House of Representatives

Tax Laws Amendment (2009 Measures No. 2) Bill 2009

Explanatory Memorandum

(Circulated by the authority of the Treasurer, the Hon Wayne Swan MP)

Chapter 6 Australian Business Register

Outline of chapter

Australian Business Register amendments

6.1 Part 1 of Schedule 6 to this Bill amends the A New Tax System (Australian Business Number) Act 1999 (ABN Act) to improve the integrity and efficiency of the Australian Business Register (ABR). These amendments help position the Registrar of the ABR (Registrar) to take on the role of Multi-agency Registration Authority (see Part 2).

Multi-agency Registration Authority amendments

6.2 Part 2 of Schedule 6 to this Bill amends the ABN Act to allow the Registrar of the ABR to act as the Multi-agency Registration Authority to enable representatives of businesses to be identified for the purpose of communicating electronically with multiple government agencies on behalf of the business.

Context of amendments

Australian Business Register amendments

6.3 The Registrar already registers businesses in order for businesses to identify themselves reliably in all their dealings with the Australian Government, including for the purposes of the taxation laws. The existing legislation provides that applications for an ABN must be in a form approved by the Registrar. While the application can require name and address and other information about associates of the business the Registrar cannot always enforce the identification of associates of the business.

6.4 An entity that is dissatisfied with a decision of the Registrar does not have any formal objection rights but must apply to the Administrative Appeals Tribunal (AAT) as the only initial dispute mechanism. Section 14 of the ABN Act requires entities to update certain details that are outlined in section 25, such as an address for service of notices. Section 15 of the ABN Act permits the Registrar to require the entity to provide certain information to him. However, there is no provision to enable the Registrar to update those details either from information obtained that is publicly available or from his own resources. As a result of this, the Registrar has had difficulty in utilising opportunities to achieve and maintain an accurate register.

Multi-agency Registration Authority amendments

6.5 Many businesses have reporting obligations with multiple government agencies. Currently, if they wish to interact with multiple agencies online, they need to undergo multiple identity establishment processes, and then need to manage multiple credentials. This is one of the barriers for business to take up online communication with government.

6.6 The ABR is in a unique position to establish the identity of a business person based on their tax file number (TFN), as well as to establish a link between the person and the business they represent in order to facilitate business to government online interaction.

6.7 Registration Authorities, such as the Registrar, provide a verification of identity and relationship service when applicants register for electronic credentials to allow online transactions. Registration Authorities also play a role in maintaining registrant's information and to administering requests for credential renewals and revocations.

6.8 This new role of the ABR was envisaged when the ABR was established. One of the benefits of establishing the ABR was to reduce administrative costs for small business by limiting the number of times a business would be asked for similar information by different agencies. This would result in a reduction in the number of forms and other procedural obligations that are a burden for businesses.

Summary of new law

Australian Business Register amendments

6.9 The ABN Act is being amended to permit the Registrar to use the approved form provisions outlined in section 388-50 in Schedule 1 to the Taxation Administration Act 1953 (TAA 1953) for a range of purposes. The amendments improve the integrity of the ABR.

6.10 The purposes of the approved forms include the application for an ABN which requires the identification of the entity and its associates; notification of changes to various details recorded on the ABR in respect of the entity; an obligation for the entity or an associate to provide certain information in respect of the entity or an associate respectively; and for the entity to request the cancellation of the entity's ABN.

6.11 The Registrar would also be given the power to update details on the ABR, where he is satisfied that the details entered in relation to an entity are incorrect, and replace them with information that he believes to be correct.

6.12 The introduction of objection rights for a range of decisions of the Registrar assists entities to receive a low cost review of decisions rather that having to apply for review of the decision to the AAT. If the entity is not satisfied with the decision of an objection the entity is able to take the matter to the AAT or the Courts.

6.13 Section 10 of the ABN Act outlines the conditions that must be met before the Registrar must register an entity in the ABR. The amendments include an additional condition to be satisfied before the Registrar must register an entity. The additional condition allows the Registrar to be satisfied that the identity of an associate of the entity has been established. The approved form for registration requests details about associates of the entity.

