House of Representatives

Taxation Laws Amendment Bill 1984

Taxation Laws Amendment Act 1984

Explanatory Memorandum Part B

(Circulated by authority of the Minister Assisting the Treasurer, The Hon. Chris Hurford MP)

Notes on Clauses

PART I - PRELIMINARY

Clause 1: Short title

By this clause the amending Act is to be cited as the Taxation Laws Amendment Act 1984.

Clause 2: Commencement

Under sub-clause 2(1), sections 1 and 2 will come into operation on the day on which the amending Act receives the Royal Assent. The amendment proposed by sub-clause 319(1), which corrects a drafting oversight in the Taxation (Interest on Overpayments) Act 1983, will be deemed, by sub-clause 2(2), to have come into operation immediately after the commencement of that Act (see notes on clause 319). All other provisions will, under sub-clause 2(3), come into operation on the fifty-sixth day after the amending Act receives the Royal Assent. But for this clause the amending Act would, by virtue of sub-section 5(1A) of the Acts Interpretation Act 1901 come into operation on the twenty-eighth day after Royal Assent.

PART VII - AMENDMENTS OF THE INCOME TAX ASSESSMENT ACT 1936

Clause 91: Principal Act

This clause facilitates references to the Income Tax Assessment Act 1936 which, in this Part, is referred to as "the Principal Act".

Clause 92: Interpretation

Section 6 of the Principal Act contains a number of definitions and provisions to assist in the interpretation of the Act.

Paragraph (a) of clause 92 proposes an amendment of the definition of "assessment" in sub-section 6(1) to make it clear that, as well as the ascertainment of taxable income and tax payable thereon, an assessment is to include the ascertainment of additional tax under Part VII of the Principal Act in accordance with proposed new section 227 to be inserted by clause 152.

Paragraph (b) will insert a further interpretation provision - sub-section (1A) - in section 6 of the Principal Act which will have the effect that references in the Principal Act to a failure to do an act or thing, will, unless the contrary intention appears, include a refusal to do that act or thing.

Clause 93: Repeal of sections 10 and 13

Section 10 of the Principal Act gives to a Second Commissioner the same powers and functions as the Commissioner. By section 13 of the Principal Act a reference in that Act to the Commissioner includes a reference to a Second Commissioner or a Deputy Commissioner.

Clause 93 proposes to repeal sections 10 and 13 of the Principal Act the substance of which is to be re-enacted by the insertion of section 6D in, and the amendment of section 8 of, the Taxation Administration Act 1953 - see notes on clauses 295 and 296.

Clause 94: Annual Report

Section 14 of the Principal Act requires the Commissioner of Taxation to furnish to the Minister an annual report on the working of the Act. The Minister is required to table the report in Parliament.

Proposed sub-section 14(3) will ensure that the rules for furnishing periodic reports contained in section 34C of the Acts Interpretation Act 1901 will apply to the Commissioner's annual report to Parliament. That section provides particular rules (principally time limits) for furnishing annual reports.

Clause 95: Losses and outgoings

The amendment of section 51 - the general deduction provision - of the Principal Act by this clause to include new sub-section (4) will provide legislative support for the longstanding principle that, on the ground of public policy, an amount payable by way of penalty under a law or for an offence against a law should not be an allowable deduction for income tax purposes. Sub-section 51(4) will apply to cases where the taxpayer has paid a penalty or fine on his or her own account or on behalf of, say, an employee or third party contractor. By the operation of sub-clause 165(2), the amendment will apply to the 1984-85 income year and all subsequent years of income.

Clause 96: Qualifying expenditure

Section 124ZB of the Principal Act deals with capital expenditure on traveller accommodation that qualifies for deduction under Division 10C of Part III of the Principal Act. The purely technical amendment proposed by clause 96 will correct a drafting error.

Clause 97: Payment of withholding tax

Section 128C of the Principal Act fixes the due date for payment of withholding tax on dividends and interest paid to non-residents and imposes additional tax on overdue amounts at the rate of 20% per annum.

The amendment proposed to sub-section 128C(3) by paragraph (a) of clause 97 will ensure that such additional tax is classified as a penalty.

The effect of new sub-section 128C(4A) to be inserted by paragraph (b) will be to ensure that such penalty tax continues to accrue in respect of unpaid withholding tax notwithstanding that judgment for payment of the unpaid withholding tax has been given by, or entered in, a court. Where, in such a case, the judgment debt itself carries interest, the penalty tax otherwise payable is to be reduced by the amount of interest that relates to the unpaid withholding tax. Sub-section 128C(4A) will apply in relation to judgments given or entered after the amendments proposed by clause 97 come into operation - see notes on sub-clause 165(4).

Clause 98: Application of credits

Clause 99: State credits

The omission of sub-sections 160AN(6) and 160AP(4) of the Principal Act by clauses 98 and 99 respectively is consequential upon the authorisation, by clause 314, of a single general appropriation out of the Consolidated Revenue Fund for refunds of taxes and related payments by the Commissioner of Taxation in lieu of the numerous specific appropriations contained in the present law.

Clause 100: Amendment of assessments

Section 170 of the Principal Act authorises the Commissioner to amend an assessment in specified circumstances. Paragraph (a) of clause 100 effects a technical drafting change, while paragraph (b) will make it clear that references to tax in section 170 include additional tax assessed under Part VII.

Clause 101: Refund of amounts overpaid

This clause proposes the repeal of section 172 of the Principal Act and the substitution of a new section. The new section 172 will, like its predecessor, authorise the refund of any tax overpaid in cases where an amendment of an assessment has reduced a person's tax liability, including additional tax under section 207 or the new Part VII of the Principal Act - see new sub-section 172(2). It will also stipulate that, where additional tax for late payment has been imposed under section 207, the amount of that additional tax is to be recalculated as though the amount by which the tax has been reduced on amendment was never payable. Previously such reduction in additional tax was achieved by exercise of the Commissioner's discretion. The revised section will also authorise the Commissioner to apply any amount of tax overpaid against any tax liability of the taxpayer to the Commonwealth and to refund any amount not so applied.

Clause 102: Notice of assessment

Section 174 of the Principal Act requires the Commissioner to serve notice of an assessment on the person required to pay the tax as soon as is convenient after it has been made. By the proposed insertion of new sub-section 174(3) by clause 102, that requirement will extend to assessments of additional tax under new Part VII (clause 152) that will be made under the new section 227.

Clause 103: Remuneration and allowances of members

This clause will repeal section 182 of the Principal Act and insert a new section which reflects the current practice for determining levels of remuneration of members of Taxation Boards of Review. The new section 182 will authorise the payment of remuneration of the Chairman and other members of a Taxation Board of Review as determined by the Remuneration Tribunal and the payment of such allowances as are prescribed.

Clause 104: Interpretation

The amendment proposed to section 184A of the Principal Act - which defines the expression "Supreme Court" in relation to taxation reviews and appeals - is largely consequential upon the repeal, by clause 105, of section 184B. The amendment will remove a superfluous reference to "Australia" and omit the concluding words of paragraph (b) that pertain to limitations on the jurisdiction of Territory Supreme Courts contained in section 184B.

Clause 105: Repeal of section 184B

Section 184B of the Principal Act limits the jurisdiction of Territory Supreme Courts to those proceedings arising out of assessments where the taxpayer concerned was ordinarily resident in or, in the case of a company, had its principal place of business in the Territory at the time of institution of the proceedings or during the whole or a part of the year of income concerned.

It has been found in practice that the section is too restrictive. It prevents, for example, a taxpayer who becomes a bona fide resident of a Territory during the period between the institution of an appeal and the hearing of it to have the appeal transferred to and heard by the Supreme Court of the Territory in which he or she is then resident.

Clause 105 therefore proposes the repeal of section 184B, with the effect that the jurisdiction of Territory Supreme Courts in taxation appeals would, by reason of section 15C of the Acts Interpretation Act 1901, be on the basis of a relevant nexus with the Territory concerned.

Clause 106: Powers of Board

This clause will amend section 193 of the Principal Act to circumscribe the powers of a Taxation Board of Review to review decisions of the Commissioner of Taxation concerning remission of additional tax that may be imposed under new Part VII of the Principal Act to be inserted by clause 152.

In broad terms, section 193 extends to a Taxation Board of Review, for the purpose of reviewing decisions of the Commissioner, the powers and functions of the Commissioner in making assessments, determinations and decisions under the Principal Act. The Commissioner presently has power to remit statutory additional tax imposed, inter alia, by section 226 and the Board has power to review the Commissioner's decision where, broadly, the additional tax after remission exceeds the greater of $2 or an amount calculated at 10% per annum of the tax in question. In cases where the additional tax is imposed under sub-section 226 (2B) or (2D) in relation to international profit shifting transactions, the Board has an unfettered power of review.

Proposed new sub-section 193(2) to be inserted by clause 106 will carry through the existing principles of review in cases of remission of additional tax imposed under new sections 222 (failure to furnish a return), 223 (false or misleading statements), 224 (use of specific tax avoidance schemes), 225 (avoidance by transfer pricing) and 226 (general tax avoidance), but the existing minimum $2 or 10% per annum review limits will be increased to $20 and 20% respectively.

New sub-section 193(3) will apply in cases where a trustee of a trust estate is made personally liable under proposed new sub-section 223(4) for additional tax resulting from the making of a false or misleading statement relating to the affairs of the trust estate. In such a case, the Board of Review will be able to review a decision of the Commissioner to remit some of the additional tax where, after remission, it exceeds $20.

New sub-section 193(4) contains the definitions of terms used in sub-section 193(2) -

"prescribed day", will be the last day of the period allowed to the taxpayer for furnishing to the Commissioner a return of income and will set the commencement of the period for calculating whether or not the additional tax in a given case exceeds 20% per annum of the amount of relevant affected tax; and
"relevant affected tax" will mean the amount of tax sought to be avoided by the making of a false or misleading statement or participation in a tax avoidance scheme, i.e., by the various acts or omissions in respect of which a penalty is imposed under the proposed new Part VII.

Notwithstanding the amendment of sub-sections 193(2) and (3) of the Principal Act by clause 106, the existing sub-sections will continue to apply after the amendments come into operation in relation to decisions of the Commissioner to remit additional tax under existing sub-section 226(3) - see notes on sub-clause 165(6).

Clause 107: Pending appeal not to delay payment of tax

Section 201 of the Principal Act stipulates that liability to pay income tax under an assessment is not suspended pending the outcome of an appeal or reference to a Board of Review against the assessment. The insertion of new sub-section 201(2) by this clause will make it clear that the requirement to pay tax pending an appeal or reference applies to additional tax imposed by section 207 for late payment and additional tax imposed under Part VII in respect of the various acts or omissions specified therein.

Clause 108: Adjustment of tax after appeal

This clause proposes the repeal of section 202 of the Principal Act and its replacement by a new section.

The new sub-section 202(1) will, like its predecessor, authorise the refund of any tax overpaid, including additional tax under section 207 and the new Part VII - see new sub-section 202(3), in cases where an amendment of an assessment on an appeal or reference to a Board of Review has reduced a person's tax liability. Alternatively, the Commissioner may apply the amount overpaid against any liability of the person arising under a taxation law that the Commissioner administers, and refund any balance. In the converse situation, any increase in the amount of tax will be recoverable from the person - new sub-section 202(2). Where additional tax for late payment has been imposed under section 207 and tax is reduced on amendment, the amount of that additional tax is to be recalculated as though the amount by which the tax has been reduced was never payable.

Clause 109: When tax payable

Section 204 of the Principal Act declares that income tax assessed is due and payable by the person liable to pay the tax on the due date specified in the notice of assessment or, if no date is specified, 30 days after the service of the notice. New sub-section 204(2) to be inserted by this clause will make it clear that this requirement also extends to additional tax under proposed Part VII that is assessed in accordance with new section 227.

Clause 110: Taxpayer leaving Australia

Where the Commissioner has reason to believe that a person liable to pay tax may leave Australia before the due date for payment, he may, under section 205, notify an earlier due date. New sub-section 205(2) to be inserted by this clause will have a similar effect in relation to such tax as new sub-section 204(2) will have and will ensure that the due date for payment of additional tax under proposed Part VII can likewise be advanced.

Clause 111: Extension of time and payment by instalments

The amendment proposed by this clause is comparable to those being made by clauses 109 and 110, and will make clear that references in section 206 to tax payable under extensions of time or instalment arrangements granted by the Commissioner include references to additional tax assessed under new Part VII.

Clause 112: Penalty for unpaid tax

Section 207 of the Principal Act imposes additional tax at the rate of 20% per annum on any tax that remains unpaid after the due date for payment notified in a notice of assessment.

The amendment of sub-section 207(1) by paragraph (a) of clause 120 will ensure that such additional tax is in the nature of a penalty for failure to pay by the due date.

Paragraph (b) will make a technical amendment of sub-section 207(1A).

The effect of new sub-section 207(1B) to be inserted by paragraph (c) will be to ensure that penalty tax for late payment continues to accrue in respect of unpaid tax notwithstanding that judgment for its payment has been given or entered in a court. Where, in such a case, the judgment debt itself carries interest, the penalty tax otherwise payable is to be reduced by the amount of interest that relates to the unpaid tax. Sub-section 207(1B) will apply in relation to judgments entered or given after the amendments proposed by clause 112 come into effect - see explanation of sub-clause 165(4).

New sub-section 207(3) will make clear that additional tax for late payment is to be calculated on both primary tax and any additional tax that may be imposed under new Part VII.

Clause 113: Tax a debt due to the Commonwealth

Section 208 of the Principal Act specifies that income tax due and payable is a debt due to the Commonwealth and payable to the Commissioner. New sub-section 208(2) to be inserted by clause 121 will make it clear that the application of section 208 extends to additional tax for late payment imposed under section 207 and additional tax under new Part VII.

Clause 114: Recovery of tax

The amendment effected by this clause will have a similar effect in relation to section 209 of the Principal Act - which authorises the Commissioner to sue for recovery of unpaid tax - as the amendment proposed by clause 113 will have on section 208 and will thus ensure that the power to recover unpaid tax extends to additional taxes.

Clause 115: Substituted service

The amendment of section 214 of the Principal Act by this clause is similar in effect to those proposed by clauses 113 and 114. Section 214 enables the Commissioner to effect service, by post, of any process in proceedings for recovery of income tax against a person absent from Australia and, as amended, will extend to recovery of additional taxes.

Clause 116: Liquidators, etc.

Section 215 of the Principal Act imposes a personal liability on a company liquidator who fails to retain assets of the company sufficient to provide for the amount of income tax, recoupment tax or prescribed tax that the Commissioner notifies as being the likely tax liability of the company. Prescribed tax in this context means A.C.T. pay-roll tax, sales tax, tobacco charge and wool tax.

The amendment proposed by paragraph (a) - to substitute a new sub-section 215(3D) for the existing sub-section 215(3D) - will reflect amendments made elsewhere in the Bill to make it clear that those taxes are to be taken to include penalty taxes imposed under the A.C.T. pay-roll tax, the sales tax, the tobacco charge and the wool tax laws.

The amendment by paragraph (b) is designed, in relation to section 215, to serve a similar purpose to the amendments proposed by clauses 113, 114 and 115.

Clause 117: When tax not paid during lifetime

The combined effect of existing sections 216 and 217 is to be consolidated into the one section by the amendments to be made by this and the ensuing clause. Section 216 enables the Commissioner to assess and obtain payment of tax from the trustees of the estate of a deceased person who escapes full taxation in his or her lifetime by reason of not having made full, complete and accurate returns, while section 217 imposes upon the legal personal representatives of a deceased person a liability to income tax in respect of all income derived by the deceased up to the time of his or her death which has not been taxed in his or her lifetime.

The amendments of section 216 proposed by paragraphs (a) and (b) will mean that, where the whole of the deceased's liability to tax up to the time of death has not been satisfied, the Commissioner will have the same powers and remedies for the assessment and recovery of tax from the trustees in respect of that liability as he would have had against the taxpayer if the taxpayer were still living.

New paragraph 216(1)(aa) that is to be inserted by paragraph (c) is essentially a re-statement of existing sub-section 217(2) which requires a trustee to lodge a return of income derived by the deceased person where no return has been lodged, while new sub-section 216(2) is a re-enactment of the Commissioner's authority, presently contained in sub-section 217(3), to make an assessment of the tax payable on the taxable income of the deceased person where the trustee fails or refuses to lodge the relevant return.

The insertion of new sub-section 216(3) by paragraph (e) of clause 117 will have the same effect, in relation to section 216, as the amendments proposed by clauses 113, 114, 115 and 116.

By sub-clause 165(7), the amended section 216 will apply in relation to persons who died before, and persons who die after, the day on which the amendments come into operation.

Clause 118: Repeal of section 217

As explained in the notes on clause 117, the requirements of section 217 described above are to be re-enacted in section 216 by that clause. Accordingly, section 217 is to be repealed. However, by sub-clause 165(8), an assessment made under section 217(3) prior to its repeal is to have effect as if it were made under sub-section 216(2) as proposed to be amended by clause 117.

Clause 119: Commissioner may collect tax from person owing money to taxpayer

This clause will make a number of amendments to improve the operation of section 218 of the Principal Act, which authorises the Commissioner to collect tax that is owing by a taxpayer from a person who, broadly, owes money to the taxpayer or has authority to pay money to the taxpayer.

The amendments by paragraph (a) are of a purely technical kind : first they will remove incorrect references to paragraphs (1)(i) and (ii) and substitute the correct references (1)(e) and (f) and, second, they will delete existing references to fines and costs imposed under the Principal Act as a consequence of the inclusion of such fines and costs in the definition of "tax" in new sub-section 218(6B).

The insertion of new sub-section 218(6) by paragraph (b) will make clear that, where money is on deposit in a building society account in circumstances whereby the deposit technically constitutes part of the share capital of the society and a withdrawal would constitute the redemption, cancellation or withdrawal of that share capital, that money will be taken to be money that is due or that may become due by the building society to the depositor and hence available to satisfy an outstanding income tax liability in accordance with sub-section 218(1). This will place the treatment of building society accounts for these purposes on the same footing as investments in other financial institutions.

Proposed new sub-section 218(6A), also to be inserted by paragraph (b), will have the effect that, for the purpose of section 218, money will be treated as being due to a person or repayable on demand notwithstanding that some pre-condition for the obtaining of the money (e.g., the production of a pass book) has not been fulfilled.

A number of definitions that are consequential upon the amendments of section 218 are to be contained in new sub-section 218 (6B) :

"building society" means a society registered or incorporated as such under the law, or as a co-operative housing or similar society.
"person" includes a company, a partnership, the Commonwealth, a State, a Territory or a public authority.
"tax" includes -

(a)
additional tax for late payment imposed under section 207 or penalty tax under proposed Part VII;
(b)
amounts payable to the Commissioner under Division 1A (company instalments), Division 2 (P.A.Y.E. instalments), Division 3 (provisional tax) or Division 3A (prescribed payments);
(c)
a judgment debt or costs in respect of primary tax or other taxes included in paragraphs (a) or (b);
(d)
any fine or costs imposed by a court in respect of a taxation offence; or
(e)
an amount ordered by a court to be paid to the Commissioner on conviction for a taxation offence.

"taxpayer" includes, for the purposes of section 218, a person who is liable to pay to the Commissioner one of the amounts specified in paragraph (b) of the proposed definition of "tax".

Clause 120: Assessment where no administration

Section 220 of the Principal Act facilitates the recovery of tax owing by a deceased taxpayer where probate has not been granted or letters of administration taken out within 6 months of death by authorising the Commissioner to make an assessment of the amount of tax payable in respect of income derived up to the date of death.

Paragraph (a) of clause 120 will omit sub-section 220(1) and substitute a new sub-section, to make clear that the Commissioner may make such an assessment of the tax payable where either primary tax or penalty tax under new Part VII of the Principal Act has not been assessed or paid.

The effect of the amendments proposed by paragraphs (b) and (c) will be that the authorisation of a person in pursuance of sub-section 220(5) of the Principal Act to recover assessed tax from any assets of the deceased taxpayer will encompass primary tax, additional tax imposed under section 207 and penalty tax assessed under Part VII.

Clauses 121, 122, 123 and 124 : Additional tax where company instalments of tax estimated

Introductory Note

Under sub-section 221AG(6) of the Principal Act, additional tax is imposed where, on the basis of its own estimate, a company has applied under sub-section 221AG(1) for a variation of an instalment of company tax notified by the Commissioner under section 221AF and, in so doing, has under-estimated the amount of tax payable. The additional tax payable is calculated by reference to any short-payment of the instalment of tax to which the estimate related. Sub-section 221AG(7) imposes additional tax in relation to any short-payment of any subsequent instalment that occurs by reason of the under-estimation.

In a case where a company has applied for a variation of a notified instalment of tax and the amount of income tax estimated by the company to be payable in respect of its taxable income for that year of income is nil or an amount less than $1000, it has been the practice of the Commissioner in accordance with sub-section 221AE(2) not to issue further instalment notices for that year of income. If such a company has under-estimated its tax liability, penalty tax is imposed under sub-section 221AG(6) in respect of the non-payment of the instalment of tax to which the estimate relates but, because there are no further instalment notices, no penalty tax under sub-section 221AG(7) is imposed. The amendments proposed by clauses 121 to 124 will ensure penalty tax is imposed in these circumstances.

Clause 121: Interpretation

This clause will amend section 221AA which appears in Division 1A of Part VI of the Principal Act entitled "Collection by Instalments of Tax on Companies". Section 221AA defines the terms "tax" and "income tax" for the purposes of the Division and contains other interpretational provisions.

By paragraph (a), existing references in sub-sections 221AA(2) and (3) to section 218 are to be deleted as a consequence of amendments being made to that section by clause 119.

Paragraph (b) proposes a technical amendment of sub-section 221AA(2) to effect a change in drafting style.

Paragraph (c) will amend sub-section 221AA(3) which relates to the collection and recovery of additional tax payable where a company has obtained a reduction of an instalment of tax on the basis of an estimate which proves to be less than the tax payable on assessment. The amendment will insert a reference to the new additional tax provisions - sub-sections 221AG(7A) and (7B) - proposed by clause 123.

Clause 122: Amount of instalment of tax

Section 221AE of the Principal Act provides generally, subject to the Commissioner being empowered to vary the amount in certain circumstances, that the amount payable by a company as an instalment of tax in respect of its income of a year of income is equal to one-quarter of the amount of the notional tax of the company (broadly, the preceding year's tax) that is specified in a notice of instalment served on the company by the Commissioner.

Clause 122 proposes to amend section 221AE to insert two new sub-sections - sub-sections (1A) and (1B). Sub-section (1A) will apply so that, where an instalment of tax otherwise payable by a company in respect of its income of a year of income is less than $250 or an amount determined by the Commissioner under sub-section (1B), the instalment of tax will not be payable. By sub-section (1B), the Commissioner may, by publishing a notice in the Commonwealth Gazette, determine an amount other than $250 as the minimum instalment payable by companies in respect of a specified year and subsequent years. Sub-sections (1A) and (1B) will apply in relation to the year of income that commenced on 1 July 1983 and all subsequent years - see notes on sub-clause 165(9). As company tax is levied in respect of the year of tax which follows the year of income, the amendments will be effective for estimates of tax made in 1984-85.

Clause 123: Estimated income tax

As mentioned in the introductory note, section 221AG enables a company to reduce an amount payable as an instalment of tax by furnishing an estimate of the amount of income tax, if any, that the company believes will be payable by it in respect of its taxable income of the relevant year of income.

Paragraph (a) of clause 123 proposes an amendment of sub-section 221AG(1) to permit the Commissioner of Taxation to grant a company an extended period in which it may apply for a variation of a notified instalment of tax. The amount payable as the instalment of tax will, however, continue to be payable on the date specified in the notice served on the company under sub-section 221AF(1) of the Principal Act and late payment penalty under sub-section 207(1) of the Principal Act will apply from that date.

New sub-section 221AG(5A), to be inserted by paragraph (b) of clause 123, will fix the amount payable on each instalment of tax in cases where two or more instalments are due and payable on the same day and the company has furnished an estimate in respect of one of those instalments of tax. The sub-section is intended to apply where an assessment of the income of the previous year was not made in time to allow notional tax to be determined and a notice of instalment under sub-section 221AF(1) to be served on the company by either 15 August, 15 November or 15 February of the relevant year of tax. Where that happens, two or three instalment notices may be served on the company, each specifying the same date of issue and the same due date for payment of each instalment of tax. If, in these circumstances, the company makes an estimate to vary the amount of income tax payable as specified in one of the notices or the Commissioner substitutes his own estimate for the company's estimate, the amount of each instalment of tax payable will be the amount equal to the company's estimate or the amount substituted by the Commissioner.

Paragraphs (c) and (f) of clause 123 amend sub-sections 221AG(6) and (7) respectively to ensure that additional tax imposed under each sub-section is in the nature of a penalty. Paragraphs (d), (e) and (g) propose amendments of those sub-sections that are consequential upon the insertion of new sub-sections (7A), (7B) and (7C) by paragraph (h).

The purpose of new sub-section 221AG(7A), to be inserted by paragraph (h) of clause 123, is to impose additional tax in a case where a company furnishes an estimate of the notional tax payable on its taxable income for a year and the estimate or the amount substituted by the Commissioner is nil, an amount less than $1000 or an amount less than four times the minimum tax instalment amount determined by the Commissioner under new sub-section 221AE(1B).

The additional tax payable in relation to each instalment which by reason of the company's under-estimate is not payable is to be calculated at the rate of 20% per annum on an amount equal to the prescribed amount (see below) for the period commencing on either 16 November or 16 February of the relevant year of tax, whichever is the earlier day on which an instalment of tax would have been due and payable but for the estimate furnished by the company, and ending on the due date for payment of the assessed tax. By reason of the amendment of sub-section 221AG(6) proposed by paragraph (d), the prescribed amount in relation to each instalment of tax not served on the company is the amount by which that instalment of tax, had it been notified, would be short-paid by virtue of the under-estimate.

New sub-section (7B) will apply in a case where two or more instalments of tax are issued on the same day and are due and payable on the same day, i.e., in a case to which new sub-section 221AG(5A) applies. Where, in such a case, additional tax is imposed by sub-section 221AG(6) in relation to an instalment of tax for which an estimate was furnished by the company, sub-section (7B) will impose a like amount of additional tax in respect of each other instalment.

Paragraph (h) of clause 123 will also insert new sub-section (7C) to re-enact an existing power of remission contained in sub-sections (6) and (7) (which is being omitted by paragraphs (e) and (g)) and extend its operation to new sub-sections (7A) and (7B).

Sub-sections (5A), (7A) and (7B) will apply in relation to an estimate made by a company under sub-section 221AG(1) of the Principal Act after the commencement of the amendments proposed by this clause - sub-clause 165(10).

Clause 124: Notice of alteration of amount of instalment

Section 221AH of the Principal Act requires notification to a company of any alteration in the amount payable as an instalment of tax. Paragraph (a) of clause 124 will amend the section consequent upon the insertion of new sub-sections 221AE(1A) (whereby an instalment of tax may not be payable) and 221AG(5A) (which fixes the amount payable by a company on each instalment where two or more instalments of tax are due and payable on the same day).

Paragraph (b) will insert a new sub-section 221AH(3) to apply in a case where a company, upon being served on the same day with two or more instalments of tax, makes an estimate in respect of one of those instalments of the tax that will be payable for the relevant year of income, but the Commissioner makes a higher estimate of the amount payable as the instalment of tax. Where the Commissioner serves on the company a notice in accordance with sub-section 221AH(2) specifying the increase in the amount of the instalment payable by reason of the Commissioner's estimate, sub-section 221AH(3) will specify equivalent amounts as being due and payable on the same date in respect of the other instalments, notwithstanding any requirement under section 221AF that notification of due dates for payment be given.

Clause 125: Interpretation

This clause proposes the amendment of section 221A of the Principal Act to insert a definition of the term "government body". The term - which is relevant to new penalty provisions to be inserted by clauses 126 to 131 in Division 2 of Part VI of the Principal Act (the P.A.Y.E. provisions) - will encompass the Commonwealth, a State or the Northern Territory and an authority of the Commonwealth, a State or the Northern Territory.

Clause 126: Failure to make deductions from salary or wages

This clause will insert in the Principal Act section 221EAA which will impose penalties for failure to make appropriate deductions of tax in respect of salary or wages.

By sub-section (1), an employer, other than a government body, who makes a payment of salary or wages to an employee without first making a P.A.Y.E. deduction that is required to be made from the payment in accordance with section 221C will be liable to pay to the Commissioner, by way of penalty, an amount equal to the amount which the employer failed to deduct (the "undeducted amount") - paragraph (a) - plus an amount equal to 20% per annum of so much of the undeducted amount as remains unpaid, calculated from the date when the amount, if it had been deducted, would have been payable to the Commissioner or, where the employer is not a group employer, the date when tax stamps of equivalent value would have been required to be affixed to a tax stamps sheet - paragraph (b).

If the employer is a government body (other than the Commonwealth) it will be liable to pay to the Commissioner, by way of penalty under sub-section (2), an amount equal to 20% per annum of the undeducted amount, calculated from the day on which the employer was required to make the deduction and ending on 30 June in the financial year in which that day occurred.

Clause 127: Group employers

Clause 127 proposes the omission of sub-sections (10), (10A), (11) and (12) of section 221F of the Principal Act and the insertion of new sub-sections (10), (11) and (12). The omitted provisions pertain to the imposition of additional tax on amounts payable to the Commissioner under section 221F by group employers, remission of the additional tax and offences and penalties for failure to comply with the requirements of section 221F.

By way of background to an explanation of the new sub-sections (10), (11) and (12), existing sub-section 221F(9) provides that a group employer is liable to pay to the Commissioner the amount of any excess credit allowed to a taxpayer in a case where the amount of tax instalments deducted are overstated on a group certificate and grants to the group employer the right to recover the excess from the employee. New sub-section (10) will require the Commissioner to notify the group employer in writing, as soon as practicable after the excess is paid or credited to the taxpayer, the amount payable by the group employer under sub-section (9).

Proposed sub-section (11) will require a group employer to pay any liability arising under sub-section (9) by the due date specified in the notice issued by the Commissioner in accordance with new sub-section (10).

Sub-section (12) will impose a penalty in a case where a group employer, other than the Commonwealth, deducts an amount from a payment of salary or wages but fails to remit that amount to the Commissioner of Taxation within the time required by existing paragraph 221F(5)(a) - i.e., by the seventh day of the next month. The employer will continue to be liable to pay the amount to the Commissioner - paragraph (a) - and will also be liable to pay to the Commissioner, by way of penalty -

·
if the group employer is a government body, an amount equal to 20% per annum calculated in respect of the unpaid amount for the period the amount remained unpaid - sub-paragraph (b)(i); and
·
if the group employer is not a government body, an amount referred to as the "relevant penalty amount" equal to 20% flat of the unpaid amount - sub-sub-paragraph (b)(ii)(A) - plus an amount equal to 20% per annum of the amount remaining unpaid in respect of both the unpaid amount and the relevant penalty amount, also calculated for the period that the unpaid amount remained unpaid - sub-sub-paragraph (b)(ii)(B).

Existing sub-sections 221F(10) and (10A) will, by sub-clause 165(11), continue to apply after the commencement of clause 127 in relation to an amount that was required by section 221F of the Principal Act to be paid to the Commissioner before the commencement of that section.

Clause 128: Employers other than group employers

Clause 128 will insert new sub-section 221G (4A) into the Principal Act. The sub-section will impose penalties in a case where an employer, other than a group employer, deducts an amount from the salary or wages of an employee and refuses or fails to affix tax stamps of a face value equal to the amount of the deduction within the time required by section 221G - generally the last day of each successive four weekly period. The employer will be liable to pay to the Commissioner, by way of penalty -

·
if the employer is a government body, an amount equal to 20% per annum of the unpaid amount calculated for the period the amount remained unpaid - paragraph (c); and
·
if the employer is not a government body, an amount referred to as the "relevant penalty amount" equal to 20% flat of the unpaid amount - sub-paragraph (d)(i) - plus an amount equal to 20% per annum of the amount remaining unpaid in respect of both the unpaid amount and the relevant penalty amount, calculated for the period the unpaid amount and the relevant penalty amount remained unpaid - sub-paragraph (d)(ii).

Clause 129: Repeal of section 221N

This clause proposes the repeal of section 221N of the Principal Act under which an employer is liable to pay to the Commissioner any amount not deducted from salary or wages paid to an employee, and which authorises the Commissioner to sue for and recover that amount. The section also requires the Commissioner to apply an amount so recovered against the tax payable by the employee and enables the employer to recover any such amount from the employee. The repeal of section 221N is consequential upon the insertion by clause 126 of section 221EAA. Notwithstanding the repeal of section 221N, the section will continue to apply in relation to a liability under the section that accrued before the commencement of clause 129 - paragraph (a) of sub-clause 165(14).

Clause 129 also proposes the insertion of three new sections as follows:

Section 221N : Remission of certain amounts

New section 221N will empower the Commissioner to remit penalties - other than relevant penalty amounts (i.e. the 20% flat penalties) and penalties equal to the amount that should have been deducted (the "undeducted amount") - imposed on an employer by section 221EAA or sub-section 221F(12) or 221G(4A).

By sub-section (1), the authority of the Commissioner to remit those penalties (in that sub-section referred to as "late payment penalty") is restricted to certain circumstances that parallel those specified in existing sub-section 207(1A) of the Principal Act which authorises remission of additional tax imposed under section 207.

