House of Representatives

Explanatory Memorandum

(Circulated by authority of the Assistant Minister for Productivity, Competition, Charities and Treasury, the Hon Dr Andrew Leigh MP)

Chapter 4: Minor and technical amendments

Outline of chapter

4.1 Schedule 4 to the Bill makes minor and technical amendments to Treasury portfolio legislation. The amendments demonstrate the Government's ongoing commitment to the care and maintenance of Treasury portfolio legislation.

4.2 The amendments correct unintended drafting outcomes, update legislative references, simplify provisions and reduce red tape.

Context of amendments

4.3 Minor and technical amendments are periodically made to Treasury portfolio legislation to correct errors and unintended outcomes, make technical changes and improve the quality of Treasury portfolio legislation.

4.4 The process was first supported by a recommendation of the 2008 Tax Design Review Panel, which considered ways to improve the quality of tax legislation. It has since been expanded to all Treasury legislation

Summary of new law

4.5 Divisions 1 and 2 of Part 1 amend the CCA; Divisions 3 to 7 of Part 1 amend the Corporations Act; Division 4 of Part 1 also amends the Corporations (ATSI) Act; Division 8 of Part 1 amends the IGT Act; Divisions 1 to 3 of Part 2 amend the GST Act; Division 2 of Part 2 also amends FT Act and TAA; Division 4 of Part 2 amends the ITAA 1997; and Part 3 amends the Excise Act.

4.6 The minor and technical amendments maintain and improve the quality of Treasury legislation by:

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enhancing readability and administrative efficiency;

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reducing unnecessary red tape; and

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making other technical changes.

Part 1 – Amendments commencing day after Royal Assent

Division 1 – Scams prevention framework

4.7 The SPF Act inserted Part IVF into the CCA and established the SPF, which requires regulated entities to implement measures to prevent, combat and respond to scams relating to, connected with, or using their services. The SPF includes the following features:

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overarching principles (SPF principles) that apply to regulated entities;

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sector-specific codes (SPF codes) that apply to regulated entities in certain regulated sectors; and

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enforcement through a multi-regulator framework, comprising an SPF general regulator and SPF sector regulators.

4.8 The ACCC is the SPF general regulator, responsible for regulating and enforcing compliance with the SPF principles.

4.9 Each SPF code will be regulated by an SPF sector regulator. The Government has announced that for the sectors that will be initially designated under the SPF, ASIC will regulate the SPF code for the banking sector, the Australian Communications and Media Authority will regulate the SPF code for the telecommunications sector, and the ACCC will regulate the SPF code for specified digital platforms services.

4.10 The functions and powers of the SPF general regulator and the SPF sector regulators are set out in the SPF Act. The amendments in the Bill clarify these functions and powers.

4.11 The amendments make clear that the functions and powers of the SPF general regulator include monitoring, investigating and enforcing compliance with the SPF provisions, other than the provisions of the SPF codes. Monitoring, investigating and enforcing compliance with legislative requirements are standard functions and powers of any regulator. This clarification also puts beyond doubt that the ACCC, as the SPF general regulator, can use its existing information gathering powers in section 155 of the CCA to monitor compliance with the SPF principles.

[Schedule 4, item 1, paragraph 58EB(2)(a)]

4.12 With respect to the SPF sector regulators, the amendments similarly make clear that the functions and powers of the SPF sector regulator for a regulated sector include monitoring, investigating and enforcing compliance with the SPF code for the sector. Where the SPF sector regulator is the ACCC, the amendments also provide that its powers include the ACCC's existing information gathering powers under section 155, to the extent it relates to the relevant SPF code, or the performance of a function or the exercise of a power otherwise conferred on the SPF sector regulator. Together, these clarifications put beyond doubt that the ACCC, in its role as an SPF sector regulator, can use its existing powers in section 155 of the CCA to monitor compliance with the relevant SPF code.

[Schedule 4, item 7, subsection 58ED(3)]

4.13 Consequential amendments are also made to the provisions relating to the SPF general regulator's functions and powers, and the delegation of the functions and powers of both the SPF general regulator and SPF sector regulators. These amendments are needed to ensure these provisions accurately reflect the ACCC's functions and powers (including its existing powers under section 155) when it is acting in its role as the SPF general regulator and as an SPF sector regulator.

[Schedule 4, items 3, 6 and 10, subparagraph 58EB(2)(b)(ii), paragraph 58EC(2)(b) and paragraph 58EE(2)(b)]

4.14 These amendments are consistent with the intent of the SPF Act. The simplified outline in section 58FA of the CCA (as inserted by the SPF Act), states that the ACCC, in its role as the SPF general regulator or an SPF sector regulator, may use its powers under the CCA (including section 155) to monitor and investigate compliance with the aspects of the SPF that are relevant for that role.