Multi-agency Registration Authority amendments

6.14 The amendments allow for the Registrar to register and maintain details about representatives of businesses to enable electronic communication with one or more government agencies. The amendments allow the Registrar to identify representatives of businesses as part of the registration process. The amendments also require the entity or the representative to update the details on the Register. The Registrar is able to use public information and information provided by third parties on a voluntary basis to update and correct the Register in respect of details of representatives.

6.15 Part 1 of the Schedule introduces objection rights for entities. Part 2 extends the objection rights of entities to cover decisions in respect of representatives, where the entity is dissatisfied with a decision of the Registrar.

6.16 The amendments further extend the use of the approved form provisions in the TAA 1953 for a range of purposes related to representatives of the entity including applications for registration of a representative. Such applications may request, but not compel, the provision of the TFN of a nominating individual and that of the representative. A request for cancellation of a representative's registration by the entity uses the approved form provisions. In addition, an obligation to provide the Registrar with information relevant to confirm the representative's identity, or the details in relation to the representative entered in the ABR, requires the use of an approved form.

6.17 Two new offence provisions are included in Part 2, one for impersonating a registered representative of the enterprise, and the other for non-compliance with a request for information concerning either the identity of a representative or details entered on the ABR in respect of that representative.

Comparison of key features of new law and current law

Australian Business Register amendments

New law Current law
The approved form provisions contained in the TAA 1953 are used for a wide range of purposes. Applications for registration to obtain an ABN must be in a form approved by the Registrar.
Where details about an associate of the entity were requested in the approved form for registration, the Registrar may require that the identity of the associate is established, in addition to the existing conditions, before the Registrar must register the entity in the ABR. The Registrar must register an entity in the ABR if satisfied that a number of conditions apply to the registration. These are: the entity has applied under section 9 of the ABN Act; the entity is or will be entitled to an ABN; the identity of the entity has been established; and the entity is not already registered in the Register.
In addition to the existing details entered in the ABR, details about an entity's associate must be entered in the ABR where details about the associate of the entity were requested in the approved form for registration. The Registrar must enter in the ABR the following details: the entity's name; the entity's ABN, the date of effect of the registration; an address for services of notices under the Act; and the details prescribed in the regulations.
Objection rights are to be included in respect of certain decisions of the Registrar. Use of the provisions in Part IVC of the TAA 1953 means that appeal rights to the AAT and the Courts are retained. Applications for review of certain decisions can only be made to the AAT in the first instance.
Where the Registrar is satisfied that the details entered in the ABR for an entity are incorrect, the Registrar may adjust those details if he has access to details that the Registrar believes are correct. The Registrar cannot, without advice from the entity, update the details entered in the Register where he is satisfied that they are incorrect, despite having access to information which he believes to be correct. He can only adjust details as advised by the entity.

Detailed explanation of new law

Australian Business Register amendments

6.18 The new law introduces the approved form provisions that are contained in section 388-50 in Schedule 1 to the TAA 1953 and those provisions will be used for a variety of purposes. The definition to be inserted into section 41 of the ABN Act of 'approved form' states that it has the same meaning as in the Income Tax Assessment Act 1997 (ITAA 1997). Section 995-1 of the ITAA 1997 states that 'approved form' has the meaning given by section 388-50 in Schedule 1 to the TAA 1953. [ Schedule 6, item 28, section 41 ]

6.19 The approved form definition in the TAA 1953 is quite comprehensive as to the possible content of the form, whereas the existing provision in the ABN Act is vague and only states that the application for an ABN must be in a form approved by the Registrar. The new law improves clarity as to the content of the approved form. The approved form provisions are used in the application for registration of an enterprise in the ABR. Upon registration, an ABN is issued to the entity. [ Schedule 6, item 2, subsection 9(2 )]

6.20 The approved form provisions do not contain any mention of the use of TFNs in the form. The approved form for registration of an entity for an ABN permits the use of TFNs for both the entity and of an associate, but respect for an individual's privacy is maintained by providing that the quotation of TFNs is voluntary. [ Schedule 6, item 2, subsection 9(3 )]