Under new paragraph 221N(1)(a) the Commissioner will be permitted to remit late payment penalty payable by an employer if the Commissioner is satisfied that the circumstances that led to the delay in payment of the principal amount were not caused by an act or omission of the employer and the employer has taken reasonable action to mitigate the effects of the circumstances that led to the delay. For example, paragraph 221N(1)(a) would permit the Commissioner to remit late payment penalty in a case where the late payment was brought about by adverse climatic factors. The power to remit the late payment penalty will, however, be available only if the employer has taken action reasonably available to mitigate the effects of the adverse factors. Steps that an employer could be expected to take in mitigation would include payment of as much as practicable of the outstanding principal amount.

Paragraph 221N(1)(b) will authorise the Commissioner of Taxation to remit the late payment penalty, in appropriate cases, notwithstanding that the circumstances which led to the delay in payment of the principal amount were caused by the employer, e.g., a miscalculated business decision. Remission of the late payment penalty will be possible if the Commissioner is satisfied that the employer has made a reasonable attempt to mitigate the effects of those circumstances and that it is fair and reasonable to remit the amount imposed in view of the nature of those circumstances.

By paragraph 221N(1)(c) the Commissioner will be able to remit late payment penalty where the Commissioner considers that there are other special circumstances to justify that course.

The automatic imposition of late payment penalty would, in some cases, result in very small amounts of penalty being payable. Paragraph 221N(1)(c) would permit the Commissioner to remit those small amounts if collection would not be cost effective for example.

While sub-section (1) will restrict the Commissioner's authority to remit penalties other than the undeducted amount and relevant penalty amounts, sub-section (2) will permit the Commissioner, for such reasons as he thinks sufficient, to remit the whole or a part of the undeducted amount and relevant penalty amounts imposed by paragraph 221EAA(1)(a), sub-sub-paragraph 221F(12)(b)(ii)(A) or sub-paragraph 221G(4A)(d)(i), and the penalty payable by a government body other than the Commonwealth under sub-section 221EAA(2).

Section 221NA : Reduction of late payment penalty where judgment debt carries interest

Proposed section 221NA will ensure that an amount of penalty for late payment under sections 221EAA, 221F or 221G continues to accrue in respect of unpaid principal amounts notwithstanding that judgment for payment of the principal amount has been given or entered in a court. Where, in such a case, the judgment debt itself carries interest, the penalty tax otherwise payable is to be reduced by the amount of judgment interest that relates to the unpaid principal amount. Section 221NA will apply in relation to judgments given or entered after the amendments proposed by clause 129 come into effect - see notes on sub-clause 165(4).

Section 221NB : Penalties to be alternative to prosecution for certain offences

By proposed section 221NB, an amount of penalty will not be payable under the P.A.Y.E. provisions if a prosecution is instituted against the employer for the offence to which the penalty relates. Where an employer has paid an amount of penalty and a prosecution is instituted against that employer for the particular offence, the amount paid is to be refunded or applied by the Commissioner against a tax liability - as defined in section 2 of the Taxation Administration Act 1953 (see notes on clause 292) - of the employer. If the prosecution is withdrawn, the employer would again become liable to pay that penalty amount.

Clause 130: Employer not accounting for deductions

Clause 131: Employer failing to issue group certificate or deliver tax stamp sheet

Clauses 130 and 131 will make amendments of sections 221P (relating to employers who fail to deal with amounts required to be deducted from employees' salary and wages) and 221Q (which deals with cases where an employer has failed to issue a group certificate or deliver tax stamp sheets). The amendments proposed give effect to a technical change adopted throughout the Principal Act in provisions that impose a liability on a person who fails to comply with a particular requirement of the Act. The change will make clear that a refusal to comply with the requirement will be treated in the same way as a mere failure.

Clause 132: Repeal of section 221U

The repeal of section 221U of the Principal Act by this clause is consequential upon the proposed authorisation, by clause 314, of a single general appropriation out of the Consolidated Revenue Fund for refunds of taxes and related payments by the Commissioner of Taxation in lieu of numerous specific appropriations presently contained in the taxation laws.

Clause 133: Interpretation

Clause 133 proposes an amendment of sub-section 221YA(2) of the Principal Act which relates to the recovery and collection of provisional tax payable under Division 3 of Part VI. The amendment by paragraph (a) is consequential upon the amendment of section 218 by clause 119, while that by paragraph (b) will make it clear that additional tax imposed under section 221YDB where a person under-estimates taxable income in making application for a variation of provisional tax is recoverable in the same way as provisional tax.

Clause 134: Additional tax where income under-estimated

This clause will amend section 221YDB of the Principal Act which imposes additional tax where a person under-estimates his or her taxable income in applying for a variation of provisional tax.

Paragraph (a) proposes an increase in the rate of penalty under section 221YDB of the Principal Act from 10% to 20% and will ensure the additional tax attributable to the under-estimate is in the nature of a penalty.

Paragraph (b) will insert new sub-sections 221YDB(1B) and (1C) to require the Commissioner to notify a taxpayer in writing of the amount and due date for payment of any additional tax imposed by section 221YDB, the due date being not less than 14 days after the service of the notice, and will enable the notice to be incorporated in a notice of assessment.

By sub-clause 165(12), the 20% rate of penalty will apply in relation to estimates of provisional tax for the year of income that commenced on 1 July 1984 and all subsequent years of income. In effect this means the higher rate of penalty will be applicable to under-estimates of provisional income made in response to provisional tax notified as payable on or after 31 March 1985.

Clause 135: Interpretation

Clause 135 proposes stylistic changes to the definition of "government body" in the prescribed payments system provisions of the Principal Act - Division 3A of Part VI.

Clause 136: Failure to make deductions from prescribed payments

The amendments proposed by this clause are designed to achieve drafting consistency between two closely-related provisions of the Principal Act - section 221YHH which imposes penalties where a person fails to make the appropriate deduction in respect of a prescribed payment, and new section 221EAA (see clause 126) which will impose penalties for failure to make an appropriate deduction in respect of a payment of salary or wages.

An explanation of the amendments being made by paragraphs (a) and (d) will be found in the notes on clauses 130 and 131 which propose corresponding changes.

Paragraph (b) makes a drafting change consequential upon the amendment of sub-section (2) proposed by paragraph (e).

Paragraphs (c) and (e) contain drafting changes to paragraph 221YHH(1)(b) and sub-section 221YHH(2) so that they are consistent with the equivalent new provisions - sub-paragraph 221EAA(1)(b)(i) and sub-section 221EAA(2) (see clause 126). They will not alter the substantive effect of section 221YHH.

Consequential on the insertion of new section 221YHLB by clause 140, which broadly provides for penalties and prosecution to be alternatives for certain offences, paragraph (f) will omit sub-section 221YHH(3) which relates to the payment of penalties under section 221YHH in cases where a prosecution for an offence has been instituted.

Clause 137: Failure to pay amounts deducted to Commissioner

Section 221YHJ imposes penalties in cases where amounts deducted from prescribed payments are not remitted to the Commissioner. Clause 137 will amend sub-section 221YHJ(1) and omit sub-section 221YHJ(2). The amendment of sub-section 221YHJ(1) will make it consistent with the new sub-section 221F(12) (see clause 127) which will apply in relation to amounts not remitted by group employers. The omission of sub-section 221YHJ(2) is, like the omission of sub-section 221YHH(3) by paragraph (f) of clause 136, consequential upon the proposed enactment of new section 221YHLB by clause 140.

Clause 138: Failure to furnish deduction form, etc.

The amendments by paragraphs (a) and (b) of this clause correspond with those proposed by clauses 130 and 131. Consequential upon the enactment of new section 221YHLB by clause 140, paragraph (c) proposes the omission of sub-section 221YHK(2) which relates to the payment of penalties under section 221YHK in cases where a prosecution for an offence has been instituted.

Clause 139: Remission of certain amounts

The amendment proposed by this clause will permit the Commissioner, for such reasons as he thinks sufficient, to remit the whole or any part of a penalty payable under sub-section 221YHH(2) by a government body other than the Commonwealth that has failed to make deductions from a prescribed payment. Sub-section 221YHH(2) will thus apply in the same way as new sub-section 221N(2) in relation to remission of penalties that may be imposed on employers in similar circumstances under the P.A.Y.E. provisions.

Clause 140: Insertion of sections 221YHLA and 221YHLB

Section 221YHLA : Reduction of late payment penalty where judgment debt carries interest

Section 221YHLB : Penalties to be alternative to prosecution for certain offences

Clause 140 proposes the insertion of two new sections - sections 221YHLA and 221YHLB - into the prescribed payments system provisions of the Principal Act. The new sections are in material respects the same as new sections 221NA and 221NB, the operation of which has been explained in the notes on clause 129. Section 221YHLA will apply in relation to judgments given or entered after the amendments come into effect - sub-clause 165(4).

Clause 141: Repeal of section 221YHO

The repeal of section 221YHO of the Principal Act proposed by this clause is consequential upon the authorisation, under new section 16 of the Taxation Administration Act 1953 being inserted by clause 314, of a single general appropriation out of the Consolidated Revenue Fund for refunds of taxes and related payments by the Commissioner of Taxation in lieu of the numerous specific appropriations contained in the various taxation laws.

Clause 142: Deductions to be forwarded to Commissioner, etc.

Section 221YN of the Principal Act imposes upon a person who deducts dividend or interest withholding tax pursuant to section 221YL an obligation to remit the amount deducted to the Commissioner, subject to additional tax at the rate of 20% per annum for late payment.

The major effect of the amendments of sub-section 221YN(4) proposed by paragraphs (a) to (d) of clause 142 will be to classify such additional tax as a penalty for failure to pay by the due date. Several minor drafting changes are also being made by the clause that are consistent with broadly similar provisions in clauses 126 to 128.

The amendments of sub-section 221YN(5) by paragraphs (e) and (f) are of a minor drafting nature consequent upon the amendments of sub-section 221YN(4).

Paragraph (g) of clause 142 proposes the insertion of new sub-sections 221YN(6), (7), (8), (9) and (10). Sub-sections 221YN(6) and (7) will ensure that an amount of penalty for late payment under section 221YN continues to accrue in respect of unpaid principal amounts notwithstanding that judgment for payment of the amount has been given or entered in a court. Where, in such a case, the judgment debt itself carries interest, the penalty tax otherwise payable is to be reduced by the amount of that interest that relates to the unpaid principal amount. Sub-sections 221YN(6) and (7) will apply in relation to judgments given or entered after the amendments proposed by clause 142 come into effect - sub-clause 165(4).

New sub-sections 221YN(8), (9) and (10) will mean that an amount of penalty under section 221YN is not payable when a prosecution has been instituted against the person for the offence to which the penalty relates. Where a person has paid an amount of penalty and a prosecution is instituted against that person for the particular offence, the amount paid is to be refunded or applied by the Commissioner against a tax liability - as defined in section 2 of the Taxation Administration Act 1953 (see clause 292) - of the person. If the prosecution is withdrawn, the person is to again become liable to pay that penalty amount.

Clause 143: Repeal of section 221YW

The repeal of section 221YW of the Principal Act by this clause is consequential upon the proposed authorisation of a single general appropriation out of the Consolidated Revenue Fund for refunds of taxes and related payments by the Commissioner of Taxation.

Clause 144: Deductions to be forwarded to Commissioner, etc.

Section 221ZC of the Principal Act imposes upon a person who deducts mining withholding tax pursuant to section 221ZB an obligation to remit the amount deducted to the Commissioner, subject to additional tax at the rate of 20% per annum for late payment.

The major effect of the amendments of sub-section 221ZC(4) proposed by paragraphs (a) to (d) of clause 144 will be to classify such additional tax as a penalty for failure to pay by the due date. Several minor drafting changes are also being made by the clause that are consistent with broadly similar provisions in clauses 126 to 128.

The amendments of sub-section 221ZC(5) by paragraphs (e) and (f) are of a minor drafting nature consequent upon the amendments of sub-section 221ZC(4).

Clause 145: Liability of person who fails to make deduction, etc.

Section 221ZD of the Principal Act is similar in effect to section 221ZC (see notes on clause 144), but applies to a person who fails to make a deduction of mining withholding tax from a mining payment. That person is liable to pay the amount that should have been deducted to the Commissioner and is liable to additional tax of 10% per annum.

The amendments proposed by this clause are similar in nature to those being made by the previous clause and, in addition, will increase the rate of additional tax from 10% to 20% per annum.

Clause 146: Insertion of sections 221ZDA and 221ZDB

This clause proposes to insert two new sections - sections 221ZDA and 221ZDB - into Division 5 of Part VI of the Principal Act (Collection of Mining Withholding Tax).

Section 221ZDA : Reduction of late payment penalty where judgment debt carries interest

New section 221ZDA will ensure that penalty tax for late payment under section 221ZC or 221ZD continues to accrue in respect of unpaid principal amounts notwithstanding that judgment for payment of the amount has been given or entered in a court. Where, in such a case, the judgment debt itself carries interest, the penalty tax otherwise payable is to be reduced by the amount of that interest that relates to the unpaid principal amount. Section 221ZDA will, by reason of sub-clause 165(4), apply in relation to judgments given or entered after the amendments come into effect.

Section 221ZDB : Penalties to be alternative to prosecution for certain offences

New section 221ZDB will mean that an amount of penalty tax under sections 221ZC or 221ZD is not payable when a prosecution is instituted against the person for the offence to which the penalty relates. Where a person has paid penalty tax and a prosecution is instituted against him or her for the particular offence, the amount paid is to be refunded or applied by the Commissioner against a tax liability - as defined in section 2 of the Taxation Administration Act 1953 (see clause 292) - of the person but, if the prosecution is withdrawn, the person will again become liable to pay that penalty amount.

Clause 147: Repeal of section 221ZJ

The repeal of section 221ZJ of the Principal Act by this clause is consequential upon the authorisation (clause 314) of a single general appropriation out of the Consolidated Revenue Fund for refunds of taxes and related payments by the Commissioner of Taxation.

Clause 148: Liability of person who fails to make deduction

Section 221ZO of the Principal Act applies where a person fails to deduct from a withdrawal made from an account in the Australian Film Industry Trust Fund the amount required to be deducted under section 221ZN. It imposes on the person a liability to pay an amount equal to the undeducted amount to the Commissioner plus 10% per annum of the amount unpaid.

The amendments proposed by clause 148 will classify that latter amount as a penalty for late payment and increase the rate per annum from 10% to 20%. They will also make it clear that section 221ZO applies where the person concerned either refuses or fails to comply with section 221ZN.

Clause 149: Liability of person who fails to remit deduction

Section 221ZP of the Principal Act applies where an amount is deducted from a withdrawal made from an account in the Australia Film Industry Trust Fund but is not remitted on time to the Commissioner. It requires payment of the amount to the Commissioner plus an additional amount calculated at the rate of 20% per annum.

The amendments of section 221ZP that are proposed by clause 149 will classify those additional amounts as a penalty for failure to remit the amount deducted by the due date, while also effecting several improvements in drafting style.

Clause 150: Insertion of sections 221ZQA and 221ZQB

Section 221ZQA : Reduction of late payment penalty where judgment debt carries interest

Section 221ZQB : Penalties to be alternative to prosecution for certain offences

This clause proposes to insert two new sections - sections 221ZQA and 221ZQB - into Division 6 of Part VI of the Principal Act. The new sections will have the same effect in relation to penalties imposed under sections 221ZO and 221ZP as the new sections 221ZDA and 221ZDB will have in relation to penalties imposed under 221ZC and 221ZD. An explanation of sections 221ZDA and 221ZDB is contained in the notes on clause 146. Section 221ZQA will apply by reason of sub-clause 165(4) in relation to judgments given or entered after the amendments come into effect.

Clause 151: Repeal of section 221ZV

The repeal of section 221ZV of the Principal Act by this clause is consequential upon the proposal for a single general appropriation out of the Consolidated Revenue Fund for refunds of taxes and related payments by the Commissioner of Taxation (clause 314).

Clause 152: Penalty Tax

Introductory Note

This clause will repeal Part VII of the Principal Act, which imposes statutory penalties for failure to comply with various requirements of the Act (including the non-furnishing of returns and information, the omission of income or making false deduction or rebate claims, and the participation in certain tax avoidance schemes) and creates a number of offences that are punishable on conviction by a fine. Existing Part VII also contains machinery provisions setting out the procedure for conducting prosecutions against such offences.

A new Part VII is to be inserted in the Principal Act by clause 152. The substituted Part VII will impose statutory penalties (or increase them in some cases) where tax is sought to be avoided by a refusal or failure to lodge a return or furnish information required under the Act, by the making of false or misleading statements or by participation in certain tax avoidance arrangements.

The various offences and prosecution procedures now contained in Part VII are to be replaced by more effective and comprehensive provisions in new Part III of the Taxation Administration Act 1953 to be inserted by clause 297.

Notwithstanding the repeal of Part VII, sub-clause 165(14) provides that the existing penalties and prosecution procedures are to continue to apply to offences committed before the amendment proposed by clause 152 comes into operation. Sub-clause 165(14) also provides that section 225 (order to comply with taxation requirement) continues to apply to a person convicted (whether before or after commencement of the amendment) of an offence of failure to furnish a return or refusal to give evidence committed before commencement of the amendments and sub-sections 226(3) and (4) of the Principal Act (remission of penalties and no double jeopardy) continue to apply in relation to a liability for additional tax that accrued before that commencement.

Section 222 : Penalty for failure to furnish return

The new section 222 to be inserted by clause 152 will impose a penalty (in lieu of the existing penalty under sub-section 226(1) of an amount equal to the tax assessable to the taxpayer) equal to double the amount of tax payable by a taxpayer in respect of a year of income if the taxpayer refuses or fails to furnish, when required to do so under the law, a return of income for that year or information relating to that year. The minimum penalty is to be $20 (presently $2).

Section 223 : Penalty for false or misleading statements

Sub-section 223(1), which replaces sub-section 226(2), will apply where a taxpayer makes a statement for the purposes of the Principal Act or the regulations that is false or misleading in a material particular or which, by the omission of some matter, is rendered misleading. If, in such a case, the tax properly payable by the taxpayer exceeds the tax that would be payable if the statement were correct, the taxpayer will be liable to penalty tax equal to double the excess.

Sub-section 223(2) will apply where a partner in a partnership makes a false or misleading statement relating to the affairs of the partnership, or omits something that renders a statement misleading. In that case, the partner (or partners) who made the statement will be liable to a penalty of double any difference between the tax properly payable by that partner (or those partners) and any other partner and the amount or amounts that would have been payable if they were assessed on the basis that the statement was correct.

By sub-section 223(3), a person will not be liable to penalties under both sub-sections (1) and (2) in respect of a statement or omission relating to the same matter, but will be liable under whichever sub-section the Commissioner determines to be the more appropriate.

Sub-section 223(4) will impose a personal liability for penalty on the trustee of a trust estate who makes a false or misleading statement relating to the affairs of the trust estate, or omits something from such a statement so as to render it misleading. That penalty will be equal to double the amount of any tax that a beneficiary in the trust estate would have escaped if the beneficiary had been assessed on the basis of the statement being correct.

Sub-section 223(5) is a drafting measure that will make clear that sub-section (4) does not imply that, elsewhere in Part VII, references to a taxpayer exclude a taxpayer in the capacity of a trustee.

Sub-sections 223(1) to (5) will overcome deficiencies in the existing law highlighted by decisions of the courts and Boards of Review. In particular, a taxpayer who misdescribes expenditure incurred by him or her in a manner which misleads the Commissioner into accepting the claim as an allowable deduction will, in future, be subject to statutory additional tax on the same basis as a taxpayer who makes a claim for an amount in excess of the expenditure actually incurred or who falsely claims for expenditure not incurred at all.

By the operation of sub-section 223(6), the minimum penalty payable under the section is to be $20.

Sub-section 223(7) is to ensure that a person who omits an amount of income from his or her return, or from a partnership or trust return, will be liable for a penalty under sub-sections (1), (2) or (4), whichever is applicable.

The penalties imposed by sub-sections 223(1), (2) and (4) will apply to statements made to a taxation officer or other person for purposes in connection with the operation of the Principal Act or the regulations. Sub-section 223(8) will define the term 'statement' for these purposes to mean an oral or written statement, or one made on a data processing device or in any other form. In particular, the sub-section will ensure that statements contained in an objection against an assessment will be penalisable where such statements are false or misleading. The term will include a statement whether or not furnished by compulsion, but will not include a statement in a book, document or paper furnished pursuant to paragraph 264(1)(b) of the Principal Act. That paragraph obliges a person, when required by the Commissioner, to attend and give evidence and to produce books, documents and other papers in his or her custody or under his or her control. But for this exclusion a person may have sought to decline to produce books, etc., required for fear that their production would give rise to the imposition of additional tax for false or misleading information contained in them.

A statement made to a person other than a taxation officer will, by sub-section 223(9), include statements in a document given to the person, any answer to a question asked by the person or any information furnished to the person.

Sub-section 223(10) will define the following terms used in section 223:

"data processing device" is any article or material (e.g. computer tapes or discs) from which information is capable of being reproduced either with or without the aid of any other article or device; and
"taxation officer" is a person exercising powers, or performing functions under the Principal Act or the regulations.

Section 224 : Penalty tax where certain anti-avoidance provisions apply

Section 224 will impose on participants in tax avoidance schemes that have been struck down by specific anti-avoidance provisions (i.e., where the general anti-avoidance provisions of Part IVA of the Principal Act do not apply) penalty tax of 200% of the tax sought to be avoided. This is the level of penalty that is already attracted by schemes to which Part IVA applies.

Paragraphs 224(1) (a) to (d) set out the conditions necessary for the application of the section. They are that :

·
in making an assessment or considering an objection, the Commissioner has calculated the tax assessable to a taxpayer;
·
in making that calculation, an amount omitted from the taxpayer's income was included or a claimed deduction or rebate was disallowed; and
·
in including the amount or disallowing the deduction or rebate, the Commissioner exercised a discretion, formed an opinion, came to a state of mind or made a determination under a specific anti-avoidance provision of the Principal Act, other than the general anti-avoidance provision (Part IVA) or the provisions that relate to tax avoidance by international transfer pricing (Division 13 of Part III) concerning a particular tax avoidance scheme.

Where those conditions apply, paragraphs 224(1) (e) and (f) will impose on the taxpayer a liability to pay penalty tax equal to double the difference between the tax properly payable and the tax that would have been payable if the assessment were made or the objection determined on the basis that the omitted income was not assessable income or the claimed deduction or rebate was allowable.

For the purposes of the application of the section, sub-section 224(2) will define the expression "tax avoidance scheme" as a scheme within the meaning of Part IVA (that is, as defined in section 177A) entered into or carried out for the sole or dominant purpose of enabling a person to reduce a tax liability.

Section 225 : Penalty tax where Division 13 of Part III applies

Existing sub-sections 226(2B) and (2D) of the Principal Act provide that additional tax at the rate of 10% per annum is payable where, in calculating the tax assessable to a taxpayer, Division 13 or a corresponding provision of a double taxation agreement has been taken into account and an increase in the amount of tax assessable to the taxpayer has resulted. Division 13 authorises the Commissioner of Taxation to adjust a taxpayer's income or deductions to counter the avoidance of Australian tax through what are commonly referred to as "transfer pricing" or "profit shifting" arrangements.

Proposed new section 225 will replace these existing sub-sections and provide for the imposition of additional tax (at an increased level) where Division 13 or a corresponding provision of a double taxation agreement has been applied either on assessment or in considering an objection against an assessment. Penalty tax will be imposed where the application has resulted in an increase in the amount of tax assessable to the taxpayer or, where no tax was previously assessable, in an amount of tax now being payable.

Additional tax at the rate of 25% per annum is to be imposed unless the transfer pricing or profit shifting arrangements were entered into for the sole or dominant purpose of avoiding liability to Australian tax, in which case additional tax of 200% is to be payable.

As is the case under the existing law, the additional tax will, by virtue of new sub-section 227(3), be subject to remission by the Commissioner. Decisions relating to remission will, by reason of amendments proposed by clause 106 of this Bill, be subject to review by an independent Taxation Board of Review provided the additional tax payable exceeds 20% per annum of the tax assessable to the taxpayer.

In determining the increase in tax attributable to the application of Division 13 or of a corresponding double taxation agreement provision, and on which the 25% per annum or 200% additional tax is based, it is necessary first to calculate a base amount of tax: The base amount of tax for this purpose will, broadly, be the tax that would be payable if the taxpayer were to be assessed as having the taxable income revealed by the taxpayer's return. The tax payable as the result of the application of Division 13 or of the relevant agreement provision having been calculated, the additional tax - in cases where the profit shifting arrangements are not connected with blatant tax avoidance arrangements - will be 25% per annum of the difference between that amount and the base amount, calculated from the last day allowed for furnishing the return to the date of assessment. Where tax would not have been assessable to the taxpayer but for the application of Division 13, or of a relevant agreement provision, the additional tax will be 25% per annum for the abovementioned period or 200% flat, as the case may be, of the tax payable.

New sub-section 225(1) (which will replace existing sub-section 226(2B)) will apply for the purpose of calculation of the additional tax where either section 136AD or 136AE of the Principal Act (each a "prescribed provision" as defined in proposed sub-section 225(4)) has been applied. In such a case, additional tax as explained above will be payable by virtue of the sub-section.

By new sub-section 225(2) (replacing existing sub-section 226(2C)), additional tax is to be imposed where a prescribed provision has not applied because of the Income Tax (International Agreements) Act 1953 - that is, where by virtue of sub-section 4(2) of that Act (under which the provisions of that Act have effect notwithstanding anything inconsistent therewith in the Principal Act) the provisions of a double taxation agreement dealing with profit shifting have applied instead of a prescribed provision. (Paragraph 2 of Article 7 and paragraph 1 of Article 9 of the Australia/USA Convention, and corresponding articles in other agreements, are such agreement provisions).

In effect, additional tax of 25% per annum or 200% flat is to be calculated on the basis set out in sub-section 225(1), by reference to the tax that would have been assessed if Division 13 had been applied (paragraph (c)) and by reference to the tax that has been assessed upon the application of the provision of the double taxation agreement that has displaced the application of Division 13 (paragraph (d)).

Where the amount calculated under each of the two paragraphs is the same, the taxpayer will be liable, by sub-section 225(3), which replaces sub-section 226(2D), to pay that amount as additional tax. In a case where different amounts are calculated under paragraphs 225(2)(c) and (d), the taxpayer will be liable to pay the lesser of the two amounts.

Moreover, where additional tax is payable by reason of sub-section 225(2), in relation to a year of income, the taxpayer will not be liable to pay additional tax under sub-section 225(1) in relation to that year of income.

New sub-section 225(4) (to replace existing sub-section 226(2E)) is a drafting aid which will define the term "prescribed provision" used in sub-sections 225(1) and (2) as meaning section 136AD or 136AE - the operative provisions of Division 13 of the Principal Act.

Sub-section 225(5) (replacing existing sub-section 226(2F)) will make it clear that, in calculating additional tax under sub-sections 225(1) and (2), the possibility that certain other provisions of the Principal Act would have applied in a particular case in which they did not apply is to be disregarded. That is, those provisions are not to be taken into account in calculating, for purposes of paragraph 225(1)(c) or 225(2)(c), the tax that would have been payable if neither Division 13 nor a double taxation agreement had been applied. The provisions in question are those of section 31C of the Principal Act (dealing with the non-arm's length purchase of trading stock), Sub-division C of Division 2 of Part III of the Principal Act (applicable where certain business is carried on partly in and partly out of Australia) and Part IVA of the Principal Act (the general anti-tax avoidance provision of the law).

Section 226 : Penalty tax where Part IVA applies

Section 226, which re-enacts (with an extension to cover claims made by way of objection) sub-section 226(2A), will impose on participants in tax avoidance schemes to which Part IVA of the Principal Act applies penalty tax of 200% of the tax sought to be avoided.

Paragraphs 226 (a), (b) and (c) set out the conditions necessary for the application of the section. They are that :

·
in making an assessment or considering an objection, the Commissioner has calculated the tax assessable to a taxpayer;
·
in making that calculation, account was taken of a determination of the Commissioner under sub-section 177F(1) that an amount should be included in the taxpayer's assessable income or disallowed as a deduction from assessable income in order to neutralise a tax benefit that would otherwise be obtained under a tax avoidance scheme; and
·
if the sub-section 177F(1) determination had not been made (i.e., if the taxpayer had reaped the benefit of the tax avoidance scheme), no tax would have been assessable or the assessed tax would have been less.

Where those circumstances apply, paragraphs 226 (d) and (e) will impose on the taxpayer a liability to pay penalty tax equal to double the amount of the tax that would have been avoided but for the sub-section 177F(1) determination.

Section 227 : Assessment of additional tax

Under new sub-sections 227(1) and (2) the Commissioner will be under an obligation to make an assessment of the additional tax payable by a taxpayer under section 222, 223, 224, 225 or 226, but may incorporate notice of the assessment in another notice of assessment that is being sent to the taxpayer. Generally, it may be anticipated that the assessment of additional tax will be notified in the assessment of the primary tax.

By sub-section 227(3), which re-enacts for practical purposes sub-section 226(3), the Commissioner may, either before or after making an assessment of additional tax, remit the whole or any part of the additional tax payable by a person.

Section 228 : Return to be incorporated in objection for certain purposes

Section 228 is a drafting device to ensure that references in certain provisions to a return will be read as including references to information contained in a notice of objection.

The effect of section 228 will be that, for the purposes of applying penalty taxes under section 224 or 225, the taxpayer's return and notice of objection are to be read as one in relation to particulars of deductions or income that are contained in them, but information contained in the objection is to be taken as the information provided by the taxpayer if there is any inconsistency between the two documents.

Clause 153: Cancellation or suspension of registration of tax agent

Section 251K of the Principal Act provides for the cancellation by a Tax Agents' Board of the registration of a tax agent where, for example, the agent has prepared a false return, neglected the business of a principal, or is guilty of other misconduct as an agent.

Paragraph (a) of clause 153 will insert new sub-sections 251K (1A) and (1B), the effect of which will be that the registration of a tax agent convicted of an offence against section 8P, 8T or 8U of the Taxation Administration Act 1953 (as inserted by clause 297 of this Bill) - broadly, offences relating to intentionally making false statements, falsifying records or falsifying or concealing a person's identity or address - will at the option of a Tax Agents' Board be either suspended for a minimum period of 3 months or cancelled. If the registration is already suspended, it will be liable to be suspended for a further 3 months or cancelled.

A tax agent will be similarly penalisable for a conviction under the Crimes Act 1914 for aiding, abetting, conspiring or otherwise assisting in the commission of an offence against section 8P, 8T or 8U of the Taxation Administration Act 1953.

Paragraph (b) proposes an amendment of sub-section 251K(2A) to make clear that cancellation of registration may occur where a tax agent has either refused or failed to give notice and provide particulars to a Tax Agents' Board in accordance with section 251JA.

Paragraphs (c) and (d) are measures consequent on the insertion of sub-sections 251K(1A) and (1B) by paragraph (a) and will enable an application to be made to the Administrative Appeals Tribunal by a tax agent whose registration has been cancelled or suspended for review of the decision.

Paragraph (e) proposes to insert new sub-sections 251K(9) and (10) into the Principal Act. Sub-section (9) will provide that, apart from requirements relating to certain notifications and notices that tax agents are required to give to Tax Agents' Boards and the location of tax agents' principal places of business, suspended tax agents are to be treated as not being registered during the suspension period. Accordingly, they will not, during the period of suspension, be permitted to charge fees for the preparation of returns or transacting income tax business on behalf of taxpayers.

The effect of sub-section (10) will be that, where a court has found a charge against a tax agent proved but has not, due to the particular circumstances, proceeded to a conviction, the tax agent will nevertheless be treated as having been convicted for the purpose of sub-section (1A).

Clause 154: Unregistered tax agents not to charge fees

Section 251L stipulates that a person who is not a registered tax agent must not charge a fee to prepare a tax return or objection for a person or transact other income tax business on behalf of others. By sub-section 251L(6), a prosecution for a breach of the section may be instituted within 6 years of the offence being committed. The proposed omission of sub-section 251L(6) by clause 154 follows from the consolidation, by clause 297, of the prosecution rules relating to taxation offences in the Taxation Administration Act 1953. Notwithstanding this amendment, sub-section 251L(6) of the Principal Act will continue to apply in relation to an offence against section 251L committed before the proposed amendments come into operation - see notes on sub-clause 165(15).

Clause 155: Repeal of section 251V

Section 251V of the Principal Act imposes on a person who makes a false statement affecting liability to Medicare levy a penalty of up to double the amount of levy that would have been avoided by reason of the statement. In conjunction with the proposed enactment by clause 152 of section 223 and, by clause 297, of sections 8K, 8N and 8P of the Taxation Administration Act 1953 relating to false or misleading statements, section 251V is redundant and is to be repealed. Existing sub-sections 251V(2), (3), (4) and (5) relating to remissions of penalty and prosecutions under the section continue to apply to a liability for additional Medicare levy that accrues before the repeal comes into operation (see notes on sub-clause 165(14)).

Clause 156: Public officer of company

Section 252 of the Principal Act requires every company that carries on business in Australia or derives income in Australia from property to appoint a person residing in Australia as its public officer. In discharging the various responsibilities placed upon taxpayers in relation to compliance with the requirements of the Act (e.g., furnishing returns or information), the public officer is answerable for the doing of all such things as are required to be done by the company and, in case of default, is liable to the same penalties as the company.

The amendments proposed by clause 156 will require a company at all times to have as its public officer a natural person who has attained the age of 18 years and who is capable of understanding the nature of the appointment of a public officer. In addition, that person must be ordinarily resident in Australia unless the company carries on business solely or principally in either Norfolk Island, the Territory of Cocos (Keeling) Islands or the Territory of Christmas Island or, in the immediately preceding 12 months, derived not less than 50% of its income from sources in one of those Territories. In this case, the public officer can be a person who satisfies the criterion of being ordinarily resident either in that Territory or in Australia.

