House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)

Chapter 6 Authorised on-disclosures by recipients of taxpayer information

Outline of chapter

6.1 This chapter outlines what recipients of taxpayer information who are not taxation officers can do with the information that they receive.

6.2 Reference to recipients who are not taxation officers includes both:

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non-taxation officers in lawful receipt of taxpayer information; and

•

non-taxation officers who receive taxpayer information as a result of a breach of a taxation law.

Context of amendments

Operation of current provisions

6.3 Under the current law, taxation secrecy provisions generally continue to control the use and disclosure of taxpayer information, where this information is disclosed outside of the Australian Taxation Office (ATO).

6.4 In governing the on-disclosure of information by non-taxation officers, the current law contains a variety of rules. Some provisions permit on-disclosure in a wide range of circumstances (for example, subsection 16(2A) of the Income Tax Assessment Act 1936 (ITAA 1936) allows a Commonwealth or State officer who is in receipt of taxpayer information to on-disclose information in the performance of their duties as an officer). In contrast, some provisions detail to whom and in what circumstances on-disclosures are allowed (for example, permitted on-disclosures by Royal Commissions are specified in subsections 16(4A) through to 16(4JC) of the ITAA 1936).

6.5 The current law also recognises that entities that acquire information because of a breach of a taxation law should only be able to disclose that information in limited circumstances.

Summary of new law

6.6 The new framework continues to recognise that the taxation secrecy and disclosure provisions should apply to and limit disclosures of taxpayer information even when that information has been disclosed outside of the ATO.

6.7 In distinguishing between taxation officers and non-taxation officers, the framework also recognises that where taxpayer information is disclosed to a non-taxation officer, such an entity should be able to on-disclose that information for the purpose for which the information was originally disclosed by a taxation officer or for a connected purpose. This is consistent with one of the objectives of the framework as outlined in Chapter 1, to facilitate effective and efficient Government administration and law enforcement.

6.8 The new framework also recognises that in some limited circumstances a non-taxation officer should be able to on-disclose taxpayer information for a purpose that is unconnected to the purpose for which information was disclosed by a taxation officer.

6.9 Consistent with the current law, the new framework provides that where an entity receives taxpayer information in breach of a taxation law, the circumstances in which they can disclose that information should be limited.

Comparison of key features of current law and new law

Detailed explanation of new law

Non-taxation officers who lawfully acquire the information

6.10 The explanation below provides guidance on the restrictions placed on the on-disclosure of information provided by the ATO to a non-taxation officer. While most non-taxation officers are limited to only on-disclosing information for the purpose for which the information was originally disclosed (or a connected purpose), in limited circumstances the on-disclosure is not so limited.

6.11 As described in Chapter 3, the offence provisions for non-taxation officers who have received taxpayer information do not capture the disclosure of information to the entity to whom the information relates, or their agent. This recognises the lack of harm in making such disclosures.

On-disclosures for original or connected purpose

6.12 Under the new framework, where taxpayer information is disclosed by a taxation officer to another entity (a non-taxation officer) for a particular purpose, it is not an offence for that entity to on-disclose that information for, or in connection with, the original purpose. [Schedule 1, item 1, subsection 355-175(1)]

6.13 Non-taxation officers may on-disclose information acquired from a taxation officer (or from a non-taxation officer) provided that each on-disclosure is for the same purpose as that for which the information was originally disclosed or a connected purpose.

Example 6.1

A taxation officer lawfully disclosed taxpayer information to the Child Support Registrar for the purpose of administering the Child Support Assessment Act 1989 . It is not an offence for the Registrar to on-disclose that taxpayer information to the Secretary of the Department of Human Services for the purpose of administering the Child Support Assessment Act 1989 or a connected purpose, or for the Secretary to on-disclose the information to a General Manager within the department for the purpose of administering the Child Support Assessment Act 1989 or a connected purpose, or for the General Manager to on-disclose the information to a policy officer for the purpose of administering the Child Support Assessment Act 1989 or a connected purpose. All of these on-disclosures are authorised disclosures as they are made for the same purpose for which the information was originally disclosed by a taxation officer, or for a connected purpose.

Original purpose

6.14 The relevant original purpose is the purpose for which the information was initially disclosed by the taxation officer under an exception in Subdivision 355-B. [Schedule 1, item 1, paragraph 355-175(1)(a)]

Example 6.2

Ari, an ATO officer, discloses information to Waleed, an officer of the Australian Securities and Investment Commission (ASIC) for the purpose of enforcing a law ASIC administers that imposes a pecuniary penalty. Waleed can on-disclose the information he receives from Ari, for the purpose of the enforcement of a law ASIC administers that imposes a pecuniary penalty.