6.21 The approved form provisions would apply to the notification of changes to matters set out in the ABR. Previously, there was no particular form to lodge any amendments to those details. [ Schedule 6, item 9, paragraph 14(2 )( b )]

6.22 The approved form provisions also apply to requests by the Registrar to entities that are registered in the ABR to confirm various aspects of the registration in the ABR. Previously, there was no particular form for such requests. [ Schedule 6, item 11, paragraph 15(3 )( b )]

6.23 An associate who had not been identified upon registration of an entity may also be affected by the approved form provisions as the Registrar may require an associate of an entity to give the Registrar information that is relevant to confirming the associate's identity. This also applies to new associates of the entity after registration. This form is subject to the offence provision under section 8C of the TAA 1953, if the associate fails to comply with the request. [ Schedule 6, item 11, item 2 in the table in subsection 15(1 )]

6.24 Similarly, there is an approved form for an entity to apply for cancellation of its registration in the ABR. The previous form for this purpose is a form approved by the Registrar. [ Schedule 6, item 17, subsection 18(4 )]

6.25 To improve the integrity of the ABR, the Registrar may require that the identity of an associate is established before an entity is registered on the ABR. This applies where details about an associate were requested in the approved form for registration of the entity. [ Schedule 6, item 3, paragraph 10(1 )( ca )]

6.26 To assist the Registrar to identify associates, he is able to request the entity to provide specified information or a specified document in respect of an associate. [ Schedule 6, item 4, paragraph 10(2 )( b )]

6.27 Previously, an entity could make an application to the AAT for a review of certain decisions, where they were dissatisfied with the decision of the Registrar. This was a reasonable arrangement given that the initial focus of the Registrar was to encourage all eligible entities to apply for an ABN. Objection rights were available to entities in respect of both the goods and services tax and income tax matters.

6.28 However, to improve the integrity of the ABR, in recent times the Registrar has introduced an online eligibility tool which automatically rejects applications that do not appear to be carrying on an enterprise. The Registrar has also been more active in identifying and cancelling registrations of entities that are not or are no longer eligible. It is therefore appropriate that persons who are dissatisfied with that decision are able to access a low cost review process. Accordingly, the entity has objection rights using the provisions set out in Part IVC of the TAA 1953. Those provisions use the approved form provisions contained in section 388-50 of Schedule 1 to the TAA 1953. The objection rights extend to all of the previous types of decisions for which an entity could seek review of the decision of the Registrar by applying to the AAT. [ Schedule 6, item 22, section 21 ]

6.29 Should an objection decision be unfavourable to the entity, the entity is able to seek a review of the decision from the AAT or appeal to the Federal Court against the decision. These choices result from the use of the provisions in Part IVC of the TAA 1953. The term 'reviewable ABN decision' is inserted into the definition section of the ABN Act to refer to certain decisions made by the Registrar that are subject to objection rights. [ Schedule 6, item 31, section 41 ]

6.30 Although the Registrar may enter in the ABR any details that he has obtained, there are certain details outlined in section 25 of the ABN Act that the Registrar must enter in the ABR. The amendments include a provision to require the Registrar to enter in the ABR details about the entity's associates that were requested in the approved form for registration in the ABR. Due to section 14, an entity has to advise of any change to its associates that are entered on the ABR. [ Schedule 6, item 23, paragraph 25(2 )( aa )]

6.31 Previously, where the entity did not advise of a change in details in accordance with the requirement under section 14 of the ABN Act and where the Registrar has been unable to obtain correct details from the entity, the Registrar had limited ability to update the ABR. The Schedule contains a new provision to permit the Registrar to amend the details entered in relation to the entity in the ABR based upon his own information. This occurs where he considers that the details entered in the ABR are incorrect and he has access to other details that he considers to be correct. Such information could be obtained from publicly available sources or other accessible information. If the information obtained was subject to the secrecy provisions that apply to a government entity, the information would usually remain subject to those secrecy provisions. This amendment maintains the integrity of the ABR. [ Schedule 6, item 27, section 29A ]

Multi-agency Registration Authority amendments

6.32 As the Multi-agency Registration Authority, the Registrar establishes the identity of a representative of an entity and the relationship between a business and its representative. Following registration of the representative, the representative is able to communicate electronically on behalf of the business with multiple government agencies depending upon the extent of their authority from the entity.