For each day on which a company contravenes the requirement to appoint a public officer in accordance with section 252, it is to be liable to a penalty on conviction of a fine not exceeding $50.

The new rules will, by reason of sub-clause 165(16), come into effect 30 days after the proposed amendments come into operation (i.e., 86 days after Royal Assent).

Clause 157: Public officer of trust estate

Section 252A contains broadly similar requirements to section 252 in relation to the appointment of a public officer of a trust estate which does not have a resident trustee and the amendments of section 252A by clause 157 will similarly require the appointment of a responsible adult. By sub-clause 165(17) a comparable transition rule to that applicable to clause 156 will apply.

Clause 158: Agents and trustees

Under section 254 of the Principal Act, an agent or trustee is answerable as taxpayer for the doing of all things required to be done by the Act in respect of income derived by the agent or trustee in a representative capacity, or derived by the principal through the agency, and for the payment of tax thereon.

The amendment proposed by this clause will make it clear that, in the application of section 254, tax includes both penalty tax imposed by section 207 for late payment and under Part VII for various acts or omissions likely to lead to an avoidance of tax.

Clause 159: Persons in receipt or control of money from non-resident

The amendment proposed by this clause will consistent with clause 158 extend the meaning of tax to include penalty taxes in relation to section 255 - which empowers the Commissioner to collect tax due and payable by a non-resident from any person who has the control, receipt or disposal of money belonging to the non-resident.

Clause 160: Recovery of tax paid on behalf of another person

This clause will make amendments that parallel those in clauses 158 and 159. It will amend section 258 of the Principal Act which provides that, where a person is required to pay to the Commissioner an amount of tax payable by another person, the payer may recover the amount from the other person.

Clause 161: Contribution from joint taxpayers

The amendment of section 259 of the Principal Act proposed by this clause is to the same effect as those in preceding clauses. Under section 259, two or more people jointly liable for tax are each liable for the whole amount, but the one who pays the tax may recover an appropriate part of the payment from the other person or other persons.

Clause 162: Release of taxpayers from liability in cases of hardship

The amendment proposed by this clause has the same effect as the amendments contained in the previous 4 clauses. In this case the amendment is of section 265 which provides a mechanism for release from payment of tax where serious hardship would result.

Clause 163: Further amendments relating to offences

Schedule 6 of the Bill will make further amendments of various provisions relating to offences under the Principal Act. An explanation of the proposed amendments is contained in notes on that Schedule.

Clause 164: Formal amendments

Schedule 7 of the Bill proposes a number of formal amendments of the Principal Act, the effect of which is explained in notes on that Schedule.

Clause 165: Application of amendments

This clause, which will not amend the Principal Act, deals with transitional aspects of the various amendments contained in Part VII of the Bill.

Sub-clause 165(1) is an interpretative provision. Wherever the term "amended Act" is used in the clause, it is to be taken as meaning the Principal Act as amended by the Bill.

Sub-clause 165(2) specifies that the amendment of section 51 of the Principal Act by clause 95 to make clear that amounts paid by way of penalty imposed under a law are not allowable deductions, will apply in relation to the year of income commencing on 1 July 1984 and all subsequent years of income. Sub-clause 165(3) declares that the amendment is being enacted for the avoidance of doubt and shall not be taken to imply that a deduction of this kind is or was allowable under section 51 of the Principal Act in relation to a year of income earlier than 1 July 1984. The purpose of sub-clause (3) is to ensure that the law as declared in the recent decision of the Supreme Court of Victoria in Mayne Nickless Limited v Federal Commissioner of Taxation 84 ATC 4458 is not, by implication, overridden by the amendment of section 51.

Sub-clause 165(4) makes clear that various amendments being made to the Principal Act to the effect that, late payment penalty shall continue to accrue on unpaid tax notwithstanding that judgment has been given in a court, will apply to judgments given or entered after the proposed amendments come into operation.

Sub-clause 165(5) is a measure to ensure that amendments made by the Bill to include in various provisions of the Principal Act references to penalty taxes imposed by section 207 for late payment and under Part VII for various false or misleading statements or involvement in tax avoidance are not to give rise to any implication that the existing provisions do not encompass such penalty taxes.

Sub-clause 165(6) deals with amendments being made to the Principal Act relating to the powers of the Board of Review to review a decision of the Commissioner to remit additional tax. By sub-clause 165(6) the existing powers of the Board will continue to apply in respect of any decision by the Commissioner made under the existing remission authority.

Sub-clause 165(7) specifies that the amendment of section 216 of the Principal Act by clause 117 which relates to liabilities of trustees of a deceased estate will apply both to persons who die before and after the amendment comes into operation.

Sub-clause 165(8) stipulates that where an assessment has been made of the income of a deceased estate before the amendments of section 216 come into operation, that assessment will be treated as if it were made under the amended sub-section 216(2).

Sub-clause 165(9) specifies that new sub-sections 221AE(1A) and (1B), concerning instalments of company tax of less than $1000, being included in the Principal Act by clause 122, will apply in respect of income of the year of income that commenced on 1 July 1983 and all subsequent years.

Sub-clause 165(10), which concerns new additional tax penalties being implemented by clause 123 for under-estimation of company tax, specifies that the relevant amendments will apply to estimates made after the amendments proposed by clause 123 come into operation (i.e. 56 days after Royal Assent).

Sub-clause 165(11) makes clear that, notwithstanding the omission by clause 127 of sub-sections 22F(10) and 10A) of the Principal Act which impose for late payment penalty and authorise its remission by the Commissioner, those sub-sections will continue to apply to amounts required to be paid to the Commissioner before the amendments being made by clause 127 come into operation.

Sub-clause 165(12) makes clear that the new rate 20% of additional tax for late payment of provisional tax under section 221YDB (by clause 134) will apply to provisional tax payable in relation to assessments made for the year of income commencing 1 July 1984, and for subsequent years.

Sub-clause 165(13), which relates to the repeal of averment and enforcement provisions of the Principal Act which are being substantially re-enacted in Part III of the Taxation Administration Act 1953, specifies that the repealed sections continue to apply to proceedings or orders instituted or made before the repeal comes into effect.

Sub-clauses 165(14) and (15) relate to various sections of the Principal Act being amended that specify the time for commencement of prosecutions, impose additional tax or contain penal and prosecution procedures. These sections will continue to apply to offences committed before the relevant amendments come into operation, to convictions for such offences recorded either before or after that time and to additional tax that accrued before that time.

By sub-clauses 165(16) and (17) new rules being included in the Principal Act relating to the appointment of public officers will commence to apply 30 days after the relevant amendments come into operation (i.e. 86 days after Royal Assent).

Sub-clause 165(18) declares that the amendments effected by sub-clause 165(17) shall be disregarded in determining whether, before the amendments come into operation, a particular person was capable of being appointed as a public officer. Thus, the appointment of a corporation as a public officer before the amendments become law may nevertheless be in breach of the existing law.

Sub-clause 165(19) relates to provisions of the Principal Act that are applied by sub-section 4(1) of the Taxation (Unpaid Company Tax) Assessment Act 1982 for the purposes of the assessment and collection of recoupment tax. The transitional rules contained in this clause will apply for the purposes of that latter Act in the same manner as they apply for the purposes of the Principal Act.

Clause 166: Default imprisonment - transitional provisions

This clause, which will not amend the Principal Act, is consequential upon the repeal of sections 247 and 248 of that Act which are contained in existing Part VII being repealed by clause 152.

Section 247 empowers a Court to commit a person to gaol for non-payment of a pecuniary penalty, to release the convicted person on his giving sufficient security, or to exercise enforcement by any power of distress or execution it possesses. Section 248 sets out conditions for the release of a person gaoled pursuant to section 247.

In the absence of the express provisions of sections 247 and 248, a State or Territory court will, by virtue of section 18A of the Crimes Act 1914, be required in future to treat persons who fail to pay a fine imposed on conviction for a taxation offence in the same way as persons who fail to pay fines for offences against the laws of the particular State or Territory.

Clause 166 is intended to apply in any case where, at the time of the repeal of sections 247 and 248 (i.e., 56 days after Royal Assent), a person is imprisoned in pursuance of a court order for non-payment of a pecuniary penalty or the court has stayed an order for the person's imprisonment to allow time for payment.

Sub-clause (1) stipulates that sections 247 and 248 continue to apply generally in relation to a person who, prior to commencement of clause 166, has been committed to gaol for non-payment of a court imposed fine.

Sub-clause (2) sets out the circumstances necessary to permit an application to be made under sub-clause (3) by the Commissioner of Taxation, the person imprisoned or, where appropriate, the gaoler of the gaol in which the person is imprisoned, for a review by a court of the period of imprisonment imposed on the person. The conditions are that the person is either serving a period of imprisonment or a court has ordered the person to be imprisoned, but has stayed the execution of the order to allow time for payment.

Sub-clause (3) authorises a court to vary a previous court order committing an offender to gaol. In cases where the period of imprisonment being served, or to be served, by the convicted person is greater than the period that would have been imposed if section 18A of the Crimes Act 1914 had been applicable at the time of conviction, the court will be required to reduce the period of imprisonment. In such a case, that would result in a person being discharged from gaol if the period of imprisonment already served by the person were not less than the revised period of imprisonment determined by the court by reference to section 18A of the Crimes Act 1914. A person who had not served a period sufficient to allow immediate discharge would be required to serve out only the remainder of any reduced imprisonment period.

In a case where the sentence applicable under section 18A of the Crimes Act 1914 would not have been imprisonment but would have been some other order (e.g., a community service order or weekend detention), the court would be required to revoke the original order and make such new orders as it considers just and equitable. If no sentence or order would have been applicable under section 18A of the Crimes Act 1914, the court would be required to revoke the original order.

Sub-clause (4) will apply to ensure that the Acts Interpretation Act 1901 provisions relating to the continuing operation of repealed provisions do not affect the intended continued application of sections 247 and 248 to persons who were the subject of a prior court order; nor will they affect the proposed application of section 18A of the Crimes Act 1914 to such a person.

Sub-clause (5) will affect the operation of section 247 and 248 of the Principal Act as those sections are applied by sub-section 4(1) of the Taxation (Unpaid Company Tax) Assessment Act 1982 for the purposes of the assessment and collection of recoupment tax. The transitional provisions of clause 166 will apply for the purposes of that latter Act in the same manner as they are to apply for the purposes of the Principal Act.

PART XXIV - AMENDMENTS OF THE TAXATION ADMINISTRATION ACT 1953

Clause 291: Principal Act

This clause facilitates references to the Taxation Administration Act 1953 which, in this Part, is referred to as "the Principal Act".

Clause 292: Repeal of sections 2 and 3

By clause 292, sections 2 and 3 of the Principal Act which are redundant are to be repealed and the following sections substituted :

Section 2 : Interpretation

This section defines a number of terms used throughout the Principal Act and specifies the extent to which the Act applies to the external Territories.

"Commissioner" means the Commissioner of Taxation appointed to administer the various taxation laws of the Commonwealth.
"Deputy Commissioner" means any Deputy Commissioner of Taxation. Each major branch office of the Australian Taxation Office is controlled by a Deputy Commissioner.
"officer" is defined to mean an officer or employee of the Australian Public Service.
"Second Commissioner" means a Second Commissioner of Taxation. There are presently two Second Commissioners who assist the Commissioner in his administration of the taxation laws.
"taxation law" is defined for the purpose of identifying those Commonwealth taxation laws to which Parts IA, III, IVA and V of the Principal Act will generally apply. A taxation law is defined to mean the Principal Act and all other Acts and regulations of which the Commissioner of Taxation has the general administration (e.g., the Income Tax Assessment Act 1936). Paragraph (b) of the definition permits Acts to be prescribed by regulation as being excluded from the definition of a taxation law.
"tax liability" means a liability to the Commonwealth arising under a taxation law as defined.

Section 3 : Extension of Act to external Territories

Proposed new sub-section 3(1) will extend the application of the Principal Act to every external territory subject, however, to sub-section 3(2) which will ensure that Part IV (Exchange Control) will operate only in relation to those external territories to which the Banking Act 1959 applies. The Treasurer may be notice exclude a particular external Territory from the operation of that Act.

Clause 293: Administration

This clause inserts into the Principal Act a new Part 1A which contains new sections 3A, 3B and 3C to deal with the general administration of the Principal Act, preparation of annual reports and confidentiality of taxation information obtained under the Principal Act.

Section 3A : General administration of Act

Under the new section 3A, the Commissioner of Taxation is to be responsible for the general administration of the Principal Act.

Section 3B : Annual report

Proposed section 3B will require the Commissioner to furnish an annual report on the working of the Principal Act to the Minister responsible for taxation matters for presentation to the Parliament. In particular the Commissioner will, as he is presently required to do under section 140 which is to be repealed, draw attention to any breaches or evasions of Part IV (Exchange Control) or breaches of undertakings given by persons in respect of whom tax clearance certificates have been issued under that Part.

Sub-section 3B(3) will ensure that the requirements of section 34C of the Acts Interpretation Act 1901 relating to periodic reports will apply to annual reports required to be furnished under the Principal Act. Broadly the section imposes time limits on the furnishing of the report and its tabling in the Parliament.

Section 3C : Secrecy

New section 3C will impose an obligation of secrecy on officers or former officers who, in the course of their duties related to the administration of the Principal Act, have acquired information with respect to the affairs of another person. Such persons will be obliged not to make a record of or divulge or communicate such information to any other person except in the course of their duties and will not be compellable to give to any court information relating to the affairs of a person except when it is necessary to do so in support of a taxation law.

An officer may be required to make an oath or declaration to maintain secrecy in conformity with section 3C.

The maximum penalty (which is an increase on the existing penalty) for an offence against the section is to be a fine of $5,000 or imprisonment for one year, or both.

Clauses 294 and 295 : Tenure of Commissioner and Second Commissioners

Clause 294 proposes amendments of section 5 of the Principal Act relating to the tenure and salary of the Commissioner and Second Commissioners. The provisions are broadly in line with those contained in other modern Commonwealth Acts that deal with the tenure of independent statutory office holders. Paragraphs (a), (b) and (c) of clause 294 will effect formal amendments to reflect more up-to-date drafting styles. By paragraph (d), sub-sections 5 (4) and 5 (5) are to be deleted. The omission of sub-section 5(4), which authorises the Governor-General to appoint persons to act in the office of Commissioner or Second Commissioner, is consequential upon the proposed enactment of section 6B. Similarly, sub-section 5(5), which ensures that a person appointed to act in the position of Commissioner or Second Commissioner has all the powers, functions and duties of the Commissioner or a Second Commissioner, will be unnecessary following the enactment of sub-sections 6B(6) and (7).

Section 6 : Leave of absence

By the new section 6, the Minister with portfolio responsibility for taxation will be authorised to grant the Commissioner or a Second Commissioner leave of absence on such terms and conditions as are determined by the Minister.

Section 6A : Resignation

Under proposed section 6A, the Commissioner or a Second Commissioner may resign by delivering a letter of resignation to the Governor-General.

Section 6B : Acting appointments

This section establishes the procedure for acting appointments in the statutory offices of Commissioner and Second Commissioner of Taxation. By virtue of sub-sections 6B(1) and (2) the Governor-General may appoint a person to act in the office of Commissioner or in an office of Second Commissioner of Taxation during temporary absences from duty (e.g., absences due to sickness, recreation leave or on official business overseas) or on suspension of the office-holder or on a vacancy in the office. The Governor-General in Council may make prospective acting appointments under the new section overcoming a deficiency in the existing law which requires the permanent incumbent to actually proceed on leave, etc., before an acting appointment can be made.

Under the new sub-section 6B(3) the instrument of appointment may be expressed to apply only in designated circumstances, e.g., that a particular person or particular persons may act in the position of Commissioner or Second Commissioner on occasions when the incumbent is on leave.

Sub-section 6B(4) will ensure that an acting appointment during a vacancy in the office of Commissioner or Second Commissioner cannot continue for a period of more than 12 months from the date of appointment to the acting position. Where it becomes necessary for a person to act in either of these positions on more than one occasion, the 12 months limit on the duration of the appointment re-commences on each occasion that the person is required to act in the position concerned.

The effect of sub-section 6B(5), which is to be subject to sub-section 6B(3), will be that if an acting appointment as Commissioner or Second Commissioner is made for reasons other than a vacancy and that office becomes vacant during the period of the acting appointment, the person acting in the office may continue to act until the Governor-General otherwise directs, until the vacancy is filled or until the period of 12 months from the occurrence of the vacancy expires, whichever first occurs.

Sub-sections 6B(6) and (7) will ensure that, where a person is appointed to act in either the office of Commissioner or Second Commissioner, that person has all the powers and may perform all the functions of that office as permitted by the law.

By proposed sub-section 6B(8) the Governor-General may determine the terms and conditions for acting appointments (including salary and allowances) and will be authorised to terminate such an appointment at any time.

A person appointed to act in one of these offices may, under sub-section 6B(9), resign the appointment by delivering a written resignation to the Governor-General.

New sub-section 6B(10) is a safeguarding measure that will not permit any challenge to the validity of any act done by a person acting in the office of Commissioner or Second Commissioner on the ground that the statutory basis for the appointment did not exist or is not in existence, that there is a defect or irregularity in the appointment or that the appointment had ceased to have effect.

Section 6C : Suspension and removal from office of Commissioner or Second Commissioner

Proposed sub-section 6C(1) will enable the Governor-General to terminate the appointment of the Commissioner or a Second Commissioner in a case where both Houses of Parliament, in the same session of the Parliament, present to the Governor-General an address seeking the removal of the Commissioner or Second Commissioner on the ground of proved misbehaviour or physical or mental incapacity.

New sub-section 6C(2) will authorise the suspension, for misbehaviour or physical or mental incapacity, of the Commissioner or a Second Commissioner by the Governor-General.

If the Commissioner or Second Commissioner is suspended under sub-section 6C(2), the Minister with portfolio responsibility for taxation will be required by sub-section 6C(3) to arrange for a statement of the grounds of suspension to be laid before each House of the Parliament within 7 sitting days of the suspension.

If, at the end of 15 sitting days after the laying of a statement before a House of the Parliament as required by sub-section 6C(3), an address has not been presented to the Governor-General under sub-section 6C(1) seeking the removal of the Commissioner or Second Commissioner, as the case may be, the suspension will terminate and the Commissioner or relevant Second Commissioner may return to duty (sub-section 6C(4)). Normal salary and allowances will be payable during any period of suspension (sub-section 6C(5)).

By virtue of new sub-section 6C(6), if the Commissioner or a Second Commissioner becomes a bankrupt or does any of the other acts set out in paragraphs (a), (b) or (c) the Governor-General is required to remove the Commissioner or Second Commissioner from office.

The effect of sub-section 6C(7) will be that a Commissioner or Second Commissioner who is an eligible employee for the purposes of the Superannuation Act 1976 may be voluntarily retired from office by the Governor-General on the ground of physical or mental incapacity with full entitlement to whatever superannuation benefits are applicable to that office holder under that Act.

Sub-section 6C(8) makes it clear that the Commissioner or a Second Commissioner may not be suspended, removed or retired in any way other than those specified in section 6C.

Section 6D : Powers of Second Commissioner

Sub-section 6D(1) will specify that a Second Commissioner of Taxation has the powers, and may perform the functions, of the Commissioner under a taxation law. Such powers and functions are to be limited, however, by sub-section 6D(2) so as not to extend to any provision of a taxation law that-

·
authorises the Commissioner to delegate the exercise of his powers or performance of his functions under a taxation law and any other laws of the Commonwealth or a Territory (paragraph (a));
·
provides that the Commissioner has the general administration of a taxation law (sub-paragraph (b)(i)); or
·
requires the Commissioner to furnish to the Minister a report on the working of a taxation law (sub-paragraph (b)(ii)).

Proposed sub-sections 6D(3) and (4) together will deem acts by a Second Commissioner as being acts of the Commissioner, but not so as to prevent the actual overriding exercise of a power or the performance of a duty by the Commissioner.

Clause 296: Delegation

Section 8 of the Principal Act authorises the Commissioner to delegate the performance of his many powers and functions under the taxation laws to another person.

Paragraph (a) of clause 296 will omit existing sub-sections 8(1), (2) and (3) which deal with the general power of delegation and substitute new sub-sections 8(1) and (2). Sub-section 8(1) will enable the Commissioner to delegate, either generally or with stipulated conditions, any of his powers and functions under a taxation law or any other Commonwealth or Territory law, except the power of delegation itself, to a Deputy Commissioner or another person. Sub-section 8(2) will ensure that, where a delegated power or function is exercised or performed by the delegate, such action will be deemed to have been exercised or performed by the Commissioner, subject to a power of review and alteration by the Commissioner contained in sub-section 8(5).

Paragraph (b) of clause 296 will delete from sub-section 8(4) a specific reference to the right of revocation of a delegation by the Commissioner which is unnecessary. Sub-section 33(3) of the Acts Interpretation Act 1901 provides that such a right exists wherever an Act confers on a person a power to make an instrument of delegation.

The amendments proposed by paragraphs (c) and (d) to sub-sections 8(4) and (5) are of a drafting nature.

As a consequence of the proposed insertion of the new sub-section 8(2), by which a delegated power or function exercised or performed by a delegate is to be deemed to have been exercised or performed by the Commissioner, paragraph (e) proposes to delete words from existing sub-section 8(5) that duplicate that effect.

Paragraph (f) of clause 304 proposes to insert new sub-section 8(6) which will clarify the situation with delegations where there is a change in the occupancy of the office of Commissioner or a vacancy occurs in that office. Any such delegation by a former occupant of the office of Commissioner will continue in force and will be revocable or variable at will by a subsequent Commissioner.

Clause 297: Part III - Prosecutions and offences

Introductory Note

By this clause, it is proposed to insert a new Part - Part III - in the Principal Act. The new Part III, consisting of 5 Divisions, will introduce new offences and prosecution provisions applicable to every taxation law as defined in new section 2, broadly those taxation laws administered by the Commissioner of Taxation - see clause 292. Existing offence and prosecution provisions in those taxation laws are, as a consequence, being deleted by other clauses of the Bill.

The new offences contained in Part III will carry a tiered structure of penalties for second and subsequent offences. That is, penalties for second and subsequent offences will be higher than those applicable to a first conviction. Other important elements of Part III will -

·
enable a taxation offence that carries a term of imprisonment for a period not exceeding 12 months to be punishable on summary conviction;
·
enable a taxation offence punishable by a fine and not by imprisonment (including all offences by corporations) to be punishable on summary conviction regardless of the level of the pecuniary penalty;
·
permit a prosecution for a taxation offence to be instituted at any time;
·
enable courts to order persons convicted of an offence to pay to the Commissioner double or three times the amount of tax sought to be avoided by the commission of the offence;
·
impose on a corporation convicted of an offence that, if committed by an individual, would be punishable by imprisonment, a maximum penalty five times the maximum fine that could be imposed on the person; and
·
deem a person concerned in the management of a company to have committed an offence committed by the company, unless the person can show that he or she was not knowingly concerned in the offence.

A detailed explanation of each provision in new Part III follows.

PART III - PROSECUTIONS AND OFFENCES

Division 1 - Preliminary

Section 8A : Interpretation

Section 8A defines various terms contained in the new Part III and clarifies the meaning of "director" as used in that Part. The definitions in sub-section 8A(1) are as follows -

"corporation" means any body corporate.
"director" will include any person who, formally or in practice, occupies or acts in the position of director and any person in accordance with whose directions the directors of a company are accustomed to Act. The meaning of this term is further clarified by sub-section 8A(2).
"instrument" is defined to include any document as defined by section 25 of the Acts Interpretation Act 1901. By that section document includes -

·
written or printed material;
·
paper or other material containing marks, figures, symbols or perforations having a meaning for persons qualified to interpret them; and
·
articles or materials from which sounds, images or writings are capable of being reproduced.

"prescribed offence" is an offence, by means of an act or omission, against new section 8C, sub-section 8D(1) or (2) or section 8N, 8P or 8Q, or an attempt (proscribed by section 7 of the Crimes Act 1914) to commit such an offence. It also includes, by virtue of section 5 of the Crimes Act 1914, aiding or abetting any of these offences. In particular, a prescribed offence involves a failure to comply with a requirement under a taxation law, failure when attending before the Commissioner to answer questions, produce documents or take an oath or make an affirmation, recklessly or knowingly making a false statement or omitting from a statement a matter that renders the statement misleading in a material particular and recklessly or knowingly keeping records that do not correctly record and explain the matters forming part of that record. These offences are defined for the purposes of the proposed tiered structure of penalties for second and subsequent offences which may in certain cases carry penalties that include terms of imprisonment.
"prescribed taxation offence" is defined to mean a taxation offence (defined in section 8A), other than a prescribed offence, that is committed by a natural person and punishable by fine and not by imprisonment or a taxation offence committed by a corporation. In relation to natural persons, however, the expression includes prescribed offences unless the Commissioner elects to have a court treat the offence otherwise than as a prescribed taxation offence. The effect of making such an election will be to expose the defendant to a term of imprisonment upon a third conviction. Where imprisonment may be ordered different prosecution procedures apply including the requirement that the offence be proven beyond reasonable doubt.
"taxation offence" is defined to mean an offence against a taxation law as that term is defined in new section 2 of the Principal Act - see clause 300. It also includes ancillary offences under the Crimes Act 1914 for persons who are accessories after the fact, persons who attempt to commit a taxation offence, persons who incite or urge the commission of a taxation offence or persons who conspire to commit a taxation offence. The definition will also take in the offence of aiding and abetting the commission of a taxation offence by reason of section 5 of the Crimes Act 1914.

Proposed sub-section 8A(2) will make it clear that a person will not be taken to be a director of a company merely because the directors act on advice given by that person in a proper professional or business capacity.

Division 2 - Offences

Proposed Division 2 will establish the offences and provide the prosecution machinery that will apply to all taxation laws.

Subdivision A - Failure to comply with taxation requirements

Section 8B : Interpretation

This section contains measures to assist in the interpretation and application of Subdivision A.

New sub-section 8B(1) specifies that the term "relevant offence" as used in Subdivision A refers to offences against proposed section 8C (failure to comply with a requirement under a taxation law), sub-section 8D(1) or (2) (refusal or failure when attending before the Commissioner to answer a question, produce a document or take an oath or make an affirmation when required) or section 8H (failure to comply with a court order). The ancillary offences under the Crimes Act 1914 as explained in the notes on sub-section 8A(1) will also be "relevant offences" in Subdivision A.

Sub-section 8B(2) will contain the rules for determining whether a person convicted of an offence against new section 8C or sub-section 8D(1) or (2) (the "subsequent offence") has previously been convicted of a relevant offence. If the person has been so convicted within 5 years of another conviction, the person will be held to have previously been convicted of a relevant offence - paragraph (2)(a). Previous convictions outside the 5 year period will be disregarded. Where a person is convicted of a relevant offence and a subsequent offence on the same day and before the same court and the relevant offence was committed within 5 years of, or at the same time as, the subsequent offence, the person will also be held to have previously been convicted of a relevant offence - paragraph (2)(b). As will be explained more fully, a person so convicted previously will be liable to a higher scale of penalties on a subsequent conviction.

The effect of sub-section 8B(3) will be that a person convicted of an offence against section 8C or sub-section 8D(1) or (2) will be treated as having a previous conviction if the person has a conviction under section 7 of the Crimes Act 1914 for an ancillary offence relating to offences against those provisions.

New sub-section 8B(4) is to the effect that, in determining whether a previous conviction has been recorded against a person, an order of a court under section 19B of the Crimes Act 1914 that it is satisfied that a charge is proved but that, due to the circumstances, it does not see fit to convict, will be taken as representing a previous conviction. In the absence of such a provision, a person could obtain the benefit of section 19B on successive occasions and continue to be treated as a first offender.

Sub-section 8B(5) will make clear that a reference in Subdivision A to an instrument being duly stamped is a reference to the instrument being duly stamped within the meaning of the Australian Capital Territory Taxation (Administration) Act 1969.

Section 8C : Failure to comply with requirements under taxation law

New section 8C re-enacts in a revised form existing offences under the various taxation laws relating to -

·
failure to furnish a return or information or produce a book, paper, record or other document to the Commissioner or another person (paragraphs (a) and (e));
·
failure to lodge an instrument with the Commissioner or another person for assessment or failure to cause an instrument to be duly stamped (paragraphs (b) and (c));
·
failure to notify the Commissioner or another person of a matter or thing (paragraph (d)); and
·
failure to attend before the Commissioner or another person (paragraph (f)).

Section 8C applies to all taxation laws as defined in proposed section 2 of the Principal Act - see clause 292. Further it requires compliance to the extent that the subject person is capable of complying with the particular requirement. Thus, self-incrimination would not be a defence to a charge under section 8C.

Section 8D : Failure to answer questions when attending before Commissioner, etc.

New section 8D makes it an offence if a person, when attending before the Commissioner - for example, under section 264 of the Income Tax Assessment Act 1936 - refuses or fails when lawfully required to answer questions or produce documents (sub-section 8D(1)), or take an oath or make an affirmation (sub-section 8D(2)). Again, self-incrimination would not be a defence to a charge under sub-section 8D(1).

Section 8E : Penalties for failure to comply with requirements under a taxation law

New sub-section 8E(1) sets the penalty on conviction for a first offence against section 8C or sub-section 8D(1) or (2) as a fine not exceeding $2,000.

Under sub-section 8E(2), the maximum penalty that may be imposed by a court in a case where a person convicted of an offence against section 8C or sub-section 8D(1) or (2) has previously been convicted of one relevant offence (as explained in the notes on section 8B) is a fine not exceeding $4,000.

Sub-section 8E(3) will apply in the case of a conviction for an offence against section 8C or sub-section 8D(1) or (2) where the court is satisfied that the person has previously been convicted of 2 or more relevant offences (as explained in the notes on section 8B). In this case, the maximum penalty for a third or subsequent offence against section 8C or sub-section 8D(1) or (2) is, provided the offence is prosecuted otherwise than as a prescribed taxation offence, a fine not exceeding $5,000 or imprisonment for a period not exceeding 12 months, or both. The penalty in sub-section 8E(3) cannot apply unless the Commissioner has elected under the proposed section 8F to have the offence treated as an offence other than a prescribed taxation offence. As explained in the notes on section 8F, where an offence is prosecuted otherwise than as a prescribed taxation offence, different and more onerous prosecution procedures apply.

Section 8F : Election to treat offence otherwise than as prescribed taxation offence

As noted earlier, new section 8F will permit the Commissioner to elect before a prosecution is instituted to treat an offence to be prosecuted otherwise than as a prescribed taxation offence. The offences in respect of which an election may be lodged are those committed by a natural person where the available penalty for a third or subsequent offence includes a term of imprisonment. The lodgment of an election will mean that -

·
the defendant will be exposed on conviction to a penalty that may include a term of imprisonment;
·
the burden of proof on the prosecution will be the criminal burden of proof beyond reasonable doubt;
·
the averment procedure will not be available to establish that the elements of the offence have been made out by the prosecution.

Sub-section 8F(2) will require the Commissioner to file an election under sub-section (1) in the court in which the prosecution is instituted.

Section 8G : Order to comply with requirement

Section 8G will authorise a court, in respect of a person convicted of an offence against section 8C or sub-section 8D(1) or (2), including a case where an order under section 19B of the Crimes Act 1914 is made in respect of such a person (as explained in the notes on sub-section 8B(4)) to order the person, in addition to imposing a penalty or making the order under section 19B of the Crimes Act 1914 on the person, to comply with the requirement that has not been complied with and to do so within a specified time or at a specified place and time - sub-section 8G(1).

Sub-section 8G(2) will require an officer of the court to serve on the person a copy of the order made under sub-section (1) where the person fails to attend court and the order is not given orally by the court to the person to whom it is addressed.

Section 8H : Penalty for failure to comply with order to comply

Under section 8H, a fine not exceeding $5,000 or imprisonment for a period not exceeding 12 months, or both, is the prescribed penalty if a person fails or refuses to comply with a court order under sub-section 8G(1).

Subdivision B - Offences relating to statements records and certain other matters

Section 8J : Interpretation

New section 8J contains definitions and other interpretative provisions relevant to the application of Subdivision B.

Sub-section 8J(1) contains the following definitions used in the Subdivision -

"accounting records" is defined to include various kinds of accounting records such as invoices, receipts, orders for the payment of money, bills of exchange, cheques and promissory notes, vouchers and other documents of prime entry including working papers, and other documents as are necessary to explain the methods and calculations by which accounts are made up. It also includes any other documents as may be prescribed by regulation.
"accounts" means ledgers, journals, profit and loss accounts and balance sheets and includes statements, reports and notes attached to, or intended to be read with, such records.
"data processing device" means any article or material (e.g. computer tapes or discs) from which information is capable of being reproduced with or without the aid of any other article or device.
"taxation officer" means a person exercising powers or performing functions under, pursuant to or in relation to a taxation law.

The offences contained in new Subdivision B apply to statements made to a taxation officer or to a person other than a taxation officer for purposes in connection with the operation of the Principal Act or the regulations - sub-sections 8J(2), (9) and (10). Those sub-sections will apply in a similar manner to new sub-sections 223(8) and (9) of the Income Tax Assessment Act 1936, as explained in the notes on clause 152.

New sub-section 8J(3) defines the term "relevant offence" when used in Subdivision B as offences against sub-section 8K(1) (false or misleading statements) or sub-section 8L(1) (incorrectly keeping records), sections 8N, 8P, 8Q (recklessly or knowingly making false or misleading statements, or incorrectly keeping records) or section 8T or 8U (incorrectly keeping records or falsifying or concealing identity with intent to deceive or mislead) or offences against the Crimes (Taxation Offences) Act 1980 - paragraph 8J(3)(a). Paragraph 8J(3)(b) will parallel the effect of paragraph 8B(1)(b) - see notes on that paragraph.