4.15 These amendments also remove references in the SPF Act to the "functions" of the ACCC under section 155 of the CCA. These references are unnecessary as section 155 does not set out any functions of the ACCC, and only sets out powers of the ACCC.

[Schedule 4, items 2, 4, 5, 8 and 9, paragraphs 58EB(2)(b) and 58EC(1)(b), subsection 58EC(2), paragraph 58EE(1)(b) and subsection 58EE(2)]

Division 2 – Sustainability reporting

4.16 Division 3 of Part 1 of Schedule 4 to the Bill amends the Corporations Act to clarify and extend the limited immunity provisions to all sustainability reports, whether or not required under the Corporations Act. The amendments rectify an unintended drafting outcome.

4.17 Limited immunity provisions in section 1707D of the Corporations Act apply to protected statements in relation to sustainability reports for a limited time. The limited immunity provisions do not prevent criminal proceedings or proceedings brought by ASIC. For example, ASIC may take action for false, misleading or deceptive conduct in relation to protected statements in a sustainability report. These provisions are designed to ensure there is sufficient regulatory oversight and to encourage developing reporting and auditing capabilities during the early stages of the sustainability disclosure regime in Australia.

4.18 Sustainability reporting and the related limited immunity provisions were legislated in the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024. Paragraph 4.193 of the explanatory memorandum to the originating Bill explained that the limited immunity provisions intended to apply to all sustainability reports, whether or not required to be prepared. The limited immunity provisions intended to include voluntary reports and any reports prepared as a condition of, or to obtain the benefit of, an exemption granted by ASIC (e.g. under sections 340 or 341 of the Corporations Act).

4.19 The amendments ensure that the limited immunity provisions apply to sustainability reports even when they are not required under the Corporations Act. To avoid doubt, the amendments do not change the nature and timing of the effect of the limited immunity provisions.

4.20 The amendments make an editorial update to the table heading under section 285A of the Corporations Act to improve readability by also referencing sustainability reports alongside financial reports.

[Schedule 4, item 11, table heading to table under section 285A of the Corporations Act]

Relief condition reports

4.21 The amendments provide that where a report (relief condition report) is prepared under an ASIC order made under subsections 340(1) or 341(1) of the Corporations Act, that report is treated as a sustainability report for specific purposes, including for the purposes of the limited immunity provisions (section 1707D), ASIC directions (section 296E) and auditing provisions (section 301A).

[Schedule 4, items 12 and 13, sections 342C and 1707DB of the Corporations Act]

4.22 A sustainability report is defined under section 9 of the Corporations Act as an annual sustainability report required under subsection 292A.

4.23 ASIC has the power, under subsections 340(1) or 341(1) of the Corporations Act, to make orders (in writing) to relieve certain entities of requirements of Parts 2M.2, 2M.3 and 2M.4 (other than Division 4). Under the Corporations Act:

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section 340 of the Corporations Act covers exemption orders on an individual basis, on application by a company, registered scheme, registrable superannuation entity or disclosing entity; and

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section 341 of the Corporations Act covers exemption orders that apply to a specified class of companies, registered schemes, registrable superannuation entities or disclosing entities.

4.24 For example, the ASIC Corporations (Wholly owned Companies) Instrument 2016/785 is a legislative instrument and an order made under subsection 341(1) of the Corporations Act. The instrument provides relief that exempts a company from its financial reporting obligations if all the conditions of the instrument are met, including that the holding company of the relieved company prepares a consolidated financial statement for the group (which covers the relieved company that would have otherwise been required to prepare a report under Chapter 2M of the Corporations Act).

4.25 The amendments create a new type of report, called a "relief condition report", to ensure that if a similar order also applied to the sustainability reporting obligations of a company, and the holding company of the relieved company prepares a consolidated sustainability report, that document may be treated as a sustainability report for specific purposes.

4.26 Where ASIC makes an order under subsections 340(1) or 341(1) of the Corporations Act relieving, or having the effect of relieving a company, registered scheme, registrable superannuation entity or disclosing entity from a requirement to prepare a sustainability report for a financial year, that order may also provide for a relief condition report.

[Schedule 4, item 12, subsections 342C(1) and (2) of the Corporations Act]

4.27 Because paragraph 292A(1)(a) of the Corporations Act requires an entity to prepare a sustainability report if they are also required to prepare a financial report for the financial year, an order that provides relief from financial reporting obligations may also have the effect of relieving a company, registered scheme, registrable superannuation entity or disclosing entity of the obligation to prepare a sustainability report.