6.33 The role of the Multi-agency Registration Authority forms an integral part of the Standard Business Reporting (SBR) program. SBR is a multi-agency program that aims to reduce reporting burdens for business through eliminating unnecessary or duplicated reporting and improve the interface between businesses and government agencies.

6.34 The Registrar is well placed to act as the Multi-agency Registration Authority as the Registrar already identifies businesses that apply for an ABN (section 10 of the ABN Act).

·
The Registrar also confirms the identity of associates of the entity based on their TFN and other information disclosed by the Australian Taxation Office under paragraph 16(4)(a) of the Income Tax Assessment Act 1936 .
·
Paragraph 8WB(1A)(a) of the TAA 1953 deems the disclosure of TFN information to the Registrar not to be an offence as it is required or permitted for the purposes of a taxation law.

6.35 However, as the legislation previously read, the Registrar was not able to use TFNs and other information from the Commissioner of Taxation (Commissioner) for the purposes of other government agencies. The objects clause is broadened to allow the Registrar to create and maintain a register of representatives of businesses for the purpose of facilitating electronic dealings by those businesses with government entities. The amendment allows the Registrar to use such information to register representatives of businesses. [ Schedule 6, item 37, subsection 3(4 )]

6.36 This amendment satisfies Principle 1 of the Information Privacy Principles listed in section 14 of the Privacy Act 1988 . Principle 1 of the Information Privacy Principles precludes an agency from collecting personal information for inclusion in a record unless it is collected for a lawful purpose directly related to a function or activity of that agency.

6.37 Enterprises are able to nominate individuals to be registered as representatives of the enterprise for the purpose of facilitating the entity's electronic dealings with government entities. The application must be in the approved form and that form may request the TFN of the representative and of the individual who nominates the representative of that enterprise. It is not compulsory for either party to quote their TFN. However, quotation of the TFN would mean that a representative could be registered in real time in the one electronic session. [ Schedule 6, item 39, section 9A ]

6.38 A note has been included in the legislation to make the reader aware that the offence provisions contained in subsection 8WB(1) of Schedule 1 to the TAA 1953 do not apply to the recording or disclosing of another person's TFN on the approved form. This is because an exception applies under paragraph 8WB(1A)(a) of the TAA 1953. That paragraph permits the recording or disclosure of another person's TFN to the extent required or permitted by a taxation law.

6.39 The amendments outline the criteria to be satisfied before the Registrar must register a representative of an entity in the ABR. An application must have been made in accordance with the provisions in section 9A. The Registrar has to be satisfied that the identity of the nominating individual who has signed the declaration on the authorised form has been established. Where a representative is to nominate other representatives, the Registrar needs to be satisfied that the identity of the representative has been established. The last criterion provides that the Registrar is not forced to register multiple registrations of a representative for the same entity. [ Schedule 6, item 40, subsection 10A(1 )]

6.40 Where the Registrar needs to establish the identity of a representative, the Registrar is able to request the entity, or the proposed representative, to provide the Registrar with specified information or a specified document to satisfy the Registrar of the identity of the proposed representative. It should be noted that where the representative provides the Registrar with their TFN there would usually be no need for the Registrar to use this provision. [ Schedule 6, item 40, subsection 10A(2 )]

6.41 The Registrar registers a representative by entering certain details in the ABR in relation to the entity. The details are the name of the representative, the representative's email address and the date of effect of the registration. [ Schedule 6, item 42, section 11A ]

6.42 The Registrar is able to enter any details into the ABR but section 25 specifies certain details that must be entered in the ABR. In respect of a representative of an entity, the Registrar must enter the name of the representative, the representative's email address and the date of effect of the registration of the representative. [ Schedule 6, item 55, subsection 25(3 )]

6.43 To allow specification of additional details that must be recorded in the ABR in the future, a provision is included to permit such details to be prescribed in the regulations rather than having to amend the law. [ Schedule 6, item 55, subsection 25(4 )]