New sub-section 8J(4) proposes similar rules for determining previous convictions of persons convicted of an offence against sub-section 8K(1) or 8L(1) or section 8N, 8P, 8Q, 8T or 8U as will apply under sub-section 8B(2) in relation to convictions for offences against section 8C or sub-section 8D(1) or (2), except that, because of the more serious nature of the offences, the period during which previous convictions may be taken into account will be 10 years instead of 5 years. Its effect is explained in the earlier notes on this clause.

Sub-section 8J(5) will apply in a similar manner in relation to Subdivision B as sub-section 8B(4) will in relation to Subdivision A while sub-sections 8J(6), (7) and (8) will have an effect comparable to sub-section 8B(3).

Sub-section 8J(11) will render a person who omits an amount of income from his or her own return, or from a partnership or trust return, furnished pursuant to the Income Tax Assessment Act 1936 liable to the application of the offence provisions of Subdivision B on the basis that an omission of that kind is to be treated as a false or misleading statement.

Section 8K : False or misleading statements

New section 8K will make it an offence for a person to make a statement to a taxation officer or another person for a purpose in connection with the operation of a taxation law that is false or misleading in a material particular or which, by the omission of some matter, is rendered misleading - sub-section 8K(1).

It will be a defence if the person proves on the balance of probabilities that he or she did not know and could not reasonably be expected to have known that the statement to which the prosecution relates was false or misleading - sub-section 8K(2).

Section 8L : Incorrectly keeping records, etc.

Sub-section 8L(1) will make it an offence for a person who is required, under or pursuant to a taxation law, to keep any accounts, accounting records or other records, to keep them in such a way that they do not correctly record or explain the matters to which they relate. Similarly, a person required to make a record of any matter, transaction, act or operation who makes it in a way that does not correctly record the matter is to be guilty of an offence.

Sub-section 8L(2) permits a defence similar to that provided for offences against sub-section 8K(1).

Section 8M : Penalties for offence against sub-sections 8K(1) and 8L(1)

Penalties for offences against sub-section 8K(1) and 8L(1) are specified in new section 8M. Under sub-section 8M(1), the penalty on conviction for an offence against sub-section 8K(1) or 8L(1) is a fine not exceeding $2,000. Sub-section 8M(2) specifies a maximum penalty of a fine not exceeding $4,000 where a person convicted of an offence against sub-section 8K(1) or 8L(1) has been convicted of a previous relevant offence (see sub-section 8J(4)) within the previous 10 years.

Section 8N : Recklessly making false or misleading statements

Section 8N will make it an offence for a person to recklessly make a statement to a taxation officer or another person in connection with the operation of a taxation law that is false or misleading in a material particular or which, by omission of some matter, is rendered misleading. Reckless conduct requires a higher degree of culpability than mere negligence. The conduct must be such as to evince disregard of, or indifference to, consequences foreseeable by a reasonable person.

Section 8P : Knowingly making false or misleading statements

Under section 8P it will be an offence for a person to knowingly make a statement to a taxation officer or another person in connection with the operation of a taxation law that is false or misleading in a material particular or which, by omission, is rendered misleading. The requirement for the person to knowingly make the false or misleading statement means that the person must be aware of the nature of his or her conduct.

Section 8Q : Recklessly or knowingly keeping records, etc

The offence contained in section 8Q is similar to that in sub-section 8L(1) relating to the keeping or making of records etc., but, for the section to apply, the conduct must be undertaken recklessly or knowingly. Accordingly, the offence contained in section 8Q carries a higher penalty - see section 8R.

Section 8R : Penalties for offences against sections 8N, 8P and 8Q

The penalties for offences against sections 8N, 8P and 8Q are contained in new section 8R. Under sub-section 8R(1), the penalty on conviction for a first offence against section 8N, 8P or 8Q is a fine not exceeding $3,000. Sub-section 8R(2) specifies that, for second and subsequent offences within 10 years, the maximum penalty is a fine not exceeding $5,000 or imprisonment for a period not exceeding 12 months, or both. In order for sub-section 8R(2) to apply, however, the Commissioner would need to elect under sub-section 8S(1) to treat the offence otherwise than as a prescribed taxation offence and for the court to find that the person has been previously convicted of a relevant offence, as defined by sub-section 8J(3), within the previous 10 years.

Section 8S : Election to treat offence otherwise than as prescribed taxation offence

Proposed section 8S will have a similar application in relation to offences against sections 8N, 8P and 8Q as section 8F has in relation to offences against section 8C or sub-sections 8D(1) or (2) - see the notes on section 8F.

Section 8T : Incorrectly keeping records with intention of deceiving or misleading, etc.

Certain conduct relating to the keeping of records will be offences under section 8T if done with any of the following intentions (paragraphs 8T(e) to (j)):

·
to deceive or mislead the Commissioner or a particular taxation officer;
·
to hinder or obstruct the Commissioner or a particular taxation officer;
·
to hinder or obstruct the investigation of a taxation offence;
·
to hinder, obstruct or defeat the administration, execution or enforcement of a taxation law; or
·
to defeat the purpose of a taxation law.

A person will be guilty of an offence under section 8T where, with such an intention, that person -

·
keeps any accounts, accounting records (as defined in section 8J) or other records in such a way that they do not correctly record and explain the matters, transactions, acts or operations to which they relate, or are illegible, indecipherable, incapable of identification or incapable of being reproduced;
·
makes a record of any matter, transaction, act or operation in such a way that it does not correctly record the matter, transaction, act or operation;
·
alters, defaces, mutilates, falsifies, damages, removes, conceals or destroys any accounts, accounting records or other records in whole or in part; or
·
does or omits to do any other act or thing to any accounts, accounting records or other records.

Section 8U : Falsifying or concealing identity with intention of deceiving or misleading, etc

Section 8U will create the offence of falsifying or concealing the identity of, or address, or location of a place of residence or business of, any person. A person who does or omits to do any act or thing so as to facilitate such falsification or concealment etc., will also be guilty of an offence under the section. Conviction under section 8U will depend on the person having engaged in the particular conduct with one or more of the intentions specified in paragraphs 8U(c) to (g). They are the same as these specified in paragraphs 8T(e) to (j). An example of the conduct proscribed by this section would be giving a false name to an employer with the intention of evading tax on earnings from employment in a second job.

Section 8V : Penalties for offences against sections 8T and 8U

Proposed section 8V specifies the penalties for offences against sections 8T and 8U. For a first offence, a person will be liable to a fine not exceeding $5,000 or imprisonment not exceeding 12 months, or both - sub-section 8V(1).

By sub-section 8V(2), a person who the court finds has been convicted of a previous relevant offence within 10 years will be liable to a maximum penalty of a fine not exceeding $10,000 or imprisonment for a period not exceeding 2 years, or both. An offence under sub-section 8V(2) is an indictable offence.

Section 8W : Court may order payment of amount in addition to penalty

New section 8W will apply where a person is convicted of an offence against sub-section 8K(1), 8L(1), section 8N, 8P or 8Q relating to false or misleading statements or the keeping of incorrect accounts or records and the court is satisfied that the tax liability of the convicted person or another person exceeds the amount that would have been that liability had it been determined on the basis that the statement made by the convicted person was not false or misleading or that the relevant accounts or records were correct. In such circumstances, the court will be empowered, in addition to imposing prescribed penalty, to order the convicted person to pay to the Commissioner an amount not exceeding -

·
in the case of a second or subsequent offence against sections 8N, 8P and 8Q - treble the amount of the excess; or
·
in any other case - double the amount of the excess.

Sub-section 8W(2) will apply in a similar manner to sub-section 8W(1) in relation to offences against sections 8T and 8U where there has been an intention to deceive or mislead. As is the case with sub-section 8W(1), the court may order the person convicted of a second or subsequent offence against sub-section 8T or 8U to pay treble the amount of tax sought to be avoided, in addition to the penalty imposed for the offence itself. In other cases, the court may order that double the tax sought to be avoided be paid to the Commissioner.

Subdivision C - Miscellaneous

Section 8X : Obstructing officers

New section 8X will make it an offence for a person to hinder or obstruct another person in the exercise of that other person's powers or functions under a taxation law. The penalty is a fine not exceeding $2,000 or imprisonment for a period not exceeding 6 months, or both. The offence created by section 8X replaces similar offences existing in the various taxation laws.

Section 8Y : Liability of officers, etc., of corporations

The effect of section 8Y will be that persons concerned in, or who take part in, the management of a company will be liable for prosecution for offences committed by the company against the taxation laws as if they had committed those offences themselves.

The section will clarify the operation of provisions in the existing taxation laws (e.g., section 252 of the Income Tax Assessment Act 1936) that make company officers liable for taxation defaults by the company. While the intention of the existing provisions was that company officers should be liable for all defaults by the company, recent doubt has been cast on whether this intended effect is fully achieved by these provisions.

Where a corporation does or omits to do something that creates a taxation offence, a person (whether that person is an officer of the corporation and regardless of any title by which the person is referred to within the company) who is concerned in, or takes part in, the management of the corporation is to be deemed, by sub-section 8Y(1), to have committed the offence and be punishable as the law prescribes.

By sub-section 8Y(2) it will be a defence against a prosecution for a taxation offence by virtue of sub-section (1) if the person proves that he or she did not aid, abet, counsel or procure the particular act or omission of the company and was not in any way directly or indirectly knowingly concerned in, or party to, that act or omission.

Under sub-section 8Y(3) an officer (as defined in sub-section 8Y(4)) of a corporation will be presumed to be concerned in, and to take part in, the management of the corporation unless the contrary is proved.

Sub-section 8Y(4) defines "officer" to mean:

(a)
a director or secretary of the corporation;
(b)
a receiver and manager of property of the corporation;
(c)
an official manager or deputy official manager of the corporation;
(d)
a liquidator of the corporation appointed in a voluntary winding-up of the corporation; or
(e)
a trustee or other person administering a compromise or arrangement made between the corporation and another person or other persons.

Section 8Z : Evidentiary certificate relating to previous convictions

Section 8Z sets out the manner in which the Commissioner may present evidence of previous convictions for the purposes of the stepped scale of penalties contained in Subdivisions A and B for second or third and subsequent offences.

By sub-section 8Z(1), the Commissioner may issue a certificate setting out such facts as the Commissioner considers relevant with respect to -

·
the conviction of an offence against Subdivision A or B;
·
the conviction of a person against the Crimes (Taxation Offences) Act 1980;
·
the conviction of a person for offences under the Crimes Act 1914 relating to taxation offences; and
·
the making of an order under section 19B of the Crimes Act 1914.

A certificate purporting to be issued under sub-section (1) shall, without further proof, be prima facie evidence in a court of the facts contained in it (sub-section 8Z(2)). As the certificate is prima facie evidence only it will be open to a defendant to give evidence of any alleged inaccurancies in it and for the court to then decide whether previous convictions have been proved to its satisfaction.

Sub-section 8Z(3) declares that the provisions of section 8Z are in addition to, and not in derogation of, any other law of the Commonwealth, a State or Territory. Thus, existing rules for establishing prior convictions (e.g., the use of court records) will continue to be available.

Division 3 - Prosecution of Taxation Offences

Section 8ZA : Prosecution of taxation offences

Sub-section 8ZA(1) will make a taxation offence punishable by imprisonment for a period not exceeding 12 months if committed by a natural person an indictable offence. An indictable offence must be prosecuted by the Attorney-General or by a person authorised by commission by the Governor-General - see section 69 of the Judiciary Act 1903. Such offences may also be prosecuted by the Director of Public Prosecutions - see sections 6 and 9 of the Director of Public Prosecutions Act 1983. Indictable offences cannot be instituted by the Commissioner of Taxation.

Where an offence committed by a natural person is punishable by imprisonment for a period not exceeding 12 months, it may be prosecuted summarily - sub-section 8ZA(2). This overrides section 42 of the Acts Interpretation Act 1901.

Sub-section 8ZA(3) stipulates that a prescribed taxation offence, as defined in sub-section 8A(1), when committed by a natural person, is punishable on summary conviction, and sub-section 8ZA(4) applies in like manner to a taxation offence, as defined in sub-section 8A(1), committed by a corporation.

Section 8ZB : Prosecution may be commenced at any time

New section 8ZB will permit a prosecution for a taxation offence to be commenced at any time notwithstanding anything that may be implied by section 21 of the Crimes Act 1914, which contains limitations on the commencement of certain prosecutions.

Section 8ZC : Place where offence committed

Proposed new section 8ZC will re-enact, in a more comprehensive form, section 241 of the Income Tax Assessment Act 1936. It makes clear that a taxation offence (whether by act or omission) may be taken to have been committed at-

·
the place where the act was, or should have been, done;
·
where the person is a natural person, the usual place of residence or business of the person or the place of residence or business of the person last known to the Commissioner; or
·
in the case of a corporation, the head office, a registered office or a principal office of the corporation.

The person may be charged and convicted as if the taxation offence had been committed at any of those places - sub-sections 8ZC(1) and (2). Sub-section 8ZC(3) is a declaratory measure to the effect that section 8ZC is not to be read contrary to section 80 of the Constitution which relates to the place of trials for indictable offences.

Section 8ZD : Conduct by servants or agents of corporations

Sub-section 8ZD(1) deals with the "state of mind" to be attributed to a corporation where it is necessary to establish in a prosecution for a taxation offence the intention of the corporation. Because a corporation cannot itself have a state of mind, by sub-section(1), it will be sufficient to show that a servant or agent of the corporation by whom the act was done or omitted to be done had the necessary intention.

New sub-section 8ZD(2) will deem acts done or omitted to be done on behalf of a corporation by a director, servant or agent or by any other person at the direction or with the consent or agreement of a director, servant or agent, to have been done by the corporation.

Section 8ZE : Penalty taxes to be alternative to prosecution for certain offences

Elsewhere in the Bill new provisions will be inserted which impose, by way of penalty, additional tax, duty or charge where a person fails to furnish a return or information, makes a false or misleading statement or omits from a statement something that renders it false or misleading.

Sub-section 8ZE(1) will re-enact in a modified form existing provisions of the various taxation laws that specify that additional tax, duty or charge imposed under a "penalty tax provision" (see notes on sub-section 8ZE(3)) is not payable where a prosecution is instituted against the person for an offence against section 8C (failure to comply with a requirement of a taxation law), sub-section 8K(1) or section 8N or 8P (false or misleading statements) in relation to the same act or omission, unless and until the prosecution is withdrawn.

Sub-section 8ZE(2) will apply where a person has paid the whole or a part of the additional tax, duty or charge imposed under a "penalty tax provision" before a prosecution is instituted. In such a case, the amount so paid is required to be refunded to the person or applied by the Commissioner in total or partial discharge of a tax liability of the person. However, if the prosecution is withdrawn, the person will again become liable to pay the additional tax, duty or charge imposed under the "penalty tax provision".

Those provisions mentioned in the opening note on this section are enumerated in sub-section 8ZE(3) and are referred to in the section as "penalty tax provisions".

Section 8ZF : Penalties for corporations

By new section 8ZF, where a corporation is convicted of a taxation offence (other than a prescribed offence) that if committed by a natural person is punishable by imprisonment, the penalty that a court may impose on the corporation is a fine not exceeding 5 times the maximum fine that the court could impose as a penalty on the natural person.

Section 8ZG : Enforcement of orders for payment

New section 8ZG contains rules for the enforcement of orders made by a court upon the conviction of a person for a taxation offence where, in addition to imposing a fine or a term of imprisonment, the court orders the person to pay an amount to the Commissioner. If the court has civil jurisdiction to the extent of the amount ordered to be paid, the order is enforceable as a final judgment of the court in favour of the Commissioner - sub-section 8ZG(1). If the court does not have civil jurisdiction, or has civil jurisdiction but not to the extent of the amount ordered to be paid, an officer of the court will be required to issue a certificate containing the relevant particulars of the court order - sub-section 8ZG(2). That certificate may then be registered in a court having the appropriate civil jurisdiction and, upon registration, the certificate is enforceable as a judgment of the court in which it is registered (sub-sections 8ZG(3) and (4)). Any costs of registration or other proceedings to recover the amount are deemed to be payable under the certificate - sub-section 8ZG(5).

Section 8ZH : Penalties not to relieve from tax

New section 8ZH will ensure that the payment of a penalty upon conviction does not affect in any way the amount of tax, duty or charge correctly payable under a taxation law.

Division 4 - Prescribed Taxation Offences

Section 8ZJ : Prosecution of prescribed taxation offences

Sub-section 8ZJ(1) stipulates that a prosecution for a prescribed taxation offence is to take the form of a proceeding by the Commonwealth for the recovery of a pecuniary penalty. This will mean, in effect, that the proceedings are civil in nature rather than criminal. Sub-section 8ZJ(2) will permit a prosecution for a prescribed taxation offence to be instituted in a court of summary jurisdiction in the official name of the Commissioner by information or complaint by a person authorised under sub-section 8ZJ(8).

A similarly authorised person may institute proceedings in the official name of the Commissioner in a Supreme Court in respect of a prescribed taxation offence punishable by a fine exceeding the "prescribed amount". As defined in sub-section 8ZJ(9), the "prescribed amount" is $5,000 in respect of a natural person and $25,000 in respect of a corporation.

New sub-section 8ZJ(4) will place on courts of summary jurisdiction a limitation as to the level of penalty that may be imposed in respect of a prescribed taxation offence. They will not be authorised to impose a fine exceeding the prescribed amount as defined in sub-section 8ZJ(9).

Sub-section 8ZJ(5) will allow a person who does not wish to be tried before a court of summary jurisdiction to elect, within 14 days of service of process, to have a matter tried in the Supreme Court of the State or Territory in which the prosecution was instituted, if the fine that may be imposed on conviction exceeds the prescribed amount as defined in sub-section 8ZJ(9).

Sub-section 8ZJ(6) re-enacts existing provisions in the income tax law that stipulate that a prosecution for a prescribed taxation offence (previously referred to as a "taxation prosecution") instituted in a Supreme Court may be proceeded with in accordance with either the usual practice and procedure of the court in civil cases or the directions of the Court or a justice or judge of the Court.

Sub-section 8ZJ(7) specifies that the jurisdiction of the Supreme Court of a State or Territory under section 8ZJ shall be exercised by a single justice or judge of the Court.

As mentioned, the Commissioner will be empowered to authorise another person to institute a prosecution for a prescribed taxation offence. The Commissioner may, by sub-section 8ZJ(8), exercise this power in relation to a specified prescribed taxation offence, a special prescribed taxation offence included in a specified class of prescribed taxation offences or all prescribed taxation offences.

Section 8ZK : Protection of witnesses

Section 8ZK specifies that a witness called on behalf of the Commissioner is not compellable to give evidence in regard to certain confidential information or documents. The section re-enacts in a modified form the provisions of existing section 242 of the Income Tax Assessment Act 1936 and will have the same effect in relation to prosecutions for prescribed taxation offences as section 242 presently has in relation to income tax matters.

Section 8ZL : Averment

Section 8ZL effectively re-enacts the provisions of section 243 of the Income Tax Assessment Act 1936 concerning averments by the prosecutor in taxation prosecutions. The section will have the same effect for prescribed taxation offences as section 243 now has in relation to income tax matters.

Secton 8ZM : Evidence of authority to institute proceedings

Section 8ZM stipulates that where a prosecution for a prescribed taxation offence is instituted in the official name of the Commissioner, there shall be a presumption, subject to the contrary being proved, that the prosecution has been instituted with the authority of the Commissioner - sub-section 8ZM(1).

By sub-section 8ZM(2), the production of an instrument, telegram or copy of a telex sent by the Commissioner, Second Commissioner or Deputy Commissioner notifying a person that he or she is authorised to institute a prosecution will be conclusive evidence of the authority of the person to institute the prosecution. Section 8ZM substantially re-enacts existing section 244 of the Income Tax Assessment Act 1936.

Section 8ZN : Costs

New section 8ZN specifies that a court may award costs against any party in a prosecution for a prescribed taxation offence.

Clause 298: Heading to Part III

The amendment proposed by this clause is consequential upon the insertion of new Part III into the Principal Act by clause 297. The new Part III will incorporate - as Division 5 of that Part - the existing provisions of Part III of the Principal Act.

Clause 299: Interpretation

This clause will amend section 9 of the Principal Act which defines a number of terms that are used in the existing Part III (proposed Division 5 of new Part III). The amendments to be made by paragraphs (a), (b), (d) and (e) are consequential upon the insertion of new prosecution procedures in new Part III of the Principal Act by clause 297 and, in particular, the substitution of the term "prescribed offence" by "prescribed taxation offence". Paragraph (c) of clause 299 proposes a change to the definition of "defendant" in section 9 to overcome doubts that have been expressed about the intended operation of sub-section 10(1) - refer to explanation on clause 300.

Clause 300: Service of summons by post

Clause 300 will make amendments of section 10 of the Principal Act which authorises the service of summonses by post in specified circumstances. The amendment proposed by paragraph (a) of clause 300 is associated with that made by paragraph (c) of clause 299 and, in conjunction with the insertion of a new sub-section 10(1A) by paragraph (c) of this clause, is designed to clarify the intended operation of sub-section 10(1). The need for that clarification arises from the suggestion that the service of a summons by any means under a law of a State or Territory may nevertheless constitute "service in accordance with section 10" because such service would be authorised by the opening words of sub-section 10(1) that are to be omitted by paragraph (a). By omitting those words and re-enacting them as new sub-section (1A), together with the change proposed to the definition of "defendant" by clause 299, it is intended that the provisions of sections 11, 12, 13 and 13A - which require a series of notices to be served on a person before he or she is imprisoned for non-payment of a fine and give a right to a re-hearing of proceedings in specified circumstances - will apply only where a summons is served by ordinary pre-paid post under sub-section 10(1). Where a summons is served in accordance with State or Territory law, the provisions of that law concerning enforcement of penalties imposed on convicted persons will apply. The amendment by paragraph (b) is consequential upon the use of the term "prescribed taxation offence" in Part III in substitution for "prescribed offence" - see clause 299.

Clause 301: Notice of conviction in absentia

Clause 302: Limitation of action to enforce payment of fine

Clause 303: Application of other laws

The amendments proposed by clauses 301, 302 and 303 of sections 11, 13 and 13C of the Principal Act are consequential upon the use of the term "prescribed taxation offence" and the conversion of existing Part III to Division 5 of new Part III. The sections being amended contain various rules pertaining to enforcement of fines on convicted persons as explained in the notes on clause 300.

Clause 304: Interpretation

Clause 304 will amend section 14A of the Principal Act which contains definitions of a number of terms used in Part IV (Exchange Control - Taxation Certificates) of that Act. The amendment by paragraph (a) follows the inclusion of definitions of the terms "Commissioner", "Deputy Commissioner" and "Second Commissioner" in section 2 by clause 292, while the amendment by paragraph (b) is related to the proposed repeal of section 14HA - see notes on clause 309.

Clauses 305-307: Tax screening arrangements

Introductory Note

Part IV - comprising sections 14A to 14O - of the Principal Act contains the machinery by which, and the rules under which, the Commissioner may issue a tax clearance certificate in respect of certain foreign exchange transactions. It also provides for review by a Taxation Board of Review of a refusal by the Commissioner to issue such a certificate.

Section 14B of the Principal Act sets out the circumstances in which a person may apply to the Commissioner for the issue of a tax clearance certificate. The circumstances specified are where the Reserve Bank declines to grant approval for an exchange control application submitted to it without a certificate or where, in broad terms, a certificate is required by virtue of a notice issued by the Treasurer under sub-section 39B(2) of the Banking Act 1959.

Revised tax screening arrangements came into effect when new foreign exchange dealers were authorised on 25 June 1984. These arrangements are based on general authorities issued by the Reserve Bank to foreign exchange dealers and to the public, and are conditional on tax clearance certificates being obtained in certain circumstances. These circumstances are specified in a notice - similar to that previously given under the Banking Act 1959 but discontinued when the new arrangements commenced - which is now incorporated in the general authorities issued to dealers and the public. The Reserve Bank retains the residual power to decline approval for an exchange control transaction without a tax clearance certificate.

The amendments proposed by these clauses will ensure that the existing legislative basis for the issue of tax clearance certificates will extend to applications made on the basis of the revised tax screening procedures.

Clause 305: Applications for issue of certificates

This clause will add a new sub-section to section 14B of the Principal Act to extend its application to circumstances in which a tax clearance certificate is required by virtue of the revised tax screening arrangements. New sub-section 14B(2) will permit a person who, because of a condition contained in an authority issued pursuant to regulations made under section 39 of the Banking Act 1959 that a specific act or thing cannot be done without a tax clearance certificate having first been issued by the Commissioner, to apply to the Commissioner for the issue of the necessary certificate. The activities that cannot proceed under the revised procedures without a tax clearance certificate having first been obtained accord, in practical respects, with those previously specified in the notice given by the Treasurer under sub-section 39B(2) of the Banking Act 1959.

This measure will ensure that all applications for tax clearance certificates for purposes of tax screening will be considered under the comprehensive rules contained in Part IV of the Principal Act. It will also make available to an applicant who is refused a certificate the right to have the Commissioner's refusal reviewed by a Taxation Board of Review.

Clause 306: Issue of certificates

Paragraphs (a), (b) and (c) of this clause propose technical amendments of section 14C that are consequential on clause 305. The amendments reflect the terms of new sub-section 14B(2) which relates to the circumstances in which a tax clearance certificate is required under the revised tax screening arrangements.

Section 14C, when read with section 14D, will continue to require that the Commissioner is to issue a tax clearance certificate if he is satisfied that the transaction in respect of which the certificate is sought does not involve the avoidance or evasion of Australian tax.

Clause 307: Grounds on which issue of certificate may be refused

Amendments of section 14D proposed by paragraphs (a), (b), (c) and (d) (which are also consequential on clause 305) have a similar effect to those proposed by clause 306.

The broad purpose of section 14D will continue to be to authorise the Commissioner to refuse to issue a tax clearance certificate in respect of a foreign exchange transaction if the applicant does not establish that the transaction has no tax avoidance or evasion connotations. The section in effect spells out what is meant by avoidance or evasion.

Clause 308: Repeal of sections 14E and 14F

This clause will repeal section 14E (which relates to the powers and functions of a Second Commissioner of Taxation) and section 14F (which contains secrecy provisions) in consequence of the proposed insertion into the Principal Act of sections 6D (clause 295) and 3C (clause 293) respectively.

Clause 309: Repeal of section 14HA

The repeal by clause 309 of section 14HA of the Principal Act, which relates to the jurisdiction of Supreme Courts of Territories, will have a similar effect to the repeal of section 184B of the Income Tax Assessment Act 1936 by clause 105 - see notes on that clause.

Clause 310: Repeal of section 14K

The repeal of section 14K of the Principal Act by clause 310 is consequential upon the inclusion of similar offences in proposed Part III of the Principal Act by clause 297.

Clause 311: Repeal of section 14O

The repeal of section 14O of the Principal Act (which relates to the furnishing of an annual report to the Parliament) is consequential upon the re-enactment of a substantially similar provision - section 3B - in the Principal Act by clause 293.

Clause 312: Departure from Australia of certain tax debtors

By this clause a new Part - Part IVA - is to be inserted in the Principal Act to authorise the Commissioner of Taxation, subject to rights of review and appeal, to take preventative measures against persons who are considered likely to evade their taxation debts by departing Australia permanently.

The new Part IVA will authorise the issue of a notice to a person who has an outstanding taxation liability prohibiting that person from leaving Australia for an overseas country until satisfactory arrangements are made to satisfy or secure that liability.

Where the Commissioner believes, on reasonable grounds, that a person intends to leave Australia without discharging his or her taxation debts or providing adequate security to the satisfaction of the Commissioner for them to be wholly discharged, the Commissioner will be authorised to issue a notice prohibiting that person from leaving Australia.

Notes on proposed Part IVA follow.

Part IVA

Division 1 - Interpretation

Section 14Q : Interpretation

New sub-section 14Q(1) contains a number of definitions used in Part IVA.

"Australia" is defined to include the external Territories when used in a geographical sense.
"authorized officer" means a person who is a member of the Australian Customs or a member of the Australian Federal Police.
"departure authorization certificate" means a certificate issued under new sub-section 14U(1) by the Commissioner authorising a person in respect of whom a departure prohibition order is in force to temporarily depart from Australia.
"departure prohibition order" means a notice issued under new sub-section 14S(1) prohibiting the departure of a person from Australia.
"Immigration Department" is a drafting device to foreshorten the title of the Department of Immigration and Ethnic Affairs.

By sub-section 14Q(2) it is made clear that the provisions of Part IVA will apply to the departure of a person from Australia for a foreign country whether or not the person intends to return to Australia.

Division 2 - Prohibition and Authorization of Departure of Certain Tax Debtors

Section 14R : Departure from Australia of certain tax debtors prohibited

New section 14R will prohibit a person in respect of whom a departure prohibition order is in force, and who knows that such an order is in force, to depart from Australia unless the departure is authorised by a departure authorization certificate. A penalty of $5,000 or imprisonment for 12 months, or both, is prescribed where a person makes an unauthorised departure.

By virtue of section 7 of the Crimes Act 1914 a person who attempts to depart Australia in the circumstances mentioned in section 14R is also guilty of an offence and is punishable on conviction as if the offence in section 14R had been committed.

Section 14S : Departure prohibition orders

Section 14S is the operative provision of the new Part. Where it applies, it will permit the Commissioner to issue a notice to a person prohibiting the departure of the person from Australia.

Under new sub-section 14S(1) the Commissioner will, subject to rights or review and appeal, be able to issue a departure prohibition order in respect of a person provided certain conditions exist. The first condition (paragraph (a)) is that the person must be subject to a tax liability (defined in clause 292 of this Bill to mean a liability to the Commonwealth arising under, or by virtue of, a taxation law). The second condition (paragraph (b)) is that the Commissioner believes, on reasonable grounds, that it is desirable to prohibit the departure of the person from Australia to ensure that the tax liability of the person is wholly discharged or satisfactory arrangements for it to be discharged are made.

Sub-section 14S(2) will ensure that a departure prohibition order remains in force until revoked by the Commissioner in terms of proposed section 14T, or set aside by a court.

Sub-section 14S(3) will operate so that, where a person is subject to a deportation order as defined in section 5 of the Migration Act 1958, that order will prevail over any departure prohibition order made by the Commissioner in respect of the same person. To that end, the departure prohibition order will be taken not to be in force during any period that a deportation order is in force in respect of the same person. (Consequential amendments of the Migration Act 1958 to achieve this result are explained in the notes on clauses 171-175).

Where a departure prohibition order is made, the Commissioner will be required by virtue of sub-section 14S(4) to serve the order forthwith on the person concerned (paragraph (a)). So that any attempt at an unauthorised departure from Australia may be detected, the Commissioner will, subject to sub-section 14S(5), also be required (by paragraph (b)) to give a copy of the order and such other information as the Commissioner considers likely to facilitate the identification of the person concerned to the Secretary of the Department of Immigration and Ethnic Affairs and such other persons as the regulations may prescribe. It is envisaged that administrative arrangements will be made with other Commonwealth agencies to utilise existing detection facilities in use at recognised departure points in Australia to detect persons on whom departure prohibition orders have been made who may be attempting to depart without the issue of an authorization.

By sub-section 14S(5), the Commissioner will not be required to supply a copy of the departure prohibition order or other relevant information to the Secretary of the Department of Immigration and Ethnic Affairs if the order has been made in respect of an Australian citizen.

Section 14T : Revocation and variation of departure prohibition orders

New section 14T will require or permit the Commissioner to revoke or vary a departure prohibition order in specified circumstances.

Under sub-section 14T(1) there will be a requirement to revoke a departure prohibition order, either on the application of the person concerned or on the Commissioner's initiative, if the tax liabilities to which the person is subject have been fully discharged and the Commissioner is satisfied that any known future tax liabilities are likely to be discharged or become irrecoverable (paragraph (a)). Alternatively, the order is to be revoked if the Commissioner is satisfied that the tax liabilities to which the person is subject are irrecoverable (paragraph (b)).

By sub-section 14T(2), a departure prohibition order may be revoked or varied for any other reason at the Commissioner's discretion.

Sub-section 14T(3) is a drafting measure which will ensure that a reference in paragraph 14(1)(a) to tax liabilities having been wholly discharged includes a reference to arrangements satisfactory to the Commissioner having been made to discharge the liabilities. It also will mean that a reference to the Commissioner being satisfied that future tax liabilities are likely to be discharged includes a reference to the making of satisfactory discharge arrangements.

As soon as practicable after a departure prohibition order is revoked or varied, the Commissioner will be required by virtue of sub-section 14T(4) to issue notification of the revocation or variation to the person concerned and to each person to whom a copy of the departure prohibition order was given.

The Commissioner will also be required by virtue of sub-section 14T(5) to notify the person concerned of a decision under sub-section 14T(1) or (2) not to revoke a departure prohibition order. The person must be notified as soon as practicable after the decision has been made.

Decisions of the Commissioner under section 14T are to be reviewable by the Administrative Appeals Tribunal - see section 14Y.

Section 14U : Departure authorization certificates

By new section 14U, a person in respect of whom a departure prohibition order is in force will, if the person wishes to depart from Australia, be able to apply to the Commissioner for a departure authorization certificate. If a certificate is granted it will permit the person to leave Australia temporarily, notwithstanding that the departure prohibition order remains in force.