4.28 A relief condition report is a document that meets all of the following conditions:

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it is prepared by a company, registered scheme, registrable superannuation entity or disclosing entity (the reporting entity);

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it is covered by the relevant ASIC order (under subsections 340(1) or 341(1) of the Corporations Act) that specifies that paragraph 342C(4)(b) will apply to the document for the relevant year; and

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it contains a director's declaration that it is intended that the document be treated as a sustainability report for the purposes of sections 296E (regarding ASIC directions) and 301A (regarding the audit of the sustainability report).

[Schedule 4, item 12, subsections 342C(4) and (5) of the Corporations Act]

4.29 A relief condition report is treated as a sustainability report for the purposes of sections 296E (regarding ASIC directions) and 301A (regarding the audit of the sustainability report). Therefore, these reports, similar to sustainability reports required under section 292A of the Corporations Act, are subject to ASIC's direction powers and auditing requirements.

[Schedule 4, item 12, subsection 342C(6) of the Corporations Act]

4.30 The amendments also extend the application of the limited immunity provisions in 1707D to relief condition reports as covered by the ASIC order if they are prepared in respect of a financial year commencing within 3 years of the start date under the limited immunity regime. This is because all limited immunity protections under section 1707D of the Corporations Act no longer apply after that period.

[Schedule 4, item 13, section 1707DB of the Corporations Act]

4.31 The limited immunity provisions apply to the relief condition report as if it were a sustainability report. The amendments also remove the requirements in subparagraphs 1707D(3)(a)(i) and (4)(a)(i) of the Corporations Act relating to a sustainability standard as the relief condition report may not be prepared for the purpose of complying with a sustainability standard. Statements made by auditors in their audits of these relief condition reports will also have the benefit of limited immunity. Amendments specifically clarify that references to auditor's reports of an audit or review of a sustainability report include references to auditor's reports on the relief condition reports for this purpose.

[Schedule 4, item 13, subsections 1707DB(4) and 1707DB(5) of the Corporations Act]

4.32 The extension of limited immunity ensures that, consistent with all other sustainability reports required under section 292A of the Corporations Act, the relief condition reports would benefit from the limited immunity provisions designed to encourage developing reporting and auditing capabilities across industries in the early stages of the sustainability reporting regime in Australia. As this extension only applies where the directors resolve that the document is effectively a relief condition report (that would be treated as a sustainability report for specific purposes), the report is also subject to sufficient ASIC oversight, directions powers and audit requirements.

4.33 To avoid doubt, the amendments do not limit any conditions imposed by ASIC in the exercise of their powers under sections 340 and 341 of the Corporations Act.

Voluntary sustainability reports

4.34 Similarly, the amendments extend the limited immunity provisions in section 1707D of the Corporations Act to sustainability reports prepared on a voluntary basis (e.g. a report not required under section 292A of the Corporations Act and that is not a relief condition report).

4.35 Under the amendments, a voluntary sustainability report prepared by a company, registered scheme, registrable superannuation entity or disclosing entity would be covered by the limited immunity provisions in section 1707D of the Corporations Act if it meets certain requirements. To be covered by the limited immunity provisions, these reports must be prepared within 3 years starting from the start date of the regime as all limited immunity protections under section 1707D of the Corporations Act no longer apply after that period.

4.36 This voluntary sustainability report must be a document that would be a sustainability report within the meaning of section 9 of the Corporations Act, had it been required to be prepared under section 292A. An entity may not be required to prepare a sustainability report for various reasons, including if they do not meet the threshold requirements in section 292A of the Corporations Act.

[Schedule 4, item 13, paragraph 1707DA(1)(a) and subparagraph 1707DA(1)(b)(i) of the Corporations Act]

4.37 Voluntary sustainability reports covered by the amendments must contain the contents required in a sustainability report by section 296A of the Corporations Act, including climate statements, any notes to the climate statement and the director's declaration about the statements and notes.

4.38 Sustainability reports (which would also include, under the amendments, voluntary sustainability reports that are treated as if they were sustainability reports) are expected to meet a different standard for the 3 years starting from the start date, being that the entity has, in the directors' opinion, taken reasonable steps to ensure that the substantive provisions of the sustainability report are in accordance with the Corporations Act.

[Section 1707C of the Corporations Act]

4.39 In addition to the general contents of a sustainability report, the voluntary sustainability report must also contain an additional declaration that the directors intend that section 1707DA of the Corporations Act applies to the report. This should clearly indicate that the document is a voluntary sustainability report, and that it is intended to be treated as a sustainability report for the purposes of sections 296E (regarding ASIC directions), 301A (regarding the audit of the sustainability report) and 1707D (regarding limited immunity). These provisions will apply to the voluntary sustainability report.