6.44 Where the Registrar refuses to register an individual as a representative of an entity, the Registrar must give the entity written notice of the refusal and the reasons for the refusal. [ Schedule 6, item 43, subsection 13(1 )]

6.45 If the Registrar has not decided an entity's application for an individual to be a representative of the entity within 28 days after the application was made, the entity may give the Registrar written notice that it wishes to treat the application as having been refused. Subsection 13(4) outlines the method of measuring the 28 day period, which is the same as for an application for an ABN. As the application has been effectively refused, the entity is entitled to lodge an objection under section 21 of the ABN Act. [ Schedule 6, item 45, subsection 13(2 )]

6.46 To preserve the integrity of the ABR, the Registrar has the power to request the entity, or a representative of the entity, to provide the Registrar with information that is relevant to confirming the identity of the representative, or information relevant to the details entered in the ABR in relation to the representative of the entity. Failure to provide such information is subject to the offence provisions contained in section 8C of the TAA 1953. [ Schedule 6, item 47, item 3 in the table in subsection 15(1 )]

6.47 The Registrar is able to cancel the registration of a representative of the entity where he is satisfied that one of a number of situations is satisfied. The situations covered include where the registration of the entity is cancelled; or the representative no longer represents the entity; the representative is registered under an identity that is not the representative's true identity; or the representative's identity is no longer satisfactorily established. Examples of situations where the representative no longer represents the entity are where the representative advises that they no longer wish to represent the entity or where the representative is no longer capable of representing the entity. [ Schedule 6, item 48, subsection 18(1A )]

6.48 An entity can request the Registrar to cancel the registration of a representative of an entity by completing an application in the approved form and forwarding it to the Registrar. [ Schedule 6, item 49, paragraph 18(4 )( b )]

6.49 A number of additional reviewable ABN decisions are included in the table in subsection 21(2) of the ABN Act. These are for refusing to register the entity's representative; cancelling the registration of the entity's representative; refusing to cancel the registration of the entity's representative; and setting the date of effect of a cancellation. [ Schedule 6, item 51, subsection 21(2 )]

6.50 The Registrar must reinstate the registration of a representative in the ABR if the Registrar is satisfied that the registration should not have been cancelled. This could occur where the Registrar realised that a mistake had been made; or as a result of an objection; a request for review; or an appeal; determined that the registration of the representative should not have been cancelled, or the application refused. The Registrar must give written notice of such reinstatement to the entity. [ Schedule 6, item 50, subsection 19(1 )]

6.51 An offence provision is included in the amendments to discourage a person from impersonating a person who is registered under the ABN Act as a representative of an entity. The penalty for such an offence is two years imprisonment. [ Schedule 6, item 54, subsection 23(3 )]

6.52 Where the Registrar is satisfied that the details of representatives of entities entered in the ABR are incorrect, and the Registrar has access to details that he believes to be correct, the Registrar is able to correct the details on the ABR. If the information obtained was subject to the secrecy provisions that apply to a government entity, the information would usually remain subject to those secrecy provisions. The Registrar is able to update his records to maintain the integrity of the register. [ Schedule 6, item 56, paragraph 29A(1 )( b )]

6.53 The disclosure provisions contained in section 30 are amended to permit the Registrar to disclose information concerning a representative, who is registered, or has been registered in the Register, provided it is for the purpose of facilitating an entity's dealings with government entities, or for the purpose of maintaining details registered under the ABN Act. [ Schedule 6, item 57, paragraph 30(3 )( e )]

Commencement date

Australian Business Register amendments

6.54 These amendments commence on the day on which this Bill receives Royal Assent.

Multi-agency Registration Authority amendments

6.55 These amendments commence on a single day to be fixed by Proclamation, but limited to a day not later than 12 months after Royal Assent. The reasons for such a commencement date are outlined in the following paragraphs.

