement.

Please forward your comments to the contact officer by the due date.

Due date: 7 July 2020
Contact officer: Michelle Dorey
Email: Michelle.Dorey@ato.gov.au
Phone: (02) 6216 1437

Statement of compatibility with Human Rights

This Statement is prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Classes of Electronic Payment System Transactions Exempt From Being Reported In Third Party Reports Determination 2020

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Legislative Instrument

This Legislative Instrument exempts administrators of payment systems (within the meaning of the Payment Systems (Regulation) Act 1998) from having to include specified classes of transactions in reports prepared and lodged in relation to item 9 in the table included in section 396-55 of Schedule 1 to the TAA.

Human rights implications

This Legislative Instrument does not engage any of the applicable rights or freedoms. It provides exemptions from reporting requirements which are considered to be minor in nature.

Conclusion

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.



Louise Clarke
Deputy Commissioner of Taxation
Policy, Analysis and Legislation
Law Design and Practice

Legislative References:
A New Tax System (Goods and Service Tax) Act 1999
The Act

Acts Interpretation Act 1901
The Act

Human Rights (Parliamentary Scrutiny) Act 2011
The Act

Insurance Act 1973
The Act

Legislation Act 2003
The Act

Life Insurance Act 1995
The Act

Payment Systems (Regulation) Act 1998
The Act

Private Health Insurance (Prudential Supervision) Act 2015
The Act

Retirement Savings Accounts Act 1997
The Act

Superannuation Industry (Supervision) Act 1993
The Act

Taxation Administration Act 1953
The Act

Telecommunications Act 1997
The Act

Related Legislative Determinations:
TPRE 2020/D1