Example 6.3

The Australian Federal Police believes that Mr X has stolen property belonging to the Commonwealth and requests copies of Mr X's recent tax returns from the ATO. This information is provided to the Australian Federal Police. After obtaining further information, the Australian Federal Police decide to prosecute Mr X for receiving stolen goods (rather than theft). The Australian Federal Police can on-disclose the information it has obtained from the ATO in the course of prosecuting Mr X (for instance to the Commonwealth Director of Public Prosecutions). While the Australian Federal Police originally received the information for the purpose of investigating whether Mr X had committed theft, the relevant purpose is the enforcement of a law 'the contravention of which is a serious offence'. The on-disclosure, while technically relating to a different offence, is still made for the original purpose (the receipt of stolen goods, like theft, is a serious offence under the Criminal Code ).

Connected purpose

6.15 A 'connected purpose' is one that relates to the original purpose and is incidental to, or arises as a consequence of, any action taken in pursuance of the original purpose.

Example 6.4

A taxation officer lawfully disclosed taxpayer information to the Development Allowance Authority for the purpose of administering the Development Allowance Authority Act 1992 . It is not an offence for an officer with the delegated responsibilities of the Development Allowance Authority to on-disclose that information for the purpose of administering any regulations associated with the Development Allowance Authority Act 1992 , as this is connected to the original purpose for which the information was disclosed by the taxation officer.

6.16 A connected purpose includes the purpose of criminal, civil or administrative proceedings related to the original purpose. This extends to disclosures to Courts, external legal advisers or to the Commonwealth Director of Public Prosecutions in relation to proceedings that arise in connection with the original purpose. [Schedule 1, item 1, subsection 355-175(2)]

Multiple purposes

6.17 As noted in paragraph 5.81, the new framework facilitates the disclosure of taxpayer information for law enforcement and related purposes. Sometimes there are a number of purposes for which information can be provided to law enforcement agencies, taskforces and certain State Royal Commissions, including the purpose of enforcing a law the contravention of which is a serious offence, investigating the commission of such an offence or the making of a proceeds of crime order. In addition, there are a number of 'purposes' of the Project Wickenby taskforces for which taxpayer information can be disclosed.

6.18 While the 'connected purpose' should enable an agency or body that received information for one purpose to use that information for another closely related purpose, the new framework puts this result beyond doubt. It does this by ensuring that these agencies or bodies are able to on-disclose taxpayer information they received for one purpose for another purpose for which they could have acquired the information. [Schedule 1, item 1, subsection 355-175(3)]

Example 6.5

A taxation officer lawfully discloses taxpayer information to a Project Wickenby officer for the purpose of detecting the promotion of an international tax avoidance arrangement. It is not an offence for that Project Wickenby officer to on-disclose that information for the purpose of investigating an international money laundering arrangement even though that is a different Project Wickenby purpose.

Example 6.6

Taxpayer information is disclosed to Geoff, an Australian Federal Police officer and an authorised law enforcement agency officer under the new framework. The disclosure is made for the purpose of enabling the Australian Federal Police to investigate a suspected case of fraud against the Commonwealth. After investigation, the Australian Federal Police determine that there is sufficient evidence to seek a prosecution for the offence. Geoff discloses the information to Ben, a Crown Prosecutor, for this purpose. After a successful prosecution, Geoff further decides that there is sufficient evidence to seek a proceeds of crime order in relation to the commission of the offence.

While the information was originally obtained from the ATO for the purpose of 'investigating' whether a serious offence has been committed, Geoff is able to on-disclose the information for the purpose of prosecuting (that is, enforcing) the offence and also for the purpose of seeking a proceeds of crime order in relation to the commission of the offence.

On-disclosures to ministers

6.19 As noted in Chapter 4, consistent with the existing law, the new framework limits the circumstances in which taxpayer information can be provided to ministers. However, as with taxation officers, there are legitimate circumstances in which taxpayer information should be able to be provided by non-taxation officers to a minister.

6.20 The new framework recognises this. It is not an offence to on-disclose taxpayer information to a minister who has a statutory power or function in relation to the original purpose where that on-disclosure is to enable the Minister to exercise the power or perform the function (or to decide whether to exercise the power or perform the function). [Schedule 1, item 1, section 355-180]

On-disclosures not limited by original or connected purpose

6.21 In addition to the more general on-disclosure provision for the original or a connected purpose, the new framework also permits, in certain limited circumstances, the on-disclosure of taxpayer information for a purpose that may be unconnected to the purpose for which the taxation officer provided the information. These circumstances either reflect on-disclosures permitted by the current law or reflect circumstances where there is a public interest in permitting such on-disclosures.