6.56 The Government announced that the SBR program would be available to businesses from 1 July 2010. The SBR Authentication solution that allows for the registration of individuals, as representatives of businesses, for the purpose of enabling electronic dealings with government agencies, is just one component of the wider SBR program. The registration aspect facilitates the issue of an electronic identity that enables business representatives to authenticate their transactions when reporting to government agencies for the purposes for which they are authorised.

6.57 The Government agencies in the SBR program need to be able to receive communications authenticated by the electronic identity issued to business representatives. The SBR program will need to ensure that all components of the system are working properly, including (but not limited to):

·
the commercial software which is being developed to pre-fill government forms directly from the client's accounts/records;
·
SBR Core Services, which will validate the information on the forms and the version of the forms being transmitted, confirm the identity used to transmit the information, provide confirmation of receipt back to the client and direct the forms to the right agencies; and
·
systems of participating agencies being able to receive the electronic forms and be accepted by their processing systems.

6.58 Although the authentication solution will need to be delivered ahead of the broader SBR implementation deadline, a specific date is not yet known. The delivery of the authentication solution is dependant on its end-to-end testing and its integration with the other key components of the SBR program. It is therefore dependant on the successful delivery of these other components.

6.59 Other key dependencies which may impact on the Registrar's ability to meet a fixed date of effect for the legislative amendments include the significant IT development work required to support the outcomes of this Bill. This work includes the development of the registration process, as well as developments required in taxation systems to deliver the functionality introduced in this Bill, such as the use of TFN information to streamline identity verification processes. Access to this information will be dependant on, and become part of, the major systems refresh currently being undertaken by the Commissioner. Slippage in the delivery of this refresh could impact on the successful delivery of the registration process.

6.60 The success of the SBR program is dependant upon all aspects of the program being available at the same time. Businesses must be able to experience a smooth registration process for its representatives and receive their associated electronic identity and be able to interact with the various agencies involved in the SBR program. In turn, the agencies need to be able to receive and process the information supplied by businesses.

6.61 For these reasons, the legislation provides for a commencement date to be a single day to be fixed by Proclamation but limited to a day not later than 12 months after Royal Assent. The actual date will be dependent upon all aspects of the SBR program being successfully integrated and tested.

Application and transitional provisions

Australian Business Register amendments

6.62 Where the approved form provisions contained in section 388-50 of the TAA 1953 replace the existing form approved by the Registrar or the approved form replaces a document that does not have any special requirements, the new form applies after the commencement of the relevant provisions, that is, Royal Assent.

6.63 Items 1 to 4, 23 and 28 are relevant to the approved form for applications for an ABN. Those items apply to applications using the new approved form from their commencement, that is, Royal Assent.

6.64 Item 17 refers to the new approved form to apply to cancel the registration of the ABN. As above, the provision apply to applications for cancellation of an ABN from the commencement of the item, that is, Royal Assent.

6.65 An approved form is introduced to enable entities and associates to update information contained in the ABR concerning the entity or an associate. At present, such information can be provided in any format. The new provision regarding the approved form applies from commencement of items 9 and 10, that is, Royal Assent.

6.66 Item 11 introduces an approved form for the Registrar to request entities and associates to update items in the ABR, or to confirm the identity of either associates or entities, or the entitlement of entities to be registered in the ABR. The approved form for these purposes applies to requests by the Registrar after the commencement of that item, that is, Royal Assent. [ Schedule 6, item 32 ]

Consequential amendments

Australian Business Register amendments

6.67 Two consequential amendments are included to more appropriately identify the authority for the use of the phrase 'address shown in the Register'. The first instance of this occurs in paragraph 57(1)(a) of the Product Grants and Benefits Administration Act 2000 . The words 'under subsection 25(2) of the A New Tax System (Australian Business Number) Act 1999' are to be added to the phrase 'address shown in the Register'. [ Schedule 6, item 33, paragraph 57(1 )( a ) in the Product Grants and Benefits Administration Act 2000 ]

6.68 The second instance occurs in paragraph 105-140(1)(a) in Schedule 1 to the TAA 1953 where the same words included in the above amendment are also included in this provision. [ Schedule 6, item 34, paragraph 105-140(1 )( a ) in Schedule 1 to the TAA 1953 ]


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