Under sub-section 14U(1) the Commissioner may issue a departure authorization certificate to allow the person to depart from Australia on or before the seventh day after the issue date of the certificate.

Paragraphs 14U(1)(a) and (b) set out a number of conditions that must be met before a departure authorization certificate will be issued.

Under paragraph 14U(1)(a) the Commissioner must be satisfied that it is likely that the person concerned will return to Australia within a reasonable time, that the person's tax liabilities or any known future tax liabilities will be fully discharged or satisfactory arrangements made for their payment or that the tax liabilities will become irrecoverable, and that it is not necessary or desirable for the person to give security for his or her return to Australia.

If those conditions are not satisfied, the Commissioner will nevertheless be required to issue a certificate if the person has given security in the manner provided by sub-section 14U(2) (see below) for the person's return to Australia or, if the person is unable to give security, if the Commissioner believes departure is justified on humanitarian grounds or is in Australia's interests.

Sub-section 14U(2) contains rules relating to the giving of security to satisfy requirements for the issue of a departure authorization certificate.

By paragraph 14U(2)(a) the security may be by bond, deposit or any other means for the person's return to Australia by a date agreed by both the person concerned and the Commissioner.

Paragraph 14U(2)(b) will empower the Commissioner to substitute a later date for the person's return to Australia (including a previously substituted date), either on the Commissioner's initiative or on application by the person concerned.

By paragraph 14U(2)(c) the Commissioner may refuse to substitute a later date unless the person, to the satisfaction of the Commissioner, increases the value of the security or gives further security.

As soon as practicable after a departure authorization certificate is issued, the Commissioner is required by virtue of sub-section 14U(3) to cause a copy of the certificate to be issued to the person concerned and to each person to whom a copy of the departure prohibition order was given.

The Commissioner will also be required by virtue of new sub-section 14U(4) to notify the person concerned of any decision under sub-section (1) or (2) refusing to issue a departure authorization certificate or denying a request to substitute a later date for a person's return to Australia. The person must be notified as soon as practicable after the decision has been made.

The Administrative Appeals Tribunal will be empowered by section 14Y to review decisions of the Commissioner under this section.

Division 3 - Appeals from, and Review of, Decisions of the Commissioner

Section 14V : Appeals to courts against making of departure prohibition orders

By virtue of new sub-section 14V(1), a person aggrieved by the making of a departure prohibition order may appeal to the Federal Court of Australia or the Supreme Court of a State or Territory against the making of the order.

New sub-section 14V(2) is a drafting measure to ensure that nothing in section 14V exceeds the constitutional jurisdiction of the judicial arm of government, and to establish the jurisdiction of Supreme Courts in appeals under the section notwithstanding section 9 of the Administrative Decisions (Judicial Review) Act 1977 which could otherwise oust the jurisdiction of the Supreme Courts.

Section 14W : Jurisdiction of courts

New sub-section 14W(1) stipulates that an appeal to the Federal Court of Australia or the Supreme Court of a State or Territory under section 14V will be heard by a single Judge or Justice.

Sub-section 14W(2) will authorise an appeal to the Federal Court of Australia from a judgment or order of the Supreme Court of a State or Territory exercising jurisdiction under proposed section 14V. This will allow an appeal by either the Commissioner or the person aggrieved by the making of a departure prohibition order where a judgment or order has been made by a Supreme Court. Where the case is first heard by a single judge of the Federal Court, similar appeal rights exist under section 24 of the Federal Court of Australia Act 1976.

Sub-section 14W(3) and sub-section 33(3) of the Federal Court of Australia Act will permit an appeal to the High Court from a judgment or order of the Federal Court of Australia, but only with special leave of the High Court.

Sub-section 14W(4) will make it clear that an appeal does not lie from a judgment or order of the Supreme Court except as provided in sub-sections (2) or (3); i.e., an appeal to the Federal Court from a judgment or order of the Supreme Court or an appeal with special leave to the High Court from a judgment or order of the Federal Court.

Section 14X : Orders of court on appeal

New section 14X will enable a court hearing an appeal against the making of a departure prohibition order to make an order setting aside the order or dismissing the appeal.

Section 14Y : Applications for review of certain decisions

New sub-section 14Y(1) will allow a person to apply to the Administrative Appeals Tribunal for a review of a decision of the Commissioner not to revoke or vary a departure prohibition order on the application of the person under section 14T, or to refuse a request to issue a departure authorization certificate, to extend the period the person may spend outside Australia or to accept a particular level of security under section 14U.

By sub-section 14Y(2), the word "decision" in sub-section (1) will have the same meaning as in the Administrative Appeals Tribunal Act 1975.

In that Act, a decision includes -

(a)
making, suspending, revoking or refusing to make an order or determination;
(b)
giving, suspending, revoking or refusing to give a certificate, direction, approval, consent or permission;
(c)
issuing, suspending, revoking or refusing to issue a licence, authority or other instrument;
(d)
imposing a condition or restriction;
(e)
making a declaration, demand or requirement;
(f)
retaining, or refusing to deliver up, an article; or
(g)
doing or refusing to do any other act or thing.

Division 4 - Enforcement

Section 14Z : Powers of authorized officers

Section 14Z will empower authorized officers as defined in section 14Q, i.e., Customs officers and officers of the Australian Federal Police, to prevent the departure from Australia of a person subject to a departure prohibition order where the person does not hold a departure authorization certificate.

Under sub-section 14Z(1), if an authorized officer believes on reasonable grounds that a person subject to a departure prohibition order is about to depart from Australia and that the departure is not authorised by a departure authorization certificate, the officer may take such steps as are reasonably necessary to prevent the departure of the person. Such steps may include preventing the person going on board a vessel or aircraft or, where the person is already on board, removing the person from the vessel or aircraft. The authorized officer may also require the person to answer questions or produce documents to help ascertain whether a departure prohibition order is in force and, if so, whether the departure of the person is authorised by a departure authorization certificate.

By new sub-section 14Z(2) a person who, without reasonable excuse, refuses or fails to answer a question or produce a document when required to do so by an authorized officer in accordance with sub-section (1) is guilty of an offence punishable on conviction by a fine not exceeding $1,000.

A person who knowingly makes a statement that is false or misleading in a material particular when required to answer a question of an authorised person in accordance with sub-section (1) is, by sub-section 14Z(3), guilty of an offence punishable on conviction by a fine not exceeding $1,000 or imprisonment for 6 months, or both.

New sub-section 14Z(4) is a drafting measure that will ensure that new section 8C of the Principal Act (which relates to failure to comply with certain specified requirements under a taxation law) does not apply in relation to a requirement made pursuant to sub-section (1).

Similarly, sub-section 14Z(5) will make it clear that certain other new provisions being inserted by clause 297 do not apply in relation to an answer given to a question asked, or a document produced in accordance with sub-section (1). The provisions concerned are sub-section 8K(1) (concerning false or misleading statements), section 8N (recklessly making false or misleading statements) and section 8P (knowingly making false or misleading statements).

Section 14ZA : Certain tax debtors to produce authority to depart, etc.

New section 14ZA will apply where a person subject to a departure prohibition order is about to depart from Australia and the departure is authorised by a departure authorization certificate.

By virtue of sub-section 14ZA(1), such a person who fails to produce a copy of a departure authorization certificate for inspection if required by an authorized officer will be liable for a penalty on conviction of $500.

New sub-section 14ZA(2) is a similar drafting measure to proposed sub-section 14Z(4). It will ensure that new section 8C of the Principal Act does not apply in relation to a requirement made pursuant to sub-section (1).

Clause 313: Appearance by Commissioner, etc.

Clause 313 will repeal section 15 of the Principal Act which is redundant and insert a new section 15. The new section concerns appearances by the Commissioner, a Second Commissioner or a Deputy Commissioner in an action, prosecution or other proceeding under, or arising out of, a taxation law. By sub-section 15(1), it is stipulated that the Commissioner, Second Commissioner or Deputy Commissioner may appear personally or be represented by an appropriately enrolled barrister or solicitor or by another person, such as a legally qualified officer, authorised in writing to appear.

By sub-section 15(2), the appearance of a person and that person's statement that he or she appears by authority of the Commissioner, a Second Commissioner or a Deputy Commissioner, will be prima facie evidence of the right to appear.

Clause 314: Payments out of Consolidated Revenue Fund

Clause 314 will amend the Principal Act by inserting new section 16 as a single general appropriation out of the Consolidated Revenue Fund for refunds of taxes and related payments by the Commissioner of Taxation. The clause, together with amendments by clauses 40, 98, 99, 103, 132, 141, 143, 147, 151, 168, 327 and 331, will replace various existing individual appropriations in the taxation laws administered by the Commissioner.

By new section 16, appropriation out of the Consolidated Revenue Fund will be made in respect of payments -

·
that the Commissioner is required or permitted to make to a person by or under a provision of a taxation law (as defined by section 2);
·
that are required or permitted to be paid to a person by or under a provision of a taxation law, but the Commissioner is not specified as the person liable to make the payment; or
·
that are required or permitted to be paid to a person by way of repayment of a part or the whole of an amount paid into the Consolidated Revenue Fund.

Clause 315: Powers of taxation officers in relation to references to currency, etc.

Clause 315 will make amendments of sub-section 17(1) of the Principal Act to effect drafting changes to the definitions of "taxation law" (paragraph (a)) and "officer" (paragraph (b)) as a consequence of the inclusion, by clause 292, of definitions applicable to the Principal Act as a whole.

Clause 316: Further amendments relating to offences

Schedule 13 of the Bill proposes further amendments relating to offences under the Principal Act. An explanation of the amendments is contained in the notes on the Schedule.

Clause 317: Application of amendments

This clause, which will not amend the Principal Act, will specify a number of ways in which the various amendments proposed by the Bill will apply.

For that purpose, sub-clause 317(1) makes clear that, wherever the term "amended Act" is used in the clause, that is to be taken as meaning the Principal Act as proposed to be amended by the Bill.

Sub-clause 317(2) provides that a delegation in force under section 4 of the Sales Tax Procedure Act 1934 or sub-section 8(1) of the Principal Act prior to these amendments, continues in force after these amendments come into operation, as if the delegation were made under sub-section 8(1) as amended.

Sub-clause 317(3) provides that, notwithstanding the repeal of section 14K of the Principal Act, sub-sections 14K(2) and (3) (which deal with orders of the court that a person satisfy a taxation requirement) continue to apply after these amendments have effect, in relation to a person convicted (whether before or after the amendments come into operation) for an offence against 14K of the Principal Act.

PART II - AMENDMENTS OF THE AUSTRALIAN CAPITAL TERRITORY TAXATION (ADMINISTRATION) ACT 1969

Clause 3: Principal Act

This clause facilitates references to the Australian Capital Territory Taxation (Administration) Act 1969 which, in this Part, is referred to as "the Principal Act".

Clause 4: Interpretation

Section 4 of the Principal Act contains definitions used in that Act and other interpretation provisions. Paragraph (a) of clause 4 proposes to amend the definition of "assessment" to make it clear that the term includes an assessment of an additional amount under section 70 (see clause 10), and to effect minor drafting improvements.

Paragraph (b) will omit sub-section 4(5) which stipulates that a reference to the Commissioner of Taxation includes a reference to a Second Commissioner of Taxation, an Acting Commissioner of Taxation, an Acting Second Commissioner of Taxation and a person, including a Deputy Commissioner of Taxation, to whom the Commissioner has delegated a power or function under the Act.

The amendment proposed by paragraph (b) is consequential upon the insertion of new sub-sections 6B(6) and (7) and new section 6D in, and the amendment of section 8 of, the Taxation Administration Act 1953 by clauses 295 and 296, which in substance will re-enact sub-section 4(5) of the Principal Act.

Clause 5: Repeal of section 6

This clause will repeal section 6 of the Principal Act which relates to the powers and functions of a Second Commissioner of Taxation. The repeal is consequential upon the proposed insertion of new section 6D in the Taxation Administration Act 1953 by clause 295.

Clause 6: Annual report

Section 6A of the Principal Act requires the Commissioner of Taxation to furnish to the Minister an annual report on the working of the Act. Clause 6 will ensure that the requirements of section 34C of the Acts Interpretation Act 1901 relating to periodic reports will apply to annual reports of the Commissioner. Broadly, that section imposes time limits on the furnishing of the report and its tabling in the Parliament.

Clause 7: Duty stamps

Section 8 of the Principal Act, which it is proposed to amend by clause 7, authorises adhesive stamps for denoting the payment of duty or tax or penalty tax to be made and sold, and dies and other devices for making the stamps to be made and used, as the Commissioner directs.

The amendments contained in clause 7 follow the amendment of section 9 of the Principal Act by clause 8 to make clear that duty or tax includes "penalty tax" assessed under section 70 (see clause 10).

Clause 8: When duty or tax payable

This clause amends section 9 of the Principal Act, which stipulates the time when duty or tax is payable.

The amendments of section 9 of the Principal Act proposed by paragraphs (a) and (b) of clause 8 are consequential upon the insertion into the Principal Act of new section 70 that will empower the Commissioner to make an assessment of "penalty tax" for failure to lodge a return or instrument or for making a false or misleading statement (see clause 10). The amendments will set the due date for payment of the penalty tax as the due date specified in the notice of assessment. New sub-section 9(5) to be inserted by paragraph (e) will define "penalty" to mean, for the purposes of section 9, an additional amount payable under new section 70. Paragraphs (c) and (d) will effect drafting changes to section 9 that are consequential upon the insertion of sub-section 9(5).

Clause 9: Default assessments

Section 68 of the Principal Act permits the Commissioner of Taxation to make an assessment of the duty or tax payable in cases where a person has failed to furnish a return or any information, has made a false or misleading statement or has otherwise failed to comply with specified requirements under the Principal Act. Under existing section 70, additional duty or tax is imposed in respect of assessments of duty or tax made pursuant to section 68. By paragraphs (a) and (c) of clause 9, those elements of section 68 that are to be separately penalisable under the revised section 70 (see clause 10) are to be deleted, and a general authority enacted to enable an assessment of duty or tax to be made where the Commissioner is of the opinion that a person is liable to pay such duty or tax. The new provision will have the same substantive effect as the existing provision in relation to a person who fails to furnish a return or comply with a requirement to furnish information or documents, or in a case where a dutiable instrument is seized for some falsity.

The amendments proposed by paragraphs (b), (d) and (e) of clause 9 are drafting changes consequential upon the amendments proposed by paragraphs (a) and (c).

Clause 10: Penalty for failure to furnish return, etc.

Under section 70, a person who fails to furnish a return or any information requested by the Commissioner, omits particulars from a return or furnishes a return that is false or misleading in a material particular, is liable to pay by way of penalty an additional amount equal to double the amount of duty or tax payable by that person. The section also imposes penalty where a return or instrument is lodged late, the penalty being calculated from the date that the return or instrument was required to be lodged and ending on the day of lodgment at a rate of 10% per annum upon the amount of tax or duty payable. The Commissioner is authorised by sub-section 70(6) to remit the whole or part of any penalty payable under the section.

Clause 10 will repeal section 70 and substitute a new section 70 which will have substantially the same effect as proposed section 222, sub-sections 223(1), (6), (8) to (10) and section 227 of the Income Tax Assessment Act 1936, an explanation of which is given in the notes on clause 152.

Clause 11: Amendment of assessments

Section 71 of the Principal Act authorises the amendment of assessments of duty or tax within specified time limits. Paragraph (a) of clause 11 proposes the omission and replacement of sub-section 71(3). New sub-section 71(3) means that, where a person's liability to tax or duty is reduced as a result of an amended assessment, the amount by which the tax or duty is reduced will be taken never to have been payable in calculating late payment penalty under section 81. The practical effect will be that late payment penalty under section 81 will be payable only in respect of the duty or tax which ultimately turns out to be payable after the reduction on amendment is taken into account (see clause 15).

Sub-section 71(5), which is to be inserted by paragraph (b) of clause 11, will make clear for the purposes of section 71 that duty or tax includes penalty imposed under section 70 (see clause 10). Paragraph (b) of clause 11 also proposes the insertion of new sub-section 71(6) to make it clear that in sub-section 71(4) - which requires notification to be given by the Commissioner of the amount of tax or duty payable after the making of an amended assessment - duty or tax so notified also includes late payment penalty imposed under section 81.

Clause 12: Assessments in relation to deceased persons

Section 72 of the Principal Act provides that the Commissioner of Taxation has the same powers of assessment of duty or tax in relation to the trustee of a deceased person's estate as the Commissioner would have had in relation to that person if the person were still living. Sub-section 72(2), to be inserted by clause 12, will make it clear that duty or tax in section 72 includes penalty tax imposed under section 70 (see clause 10).

Clause 13: Pending appeal or reference not to affect payment of tax or duty

Under section 77 of the Principal Act duty or tax in respect of an assessment may be recovered by the Commissioner of Taxation notwithstanding that there is a pending reference to a Board or Review or a pending appeal or reference to the Supreme Court of the Australian Capital Territory. Sub-section 77(2), which is to be inserted by clause 13, will make it clear that duty or tax in section 77 also includes penalty imposed under section 70 (see clause 10).

Clause 14: Adjustments of duty or tax after appeal

Section 78 of the Principal Act deals with the recovery of duty or tax not paid or the refund of amounts found to be overpaid if an assessment is varied following a reference or appeal. Clause 14 proposes to omit sub-sections 78(2) and (3) which presently deal with overpayments and refunds on the variation of an assessment or the setting aside of a prescribed decision (e.g., a decision as to whether the registration of a vehicle is exempt from registration tax). In their stead, new sub-sections 78(2) and (3) will re-enact existing paragraphs 78(2)(a) and 78(3)(a) for the recovery of duty or tax in cases where an underpayment is found to have occurred following a variation of assessment on a reference or appeal. Provision for the refund of overpaid amounts, presently dealt with by paragraphs 78(2)(b) and 78(3)(b), is being made by new section 91A (clause 21).

By sub-section 78(4), where a person's liability to tax or duty is reduced as a result of a variation of an assessment or the setting aside of a prescribed decision by a Board of Review or a court, the amount by which the tax or duty is reduced will be taken to have never been payable for the purposes of calculating late payment penalty under section 81 of the Principal Act. The effect will be similar to that of sub-section 71(3), as explained in the notes on clause 11.

New sub-section 78(5) will make it clear that duty or tax in section 78 includes penalties imposed under section 70 or 81 (see clause 10 and 15 respectively).

Clause 15: Penalty for unpaid duty or tax

Under section 81 of the Principal Act, an additional amount becomes payable when duty or tax remains unpaid after it becomes due and payable, that penalty being imposed at the rate of 10% per annum of the amount of tax or duty unpaid, calculated from the date on which it became due and payable to the date on which it is paid. Authority for the Commissioner to remit late payment penalty is contained in sub-sections 81(2) and (3).

Clause 15 will repeal section 81 and substitute a new section.

New sub-section 81(1) will increase the rate of late payment penalty from 10% to 20% per annum. It will also ensure that where, under sub-section 9(2) or 9(3) of the Principal Act, the Commissioner has granted a person an extension of time for payment of duty or tax, or has permitted payment to be made by instalments, penalty is able to be imposed in respect of any duty or tax remaining unpaid after the original date for payment.

New sub-section 81(2) will re-enact, in a more limited way, the Commissioner's authority to remit late payment penalty. An explanation of the effect of the revised rules can be found in the notes on clause 129 explaining comparable provisions of the Income Tax Assessment Act 1936.

An existing power of delegation contained in sub-section 81(3) in relation to the remission of penalty for late payment of vehicle registration tax will be authorised by the general delegation power proposed to be inserted in section 8 of the Taxation Administration Act 1953 by clause 296.

The insertion of new sub-section 81(3) will have the same effect as sub-section 207(1B) of the Income Tax Assessment Act 1936. An explanation in contained in the notes on clause 112. By sub-clause 23(4), sub-section 81(3) will apply in relation to judgments given or entered after the amendments come into operation.

Proposed sub-section 81(4) will make it clear that, in calculating late payment penalty under section 81, any penalty payable under section 70 that remains unpaid is to be taken to be unpaid duty or tax.

Clause 16: Recovery of additional penalty

This clause will omit sub-section 82(2) which stipulates that, in cases where a prosecution is instituted for an offence where penalty has been imposed under section 70, the penalty is not payable unless the prosecution is withdrawn. The amendment is consequential upon the insertion of new section 8ZE in the Taxation Administration Act 1953 by clause 297 which is to the same effect.

Clause 17: Recovery of duty or tax from trustees of deceased persons

Sub-section 83(2) of the Principal Act, which authorises the recovery of duty or tax from trustees of deceased estates, provides that such a trustee is subject to any additional amount payable under the Act to the same extent as the deceased person would have been if he or she were still living. The amendment of sub-section 83(2) proposed by paragraph (a) will identify sections 70 and 81 as those under which the additional amounts are payable.

Paragraph (b) of clause 17 proposes the insertion of new sub-section 83(3) to make clear that, in sub-section 83(1), duty or tax includes penalties imposed under section 70 or 81 (see clauses 10 and 15 respectively).

Clause 18: Collection of duty or tax from person indebted to person liable to pay duty or tax

This clause effects a number of amendments to improve the operation of section 84 of the Principal Act, which authorises the Commissioner to collect duty or tax owing by a person from another person who either owes money to the first-mentioned person or has authority to pay money to that person.

The insertion of new sub-section 84(7A) and 84(7B) and a definition of "building society" as proposed will have the same effect as sub-sections 218(6), (6A) and (6B) of the Income Tax Assessment Act 1936. An explanation is contained in the notes on clause 119.

By paragraph (c), the definition of "duty or tax" in sub-section 84(8) is to be replaced by a new definition to make clear that the term includes, for the purposes of collection under section 84:

(a)
additional amounts for late payment imposed under section 81 or penalty tax assessed under proposed section 70;
(b)
a judgment debt or costs in respect of primary duty or tax or amounts mentioned in paragraph (a);
(c)
any fine or costs imposed by a court in respect of an offence against the Principal Act or the regulations; and
(d)
an amount ordered by a court to be paid to the Commissioner on conviction for such an offence.

Paragraph (c) also amends the definition in sub-section 84(8) of "person indebted" to include a company and a partnership.

Clause 19: Person in receipt, etc, of money for non-resident

Clause 19 will make it clear that duty or tax in section 85 includes penalties imposed under section 70 or 81 (see clauses 10 and 15 respectively). Section 85 of the Principal Act imposes certain obligations on a person who has the receipt, control or disposal of money belonging to a non-resident who is liable to duty or tax.

Clause 20: Evidence

This clause is to the same effect in relation to section 86 of the Principal Act (which contains rules relating to evidence in proceedings for the recovery of duty or tax) as that proposed by clause 19.

Clause 21: Refunds of duty or tax

New section 91A, which will be inserted in the Principal Act by clause 21, will authorise the Commissioner to refund any overpaid duty or tax, including penalty imposed under section 70 or 81, or to apply that amount against any outstanding liability of the person under any Act administered by the Commissioner and to refund any balance.

The amendment is consequential on clauses 11 and 14.

Clause 22: Further amendments relating to offences and formal amendments

Schedule 1 of the Bill proposes further amendments relating to offences under the Principal Act. An explanation of the amendments is contained in the notes on the Schedules.

Clause 23: Application of amendments

This clause, which will not amend the Principal Act, will specify a number of ways in which the various amendments proposed in the Bill will apply.

Sub-clause 23(1) will make clear that wherever the term "amended Act" is used in the clause it is to be taken as meaning the Principal Act as proposed to be amended by the Bill.

Although section 10 is to be repealed by Schedule 1, certain machinery provisions (sub-sections 10(3), (4) and (5)) will continue to apply in relation to persons previously convicted of an offence (for deliberate avoidance of duty) under the section (paragraph (a) of sub-clause 23(2)). Similarly, repealed sub-sections 62(3), (4) and (5) will continue to apply in relation to persons convicted of an offence (for furnishing false or misleading returns or information) under the section (paragraph (b) of sub-clause 23(2)).

Notwithstanding the proposed repeal by Schedule 1 of sections 62, 63 and 65 and Part VII (prosecution provisions), the power of a court to order payment of an additional amount equal to the duty or tax sought to be avoided will continue to apply to offences against the Principal Act committed before the amendments proposed by the Bill come into operation (paragraph (c) of sub-clause 23(2)).

Notwithstanding the repeal of sections 70 and 81 of the Principal Act, sub-section 70(6) and 81(2) which relate to the Commissioner's power to remit an additional amount, will continue to apply in relation to a liability for an additional amount that accrued before the amendments by clauses 10 and 15 come into operation (paragraph (d) of sub-clause 23(2)).

Sub-clause 23(3) is to the same effect as sub-clause 165(5) - see notes on that sub-clause.

By sub-clause 23(4) new sub-section 81(3), which provides that late payment penalty will continue to accrue in relation to judgment debts, will have effect in relation to judgments given or entered after the amendments proposed by clause 15 come into operation.

PART III - AMENDMENTS OF THE BANK ACCOUNT DEBITS TAX ADMINISTRATION ACT 1982

Clause 24: Principal Act

This clause facilitates references to the Bank Account Debits Tax Administration Act 1982 in this Part as "the Principal Act".

Clause 25: Interpretation

Section 3 of the Principal Act defines a number of terms used in the Act and contains other interpretative provisions.

Paragraph (a) of clause 25 will amend the definition of "assessment" in sub-section 3(1) to make it clear that the term includes an assessment of additional tax under section 17 (see clause 33).

Paragraph (b) will insert new sub-section 3(8) to specify that a reference in the Principal Act to a liability of a person to the Commonwealth is to be read as a reference to a liability arising under a taxation law - that is, a law of which the Commissioner of Taxation has the general administration. This amendment is related to those provisions which will enable the Commissioner in given circumstances to apply amounts of tax overpaid by a person against another outstanding tax liability of that person.

Clause 26: Repeal of section 5

Clause 26 will repeal section 5 of the Principal Act which stipulates that a Second Commissioner has the same powers and functions as the Commissioner and that a reference in that Act to the Commissioner is to be read as a reference also to a Second Commissioner, a Deputy Commissioner or any other person upon whom powers and functions under the Principal Act are conferred. The repeal of section 5 is consequential upon the proposed insertion of new section 6D in, and the amendment of section 8 of, the Taxation Administration Act 1953 by clauses 295 and 296 respectively.

Clause 27: Annual report

Section 6 of the Principal Act requires the Commissioner of Taxation to furnish to the Minister an annual report on the working of the Act. The amendment proposed by paragraph (a) of clause 27 is consequential upon that proposed by paragraph (c), while paragraph (b) will omit a transitional provision now redundant. The effect of paragraph (c) will be to ensure that the requirements of section 34C of the Acts Interpretation Act 1901 relating to periodic reports will apply to annual reports required to be furnished under the Principal Act (see also notes on clause 94).

Clause 28: When tax payable

Section 9 of the Principal Act specifies when bank account debits tax is to be paid.

Paragraphs (a) and (b) of clause 28 amend paragraph 9(b) which specifies that tax payable under an assessment of tax made by the Commissioner is to be paid within 14 days after the day on which the notice of the assessment is served. As an assessment may be served on two or more persons who are jointly and severally liable for the tax, the amendment will provide a commencement date from which the 14 day period will apply in each case.

Paragraph (c) will insert a new sub-section 9(2) which will specify the due date for payment of additional tax imposed under section 17 of the Principal Act (see clause 33) as the due date notified in the notice of assessment of that additional tax.

Clause 29: Offences relating to certificates of exemption

The insertion of section 11A in the Principal Act by clause 29 is consequential upon the proposed repeal by Schedule 3 of Part VII (Penal Provisions) of the Act. New section 11A is a re-enactment of section 40 of Part VII, which makes it an offence to forge or falsify a certificate of exemption and prescribes maximum penalties for the offence.

Clause 30: Refund of amount incorrectly paid

Section 13 of the Principal Act authorises the Commissioner, upon application, to make an appropriate refund of any amount of tax overpaid by the bank.

The amendments of section 13 proposed by clause 30 will not affect its operation other than to authorise the Commissioner to apply any amount of tax overpaid against any other tax liability of the payee and to refund any amount not so applied.

Clause 31: Refunds for tax paid on excluded debits

Section 14 of the Principal Act requires, in any case where a bank has paid tax in respect of an excluded debit made to a taxable account, a refund of that tax to be paid by the Commissioner upon application by the bank or, if the bank has recovered the tax, by the account holder.

The amendments proposed by clause 31 are to the same effect as those to be made by clause 30.

Clause 32: Default assessments

Section 16 of the Principal Act permits the Commissioner of Taxation to make an assessment of the tax payable by a bank on a taxable debit or taxable debits in cases where a bank has failed to furnish a return, has furnished a return that is false or misleading or has failed to include in a return particulars required by the Principal Act. The Commissioner is also authorised to make an assessment where 2 or more account holders are jointly and severally liable to pay tax in respect of an eligible debit or eligible debits made to an account.

Under existing section 17, additional tax is imposed in respect of assessments of tax made pursuant to section 16. By the amendments proposed by paragraph (a) of clause 32, those elements of section 16 that are to be separately penalisable under the revised section 17 (as proposed by clause 33) are to be deleted and a general authority enacted to enable an assessment of tax to be made where the Commissioner is of the opinion that the person is liable to pay such tax. The new provision will have the same substantive effect as the existing provision has in relation to failure by a bank or account holders to comply with a requirement of the Principal Act.

The amendments, by paragraph (b) of the clause, of sub-section 16(3) (which specifies the person or persons on whom a notice of assessment made under the section is to be served) are consequential on the amendments to be made by paragraph (a). An assessment under section 16 made before the amendments come into operation will, by virtue of sub-clause 42(2), have effect as if it were an assessment under section 16 as amended.

Clause 33: Penalty for failure to furnish return, etc.

Under existing section 17 of the Principal Act, a bank which fails to furnish a return, omits particulars from a return or furnishes a return that is false or misleading in a material particular, is liable to pay by way of penalty additional tax equal to double the amount of bank account debits tax payable by that bank. The section also provides that the penalty is not payable where a prosecution is instituted in respect of the same matter unless that prosecution is withdrawn, and authorises the Commissioner to include particulars of the penalty in a notice of assessment. By sub-section 17(5) the Commissioner may remit the whole or part of any penalty payable under the section.

Clause 33 proposes to repeal section 17 and substitute a new section 17 which will have substantially the same effect as proposed section 222, sub-sections 223(1), (6), (8) to (10) and section 227 of the Income Tax Assessment Act 1936, an explanation of which is given in the notes on clause 152.

Notwithstanding the proposed repeal of existing section 17 by clause 33, the power of remission contained in existing sub-section 17(5) will, under transitional provisions contained in sub-clause 42(3), continue to apply in relation to a liability for penalty that accrues before the amendments effected by clause 33 come into operation.

Clause 34: Amendment of assessments

Section 18 of the Principal Act authorises the Commissioner to amend an assessment within 3 years to correct an error in calculation or a mistake of fact or to prevent avoidance of tax, and to amend at any time to give effect to a decision of a Board of Review or a court, a decision on an objection or where tax has been evaded.

Paragraph (a) of clause 34 will insert new sub-section 18(2A) into the Principal Act, the effect of which will be that, where a person's liability to tax is reduced as a result of an amended assessment, the amount by which the tax is reduced will be taken never to have been payable for the purposes of calculating late payment penalty under section 36 of the Principal Act (paragraph 18(2A)(a)). In practical terms, late payment penalty under section 36 will be payable only in respect of tax which ultimately turns out to be payable after the reduction in primary tax is taken into account.

Paragraph 18(2A)(b) will authorise the Commissioner to apply any amount of tax overpaid against any liability of the person to the Commonwealth that has arisen under an Act that the Commissioner administers and to refund any amount not so applied.

The amendments of sub-section 18(3) of the Principal Act by paragraphs (b) and (c) will have the same effect in relation to assessments made under section 16 as paragraph 18(2A)(b) will have in relation to overpayments generally.

Paragraph (d) effects the omission of sub-section 18(4) of the Principal Act which authorises refunds to account holders as a result of an amended assessment of the account holders' liability. The amendment in paragraph (d) is consequential upon the insertion of new sub-section 18(2A).

Paragraph (e) will omit existing sub-section 18(7), which provides that certain amended assessments are to be treated as default assessments and thus subject to additional tax under existing section 17, consequent upon the amendments contained in clauses 32 and 33.

Paragraph (e) will omit existing sub-section 18(7) and insert a new sub-section 18(7) to make clear that for the purposes of section 18 tax includes penalties imposed under section 17 or 36 (see clauses 33 and 39 respectively).

Clause 35: Prescribed decisions

The amendment proposed to section 20 of the Principal Act (which defines the expression "Supreme Court" in relation to objections, reviews and appeals) is largely consequential upon the repeal, by clause 36, of section 21. A more detailed explanation of the effect of the amendment is contained in the notes on clause 104.

Clause 36: Repeal of section 21

The repeal of section 21 which deals with the jurisdiction of Supreme Courts of Territories is similar in effect to the amendment proposed by clause 105 (see notes on that clause).

Clause 37: Variation of prescribed decision

Paragraph (a) of clause 37 will insert paragraph 31(1)(aa) in the Principal Act. This paragraph will mean that, where a person's liability to tax is reduced as a result of a variation of a prescribed decision (as defined by section 20 of the Principal Act) by a Board of Review or a court, the amount by which the tax is so reduced will be taken never to have been payable. This amendment will have a similar effect for adjustments under section 31 as the amendment proposed by clause 34 will have.

Sub-section 31(2), which is to be inserted by paragraph (b) of clause 37, will make it clear that in section 32 tax includes the penalties imposed under section 17 or 36 (see clauses 33 and 39 respectively).