Australian Security Intelligence Organisation

6.22 Where an authorised Australian Security Intelligence Organisation (ASIO) officer has lawfully obtained taxpayer information under the new framework, the officer is able to on-disclose that information to the Inspector-General of Intelligence and Security (or a member of their staff), for the purpose of enabling the Inspector-General's or the officer's duties to be performed in relation to ASIO (or in relation to ASIO officers and employees). This replicates an on-disclosure provision in the law (section 3EA of the Taxation Administration Act 1953 (TAA 1953)) which would not necessarily fall within the general on-disclosure provision. [Schedule 1, item 1, subsection 355-185(1)]

6.23 Once the information is received by the Inspector-General (or staff members), they may use the information to perform their duties with respect to ASIO. [Schedule 1, item 1, subsection 355-185(2)]

6.24 The Inspector-General of Intelligence and Security is also able to lawfully receive information disclosed for the purpose of performing the Inspector-General's or the disclosing officer's duties in relation to ASIO or officers or employees of ASIO. [Schedule 1, item 1, subsection 355-185(2)]

Example 6.7

Steve, an ATO officer, discloses taxpayer information under Subdivision 355-B to Alex, an authorised ASIO officer, for the purpose of performing ASIO's functions under the Australian Security Intelligence Organisation Act 1979 . Alex on-discloses the information to the Inspector-General of Intelligence and Security for the purpose of assisting the Inspector-General to perform his duties in relation to ASIO. It is not an offence for Alex to on-disclose information for this purpose, notwithstanding that it is not the original purpose for which information was originally disclosed by the ATO.

6.25 The framework replicates existing provisions that enable an authorised ASIO officer to on-disclose information to a law enforcement agency for the purposes of investigating or enforcing a law the contravention of which is a serious offence or for the making of a proceeds of crime order. [Schedule 1, item 1, section 355-190]

Commonwealth Royal Commissions

6.26 Currently, information that is disclosed to Commonwealth Royal Commissions is subject to very prescriptive on-disclosure provisions. Generally, however, these provisions permit such Commissions to disclose taxpayer information to a range of entities listed in section 6P of the Royal Commissions Act 1902 . These include a variety of agencies and officers involved in law enforcement, such as the Attorney-General, the Australian Federal Police, the Australian Crime Commission and the Law Enforcement Integrity Commissioner. To substantially simplify these provisions, and ensure that all information that a Commonwealth Royal Commission receives in the course of its inquiry can be disclosed in the same manner, the new framework specifically allows such Royal Commissions to on-disclose taxpayer information in accordance with section 6P. [Schedule 1, item 1, section 355-195]

6.27 This change broadens the scope of the use to which Commonwealth Royal Commissions can put taxpayer information, again recognising that the public interest outweighs the impact on a taxpayer's privacy. Royal Commissions occupy a unique place in Australia's system of government, being the highest form of inquiry available to executive government. Royal Commissions are traditionally reserved for rare matters of national significance. As noted above, entities that receive protected information from a Commonwealth Royal Commission will receive that information to assist in law enforcement activities against relevant individuals or corporations. Information is expected to be on-disclosed in rare instances, at the discretion of the Royal Commission, where public interest served by the on-disclosure outweighs the entity's privacy.

Records made in compliance with Australian laws

6.28 In performing its role in administering the Australian taxation system, the ATO may obtain information from a variety of sources. In some limited instances, entities that provide information to the ATO may be required by law to make a record of the disclosure of that information. For instance, where the ATO obtains information about a taxpayer from a credit reporting agency (through issuing an information gathering notice under section 264 of the ITAA 1936), the credit reporting agency is required, under the Privacy Act 1988 (Cwth ) to make a record of that disclosure.

6.29 Since 'protected information' takes a broad meaning and would include ATO compliance activity against a particular taxpayer (see paragraph 2.21) the fact that the ATO has issued a section 264 notice with respect to a particular taxpayer will be protected information. It is not the intent to prevent entities (such as, in the example above, a credit reporting agency) from complying with its other legal obligations. [Schedule 1, item 1, section 355-200]

Non-taxation officers who are not in lawful receipt of the information

6.30 As described in Chapter 3, the offence provisions for non-taxation officers who have received taxpayer information do not capture the disclosure of information to the entity to whom the information relates, or their agent. Furthermore, it is an exception to the offence provision if the information is already lawfully available to the public.

6.31 In addition, non-taxation officers who receive taxpayer information because of a breach of a taxation law (that is, one of the offence provisions in the new framework) can only on-disclose that information:

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to the extent that the disclosure is required or permitted by a taxation law; or

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where the disclosure is to a taxation officer for a purpose connected with administering a taxation law.

[Schedule 1, item 1, section 355-275]

6.32 Limiting the circumstances in which information that has been acquired as a consequence of a breach of a taxation law recognises the importance of ensuring that the chain of lawful disclosures is maintained.

Example 6.8

Tuan, a journalist, receives taxpayer information as a result of a breach of a taxation law. Being aware that the information has been unlawfully disclosed to him, Tuan decides not to publish the information and instead returns it to the ATO. It is not an offence to on-disclose taxpayer information to the ATO in these circumstances, notwithstanding that it has been unlawfully obtained.

If Tuan were to disclose the information to a non-taxation officer, for example to a journalist for media publication, this would be an offence.