Senate

Explanatory Memorandum

(Circulated by authority of Senator the Honourable Gareth Evans, Q.C., Attorney-General)

NOTES ON AMENDMENT

This amendment substitutes a new Clause 4 in place of the existing Clause 4. The new clause continues to deal with the matter of access to taxation information but does so in a different and more extensive manner.

The clause inserts into section 16 of the Income Tax Assessment Act 1936 provisions

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enabling the Commissioner of Taxation to communicate taxation information to the National Crime Authority for the purpose of tax-related investigations; Rec (11)

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enabling certain Royal Commissions, including the Royal Commission on the Activities of the Federated Ship Painters and Dockers Union and the Royal Commission of Inquiry into Drug Trafficking, to communicate to the National Crime Authority taxation information received by such Commissions pursuant to the provisions of section 16 of the Act and which in the opinion of the Royal Commission, relates or may relate to a tax-related investigation by the Authority Rec (48)

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removing any doubt that new Clause 43A of the National Crime Authority Bill will authorise the Costigan Royal Commission to pass over tax-derived information in its possession to the National Crime Authority. Rec (48)

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enabling a member of the National Crime Authority to apply to a Judge of the Federal Court of Australia for an order that taxation information specified in the order and relevant to a special investigation by the Authority be disclosed by the Commissioner of Taxation to the Authority

The clause also contains the following safeguards: applications to a Judge by the Authority are to be made in writing supported by affidavit; the Commissioner of Taxation is to be given an opportunity to bring to the Judge's notice any matter considered relevant to the application; the Judge may require further information; an order is not to be made unless the Judge is satisfied that reasonable grounds exist for believing that the information sought is relevant to the investigation and is not readily obtainable from any other sources; the Judge may impose restrictions as to communication of the information by the Authority to other persons, but this may be varied or revoked on application by the Authority or the Commissioner.

The clause prohibits the Authority or any of its staff from divulging or communicating taxation information received by it. This is subject to certain exceptions including communication in the course of a hearing of the Authority; or within the Authority for the purposes of tax-related or special investigations by the Authority; or to the person to whose affairs the information relates; or the person who furnished the information to the Commissioner; or in relation to offences punishable by 6 months imprisonment or more, to the relevant Police Commissioner (for use as intelligence only, not as evidence for prosecution).

The differences from the existing Bill are as follows:

Sub-clause 4(b) - This inserts into sub-section 16(4) of the Income Tax Assessment Act 1936 a provision adding the National Crime Authority to the list of exceptions to the prohibition on communication by taxation officers of taxation information, but only for the purpose of a tax-related investigation, which is defined to refer to investigations relating to offences against Commonwealth income tax laws. Rec (11)

Sub-clause 4(c) - The provision enabling certain Royal Commissions to communicate taxation information to the Authority is retained but confined to "tax-related" investigations: proposed paragraph 16(4A)(ba). Rec (48)

Sub-clause 4(f) - The provision enabling the Authority to apply to a Federal Court Judge for an order that the Commissioner of Taxation disclose taxation information to the Authority requires the information to be relevant to a "special investigation": proposed sub-section 16(4HA). Rec (29)

Sub-clause 4(f) - On such an application, the Judge is expressly required to have regard to possible prejudice to the conduct of the investigation in considering whether information is "not readily obtainable" by the Authority from sources other than the Commissioner of Taxation : proposed new sub-section 16(4HF). The Standing Committee referred to this at paragraph 5.54 of its Report.

Sub-clause 4(f) - Proposed sub-section (4HH) is to remove any doubt that clause 43A of the National Crime Authority Bill will authorise the Costigan Royal Commission to pass over to the Authority tax-derived information in its possession. This has necessitated some additional provisions as to on-communication of such information and also some re-numbering. These additions appear in the appended table.

Sub-clause 4(f) - Proposed sub-section 16(4HF) makes significant changes as to the on-communication by the Authority of taxation information. The new features are:

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information not revealing the identity of persons may be communicated to the Inter-Governmental Committee in the Authority's report on a reference : proposed paragraph 16(4HJ)(c).

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information indicating commission of an offence punishable by 6 months imprisonment or more may be communicated to the Commissioner of the Australian Federal Police or the Commanding Officer of the relevant State Police Force : proposed paragraph 16(4HJ)(e).

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communication by the Authority to staff and counsel assisting it is prohibited except for the purposes of a tax-related investigation (if received under the relevant exceptions to the general taxation secrecy requirement) or for the purpose of a special investigation (if received pursuant to judicial order) and a similar distinction is carried through to further communication by such staff or counsel : proposed paragraphs 16(4HJ)(f) and (k).

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in the case of taxation information received from the Costigan Royal Commission pursuant to clause 43A of the National Crime Authority Bill - and in accordance with new sub-section 16(4HH) - the above observations as to communication to the Inter-governmental Committee and to police forces apply. However, communication within the Authority is permitted only in connection with ordinary investigations by the Authority, special investigations by the Authority pursuant to a reference, or investigations by Task Forces co-ordinated by the Authority : new paras. 16(4HJ)(g) and (m).

Sub-clause 4(f) - Proposed new sub-section 16(4HM) prohibits recording or disclosure of information by persons to whom the Authority has communicated taxation information

Sub-clause 4(f) - Proposed new sub-section 16(4HN) prohibits the recording or disclosure, by State Police officers, of taxation information received from the Authority, except within the relevant police force for the purpose of their duties.

Sub-clause 4(f) - Proposed new sub-section 16(4HP) permits taxation information communicated to the Authority to be further communicated in connection with a taxation prosecution.

Sub-clause 4(f) - Proposed sub-section 16(4HQ) is a new additional provision to ensure that where information is communicated to a person in connection with a taxation prosecution, that person shall not divulge or communicate the information otherwise than in accordance with the section.

Sub-clause 4(f) - Proposed new sub-section 16(4HR) makes it clear that the Commissioner of Taxation and his officers are not required to divulge or communicate taxation information to the Authority or its staff except pursuant to judicial order made under proposed sub-section 16(4HD).

Sub-clause 4(f) - Proposed new sub-section 16(4HS) deals with interpretation.

Sub-clause 4(g) - This relates to changes to existing sub-section 16(4J) of the Act to ensure that the persons to whom taxation information is communicated under the proposed new provisions cannot be required to divulge or communicate the information to any Court.

Sub-clause 4(h) - This is consequential upon the new provisions relating to receipt of tax-derived information by the Authority from the Costigan Royal Commission under clause 43A of the principal Act.