Clause 38: Adjustment of assessment after appeal

The amendments of section 32 of the Principal Act proposed by clause 38 will have the same effect in relation to the variation of an assessment by a Board of Review or a court because of a successful objection or appeal as the amendments by clause 37 will have in relation to the variation of a prescribed decision.

Clause 39: Penalty for unpaid tax

Section 36 of the Principal Act imposes additional tax at the rate of 20% per annum for late payment of tax. Paragraphs (a) and (b) of clause 39 propose amendments of a purely technical kind to better reflect the concept of joint and several liability for the tax.

The insertion of new sub-section 36(2A) will have the same effect as sub-section 207(1B) of the Income Tax Assessment Act 1936. An explanation is contained in the notes on clause 112. Sub-section 36(2A) will apply to judgments entered or given after the amendments proposed by clause 39 come into effect - see sub-clause 42(5).

Paragraph (d) proposes a drafting change to sub-section 36(4).

Clause 40: Repeal of section 60

The repeal of section 60 of the Principal Act by this clause is consequential upon the proposed authorisation, by clause 314, of a single general appropriation out of the Consolidated Revenue Fund for refunds of taxes and related payments by the Commissioner of Taxation.

Clause 41: Further amendments relating to offences

Schedule 3 of the Bill contains further amendments relating to offences under the Principal Act. An explanation of the proposed amendments is contained in the notes in relation to the Schedule.

Clause 42: Application of amendments

This clause contains transitional rules relating to the application of the amendments of the Principal Act that are being made by the Bill. With the exception of sub-clause 42(2), it effectively mirrors the transitional arrangements contained in clause 23 relating to the amendments being made to the Australian Capital Territory Taxation (Administration) Act 1969 explained earlier in these notes.

By sub-clause 42(2), a default assessment (see clause 32) made before the amendments of section 16 come into operation will have effect as if it were a default assessment made under the new provisions.

PART IV - AMENDMENTS OF THE CRIMES (TAXATION OFFENCES) ACT 1980

Clause 43: Principal Act

This clause facilitates references to the Crimes (Taxation Offences) Act 1980 which, in this Part, is referred to as the Principal Act.

Clause 44: Interpretation

Clause 44 will amend of sub-section 3(1) of the Principal Act which contains definitions and interpretation provisions.

Paragraph (a) will insert in sub-section 3(1) of the Principal Act a definition of "Australian installation" consequential upon the proposed extension of the operation of the Act to such installations to which the sales tax laws already apply. The term will have the same meaning as it has for purposes of the sales tax law. Under the sales tax law an installation (as defined) that is attached to the continental shelf of Australia for resource exploration or exploitation purposes is given, from the date of its attachment, the status of a place in Australia for sales tax purposes. As a consequence, any transaction or act affecting goods on such an installation which would be taxable if the goods were in geographical Australia is taxable as if those goods were in Australia.

By paragraph (b), the reference to section 226 of the Income Tax Assessment Act 1936 in paragraph (b) of the definition of "income tax" in sub-section 3(1) is to be replaced by a reference to Part VII of that Act, as a result of the proposed repeal of section 226 by clause 152 and the enactment of a new Part VII dealing with penalty taxes.

By paragraph (c), the reference to sub-section 221F(10) of the Income Tax Assessment Act 1936 in paragraph (d) of the "income tax" definition is to be omitted and references to sub-section 221EAA(1), sub-paragraph 221F(12)(b)(ii) and paragraph 221G(4A)(d) included, consequential upon amendments by clauses 126, 127 and 128 relating to penalties for breaches of the P.A.Y.E. system.

Paragraph (d) proposes the omission of paragraph (g) of the existing definition of "income tax" in sub-section 3(1) and the insertion of a new paragraph (g). By this amendment, amounts payable under the Income Tax Assessment Act 1936 to the Commissioner pursuant to Division 3A (the prescribed payments system), Division 4 (withholding tax), Division 5 (mining withholding tax) and Division 6 (Australian Film Industry Trust Fund account withdrawals) will be included in the definition of "income tax" in the Principal Act.

Clause 45: Extension to external Territories and Australian installations

New section 3A which is to be inserted by this clause will extend the jurisdiction of the Principal Act to include all of Australia's external territories and any installations (including ships) that are attached to the continental shelf of Australia for purposes related to the exploration or exploitation of the non-living natural resources of the seabed and its subsoil. The insertion of this new section will make it clear that the offence provisions of the Principal Act apply in relation to the external territories and off-shore installations.

Clause 46: Penalties

Under section 9 of the Principal Act, a person convicted by a court of an offence against the Act is liable to a maximum penalty of a fine not exceeding $50,000 or imprisonment for 5 years, or both. A prosecution for an offence may be commenced at any time, but before proceedings for committal for trial on indictment may be commenced it is necessary to obtain the written consent of the Attorney-General, or his authorised representative.

This clause will amend section 9 by inserting new sub-sections (5) and (6). Consistent with other Commonwealth laws containing penal sanctions, proposed sub-section 9(5) will permit suspected offenders under the Act to be arrested, charged, released on bail or remanded in custody, notwithstanding that the Attorney-General, or his representative, has not given his written consent to the commencement of committal proceedings. However, no further step in the proceedings for the offence will be permitted until that consent is given.

New sub-section 9(6) is a safeguarding provision which will permit a court to discharge the accused if the Attorney General's consent is not obtained within a reasonable time.

PART V - AMENDMENTS OF THE ESTATE DUTY ASSESSMENT ACT 1914

Clause 47: Principal Act

This clause facilitates references to the Estate Duty Assessment Act 1914 in this Part as "the Principal Act". Estate duty is not imposed on the estates of persons dying after 30 June 1979.

Clause 48: Repeal of section 4B

This clause will repeal section 4B of the Principal Act which relates to the powers and functions of the Second Commissioners of Taxation. The repeal is consequential upon the proposed insertion of new section 6D in the Taxation Administration Act 1953 by clause 295.

Clause 49: Annual report

Section 7 of the Principal Act requires the Commissioner of Taxation to furnish to the Minister an annual report on the working of the Act.

An explanation of proposed new sub-section 7(3) that is being inserted in the Principal Act by this clause is contained in the notes on identical measures in clause 94.

Clause 50: Quick succession rebates

Section 8A of the Principal Act authorises a rebate of duty in a case where a person who succeeded to the whole or a part of an estate of a deceased person dies within five years of the date of death of the deceased. Clause 50 makes drafting changes to section 8A consequent upon the proposed repeal of section 47A and its substitution by section 46 (see clause 69).

Clause 51: Rebate of duty

Section 9E of the Principal Act allows a rebate of duty in respect of an estate the value of which is less than $250,000. Clause 51 proposes a drafting change to section 9E consequent upon the proposed repeal of section 47A and its substitution by section 46 (see clause 69).

Clause 52: Commissioner may require further or other returns

This clause contains two amendments of section 11 of the Principal Act which relates to requirements for further returns and alterations of returns already furnished. These amendments are consequential upon the insertion in the Taxation Administration Act 1953 of section 8C by clause 297 which makes it an offence to refuse or fail to furnish a return. Appropriate references to "furnishing" are being inserted into section 11 so that section 8C will apply to any failure to comply with a requirement of the Commissioner under section 11.

Clause 53: Amendment of assessments

Section 20 of the Principal Act authorises the Commissioner to amend an assessment of estate duty in specified circumstances. Clause 53 proposes amendments of section 20 by inserting new sub-sections 20(11) and (12).

New sub-section 20(11) will authorise the Commissioner to refund any estate duty overpaid in cases where an amendment of an assessment has reduced a person's liability for estate duty, including additional duty under section 31 or 46 as proposed to be inserted by clauses 59 and 69. It will also stipulate that where additional duty for late payment has been imposed under section 31 the amount of that additional duty is to be recalculated as though the amount by which the duty has been reduced on amendment was never payable. The revised section will also authorise the Commissioner to apply any duty overpaid against any liability of the person to the Commonwealth that has arisen under the other taxation laws, and to refund any amount not so applied.

Clause 53 will also insert new sub-section 20(12) which will make it clear that in section 20 duty includes penalties imposed under section 31 or 46 (see clauses 59 and 69 respectively).

Clause 54: Notice of assessment

Clause 54 proposes the insertion of new sub-section 23(3) into the Principal Act to make it clear that in section 23 (which relates to the notification of an assessment) duty also includes penalties imposed under section 31 or 46 (see clauses 59 and 69 respectively).

Clause 55: Pending appeal or reference not to affect assessment

The amendment of section 28B of the Principal Act proposed by paragraph (a) of clause 55 effects a minor drafting improvement. Paragraph (b) will insert new sub-section 28B(2) to make it clear that in section 28B (which relates to recovery of duty where there is a pending appeal or reference) duty includes penalties imposed under section 31 or 46 (see clauses 59 and 69 respectively).

Clause 56: Adjustment of duty after appeal

This clause will repeal section 28C of the Principal Act and insert a new section 28C. The new section 28C will, like its predecessor, authorise the refund of any duty overpaid in cases where an amendment of an assessment has reduced a person's liability for estate duty, including additional duty under section 31 or 46 as proposed to be inserted by clauses 59 and 69. It will also stipulate that, where additional duty for late payment has been imposed under section 31, the amount of that additional duty is to be recalculated as though the amount by which the duty has been reduced on amendment was never payable. The revised section will also authorise the Commissioner to apply any amount of duty overpaid against any liability of the person to the Commonwealth that has arisen under a taxation law that the Commissioner administers, and to refund any amount not so applied.

New sub-section 28C(2) will authorise the Commissioner to recover any increase in a person's liability to duty arising as a result of an alteration of an assessment on an appeal or reference.

Proposed sub-section 28C(3) will make it clear that, in section 28C, duty includes the statutory imposed penalties under section 31 or 46 (see clauses 59 and 69 respectively).

Clause 57: Interpretation

Clause 57 will insert new section 28E in the Principal Act which will make it clear that, in Part VI (which relates to the collection and recovery of duty), duty includes additional duty imposed under proposed new section 46 (see clause 69).

Clause 58: Date of payment of duty

Section 29 of the Principal Act specifies the date on which duty is due and payable. Paragraph (a) of clause 58 proposes a technical amendment of section 29 which establishes the due date for the payment of duty. The revised section is consistent with similar provisions contained in the various taxation laws. Paragraph (b) of clause 58 will insert new sub-section 29(2) to specify a due date for payment of additional duty assessed under section 46 to be inserted by clause 69.

Clause 59: Penalty for unpaid duty

Under section 31 of the Principal Act, additional duty becomes payable when duty remains unpaid after it becomes due and payable, that penalty being imposed at the rate of 10% per annum of the amount of the duty unpaid, computed in respect of the period the duty was outstanding. Sub-section 31(3) gives the Commissioner authority to remit late payment penalty imposed under this section. By sub-section 31(2), where the Commissioner has extended time for payment of duty or has permitted payment by instalments, additional duty is due and payable from the extended time for payment or from the time specified for payment of the instalment.

Clause 59 proposes to repeal section 31 and substitute a new section. New sub-section 31(1) will increase the rate of late payment penalty from 10% to 20% per annum. It will also specify that where, under section 30, the Commissioner has granted a person an extension of time for payment of duty or has permitted payment to be made by instalments, additional duty will nevertheless be payable in respect of any duty remaining unpaid from such date (not earlier than the original due date) as the Commissioner determines.

New sub-section 31(2) will re-enact, in a more limited way, the Commissioner's authority to remit late payment penalty. An explanation of the effect of the revised rules can be found in the notes on clause 129.

The insertion of new sub-section 31(3) will have the same effect as sub-section 207(1B) of the Income Tax Assessment Act 1936. An explanation is contained in the notes on clause 112. New sub-section 31(3) will apply in relation to judgments entered or given after the amendments proposed by clause 59 come into operation - sub-clause 73(4). Existing sub-section 31(3) will continue to apply in relation to a liability for additional duty accrued before the amendments proposed by clause 59 come into operation - sub-clause 73(3).

Clause 60: Duty debt due to Commonwealth

Clause 61: Duty may be sued for

Clause 62: Duty first charge on estate

Clause 63: Apportionment of duty among beneficiaries

Clause 64: Apportionment of duty

Clause 65: Registration of duty as charge

Clause 66: Duty - how payable

Clause 67: Commissioner may apply for order to sell

Clause 68: Application of proceeds

Apart from effecting some drafting improvements of a purely technical nature, clauses 60 to 68 (which deal with various collection mechanisms) will make it clear that in sections 32, 33, 34, 35, 35A, 37, 38, 39 and 41, respectively, duty includes late payment penalty imposed under section 31 (see clause 59).

Clause 69: Penalty for failure to furnish return, etc.

Under section 47A of the Principal Act, an administrator who omits from a return any part of the estate of the deceased person is liable to pay by way of penalty additional duty equal to double the amount of duty sought to be avoided by that omission. In addition, an administrator who fails or neglects to furnish a return or any information is liable to pay additional duty at the rate of 10% per annum of the amount of duty payable calculated from the last day allowed for furnishing the return or information and ending on the day of lodgment or provision. Section 47A also ensures that the additional duty is not payable where a prosecution is instituted in respect of the same matter until that prosecution is withdrawn. The Commissioner is also authorised to remit the whole or part of any additional duty payable under the section.

Clause 69 proposes to repeal section 47A (together with sections 46, 47 and 48 - that relate to offences to be included by clause 297 in the Taxation Administration Act 1953) and substitute a new provision (section 46) to impose statutory penalties for failure by an administrator to furnish a return or any information relating to an estate.

New section 46 is substantially to the same effect as proposed section 222, sub-sections 223(1), (6), (8) to (10) and section 227 of the Income Tax Assessment Act 1936, an explanation of which is given in the notes on clause 152.

Clause 70: Release from liability for duty in cases of hardship

Clause 70 will insert new sub-section 48A (13) which will make it clear that, in section 48A (which authorises full or partial release from liability in cases of hardship), duty includes the penalties imposed under sections 31 and 46 (see clauses 59 and 69 respectively).

Clause 71: Repeal of section 49

Clause 71 proposes the repeal of section 49 of the Principal Act which provides that payment of penalties imposed under that Act does not relieve any estate from assessment and payment of duty. The amendment is consequential upon the insertion of new section 8ZH in the Taxation Administration Act 1953 by clause 297.

Clause 72: Further amendment relating to offences

Schedule 4 of the Bill proposes further amendments relating to offences under the Principal Act. An explanation of the proposed amendments is contained in the notes on that Schedule.

Clause 73: Application of amendments

This clause contains transitional rules relating to the application of the amendments of the Principal Act that are being made by the Bill. In effect, it mirrors the transitional arrangements contained in clause 23 relating to the amendments being made to the Australian Capital Territory Taxation (Administration) Act 1969 explained earlier in these notes.

PART VI - AMENDMENTS OF THE GIFT DUTY ASSESSMENT ACT 1941

Clause 74: Principal Act

The Gift Duty Assessment Act 1941 is, in this Part, referred to as "the Principal Act". Gift duty does not apply to gifts made on or after 1 July 1979.

Clause 75: Repeal of sections 6 and 8

This clause will repeal sections 6 and 8 of the Principal Act. Section 6 relates to the powers and functions of a Second Commissioner, while section 8 provides that a reference in the Principal Act to the Commissioner includes a reference to a Second Commissioner and a Deputy Commissioner. The amendments proposed by clause 75 will have a similar effect to those proposed by paragraph (b) of clause 4 and clause 5 of this Bill explained in the notes on those clauses.

Clause 76: Annual report

Section 9 of the Principal Act requires the Commissioner of Taxation to furnish to the Minister an annual report on the working of the Act. The amendment proposed by clause 76 will have a similar effect to that proposed by clause 6 of this Bill (see notes on that clause).

Clause 77: Amendment of assessments

Section 22 of the Principal Act authorises the Commissioner to amend an assessment in specified circumstances. This clause will amend section 22 by replacing sub-section 22(2). The new sub-section 22(2) will, like its predecessor, authorise the refund of any duty overpaid in cases where an amendment of an assessment has reduced a person's liability for gift duty, including additional duty imposed under section 27 or 42 of the Principal Act to be inserted by clauses 81 and 88. It will also stipulate that, where additional gift duty for late payment has been imposed under section 27, the amount of additional gift duty is to be recalculated as though the amount by which the duty has been reduced on amendment was never payable. The revised section will also authorise the Commissioner to apply any amount of duty overpaid against any liability of the taxpayer under an Act that the Commissioner administers, and to refund any amount not so applied.

A new sub-section 22(3) will make it clear that, in the section (unless the contrary intention appears), gift duty includes penalties imposed under section 27 or 42 (see clauses 81 and 88).

Clause 78: Notice of assessment

Clause 78 will amend section 24 of the Principal Act which requires the Commissioner to serve notice of an assessment as soon as possible after making it. The amendment will make clear that section 24 applies to both assessments made under section 21 (an assessment from the returns and information in the Commissioner's possession) and assessments under section 23 (an assessment where no return is furnished or the Commissioner is not satisfied with any return, document or information furnished).

Clause 79: Interpretation

Clause 79 will insert new section 24A into the Principal Act to make it clear that, in Part V (which contains provisions for the collection and recovery of gift duty), gift duty includes (unless the contrary intention appears) additional gift duty imposed under proposed section 42 (see clause 88).

Clause 80: Liability for gift duty

Paragraph (a) of clause 80 proposes the insertion of new sub-section 25(1A) into the Principal Act to specify that the date on which additional duty under section 42 (see clause 88) is due is the date stated in the notice of assessment of the additional duty.

New sub-section 25(8), to be inserted by paragraph (b) of clause 80, specifies that, in the general application of section 25, gift duty includes late payment penalty imposed under section 27 (see clause 81).

Clause 81: Penalty for unpaid duty

Under section 27 additional duty becomes payable when gift duty remains unpaid longer than 30 days after service of the notice of assessment, that penalty being imposed at the rate of 10% per annum of the amount of gift duty unpaid computed for the period it remains unpaid. Authority to remit the late payment penalty is also contained in section 27. Where the Commissioner has extended the time for payment of the tax or permitted payment by instalments, the late payment penalty is calculated from such time (not earlier than 30 days after service of the assessment) as the Commissioner determines.

Clause 81 proposes the repeal of section 27 of the Principal Act and the substitution of a new section.

New sub-section 27(1) will increase the rate of late payment penalty on gift duty from 10% to 20% per annum. In other respects, sub-section 27(1) will re-enact the existing requirements of section 27.

Under rules similar to those in existing section 27, new sub-section 27(2) will impose additional gift duty (at the higher rate of 20% per annum) in respect of unpaid additional gift duty assessed under new section 42 of the Principal Act (see clause 88).

New sub-section 27(3) will re-enact, in a more limited way, the Commissioner's authority to remit late payment penalty. An explanation of the effect of the modified remission rules can be found in the notes on clause 129 which deals with a similar remission power in section 221N of the Income Tax Assessment Act 1936. Notwithstanding the proposed repeal of section 27 by clause 81, the Commissioner's current authority to remit additional tax will, by sub-clause 90(3), continue to apply in relation to late payment penalty accrued before the amendments proposed by clause 81 come into operation.

New sub-section 27(4), which deals with situations where additional duty and judgment debt interest are both applicable to a gift duty liability, will be similar in effect to sub-section 207(1B) of the Income Tax Assessment Act 1936 as explained in the notes on clause 112. Sub-section 27(4) will apply in relation to judgments given or entered after the amendments proposed by clause 81 come into operation - see sub-clause 90(4).

New sub-section 27(5) makes it clear that, in sub-sections 27(3) and (4), gift duty includes penalty duty imposed under section 42 of the Principal Act.

New sub-section 27(6) defines the expression "penalty duty" as used in sub-sections 27(2) and (5) to mean additional duty imposed under section 42 (see clause 88).

Clause 82: Duty may be sued for

Clause 83: Registration of duty as charge

Clause 84: No limitation of action

Clause 85: Objections and appeals

Clause 86: Pending appeal or reference not to affect assessment

Apart from reflecting changes in drafting, these clauses will amend sections 28, 29, 30, 31 and 37 (which deal with collection and recovery of duty and objections and appeals against assessments) to include, as appropriate, references to late payment penalty under section 27 or penalties for false or misleading statements under section 42 (see clauses 81 and 88 respectively).

Clause 87: Adjustment of duty after appeal

This clause will replace section 38 of the Principal Act. The new sub-section 38(1) will apply in a similar manner to sub-section 22(2) as explained in the notes on clause 77.

Sub-section 38(2) will authorise the Commissioner to recover any extra gift duty in cases where a person's liability to gift duty is increased as a result of an alteration of an assessment on an appeal or reference.

Sub-section 38(3) will make it clear that, in section 38 (unless the contrary intention appears), gift duty includes penalties imposed under section 27 or 42 (see clauses 81 and 88 respectively).

Clause 88: Penalty for failure to furnish return, etc.

Under section 42 of the Principal Act, a person who fails to furnish a return or any information as required is liable to additional gift duty equal to the gift duty assessable to the person. Penalty is also imposed where a person fails to include in a return any particulars relating to a gift or includes in a return a false statement. In the latter cases, the person is liable to pay additional gift duty equal to double the amount of gift duty sought to be avoided. The Commissioner is authorised by sub-section 42(3) to remit the whole or part of any penalty payable under the section.

Clause 88 proposes the repeal of section 42, together with sections 43 to 46 that contain penal and prosecution provisions to be relocated (by clause 297) in the Taxation Administration Act 1953. However, sub-sections 43(2) and 46(2) (concerning commencement of prosecutions) will continue to apply in relation to offences committed against the Principal Act before the amendments proposed by clause 88 come into operation - see paragraph (b) of sub-clause 90(3). Section 45 will, by paragraph (c) of that sub-clause, continue to apply in relation to a person convicted of an offence against section 43 (failure to furnish returns) or 44 (refusal to give evidence).

Notwithstanding the repeal of section 42 by clause 88, the Commissioner's authority to remit additional duty contained in sub-section 42(3) will continue to apply in relation to additional duty that accrues before the amendments by clause 88 come into operation - see paragraph (a) of sub-clause 90(3).

The new section 42 will impose a penalty where a person fails or refuses to furnish a return or any information required under the Act or makes a false or misleading statement or omits from a statement a matter that renders the statement misleading in a material particular - new sub-sections 42(1) and (2). The new sub-sections 42(1) to (6) proposed by clause 88 will apply in a similar way to new section 222, sub-sections 223(1), (6), (8) to (10) and section 227 of the Income Tax Assessment Act 1936, as explained in the notes on clause 152.

Clause 89: Further amendments relating to offences

Schedule 5 of the Bill proposes further amendments relating to offences under the Principal Act. An explanation of the amendments is contained in the notes on the Schedules.

Clause 90: Application of amendments

This clause contains transitional rules relating to the application of the amendments of the Principal Act that are being made by the Bill. In effect, it mirrors the transitional arrangements contained in clause 23 relating to the amendments being made to the Australian Capital Territory Taxation (Administration) Act 1969 explained earlier in these notes.

PART VIII - AMENDMENT OF THE INCOME TAX (INTERNATIONAL AGREEMENTS) ACT 1953

Clause 167: Principal Act

In this Part the Income Tax (International Agreements) Act 1953 is referred to as "the Principal Act".

Clause 168: Collection of tax due to the United States of America

Section 20 of the Principal Act enables the Commissioner to collect certain taxes due to the Government of the United States of America. This clause proposes an amendment of section 20 to replace existing sub-section (5). The amendment will have two effects. First, it will specify that the Commissioner of Taxation is responsible for paying to the Government of the United States of America any moneys obtained under the section. Second, it will delete the specific appropriation out of the Consolidated Revenue Fund for such payments, consequential upon the proposed inclusion by clause 314 of a single general appropriation out of the Fund for refunds of taxes and related payments by the Commissioner.

PART IX - AMENDMENT OF THE LOCAL GOVERNMENT (PERSONAL INCOME TAX SHARING) ACT 1976

Clause 169: Principal Act

The Local Government (Personal Income Tax Sharing) Act 1976 is, in this Part, to be referred to as "the Principal Act".

Clause 170: Interpretation

This clause will effect an amendment of a purely technical kind to sub-section 3(1) of the Principal Act, which contains definitions of words and phrases used in that Act. The amendment is consequential upon the amendments of the Income Tax Assessment Act 1936 proposed by clause 152 of the Bill to delete the existing section 226 and enact a new Part VII.

PART X - AMENDMENTS OF THE MIGRATION ACT 1958

Clause 171: Principal Act

This clause facilitates references to the Migration Act 1958 which is referred to in this Part of the Bill as "the Principal Act".

Clause 172: Interpretation

Clause 172 introduces into the Principal Act the definition of "departure prohibition order" by referring to it as an order under sub-section 14S(1) of the Taxation Administration Act 1953.

Clause 173: Offences in relation to entering into or remaining in Australia

Clause 173 proposes the amendment of section 27 of the Principal Act to insert sub-sections (2AA), (2AB), (5) and (6).

New sub-section 27(2AA) provides that a non-citizen shall be taken not to contravene paragraph 27(1)(ab) or (b) if, at the time the non-citizen becomes a prohibited non-citizen as mentioned in paragraph 27(1)(ab) or (b), a departure prohibition order is in force in respect of the non-citizen.

New sub-section 27(2AB) provides that where -

·
at the time a non-citizen becomes a prohibited non-citizen as mentioned in paragraph 27(1)(ab) or (b), a departure prohibition order is in force in respect of the non-citizen;
·
the departure prohibition order is revoked; and
·
at the time of the revocation, the non-citizen is a prohibited non-citizen;

the non-citizen is guilty of an offence, and liable upon conviction to a fine not exceeding $1,000 or to imprisonment for a period not exceeding 6 months.

New sub-section 27(5) provides that the Secretary to the Department of Immigration and Ethnic Affairs or an officer of the Department authorised by the Secretary may issue a certificate certifying that, at a specified time, no departure prohibition order was in force in respect of a specified person.

New sub-section 27(6) provides that a certificate purporting to be issued under sub-section 27(5) shall be received in evidence in a court in proceedings for an offence against paragraph 27(1)(ab) or (b) without further proof and is prima facie evidence of the matter stated in the certificate.

Clause 174: Persons concerned in bringing non-citizens secretly into Australia or harbouring prohibited non-citizens

Clause 174 proposes the amendment of section 30 of the Principal Act to insert sub-sections 30(4), (5) and (6).

New sub-section 30(4) will protect persons who may, but for the existence of a departure prohibition order, be prosecuted for aiding or inciting a person to become a prohibited non-citizen, aiding or inciting persons who are prohibited non-citizens to remain in Australia or harbouring prohibited non-citizens or deportees.

New sub-sections 30(5) and (6) make provision for an evidentiary certificate to be produced in prosecutions pursuant to sub-section 30(2) similar to that provided for in new sub-sections 27(5) and (6).

Clause 175: Minister or authorized officer may require prohibited non-citizen to leave Australia

This clause amends section 31A of the Principal Act to provide that a person need not comply with a requirement under the section to leave Australia within a specified time if, at the expiration of the specified time, a departure prohibition order is in force in respect of the person.

Clause 175 also amends section 31A of the Principal Act to insert sub-sections (2) and (3). New sub-sections 31A(2) and (3) make provision for an evidentiary certificate to be produced in prosecutions pursuant to sub-section 31A(1).

PART XI - AMENDMENT OF THE NATIONAL CRIME AUTHORITY ACT 1984

Clause 176: Principal Act

This clause facilitates references to the National Crime Authority Act 1984 which, in this Part, is referred to as "the Principal Act".

Clause 177: Schedule

This clause proposes to effect an amendment of a technical kind to the Schedule to the Principal Act which lists certain prescribed provisions for the purposes of that Act. The amendment is consequential upon amendments of the Taxation Administration Act 1953 by clauses 293 and 308 which will substantially re-enact the existing section 14F of that Act as new section 3C.

PART XII - AMENDMENTS OF THE PAY-ROLL TAX (TERRITORIES) ASSESSMENT ACT 1971

Clause 178: Principal Act

The Pay-roll Tax (Territories) Assessment Act 1971 is in this Part, referred to as "the Principal Act".

Clause 179: Repeal of sections 6 and 7

Clause 179 will repeal sections 6 and 7 of the Principal Act. Section 6 relates to the powers and functions of a Second Commissioner, while section 7 specifies that a reference in the Principal Act to the Commissioner includes a reference to a Second Commissioner, a Deputy Commissioner or any other person on whom powers and functions under the Principal Act are conferred or delegated. The amendments proposed by clause 179 will have a similar effect to those proposed by paragraph (b) of clause 4 and clause 5 of the Bill and is explained in the notes on those clauses.

Clause 180: Annual report

Section 7A of the Principal Act requires the Commissioner of Taxation to furnish to the Minister an annual report of the working of the Act. The amendment proposed by clause 180 will have a similar effect to that proposed by clause 6 of the Bill.

Clause 181: Time for payment of tax

Section 22 of the Principal Act requires an employer to pay pay-roll tax within a specified time.

New sub-section 22(3), which is to be inserted in the Principal Act by clause 181, will specify the dates mentioned in section 22 as those on which pay-roll tax generally becomes due and payable.

Clause 181 also proposes the insertion of new sub-section 22(4) which will stipulate that additional tax imposed under section 42 (see clause 196) is due and payable on the date specified in the relevant notice of assessment.

Clause 182: Assessments

Clause 182 will omit sub-section 23(3) of the Principal Act which authorises the imposition and remission of additional tax in respect of incorrect returns or non-lodgment of returns. The amendment is consequential upon the insertion of section 42 by clause 196. By sub-clause 203(2), the Commissioner's authority to remit additional tax under sub-section 23(3) will continue to apply in relation to a liability for additional tax that accrued prior to the date on which the amendments come into operation.

Clause 183: Repeal of sections 24 and 25

Clause 183 will repeal section 24 (which authorises refunds of tax overpaid) and section 25 (which enables the Commissioner to determine a due date for payment of tax when he has reason to believe that an employer may leave Australia before an amount of tax would otherwise become payable). These sections will be replaced by sections 24, 25 and 25A. An explanation of each of these new sections follows.

Section 24 : Reduction of tax upon amendment of assessment

New sub-section 24(1) will stipulate that, where additional tax for late payment has been imposed under section 27, the additional tax is to be recalculated as though the amount by which the tax has been reduced on amendment was never payable. New sub-section 24(2) will make it clear that in section 24 tax includes further tax and additional tax imposed under proposed section 42 (see clause 196).

Section 25 : Refunds

New sub-section 25(1) will authorise the Commissioner to refund any tax overpaid, or to apply it against any liability of the taxpayer that has arisen under an Act that the Commissioner administers and refund any amount not so applied.

Proposed sub-section 25(2) will make it clear that in section 25 tax includes further tax and penalties imposed under proposed section 27 or 42 (see clauses 185 and 196 respectively).

Section 25A : Employer leaving Australia

The Commissioner will be authorised by new sub-section 25A(1) to fix a date on which tax is due and payable in cases where he has reason to believe that an employer may leave Australia before the date on which tax would otherwise become due and payable. The Commissioner is required to notify the employer of the due and payable date determined in accordance with this sub-section. Sub-section 25A(1) is a substantial re-enactment of existing section 25 which is being repealed by this clause.

New sub-section 25A(2) will make it clear that in the section tax includes further tax and additional tax imposed under proposed section 42 (see clause 196).

Clause 184: Time to pay - extensions and instalments

The amendment by clause 184 of section 26 of the Principal Act, (which authorises the Commissioner to extend the time for payment of tax or to permit payment of tax by instalments) will have a similar effect to that proposed by clause 183 in respect of new sub-section 24(2) of the Principal Act.

Clause 185: Penalty for unpaid tax

Under section 27 of the Principal Act, which is to be repealed and replaced by this clause, additional tax is payable when tax remains unpaid after it becomes due and payable, the additional tax being imposed at the rate of 10% per annum of the amount of tax unpaid computed from the expiration of the date when the tax became due and payable until the date on which it is paid. Authority to remit late payment penalty is contained in sub-section 27(2). Where the Commissioner has extended the time for payment of the tax or has permitted payment by instalments, the late payment penalty is payable from the extended due date or from the time specified for payment of the instalment.

Proposed sub-section 27(1) will increase the rate of late payment penalty from 10% to 20% per annum. It will also specify that where, under section 26, the Commissioner has granted a person an extension of time for payment of tax or has permitted payment to be made by instalments, additional tax will nevertheless be payable in respect of tax remaining unpaid from such date (not earlier than the original due date) as the Commissioner determines.

New sub-section 27(2) will re-enact, in a more limited way, the Commissioner's authority to remit late payment penalty. An explanation of the effect of the revised rules can be found in the notes on clause 129. The insertion of new sub-section 27(3) and (4) will have the same effect as sub-sections 207(1B) and (3) of the Income Tax Assessment Act 1936. An explanation is contained in the notes on clause 112.

Clause 186: Recovery of tax

Clause 187: Substituted service

The amendments by clauses 186 and 187 of sections 28 and 29 of the Principal Act will make it clear that, in those sections, tax includes further tax and penalties imposed under section 27 or 42 (see clauses 185 and 196).

Clause 188: Liquidator to give notice

By clause 188 section 30 of the Principal Act (which imposes certain obligations on the liquidator of a company) will have a similar effect to those proposed by clause 116 in relation to section 215 of the Income Tax Assessment Act 1936 explained in the notes on that clause.

Clause 189: Agent for absentee principal in winding-up of business

Sub-section 31(2) of the Principal Act imposes a personal liability for pay-roll tax on an agent who fails to notify the Commissioner of his intention to wind-up an absentee principal's business or fails to provide for payment of tax. The amendment by paragraph (a) of clause 189 gives effect to a change in drafting style adopted throughout this Bill.

The amendment by paragraph (b) of clause 189 is related to the amendment by paragraph (c) that will insert in the Principal Act new sub-section 31(3) to make it clear that, in section 31, tax includes further tax and penalties imposed under section 27 or 42 (see clauses 185 and 196 respectively).

Clause 190: Where tax not paid during lifetime

Clause 191: Repeal of section 33

The combined effects of existing sections 32 and 33 are to be consolidated into one section (section 32) by the amendments proposed by these clauses. As a result, section 33 is to be repealed.

Section 32 enables the Commissioner to assess and obtain payment of pay-roll tax from the trustees of the estate of a deceased person who escaped full payment of pay-roll tax in his or her lifetime by reason of not having duly made full, complete and accurate returns, while section 33 imposes upon the legal personal representatives of a deceased person a liability to pay-roll tax in respect of any liability under the Principal Act incurred by the deceased up to his or her death which was not taxed in his or her lifetime.

The amendments of section 32 by paragraphs (a) and (b) will mean that, where the whole of the deceased's liability to pay-roll tax up to the time of death has not been satisfied, the Commissioner will have the same powers and remedies for the assessment and recovery of tax from the trustees in respect of that liability as he would have had against the taxpayer if the taxpayer were still living.

The amendment proposed by paragraph (c) is essentially a re-statement of sub-section 33(2) which requires a trustee to lodge any return that the deceased person failed to lodge, while new sub-section 32(3A) is a re-enactment of the Commissioner's authority, presently contained in sub-section 33(3), to make an assessment of the pay-roll tax payable on taxable wages where the trustee fails or refuses to lodge a relevant return.

The amendment of section 32 by paragraph (e) of clause 190 is consequential upon the amendment by paragraph (f) of that clause. Paragraph (f) will insert into the Principal Act sub-section 32(6) which will make it clear that in section 32 tax includes further tax and penalties imposed under section 27 or 42 (see clauses 185 and 196 respectively).

By sub-clause 203(5), the amendments of section 32 will apply to employers who died before, as well as employers who die after, the date on which the amendments come into operation.

Clause 192: Where no administration of estate of deceased taxpayer

Clause 192 will insert in the Principal Act new sub-section 34(8) which will make it clear that, in section 34 (which authorises the Commissioner to make an assessment of tax due by a deceased employer in certain circumstances), tax includes further tax and additional tax imposed under section 42 (see clause 196) and that, in sub-section 34(5) (which authorises the sale of the deceased employer's property to pay tax due), tax also includes late payment penalty imposed under section 27 (see clause 185).

Clause 193: Joint taxpayers

Clause 193 proposes the insertion in the Principal Act of new sub-section 35(2) which will have a similar effect in relation to section 35 (which stipulates that where two or more people are jointly liable to pay tax they are also severally liable to pay that tax) to those proposed by clauses 186 and 187 as explained in the notes on those clauses.

Clause 194: Commissioner may collect tax from person owing money to employer

This clause effects several amendments to improve the operation of section 36 of the Principal Act, which authorises the Commissioner to collect pay-roll tax that is owing by an employer from a person who, broadly, owes money to the employer or has authority to pay money to the employer. The amendments are similar in effect to those proposed in relation to section 218 of the Income Tax Assessment Act 1936 - see sub-sections 218(6) and (6A), an explanation of which will be found in the notes on clause 119.

Clause 195: Pending appeal not to delay payment of tax

Section 41 of the Principal Act stipulates that liability to pay pay-roll tax is not suspended pending the outcome of an appeal or reference against any liability or assessment. Sub-section 41(2) authorises overpaid tax to be refunded or amounts short-paid to be recovered if the liability or assessment is altered on appeal or reference.

New sub-section 41(2), which is to be inserted in the Principal Act by clause 195, will have a similar effect to the amendment by clause 183 in relation to amended assessments - see notes on new sub-section 24(1).

New sub-section 41(3) will authorise the Commissioner to recover the relevant amount in cases where an employer's liability to pay-roll tax is increased as a result of an alteration of an assessment on an appeal or reference.

Proposed sub-section 41(4) will make it clear that, in section 41 (unless the contrary intention appears), tax includes further tax and penalties imposed under section 27 or 42 (see clauses 185 and 196 respectively).

Clause 196: Repeal of Parts VII and VIII

Clause 196 will repeal Parts VII and VIII of the Principal Act which contain penal and prosecution provisions that will be re-enacted by clause 297 in the Taxation Administration Act 1953.

Sub-section 42(3) of the Principal Act (failure to comply with a requirement) will continue to apply in relation to an employer convicted, whether before or after the amendments proposed by clause 196 come into operation, of an offence against sub-section 42(1) - sub-clause 203(7). Sections 46, 47, 49 to 60 inclusive and 63 of the Principal Act (prosecution procedures) will continue to apply to offences committed against the Principal Act before the amendments proposed by clause 196 come into operation - sub-clause 203(7).

Under section 43 of the Principal Act (which is contained in Part VII), an employer who fails or neglects to furnish a return or any information requested by the Commissioner is liable to additional tax computed at the rate of 10% per annum upon the amount of tax payable calculated from the date that the return or information was required to be lodged to the day of lodgment. Penalty is also imposed if an employer fails to include in a return any particulars of taxable wages paid or payable. In this case the employer is liable to pay additional tax equal to double the amount of tax sought to be avoided. The Commissioner is authorised by sub-section 43(2) to remit the whole or part of any penalty payable under the section. Notwithstanding the proposed repeal of section 43, the power of remission provided by sub-section 43(2) will continue to apply in relation to additional tax that accrues before the amendments proposed by clause 196 come into operation - see sub-clause 203(2).

Clause 196 will repeal section 43 and substitute a new provision - section 42 - which will impose a penalty where a person fails or refuses to furnish a return or any information or makes a false or misleading statement. An explanation of the effect of the new section is given in the notes on clause 152 in relation to section 222, sub-section 223(1), (6) and (8) to (10) of the Income Tax Assessment Act 1936.

Clause 197: Public officer of company

Under section 64 of the Principal Act the Commissioner may require an employer company to appoint a person as its public officer. In discharging the various responsibilities placed upon employers in relation to compliance with the requirements of the Act (e.g., furnishing returns or information), the public officer is answerable for the doing of all such things as are required to be done by the company and, in case of default, is liable to the same penalties.

The amendments proposed by clause 197 (which mirror similar amendments to be made, by clause 228, to the Sales Tax Assessment Act (No.1) 1930) will mean that a company will not satisfy the requirements of section 64 if at any time its public officer is not a person who has attained the age of 18 years and is capable of understanding the nature of the appointment of a public officer. In addition, that person must be ordinarily resident in Australia.

The new rules will come into effect 30 days after the proposed amendments come into operation and in determining whether a natural person was capable of being a public officer before that time, those rules are to be disregarded - sub-clauses 203(8) and (9).

Clause 198: Agents and trustees

Clause 199: Person in receipt or control of money for absentee

Clause 200: Release of employers in cases of hardship

Clauses 198, 199 and 200 will make it clear that, in sections 65, 66 and 69, tax includes further tax and penalties imposed under section 27 or 42 (see clauses 185 and 196).

Clause 201: Regulations

The change by clause 201 to section 70 of the Principal Act, which enables regulations to be made under the Act, is consequential upon the change in title of the portfolio of the Minister responsible for the Australian Capital Territory.

Clause 202: Further amendments relating to offences

Schedule 8 of the Bill proposes further amendments relating to offences under the Principal Act. An explanation of the amendments is contained in the notes on the Schedules.

Clause 203: Application of amendments

This clause contains transitional rules relating to the application of the amendments of the Principal Act that are being made by the Bill. In effect, sub-clauses 203(1), (3), (4) and (7) mirror the transitional arrangements contained in clause 23 relating to the amendments being made to the Australian Capital Territory Taxation (Administration) Act 1969 explained earlier in these notes.

By sub-clause 203(2), the Commissioner will retain the power of remission of additional tax under sub-sections 27(2) and 43(2) in respect of a liability for additional tax that accrued prior to the date on which the repeal of that sub-section by clause 182 is effective.

The amendments of section 32 by clause 191 will apply to employers who die before, as well as after, the date on which those amendments come into operation - sub-clause 203(5).

Sub-clause 203(6) provides that an assessment previously made under sub-section 33(3) will have effect after the repeal of section 33 by clause 191 as if it were an assessment made under sub-section 32(3A) of the amended Act.

Sub-clauses 203(8) and (9) relate to the appointment of public officers by companies and are explained in the notes on clause 197.

Clause 204: Default imprisonment - transitional provisions

This clause proposes transitional arrangements similar in effect to sub-clauses (1) to (4) of clause 166 as explained in the notes on that clause.

PART XIII - AMENDMENTS OF THE SALES TAX ASSESSMENT ACT (NO. 1) 1930

Clause 205: Principal Act

This clause facilitates references to the Sales Tax Assessment Act (No. 1) 1930 which, in this Part, is referred to as "the Principal Act".

Clause 206: Repeal of sections 5 and 8

This clause will repeal sections 5 and 8 of the Principal Act. Section 5 relates to the powers and functions of a Second Commissioner of Taxation, while section 8 stipulates that a reference to the Commissioner in the Principal Act includes a reference to a Second Commissioner or a Deputy Commissioner. The amendments proposed by clause 206 will have a similar effect to those proposed by sub-clause 4(b) and clause 5 of the Bill already explained.

Clause 207: Annual report

Section 9 of the Principal Act requires the Commissioner of Taxation to furnish to the Minister an annual report on the working of the Act. The amendment inserted by clause 207 will parallel that proposed by clause 6 of the Bill.

Clause 208: Time for payment of tax

Section 24 of the Principal Act specifies the time for payment of sales tax payable under that Act.

Sub-section 24(2), to be inserted by clause 208, is a drafting measure that will make clear that sales tax is due and payable at the end of the period of 21 days after the close of the month during which the relevant taxable transaction occurred.

Clause 209: Further tax

Clause 209 proposes the omission of sub-section 25(2B) which provides for the imposition and remission of additional tax for non-lodgment of a return or for an incorrect return. The omission of sub-section 25(2B) is consequential upon the insertion by clause 227 of new Part VIII in the Principal Act. By sub-clause 233(2), however, the Commissioner's authority to remit additional tax under sub-section 25(2B) will continue to apply in relation to a liability for additional tax that accrues before the date on which the amendment comes into operation.

Clause 210: Reduction of tax upon amendment of assessment

New sub-section 25A(1), which is to be inserted in the Principal Act by clause 210, will have the effect that, where a person's liability to sales tax is reduced, the amount by which the tax is reduced will be taken never to have been payable in calculating late payment penalty under section 29. The practical effect will be that late payment penalty under section 29 will be payable only in respect of the duty which ultimately turns out to be payable after the reduction is taken into account.

New sub-section 25A(2) will make clear that in section 25A tax includes further tax and additional tax imposed under Part VIII (see clause 227).

Clause 211: Refunds of tax

Section 26 of the Principal Act authorises the Commissioner to refund tax overpaid in specified circumstances.

New sub-section 26(1), to be inserted by paragraph (a) of clause 211, will authorise the Commissioner to refund the amount of any overpaid tax, or to apply that amount or part of it against any outstanding liability of the person under any Act administered by the Commissioner and refund any balance not so applied.

However, by sub-section 26(1A) (which is also to be inserted by paragraph (a) of clause 211) the Commissioner, as is the case under existing sub-section 26(1), will not be able to refund or apply an overpayment under sub-section 26(1) unless satisfied that the tax has not been passed on to another person or, if passed on, has been refunded to the other person.

The amendment proposed by paragraph (b) to paragraph 26(3)(a) of the Principal Act effects a change in drafting adopted throughout the Bill.

Paragraph (c) will insert new sub-section 26(7) to make clear that in section 26 tax includes further tax and penalties imposed under section 29 or Part VIII (see clauses 214 and 227 respectively).

Clause 212: Taxpayer leaving Australia

Clause 213: Time to pay - extensions and instalments

The amendments proposed by clauses 212 and 213, by which new sub-sections 27(2) and 28(2) will be inserted in the Principal Act, will make it clear that in sections 27 and 28 tax includes further tax and additional tax imposed under Part VIII (see clause 227).

Clause 214: Penalty for unpaid tax

Under section 29 of the Principal Act, additional tax becomes payable when tax or further tax remains unpaid after the time it becomes due and payable, that penalty being imposed at the rate of 10% per annum of the amount of tax or further tax unpaid, calculated from the date on which it became due and payable to the date on which it is paid. Authority for the Commissioner to remit late payment penalty is contained in the proviso to section 29.

Clause 214 will repeal section 29 of the Principal Act and substitute a new section 29. Sub-section 29(1) will increase the rate of late payment penalty from 10% to 20% per annum. It will also specify that where, under section 28, the Commissioner has granted a person an extension of time for payment of tax or has permitted payment to be made by instalments additional tax will nevertheless be payable in respect of any tax remaining unpaid from such date (not earlier than the original date) as the Commissioner determines.

Sub-section 29(2) will re-enact, in a more limited way, the Commissioner's authority to remit late payment penalty. An explanation of the effect of the revised rules can be found in the notes on clause 129.

The insertion of new sub-sections 29(3) and (4) will have the same effect as sub-sections 207(1B) and (3) of the Income Tax Assessment Act 1936, an explanation of which is contained in the notes on clause 112.

Clause 215: Recovery of tax

Clause 216: Substituted service

The amendments proposed by clauses 215 and 216 in relation to sections 30 and 31 of the Principal Act correspond to that proposed by paragraph (c) of clause 211 (see notes on that clause).

Clause 217: Liquidator to give notice

Section 32 of the Principal Act imposes certain obligations on a liquidator of a company which is being wound up. The section requires the liquidator to give the Commissioner notice of his appointment and to set aside assets of the company to provide for tax (or prescribed tax) that the Commissioner notifies the liquidator as being the likely tax liability of the company. The amendments proposed by clause 217 will have a similar effect to those proposed by clause 116 in relation to section 215 of the Income Tax Assessment Act 1936 and are explained in the notes on that clause.

Clause 218: Agent for absentee principal in winding-up of business

Paragraph (a) of clause 218 will amend sub-section 33(2) of the Principal Act to effect a change in drafting adopted throughout this Bill, while paragraph (b) will insert new sub-section 33(3) which will make it clear that in section 33 (which imposes personal liability for tax on an agent of an absentee principal who fails to notify the Commissioner of his intention to wind-up the principal's business or who fails to set aside sufficient funds to meet any tax liability) tax includes further tax and penalties imposed under section 29 or Part VIII (see clauses 214 and 227 respectively).

Clause 219: When tax not paid during lifetime

Section 34 enables the Commissioner to obtain payment of tax from the trustees of a deceased person who escapes full taxation during his or her lifetime by reason of not having duly made full, complete and accurate returns.

Paragraphs (a) and (b) of clause 219 will amend section 33 to effect drafting improvements, while the amendments by paragraphs (c) and (d) are consequential upon the insertion of new Part VIII in the Principal Act by clause 227.

Paragraph (e) of clause 218 will insert new sub-section 34(2) to make clear that in section 34 tax includes further tax and penalties imposed under section 29 or Part VIII (see clauses 214 and 227 respectively).

Clause 220: Provision for payment of tax by executors or administrators

Section 25 of the Principal Act extends to the Commissioner the same powers of recovery and assessment of tax from the personal representatives of a deceased person as the Commissioner would have against that person if still living.

Paragraphs (a) and (b) of clause 220 propose amendments of section 35 to effect drafting improvement, while paragraph (c) will insert new sub-section 35(11) to make clear that in the general application of section 35 tax includes further tax and penalties imposed under section 29 or Part VIII (see clauses 214 and 227 respectively).

Clause 221: Recovery of tax paid on behalf of another person

Clause 222: Contributions from joint taxpayers

The amendments of sections 36 and 37 of the Principal Act by clauses 221 and 222 will have a similar affect to that proposed by clause 220.

Clause 223: Commissioner may collect tax from person owing money to taxpayer

This clause will make several amendments to improve the operation of section 38 of the Principal Act, which authorises the Commissioner to collect tax that is owing by a taxpayer from a person who owes money to the taxpayer or has authority to pay money to the taxpayer.

The amendments proposed by paragraph (a) are of a purely technical kind : first, they will remove unnecessary references to a Second Commissioner or a Deputy Commissioner; second, they will delete existing references to fines and costs imposed under the Principal Act which are to be included in the definition of "tax" in new sub-section 38(8); and, third, they will enable the amount specified in a notice under section 38 to be paid by instalments.

Paragraph (b) of clause 223 will omit sub-section 38(3) in consequence of the re-drafted sub-section 38(1). The amendment of sub-section 38(5) proposed by paragraph (c) is, as explained, consequential upon the inclusion of fines and costs in the definition of "tax" in new sub-section 38(8).

Paragraph (d) will omit existing sub-section 38(6), which defines "tax" and "person", and insert new sub-sections 38(6), (7) and (8). Sub-sections 38(6), (7) and (8) correspond with proposed sub-sections 218(6), (6A) and (6B) of the Income Tax Assessment Act 1936, an explanation of which is contained in the notes on clause 119.

Clause 224: Interpretation

Section 39A contains a definition of "Supreme Court" for the purposes of Part VII of the Principal Act (Objections and Appeals). Clause 224 will amend the definition of "Supreme Court" in consequence of the proposed repeal of section 39B by clause 225.

Clause 225: Repeal of section 39B

Clause 225 will repeal section 39B of the Principal Act which confers jurisdiction on the Supreme Courts of the Australian Capital Territory and the Northern Territory in proceedings by a taxpayer who, at the time the proceedings are instituted, was ordinarily resident or, if a company, had its principal place of business in the relevant Territory. The repeal of section 39B mirrors the repeal of section 184B of the Income Tax Assessment Act 1936, an explanation of which is contained in the notes on clause 105.

Clause 226: Pending appeal not to delay payment of tax

Section 43 of the Principal Act stipulates that liability to pay sales tax is not suspended pending the outcome of an appeal or reference against the liability.

New sub-section 43(2), to be inserted by clause 226, specifies that where the amount by which a person's liability to sales tax is reduced as a result of the outcome of an appeal or reference, additional tax for late payment imposed under section 29 is to be recalculated as though the amount by which the sales tax has been reduced was never payable.

Proposed sub-section 43(3) will authorise the Commissioner, in cases where a person's liability to sales tax is increased on appeal or reference, to recover the increased amount.

Sub-section 43(4) will make clear that, in section 43, sales tax includes penalties imposed under section 29 or Part VIII (see clauses 214 and 227 respectively).

Clause 227: Repeal of Parts VIII and IX Insertion of new Part VIII - Penalty Tax

This clause will repeal existing Parts VIII and IX of the Principal Act, and enact a new Part VIII.

Existing Part VIII imposes additional tax, and creates offences, for failure to comply with various requirements of the Act including the furnishing of returns or information, the making of false declarations, the understatement of the sale value of goods, etc. Part IX contains the machinery for prosecutions against the offences in Part VIII.

The various offence and prosecution provisions of Parts VIII and IX are to be replaced by more comprehensive provisions in new Part III of the Taxation Administration Act 1953 to be inserted by clause 297. New Part VIII of the Principal Act, comprising sections 45 to 48, will impose additional tax where sales tax is sought to be avoided by the refusal or failure to lodge a return or furnish information required under the Act, by making false or misleading statements or participation in certain tax avoidance schemes.

Under section 46 of the Principal Act, a person who fails or neglects to furnish a return or any information as and when required by the Commissioner is liable to pay by way of penalty additional tax at a rate of 10% per annum of the tax assessable to the person calculated from the date that the return or information was required to be lodged and ending on the day of lodgment. The section also imposes additional tax where a person omits particulars from a return or furnishes a return that is misleading. In such cases the person is liable to pay by way of penalty additional tax equal to double the amount of tax sought to be avoided. The Commissioner is authorised to remit the whole or part of any additional tax payable under the section.

Clause 227 will repeal section 46 which is contained in Part VIII. A new section 45 to be inserted by the clause will impose penalty where a person fails or refuses to furnish a return or any information as required or makes a false or misleading statement. New section 45 will parallel the amendments proposed by clause 152 in relation to section 222 and sub-sections 223(1), (6), (8) and (9) of the Income Tax Assessment Act 1936. An explanation is contained in the notes on that clause.

New sub-section 45(6) will define the following terms used in section 45:

"data processing device" will mean any article from which information is capable of being reproduced with or without the aid of any other article or device;
"relevant sales tax law" means the Principal Act and the regulations, the Sales Tax (Exemptions and Classifications) Act 1935, the Sales Tax Procedure Act 1934 and the regulations under those Acts to the extent that those Acts and regulations relate to goods in respect of which tax is payable under the Principal Act; and
"taxation officer" means a person exercising powers, or performing functions under, pursuant to or in relation to a relevant sales tax law.

Section 46 : Penalty where certain anti-avoidance provisions apply

New section 46 will impose on participants in tax avoidance schemes additional tax equal to double the amount of further tax payable as a result of an alteration of the sale value of any goods. The section will apply where, under sub-section 25(2) of the Principal Act, the Commissioner has made an alteration to the sale value of goods in respect of persons participating in option or service charge schemes, schemes where goods are sold at artificially low prices or other schemes struck down by specific anti-avoidance provisions contained in sub-sections 18(4), 18A(5) and 18A(6) of the Principal Act.

Section 47 : Assessment of additional tax

Under new sub-section 47(1) and (2), the Commissioner will be required to make an assessment of additional tax payable by a person under section 46 and may incorporate any notice of assessment in another notice of assessment under the Principal Act in respect of the person.

By new sub-section 47(3) the Commissioner may, either before or after making an assessment, remit the whole or part of the additional tax imposed under sub-section 45(1) or (2). Notwithstanding the proposed repeal of section 46, the authority contained in existing sub-section 46(2) to remit additional tax will continue to apply in relation to a liability for additional tax that accrues before the amendments come into operation - sub-clause 233(5).

Section 48 : When additional tax due and payable

New section 48 will set the due date for payment of additional tax as the due date specified in the notice of assessment.

Notwithstanding the repeal of Part IX being effected by clause 227, sub-section 45(3) (which relates to continuing offences after conviction) will continue to apply in relation to a person convicted of an offence against sub-section 45(1) of the Principal Act. Sections 50, 51, 53 to 64 (inclusive) and 67 (which contain the various rules for prosecution) will also continue to apply in relation to offences committed before the amendments proposed by clause 227 come into operation - see sub-clause 233(5).

Clause 228: Public officer of company

Section 68 of the Principal Act requires every company which is a manufacturer or a wholesale merchant in Australia to appoint a person residing in Australia as its public officer. In discharging the various responsibilities placed upon taxpayers in relation to compliance with the requirements of the Act (e.g., furnishing returns or information), the public officer is answerable for the doing of all such things as are required to be done by the company and, in case of default, is liable to the same penalties.

Paragraphs (a) and (b) of clause 228 propose amendments consequent upon the change by paragraph (d) while paragraph (c) effects a drafting change adopted throughout the Bill.

By new sub-section 68(2), which is to be inserted in the Principal Act by paragraph (d) of clause 228, a company will not satisfy the requirements for appointment of a public officer unless its public officer is at all times a person not less than 18 years of age who is capable of understanding the nature of the appointment of a public officer. In addition, the public officer must be ordinarily resident in Australia.

For each day on which a company contravenes the requirement to appoint a public officer in accordance with section 68, it is to be liable to a penalty on conviction of $50 (proposed sub-section 68(3)).

The new rules will come into effect 30 days after the amendments come into operation and, in determining whether a person was qualified to be a public officer before that time, the amendments are to be disregarded - sub-clauses 233(6) and (7).

The insertion of sub-section 68(4) by clause 228 is consequential upon the amendments of the Taxation Administration Act 1953 by clause 297.

Clause 229: Agents and trustees

Clause 230: Person in receipt or control of money for non-resident

Clauses 229 and 230 will insert in the Principal Act new sub-sections 69(3) and 70(2) which will make it clear that, in sections 69 and 70 respectively sales tax or tax includes further tax or penalties imposed under section 29 or Part VIII (see clauses 214 and 227 respectively).

Clause 231: Further amendments relating to offences

Schedule 9 of the Bill proposes further amendments relating to offences under the Principal Act. An explanation of the proposed amendments is contained in the notes on the Schedules.

Clause 232: Default imprisonment - transitional provisions

This clause has a similar effect in relation to the Principal Act as clause 166 has in relation to the Income Tax Assessment Act 1936. An explanation is contained in the notes on clause 166.

Clause 233: Application of amendments

This clause contains transitional rules relating to the application of the amendments of the Principal Act that are being made by the Bill. With the exception of sub-clauses 233(2), (6) and (7), which are explained in the notes on clauses 209 and 228, and sub-clauses 233(8), (9) and (10), the clause effectively mirrors the transitional arrangements contained in clause 23 relating to the amendments of the Australian Capital Territory Taxation (Administration) Act 1969 explained earlier in these notes.

Sub-clause 233(8) provides that, notwithstanding the amendments of the Principal Act and the repeal of section 12 of the Sales Tax Procedure Act 1934 (application provision), a provision of Part IX of the Principal Act (penal and prosecution provisions) which by this clause continues to apply after the amendments come into operation, will also apply to the other Sales Tax Assessments Acts, as if those amendments were not made.

Sub-clause 233(9) stipulates that a reference in the Principal Act or the "amended Act" that is applied by a relevant application provision includes a reference to that provision as so applied.

Sub-clause 233(10) specifies each "relevant application provision" for the purposes of clause 233.

ED NOTE: Headings, PART XIV through to PART XXI, relate to the Clauses below.

PART XIV - AMENDMENTS OF THE SALES TAX ASSESSMENT ACT (NO. 2) 1930

PART XV - AMENDMENTS OF THE SALES TAX ASSESSMENT ACT (NO. 3) 1930

PART XVI - AMENDMENTS OF THE SALES TAX ASSESSMENT ACT (NO. 4) 1930

PART XVII - AMENDMENTS OF THE SALES TAX ASSESSMENT ACT (NO. 5) 1930

PART XVIII - AMENDMENTS OF THE SALES TAX ASSESSMENT ACT (NO. 6)1930

PART XIX - AMENDMENTS OF THE SALES TAX ASSESSMENT ACT (NO. 7) 1930

PART XX - AMENDMENTS OF THE SALES TAX ASSESSMENT ACT (NO. 8) 1930

PART XXI - AMENDMENTS OF THE SALES TAX ASSESSMENT ACT (NO. 9) 1930

Clauses 234, 240, 246, 252, 258, 264, 270 and 276 : Principal Act

These clauses facilitate reference to the relevant Sales Tax Assessment Acts (Nos. 2 to 9) 1930 which, in each Part, is referred to as "the Principal Act".

Clauses 235, 241, 247, 253, 259, 265, 271 and 277 : Time for payment of tax

Section 9 of each Act stipulates the time for payment of tax payable under that Act.

New sub-section 9(2), to be inserted by these clauses, will have substantially the same effect as sub-section 24(2) of the Sales Tax Assessment Act (No.1) 1930 as explained in the notes on clause 208.

Clauses 236, 242, 248, 260, 266, 272 and 278 : Further tax

These clauses propose the omission of either sub-section 10(1B) or (2B) of each Act (except the Sales Tax Assessment Act (No. 5) 1930). Those sub-sections provide for the imposition and remission of additional tax for non-lodgment of a return or for an incorrect return. Their omission is consequential upon the proposed insertion of new Part VIII in the Sales Tax Assessment Act (No. 1) 1930 by clause 227. By clauses 239, 245, 251, 263, 269 and 275, however, the Commissioner's authority to remit additional tax under the omitted sub-sections will continue to apply in relation to a liability for additional tax that accrues before the date on which the amendments come into operation.

Clauses 237, 243, 249, 254, 261, 267, 273 and 279 : Refunds of tax

Section 11 of each of the Sales Tax Assessment Acts authorises the Commissioner to refund tax in specified circumstances.

New sub-section 11(1), which is to be inserted in each Principal Act and sub-section 11(1A), which is being inserted in each Principal Act (other than Acts (Nos. 4 and 8)) by paragraph (a) of the above clauses, will apply in a similar manner to sub-sections 26(1) and (1A) respectively of the Sales Tax Assessment Act (No.1) 1930, as explained in the notes on clause 211.

The amendments proposed to paragraph 11(2A)(a) of Assessment Acts (Nos. 2, 3, 6 and 7) and, by clause 255, to Assessment Act (No. 5) effect a change in drafting adopted throughout this Bill. Paragraph (b) or (c) of each clause will insert in the Principal Act a new sub-section in section 11 which will make clear that in that section tax includes further tax and penalties imposed under section 29 or Part VIII of the Sales Tax Assessment Act (No. 1) 1930 (see clauses 214 and 227 respectively).

Clauses 238, 244, 250, 256, 262, 268, 274 and 280 : Application of provisions of Sales Tax Assessment Act (No. 1) 1930

Section 12 of each Principal Act applies by reference a number of provisions of the Sales Tax Assessment Act (No. 1) 1930 that relate to the imposition, assessment and collection of the tax chargeable under the Principal Act.

The amendments of section 12 proposed by the various paragraphs (a) and (b) reflect amendments by clauses 210 and 227 of the Sales Tax Assessment Act (No. 1) 1930.

One of the effects of paragraph (c) is to effectively re-enact existing paragraph 12(1)(c). It will also define the term "prescribed tax" in applying section 37 of the Sales Tax Assessment Act (No.1) 1930 for the purposes of the Principal Act (new paragraphs 12(1)(a) and (b)). Finally, it will extend the application of section 46 (penalties for tax avoidance) to relevant tax avoidance provisions of the Principal Act (new paragraphs 12(1)(d) and (e)).

Clauses 239, 245, 251, 263, 269, 275 and 281 : Application of amendment

As explained in earlier notes, the effect of these clauses is that omitted sub-sections 10(1B) or (2B), as the case requires, continues to apply in relation to a liability for additional tax that accrues before the amendment omitting the sub-section comes into operation.

Clause 257: Further amendment relating to offences

Schedule 10 proposes further amendments relating to offences under the Sales Tax Assessment Act (No. 5) 1930. An explanation of the proposed amendments is contained in the notes on the Schedules.

PART XXII - AMENDMENTS OF THE SALES TAX (EXEMPTIONS AND CLASSIFICATIONS) ACT 1935

Clause 282: Principal Act

The Sales Tax (Exemptions and Classifications) Act 1935 is in this Part referred to as "the Principal Act".

Clause 283: General administration of Act

Clause 283 will insert in the Principal Act new section 4 to provide that the Commissioner of Taxation has the general administration of the Act. As a consequence, the Principal Act is a "taxation law" as defined in proposed section 2 of the Taxation Administration Act 1953 (see clause 292).

Clause 284: Further amendment relating to offences

Schedule 11 makes further amendments relating to offences under the Principal Act. An explanation of the proposed amendments is contained in the notes on the Schedules.

PART XXIII - AMENDMENTS OF THE SALES TAX PROCEDURE ACT 1934

Clause 285: Principal Act

This clause facilitates references to the Sales Tax Procedure Act 1934 which, in this Part, is referred to as "the Principal Act".

Clause 286: Interpretation

Section 3 of the Principal Act contains a number of definitions and interpretation provisions for the purposes of that Act. Clause 286 will amend the definition of "the Commissioner" to bring the definition into line with that used elsewhere in the taxation laws.

Clause 287: General administration of Act

This clause will repeal section 4 of the Principal Act, which concerns delegation of the Commissioner's powers and functions, and insert a new section 4 which will have the same effect as section 4 of the Sales Tax (Exemptions and Classifications) Act 1935 as explained in the notes on clause 283.

Clause 288: Repeal of section 8

Clause 288 proposes the repeal - consequent upon the insertion of Part VIII in the Sales Tax Assessment Act (No. 1) 1930 by clause 227 - of section 8 of the Principal Act which imposes statutory penalties in certain circumstances. The provisio to sub-section 8(1) authorises the Commissioner to remit all or part of the penalty and, by virtue of paragraph (b) of clause 290, that authority will continue in relation to a liability for additional tax that accrues before the amendment comes into operation.

Clause 289: Further amendments relating to offences

Schedule 12 proposes further amendments relating to offences under the Principal Act. An explanation of the proposed amendments is contained in the notes on the Schedules.

Clause 290: Application

This clause stipulates that, notwithstanding the repeal of sections 7, 8 and 11 concerning offences relating to returns, the imposition of penalty tax and offences for avoidance of tax respectively, sub-section 7(2) (failure to comply with a court order), the proviso to sub-section 8(1) (Commissioner's power remit additional tax) and sub-sections 11(2) and (3) (prosecution procedures) will continue to apply where offences were committed and penalties incurred before the relevant amendments come into operation.

PART XXV - AMENDMENTS OF THE TAXATION (INTEREST ON OVERPAYMENTS) ACT 1983

Clause 318: Principal Act

By this clause the Taxation (Interest on Overpayments) Act 1983 is, in this Part, to be referred to as the "Principal Act".

Clause 319: Interpretation

Sub-section 3(1) of the Principal Act defines a number of words and phrases used in the Act.

Clause 319 effects several amendments of sub-section 3(1). Sub-clause (1) will correct a drafting oversight in the existing legislation by extending the definition of "objection" to include an objection lodged in accordance with sub-section 220(7) of the Income Tax Assessment Act 1936 by the executor or administrator of a deceased estate. By sub-clause 2(2), the amendment will be effective from 14 February 1983, the date of commencement of the Principal Act.

Paragraphs (a) and (b) of sub-clause (2) will, in consequence of the extension of the Principal Act to certain other taxes and charges, expand the definition of "decision to which this Act applies" to include a decision of the Commissioner or a court in relation to -

·
additional tax imposed under Part VIII of the Sales Tax Assessment Act (No. 1) 1930, as applied to the Sales Tax Assessment Acts (Nos. 2 to 9) 1930;
·
a liability to a charge or additional charge arising under Part III, section 19 or 29 of the Tobacco Charges Assessment Act 1955; and
·
sales tax or additional tax under Part VIII of the Sales Tax Assessment Act (No. 1) 1930 that relates to a dispute concerning the exemption or classification of goods under the Sales Tax (Exemptions and Classifications) Act 1935.

Paragraphs (c) and (d) of sub-clause 319(2) will extend the definition of "objection" to include:

·
an objection against an assessment of stamp duty or tax or an objection against a prescribed decision relating to the registration of a vehicle made under the Australian Capital Territory Taxation (Administration) Act 1969;
·
an objection against an assessment of estate duty made under the Estate Duty Assessment Act 1914;
·
an objection against an assessment of gift duty made under the Gift Duty Assessment Act 1941;
·
an objection against an assessment in relation to pay-roll tax payable under the Pay-roll Tax (Territories) Assessment Act 1971;
·
an objection under the Sales Tax Assessment Acts (Nos. 1 to 9) 1930 against an assessment in relation to the sale value of goods; and
·
an objection against an assessment of wool tax made under the Wool Tax (Administration) Act 1964.

The amendment by paragraph (e) is a drafting measure consequential upon the amendments of section 207 of the Income Tax Assessment Act 1936 proposed by clause 112.

Paragraph (f) will extend the definition of "relevant tax" - the term used in the Principal Act to identify the kinds of tax which, if refunded as a result of an objection or appeal, will give rise to an entitlement to interest - to include :

·
additional tax imposed under new Part VII of the Income Tax Assessment Act 1936 as applied by sub-section 4(1) of the Taxation (Unpaid Company Tax) Assessment Act 1982;
·
duty or tax assessed under the Australian Capital Territory Taxation (Administration) Act 1969 (including penalty tax assessed under section 70 of that Act);
·
estate duty assessed under the Estate Duty Assessment Act 1914 (including penalty tax assessed under section 46 of that Act);
·
gift duty assessed under the Gift Duty Assessment Act 1941 (including penalty tax assessed under section 42 of that Act);
·
pay-roll tax payable under the Pay-roll Tax (Territories) Assessment Act 1971 (including penalty tax assessed under Part VII of that Act);
·
sales tax payable under the Sales Tax Assessment Act (No. 1) 1930 (including penalty tax assessed under Part VIII of the Sales Tax Assessment Act (No. 1) 1930) including that Act as applied to the Sales Tax Assessment Acts (Nos. 2 to 9) 1930;
·
tobacco charge payable under the Tobacco Charges Assessment Act 1955 (including penalty tax assessed under Part VI of that Act); and
·
wool tax payable under the Wool Tax (Administration) Act 1964 (including penalty tax assessed under Part X of that Act).

Existing paragraphs (e), (f) and (g) of the definition of "relevant tax" have for practical purposes been re-enacted as paragraphs (e) and (g) in a form consistent with the other paragraphs of the definition.

Paragraph (g) will insert new sub-section 3(3) in the Principal Act. The sub-section will apply in a case where a person pays an amount to the Commissioner in respect of disputed sales tax under an arrangement where the amount is deposited by the Commissioner in a Trust Fund established under section 60 of the Audit Act 1901 pending the outcome of the dispute. By sub-section 3(3), the amount paid to the Commissioner, notwithstanding that the amount is held in trust, will be treated as an amount of relevant tax paid by the person to the Commissioner, thereby entitling the person to interest on any amount refunded on resolution of the dispute.

Clause 320: Repeal of sections 5 and 6

This clause repeals section 5 of the Principal Act, which relates to the powers and functions of a Second Commissioner of Taxation, and section 6 which specifies that a reference in the Act to the Commissioner of Taxation includes a reference to a Second Commissioner of Taxation, a Deputy Commissioner of Taxation and a person to whom the Commissioner has delegated powers or functions.

The amendments are consequential on the insertion of sub-sections 6B(6) and (7) and section 6D in, and the amendment of section 8 of, the Taxation Administration Act 1953 by clauses 295 and 296 (see notes on those clauses for an explanation).

Clause 321: Annual report

Section 7 of the Principal Act requires the Commissioner of Taxation to furnish to the Minister an annual report on the working of the Act. The explanation of proposed new sub-section 9A(3) that is being inserted in the Principal Act by this clause corresponds with that contained in the notes on clause 94.

Clause 322: Entitlement to interest

Clause 322 will make several technical amendments of section 9 of the Principal Act which specifies the circumstances in which interest on amounts overpaid is payable.

The amendments by paragraphs (a) and (b) are consequential on the proposed insertion of sections 10A and 11A by clauses 324 and 325, while paragraph (c) effects a drafting improvement.

Clause 323: Amount of interest

Clause 323 will amend section 10 of the Principal Act which prescribes the manner of calculation of interest on overpaid tax, duty or charge, and sets the interest rate. The amendment will set the day for the commencement of the period in respect of which interest will be payable on overpaid amounts that are being included in the definition of "relevant tax" by clause 319. That will be the day on which, by reason of clause 383, the higher rates of late payment penalty generally prescribed by this Bill begin to apply.

Clause 324: Interest not to be paid for certain periods

Clause 324 will insert new section 10A in the Principal Act. Certain provisions of the Sales Tax Assessment Act (No. 1) 1930 and the Australian Capital Territory Taxation (Administration) Act 1969 permit refunds of overpaid sales tax or overpaid stamp duty or tax in cases where the tax or duty has not been passed on to another person by the taxpayer or, if passed on, has been refunded to that other person by the taxpayer. Section 10A will ensure that interest will not be payable on refunds of sales tax or A.C.T. stamp duty or tax for periods during which the tax or duty was passed on.

Clause 325: Adjustment where amount to be paid by, or refunded to, person does not exceed 49 cents

Section 11A to be inserted by clause 325 will eliminate debit or credit balances of 49 cents or less remaining after an amount of interest payable under the Principal Act is applied in discharge of any other tax liability of the person to the Commonwealth. Such small amounts are not cost-effective to pay or to collect.

Clause 326: Certain agreements, etc., to remit additional tax, etc.

The purpose of clause 326, which is a transitional measure, is to prevent an entitlement to interest arising in those cases where, by reason of an administrative arrangement in force, a taxpayer has been freed from a potential liability to a penalty of 20% per annum in respect of an amount outstanding pending resolution of a disputed assessment, decision or determination by the Commissioner.

The clause will not change the operation of section 12 of the Principal Act insofar as it relates to income tax. However, in relation to A.C.T. stamp duties and taxes, estate duty, gift duty, A.C.T. pay-roll tax, sales tax, tobacco charges and wool tax, the clause will ensure that there will be no entitlement to interest under the Principal Act where, prior to the date on which those taxes, duties, charges and amounts become exposed to the 20% penalty rate in accordance with clause 383, the Commissioner has agreed to remit all or part of the statutory penalty for late payment of the tax, duty, charge or other amount. The cases concerned are identified by proposed sub-paragraph 12(a)(ii) as those that involve disputed assessments, decisions or determinations in respect of which, under an administrative arrangement, the Commissioner has arranged with the taxpayer that, if an agreed proportion of the tax, duty, charge or amount in dispute is paid, the balance would be allowed to remain unpaid free of penalty pending the resolution of the dispute.

If a taxpayer, in keeping such an arrangement, paid a part of the tax, duty, charge or other amount in dispute and the amount paid, or a part of it, is refunded or applied against another taxation liability of the taxpayer following resolution of the dispute, section 12 of the Principal Act will operate so that there will not be an entitlement to interest in respect of the amount refunded or applied.

Paragraph (b) is a drafting measure that defines the term "relevant provision" used in sub-paragraph (a)(ii) to mean the specific provisions that impose penalty for late payment of A.C.T. stamp duty or tax, estate duty, gift duty, A.C.T. pay-roll tax, sales tax, tobacco charge or wool tax.

Clause 327: Repeal of section 14

The repeal of section 14 of the Principal Act by this clause is consequential upon the inclusion, by clause 314, of a single general appropriation out of the Consolidated Revenue Fund for refunds of taxes and related payments by the Commissioner of Taxation.

PART XXVI - AMENDMENTS OF THE TAXATION (UNPAID COMPANY TAX) ASSESSMENT ACT 1982

Clause 328: Principal Act

This clause facilitates reference to the Taxation (Unpaid Company Tax) Assessment Act 1982 which in this Part is referred to as "the Principal Act".

Clause 329: Application of Assessment Act

Section 4 of the Principal Act operates to adapt and apply for the purposes of recoupment tax the assessment and collection provisions of the income tax law.

Clause 329 will amend sub-section 4(9) to ensure that the obligations of a liquidator with respect to a company's income tax liabilities apply not only in relation to its liability to pay recoupment tax and late payment penalty (as presently provided) but also in relation to additional tax imposed under Part VII of the Income Tax Assessment Act 1936 (see clause 152) as applied for the purposes of the Principal Act.

Clause 330: Penalty for late payment of tax

Section 13 of the Principal Act authorises the imposition of additional tax of 20% per annum for late payment of recoupment tax.

Paragraph (a) of clause 330 will amend sub-section 13(1) to effect a drafting change adopted throughout this Bill.

Paragraph (b) will insert new sub-section 13(3) to make it clear that, in section 13, "recoupment tax" includes additional tax under Part VII of the Income Tax Assessment Act 1936 as applied for the purposes of the Principal Act.

Clause 331: Request to eliminate undistributed amount

The omission of sub-section 16(6) of the Principal Act by this clause is consequential upon the proposed authorisation, by clause 314, of a single general appropriation out of the Consolidated Revenue Fund for refunds of taxes and related payments by the Commissioner of Taxation.

Clause 332: Notification of company tax liability

The technical amendment of section 18 of the Principal Act by this clause 332 is consequential upon amendments proposed by clause 152 to the Income Tax Assessment Act 1936.

Clause 333: Further amendment relating to offences

Schedule 14 of the Bill proposes a further amendment relating to offences under the Principal Act. An explanation of the amendment is contained in the notes to the Schedules.

PART XXVII - AMENDMENTS OF THE TOBACCO CHARGES ASSESSMENT ACT 1955

Clause 334: Principal Act

This clause facilitates references to the Tobacco Charges Assessment Act 1955 which, in this Part, is referred to as "the Principal Act".

Clause 335: Repeal of sections 8 and 9

This clause will repeal sections 8 and 9 of the Principal Act. Section 8 relates to the powers and functions of a Second Commissioner, while section 9 specifies that a reference in the Principal Act to the Commissioner includes a reference to a Second Commissioner or a Deputy Commissioner. The amendments proposed by clause 335 will have a similar effect to those proposed by clause 93, as explained in the notes on that clause.

Clause 336: Annual report

Section 9A of the Principal Act requires the Commissioner of Taxation to furnish to the Minister an annual report on the working of the Act. An explanation of new sub-section 9A(3) that is being inserted by this clause is contained in the notes on clause 94.

Clause 337: Due date of payment

This clause will amend section 17 of the Principal Act, which determines the time when tobacco charge is due and payable. The amendment proposed by paragraph (a) is designed to make it clear that the time specified in sub-section 17(1) may be varied under sub-section 17(2) by granting an extension of time or permitting payment by instalments, or by setting an alternative date where it is believed that the person liable to tobacco charge may leave Australia.

Paragraph (b) of clause 337 will insert in the Principal Act new sub-section 17(1A) which will stipulate that additional charge imposed under section 29 (see clause 346) is due and payable on the date specified in the notice of assessment, that date being subject to variation as mentioned in the notes on paragraph (a).

Sub-section 17(3), to be inserted by paragraph (c) of clause 337, will make clear that in section 17 charge includes additional charge imposed under section 29 (see clause 346).

Clause 338: Penalty for unpaid charge

Under section 18 of the Principal Act, additional charge becomes payable when tobacco charge remains unpaid after it becomes due and payable, that penalty being imposed at the rate of 10% per annum of the amount of the charge unpaid, computed in respect of the period the charge was outstanding. Sub-section 18(3) authorises the Commissioner to remit late payment penalty imposed under the section.

New sub-section 18(1), which is to be inserted by paragraph (a) of clause 338, in lieu of existing sub-section 18(1), will increase the rate of late payment penalty from 10% to 20% per annum. It will also specify that where, under sub-section 17(2) the Commissioner has granted a person an extension of time for payment of charge or has permitted payment to be made by instalments, additional charge will nevertheless be payable in respect of any charge remaining unpaid from such date (not earlier than the original due date) as the Commissioner determines.

Paragraphs (b) and (c) of clause 338 make drafting changes to existing sub-section 18(2) in consequence of the insertion of new sub-section 18(1).

New sub-section 18(3) will more closely define the Commissioner's authority under existing sub-section 18(3) to remit late payment penalty. An explanation of the effect of the revised rules is contained in the notes on clause 129. Existing sub-section 18(3) of the Principal Act will continue to apply in relation to a liability to additional charge accrued before the amendments proposed by clause 338 come into operation - see sub-clause 349(3).

Proposed new sub-sections 18(4) and (5) will apply in a parallel way to new sub-sections 207(1B) and (3) that are proposed by clause 112 to be inserted in the Income Tax Assessment Act 1936 (see notes on that clause). New sub-section 18(4) will apply in relation to judgments entered or given after the amendments proposed by clause 338 come into operation - sub-clause 349(4).

Clause 339: Assessment of charge

Clause 339 amends sub-sections 19(1), (3) and (4) to delete unnecessary references to "further charge" consistent with other drafting improvements contained in this Part of the Bill.

Clause 340: Commissioner may sue for charge

The amendments of section 21 of the Principal Act proposed by paragraphs (a) and (b) of clause 340 will effect drafting changes consequent upon the addition of new sub-section (3).

Paragraph (c) will insert in the Principal Act new sub-section 21(3) which will make it clear that, in section 21 (which authorises the Commissioner to recover unpaid charge), charge includes penalties imposed under section 18 or 29 (see clauses 338 and 346 respectively).

Clause 341: Reduction of charge upon amendment of assessment

Clause 341 will include a new section 21A in the Principal Act. By proposed sub-section 21A(1), where a person's liability to charge is reduced as a result of an amended assessment the amount by which the charge is so reduced will be taken never to have been payable for the purposes of calculating late payment penalty under section 18 of the Principal Act. The provision will correspond with sub-section 71(3) of the Australian Capital Territory Taxation (Administration) Act 1969 explained in the notes on clause 11.

New sub-section 21A(2) will make it clear that, in section 21A, charge includes additional charge imposed under section 29 (see clause 346).

Clause 342: Refunds of charge

Section 22 of the Principal Act authorises the Commissioner to refund charge overpaid in specified circumstances.

Paragraph (a) of clause 342 will amend section 22 by omitting sub-section (1) and inserting a new sub-section (1) to authorise the Commissioner to refund the amount of any overpaid charge or to apply that amount, or any part of that amount, against any outstanding liability of the person under any Act administered by the Commissioner and to refund any balance not so applied.

The amendments proposed by paragraphs (b) to (e) inclusive are drafting improvements, while paragraph (f) inserts a new sub-section 22(4) to make it clear that, in section 22, charge includes additional charge imposed under section 18 or 29 of the Principal Act (see clauses 338 and 346).

Clause 343: Persons leaving Australia

The amendment by paragraph (a) of clause 343 is of a drafting nature. New sub-section 23(2) to be inserted by paragraph (b) specifies that, in section 23 (which authorises the Commissioner to fix a date on which charge is due and payable in cases where the Commissioner has reason to believe that a person liable to charge may leave Australia before the date on which the charge would otherwise become payable), charge includes additional charge imposed under section 29 (see clause 346).

Clause 344: Liquidators to give notice

Section 27 of the Principal Act imposes certain obligations on a liquidator of any company which is being wound up. The section requires the liquidator to give the Commissioner notice of the appointment and to set aside assets of the company to provide for charge (or prescribed tax) that the Commissioner notifies the liquidator as being the likely liability to charge (or prescribed tax) of the company.

The amendments contained in clause 344 are explained in the notes on a similar amendment of section 215 of the Income Tax Assessment Act 1936 to be made by clause 116.

Clause 345: Payment of charge by legal personal representative

The amendments of section 28(1) of the Principal Act proposed by clause 345 will, apart from effecting minor drafting improvements, ensure that the Commissioner has the same powers and remedies against the legal personal representative of a deceased person for the recovery of additional charge assessed under the proposed new Part VI and section 18 that has not been paid as would be available if the person were alive.

Clause 346: Repeal of Part VI Insertion of new Part VI - Penalty charge

Under section 31 of the Principal Act, a person who fails to include particulars of any tobacco leaf in a return is liable to pay by way of penalty additional charge equal to double the amount of charge sought to be avoided. In addition, a person who fails or neglects to furnish a return or any information is liable to pay additional charge at the rate of 10% per annum of the amount of charge payable calculated from the last day allowed for furnishing the return or information to the day of lodgment. Additional charge is not payable, however, where a prosecution is instituted in respect of the same matter until the prosecution is withdrawn. The Commissioner is authorised to remit the whole or any part of any additional charge payable under section 31.

Clause 346 will repeal Part VI and substitute a new Part VI (comprising section 29) to impose statutory penalties where a person refuses or fails to furnish a return or any information relating to tobacco leaf or makes a false or misleading statement in relation to tobacco charge.

New section 29, which replaces section 31 of the Principal Act, is substantially to the same effect as new section 222, sub-sections 223(1), (6) and (8) to (10) and section 227 of the Income Tax Assessment Act 1936, an explanation of which is given in the notes on clause 152.

Existing sections 29, 30 and 32 to 39 of the Principal Act (relating to offences and prosecutions under the Act) which are within Part VI are also being repealed by clause 346, consequent upon the insertion of new Part III of the Taxation Administration Act 1953 by clause 297.

Clause 347: Public officer of company

Section 40 contains broadly similar requirements to those in section 68 of the Sales Tax Assessment Act (No. 1) 1930 relating to the appointment by a company of a public officer. The amendment of section 40 parallels that of section 68 and is explained in the notes on to clause 228.

The new rules will come into effect 30 days after the amendments come into operation and, in determining whether a natural person was capable of being a public officer before that time, those rules are to be disregarded - sub-clauses 349(6) and (7).

Clause 348: Further amendments relating to offences

Schedule 15 of the Bill proposes further amendments relating to offences under the Principal Act. An explanation of the amendments is contained in the notes on that Schedule.

Clause 349: Application of amendments

This clause contains transitional rules relating to the application of the amendments of the Principal Act that are being made by the Bill. With the exception of sub-clauses 349(6) and (7), which are explained in the notes on clause 347, the clause effectively mirrors the transitional arrangements contained in clause 23 relating to the amendments of the Australian Capital Territory Taxation (Administration) Act 1969 explained earlier in these notes.

PART XXVIII - AMENDMENTS OF THE WOOL TAX (ADMINISTRATION) ACT 1964

Clause 350: Principal Act

This clause facilitates references to the Wool Tax (Administration) Act 1964 which, in this Part, is referred to as "the Principal Act".

Clause 351: Repeal of sections 6 and 7

This clause will repeal sections 6 and 7 of the Principal Act. Section 6 relates to the powers and functions of the Second Commissioners of Taxation, while section 7 provides that a reference to the Commissioner in the Principal Act includes a reference to a Second Commissioner or a Deputy Commissioner. The amendments effected by clause 351 will have a similar effect to those proposed by clause 93, as explained in the notes on that clause.

Clause 352: Annual report

Section 7A of the Principal Act requires the Commissioner of Taxation to furnish to the Minister an annual report on the working of the Act.

An explanation of provisions identical with those of new sub-section 7A(3) that is being inserted by this clause is contained in the notes on clause 94.

Clause 353: Certificate by Commissioner as to payment of, or exemption from, tax or previous tax

Section 20 of the Principal Act (which deals with certificates issued by the Commissioner as to payment of, or exemption from, tax) is being amended by clause 353 to effect a change in drafting style.

Clause 354: Offences relating to certificates

The insertion of section 27A in the Principal Act by clause 354 is consequential upon the repeal of Part X (penal provisions) of the Principal Act - in particular, section 66 of that Part - by clause 376. The new section 27A is a re-enactment of section 66 of Part X which makes it an offence to forge or falsify a certificate given under the Principal Act. However, the penalty has been changed from $2,000 or seven years imprisonment, or both, to $10,000 or two years imprisonment, or both. This revised penalty is consistent with those provided in other Acts (as amended by this Bill) administered by the Commissioner for similar offences.

Clause 355: Due date

Section 36 of the Principal Act sets the date on which tax is due and payable. Paragraph (a) of clause 355 will effect a minor drafting change to section 36.

Paragraph (b) of clause 355 proposes the insertion in the Principal Act of new sub-section 36(2) by which additional tax imposed under section 61 (see clause 376) is due and payable on the date specified in the notice of assessment.

Clause 356: Time to pay - extensions and instalments

Clause 356 will insert in the Principal Act new sub-section 37(4) to make clear that, in section 37 (which authorises the Commissioner to extend the time for payment of tax or to permit payment of tax by instalments), tax includes additional tax imposed under section 61 (see clause 376).

Clause 357: Penalty for unpaid tax

Under section 38 of the Principal Act, additional tax becomes payable when wool tax remains unpaid after it becomes due and payable, that penalty being imposed at the rate of 10% per annum of the amount of the tax unpaid, computed in respect of the period the tax was outstanding.

New sub-section 38(1) which is to be inserted by this clause will increase the rate of late payment penalty from 10% to 20% per annum. The amendment will have a similar effect to that proposed by clause 15 in relation to new sub-section 81(1) of the Australian Capital Territory Taxation (Administration) Act 1969 and is explained more fully in the notes on that clause. New sub-sections 38(2), (3) and (4) will also apply in a parallel way to new sub-sections 81(2), (3) and (4) to be inserted in the Australian Capital Territory (Taxation) Administration Act 1969 (see notes on that clause). New sub-section 38(3) will apply in relation to judgments entered or given after the amendments proposed by clause 356 come into operation - sub-clause 381(3).

Clause 358: Assessments

Clause 358 will effect a change in drafting style adopted throughout this Part of the Bill.

Clause 359: Notice of assessments

Paragraph (a) of clause 359 will effect a change in drafting style, while paragraph (b) will insert new sub-section 41(2) which will make it clear that, in section 41 (which requires the Commissioner to serve notice of an assessment as soon as practicable after an assessment is made), tax includes additional tax imposed under section 61 (see clause 376).

Clause 360: Date on which tax payable

Clause 360 will amend section 42 of the Principal Act (which sets the date on which tax is payable) to effect drafting improvements.

Clause 361: Commissioner may sue for tax

The amendments proposed by paragraphs (a) and (b) of clause 361 are consequential upon the insertion in the Principal Act of new sub-section 44(3) by paragraph (c) which reflects drafting improvements by this Bill that make it clear that, in section 44 (which authorises the Commissioner to recover unpaid tax), tax includes penalties imposed under section 38 or 61 (see clauses 357 and 376 respectively).

Clause 362: Reduction of tax upon amendment of assessment

Clause 362 will include a new section 44A in the Principal Act. Proposed sub-section 44A(1) will have the effect that, where a person's liability to tax is reduced as a result of an amended assessment, the amount by which the tax is so reduced shall be taken never to have been payable for purposes of calculating late payment penalty under section 38 of the Principal Act. The provision corresponds with sub-section 71(3) of the Australian Capital Territory Taxation (Administration) Act 1969 explained in the notes on clause 11.

New sub-section 44A(2) will make it clear that, in section 44A, tax includes additional tax imposed under section 61 (see clause 376).

Clause 363: Refunds of tax

Section 45 of the Principal Act authorises the Commissioner to refund overpaid tax in certain circumstances. Like its predecessor, new sub-section 45(1) will authorise the Commissioner to refund the amount of any tax overpaid, but will now permit the amount or part of the amount to be applied against any outstanding liability of the taxpayer under any Act administered by the Commissioner and refund the amount not so applied.

Paragraphs (b), (c), (d) and (e) propose drafting improvements to sub-sections 45(2) and (3), while paragraph (f) inserts a new sub-section 45(4), which will make it clear that, in section 45, tax includes penalties imposed under section 38 or 61 (see clauses 357 and 376 respectively).

Clause 364: Substituted service

By this clause, section 46 of the Principal Act (which provides for service of processes by post in certain circumstances) is redrafted in a manner consistent with various other provisions contained in the Bill that specify that, in the relevant provision, tax includes penalties imposed under section 38 or 61 (see clauses 357 and 376 respectively).

Clause 365: Liquidators to give notice

Section 47 of the Principal Act imposes certain obligations on a liquidator of any company which is being wound up. The section requires the liquidator to give the Commissioner notice of the appointment and to set aside assets of the company to provide for tax (or prescribed tax) that the Commissioner notifies the liquidator as being the likely liability to tax of the company.

Paragraph (a) of clause 365 will amend sub-section 47(3C) in a similar way to the amendment of section 215 of the Income Tax Assessment Act 1936 by clause 116 (see notes on that clause).

Paragraph (b) of clause 365 will insert new sub-section 47(8) which will make it clear that, in section 47, tax includes penalties imposed under section 38 or 61 (see clauses 357 and 376 respectively).

Clause 366: Agent for absentee principal in winding-up of business

Paragraph (a) of clause 366 will amend sub-section 48(2) of the Principal Act to effect a change in drafting style adopted throughout this Bill.

The insertion of new sub-section 48(3) by paragraph (b) of clause 366 will make it clear that, in section 48 (which imposes personal liability for tax on an agent who fails to notify the Commissioner of his or her intention to wind-up the principal's business or who fails to provide for payment of tax), tax includes penalties imposed under section 38 or 61 (see clauses 357 and 376 respectively).

Clause 367: When tax not paid during lifetime

Section 49 of the Principal Act enables the Commissioner to obtain payment of tax from trustees of a deceased person who escapes full taxation during his or her lifetime by reason of not having duly made full, complete and accurate returns.

The amendment of section 49 by paragraph (a) of clause 367 will effect a change in drafting style.

Paragraph (b) of clause 367 will insert new sub-section 49(6) to make it clear that, in section 49, tax includes penalties imposed under section 38 or 61 (see clauses 357 or 376 respectively).

Clause 368: Provision for payment of tax by trustees of deceased person

Section 50 gives the Commissioner the same powers of recovery and assessment of tax from the personal representative of a deceased person as the Commissioner would have had against that person if the person were still living. Paragraph (a) of clause 368 effects an amendment consistent with the amendment of section 33 of the Sales Tax Assessment Act (No. 1) 1930 proposed by paragraph (a) of clause 219.

Paragraph (b) of clause 368 will amend sub-section 50(3) of the Principal Act to effect a change in drafting style.

Paragraph (c) of clause 368 will insert new sub-section 50(4) which will make it clear that, in section 50, tax includes penalties imposed under section 38 or 61 (see clauses 357 and 376 respectively).

Clause 369: Where no administration of deceased person's estate

Clause 370: Recovery of tax paid on behalf of another person

Clause 371: Contributions from persons jointly liable

Clauses 369 to 371 (which deal with various collection mechanisms) will make it clear that in sections 51, 52 and 53, respectively, tax includes penalties imposed under section 38 or 61 (see clauses 357 and 376).

Clause 372: Commissioner may collect tax from person owing money to person liable to tax

This clause will make a number of amendments to improve the operation of section 54 of the Principal Act, which authorises the Commissioner to collect tax that is owing by a person from another person who, broadly, owes money to the first-mentioned person or has authority to pay money to that person.

New sub-sections 54(3A) and (3B), to be inserted by paragraph (a) and the amendments by paragraph (b) and (c) of clause 372, effect changes similar to those proposed by clause 119. An explanation of the effect of these amendments is contained in the notes in relation to sub-sections 218(6) and (6A) being inserted by clause 119 into the Income Tax Assessment Act 1936.

Clause 373: Interpretation

The amendment to section 55A of the Principal Act - which defines the expression "Supreme Court" in relation to objections, reviews and appeals under the Principal Act - is related to the repeal, by clause 374, of section 55B.

Clause 374: Repeal of section 55B

Section 55B of the Principal Act limits the jurisdiction of Territory Supreme Courts to those proceedings arising out of assessments where the taxpayer at the time of institution of the proceedings or during the whole or a part of the year of income concerned was ordinarily resident or, if a company, had its principal place of business in the Territory.

The repeal of section 55B of the Principal Act is on the same basis as the repeal of section 184B of the Income Tax Assessment Act 1936; an explanation of that amendment is contained in the notes on clause 105.

Clause 375: Pending reference or appeal not to delay payment of tax, etc.

Section 60 of the Principal Act stipulates that liability to pay wool tax is not suspended pending the outcome of an appeal or reference against the liability.

New sub-section 60(2), which is to be inserted in the Principal Act by clause 375, specifies that where the amount by which a person's liability to wool tax is reduced as a result of an alteration of an assessment on appeal or reference, additional tax for late payment imposed under section 38 of the Principal Act is to be recalculated as though the amount by which the wool tax has been reduced was never payable.

New sub-section 60(3) will authorise the Commissioner in cases where a person's liability to wool tax is increased as a result of a decision on appeal or reference, to recover the increased amount.

Sub-section 60(4) will make it clear that, in section 60 (unless the contrary intention appears), tax includes penalties imposed under section 38 or 61 (see clauses 357 and 376 respectively).

Clause 376: Repeal of Parts X and XI Insertion of new Part X - Penalty tax

Under section 62 (which is contained in Part X of the Principal Act), a person who omits from a return any particulars of wool or makes a false statement in respect of wool on which tax is payable, is liable to pay by way of penalty additional tax equal to double the amount of tax sought to be avoided by that omission. In addition, a person who fails or neglects to furnish a return or any information is liable to pay additional tax at a rate of 10% per annum of the amount of tax payable computed from the last day allowed for furnishing the return or information to the day of lodgment. Additional tax is not payable, however, where a prosecution is instituted in respect of the same matter until the prosecution is withdrawn. The Commissioner is authorised to remit the whole or any part of any additional tax payable under the section.

Clause 376 will repeal Parts X and XI (that relate to offences to be included by clause 297 in the Taxation Administration Act 1953) and substitute a new provision (section 61) to impose statutory penalties where a person refuses or fails to furnish a return or any information relating to shorn wool or makes a false or misleading statement in relation to wool tax or an omission that renders a statement misleading.

Existing sections 61 and 63 to 85 of the Principal Act (relating to offences and prosecutions under the Act), which are contained in Parts X and XI, are also being repealed by clause 376, consequent upon the insertion of new Part III of the Taxation Administration Act 1953 by clause 297.

New section 61 is substantially to the same effect as sections 222 and 223 of the Income Tax Assessment Act 1936 an explanation of which is given in the notes on clause 152.

Clause 377: Public officer of company

Section 86 contains broadly similar requirements to those in section 68 of the Sales Tax Assessment Act (No. 1) 1930 relating to the appointment by a company of a public officer. The amendment of section 86 parallels that of section 68 and is explained in the notes in relation to clause 228.

The new rules will come into effect 30 days after the amendments come into operation and in determining whether a person was capable of being a public officer before that time, those rules are to be disregarded - sub-clauses 381(5) and (6).

Clause 378: Agents or trustees

Clause 378 will insert new sub-section 87(9) which will make it clear that, in section 87 (which, broadly, specifies the rights, duties and liabilities under the Principal Act of agents and trustees), tax includes penalties imposed under section 38 or 61 (see clauses 357 or 376 respectively).

Clause 379: Person in receipt or control of money for non-resident

Clause 379 will insert new sub-section 88(7) which will make it clear that, in section 88 (which imposes certain obligations on a person who has the receipt, control or disposal of money belonging to a non-resident who is liable to wool tax), tax includes penalties imposed under section 38 or 61 (see clauses 357 and 376 respectively).

Clause 380: Further amendments relating to offences

Schedule 16 of the Bill proposes further amendments relating to offences under the Principal Act. An explanation of the proposed amendments is contained in the notes on that Schedule.

Clause 381: Application of amendments

This clause contains transitional rules relating to the application of amendments of the Principal Act that are being made by the Bill. With the exception of sub-clauses 381(5) and (6), which are explained in the notes on clause 377, the clause effectively mirrors the transitional arrangements contained in clause 23 relating to amendments of the Australian Capital Territory Taxation (Administration) Act 1969 explained earlier in these notes.

Clause 382: Default imprisonment - transitional provisions

This clause proposes similar amendments to the Principal Act as those proposed by clause 166 to the Income Tax Assessment Act 1936. An explanation of the effect of these amendments is contained in the notes on clause 166.

PART XXIX - MISCELLANEOUS

Clause 383: Deferment for 2 months of increased penalty for unpaid tax, etc.

This clause is a transitional measure designed to ensure that the existing rate of penalty tax of 10% per annum imposed for late payment under the various provisions specified in sub-clause (1) will continue to apply in respect of unpaid tax, duty or charge for any period before 2 months after the day on which this Bill receives the Royal Assent. After that time, the higher rate of 20% to be imposed by the various amendments contained in the Bill will apply.

Clause 384: Agreement to remit penalty for unpaid tax, etc.

Clause 384 is a further transitional measure designed to modify the effect of amendments being made by this Bill that limit the circumstances in which the Commissioner of Taxation may remit an amount of late payment penalty imposed under the various provisions specified in sub-clause (1). By this clause, the Commissioner's existing authority to remit an amount of late payment penalty will remain unchanged in relation to any case where, prior to the date on which the amendments come into operation, the Commissioner has entered into an arrangement with a taxpayer to remit late payment penalty in respect of an amount that has remained unpaid pending the resolution of a dispute about liability.


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