[Schedule 4, item 13, subparagraph 1707DA(1)(b)(ii) and subsections 1707DA(2) and (3) of the Corporations Act]

4.40 As with relief condition reports, statements made by auditors in their reports of audits or reviews of voluntary sustainability reports will also have the benefit of limited immunity. As noted above, statements protected under subsections 1707D(3) and 1707D(4), when made in respect of sustainability reports, are "protected statements" under the liability limiting provision in section 1707D. The amendments apply section 1707D, including in relation to auditors' statements, to voluntary sustainability reports as if they were sustainability reports that were required to be prepared.

[Schedule 4, item 13, subsection 1707DA(5) and paragraph 1707DA(4)(c) of the Corporations Act]

4.41 The extension of limited immunity ensures that, consistent with all other sustainability reports required under section 292A of the Corporations Act, the voluntary sustainability reports would benefit from the limited immunity provisions designed to encourage developing reporting and auditing capabilities across industries in the early stages of the sustainability reporting regime in Australia. This extension also only applies where the directors resolve that the document is effectively a voluntary sustainability report (that would be treated as a sustainability report for specific purposes).

4.42 Where a company, registered scheme, registrable superannuation entity or disclosing entity prepares a voluntary sustainability report covered by section 1707DA of the Corporations Act, it is a sustainability report for the purposes of sections 296E (regarding ASIC directions), 301A (regarding the audit of annual sustainability reports) and 1707D (regarding limited immunity in new sustainability reporting) of the Corporations Act. This ensures that the relevant voluntary sustainability report is subject to sufficient ASIC oversight where limited immunity applies.

[Schedule 4, item 13, subsection 1707DA(4) of the Corporations Act]

4.43 The policy intention to protect voluntary sustainability reports is to encourage entities to make climate-related financial disclosures, even if not required to do so under the legislation. Like mandatory sustainability reporting under Chapter 2M of the Corporations Act, voluntary sustainability reports will help provide Australians and investors with greater transparency and more comparable information about an entity's exposure to climate-related financial risks and opportunities and climate-related plans and strategies.

4.44 It is expected that voluntary sustainability reports would be prepared by companies and other entities that will be required to prepare sustainability reports under section 292A of the Corporations Act in a later year. These entities may wish to provide greater visibility to their shareholders and other interested parties before the legislative requirement applies to them, but they may be unlikely to prepare such a report unless the limited immunity provisions apply equally to their voluntary sustainability reports. Entities can also prepare voluntary sustainability reports even if they are not or will not be required to do so by section 292A.

Division 3 – De-registration

4.45 Division 3 of Part 1 of Schedule 4 to the Bill amends the Corporations Act to clarify when ASIC is required to deregister a company that has been wound up. The amendments would streamline the lodgement of deregistration forms regarding winding up by aligning the lodgement requirements between court ordered wind ups and voluntary wind ups.

4.46 Section 509 of the Corporations Act provides that if an end of administration return for a company is lodged with ASIC on the basis that the affairs of the company are fully wound up, ASIC must deregister the company at the end of the period of 3 months beginning on the day after the return is lodged.

4.47 However, there is uncertainty as to whether the section 509 requirement for ASIC to deregister the company within 3 months is triggered by the lodgement of an end of administration form following a court ordered winding up (rather than a voluntary winding up).

4.48 The amendments repeal section 509 of the Corporations Act and insert a new section 550 which clarifies that ASIC must deregister a company within 3 months of the lodgement of an end of administration return. Section 550 of the Corporations Act applies irrespective of whether an end of administration form is lodged following a court ordered or voluntary winding up.

[Schedule 4, items 17, section 550 of the Corporations Act]

4.49 The amendments insert a new signpost in section 9 of the Corporations Act to the definition of 'end of administration return' to improve the readability of the Corporations Act. The amendments also make consequential and editorial amendments to Treasury portfolio legislation to reflect the above changes.

[Schedule 4, items 14, 15 and 18 to 21, paragraphs 546-10(1)(c) and (2)(b) of the Corporations (ATSI) Act, section 9, subsection 601AC(1), paragraphs 601AC(1)(c) and 1239C(c) and note 2 to subsection 70-6(3) of Schedule 2 of the Corporations Act]

4.50 The amendments apply to an end of administration return that is lodged with ASIC on or after the day after Royal Assent.

[Schedule 4, item 22, section 1712 of the Corporations Act]

Division 4 - Notifying ASIC about authorised representatives

4.51 Division 4 of Part 1 of Schedule 4 to the Bill updates certain notice requirements in the Corporations Act to improve the clarity of the primary legislation.

4.52 Subsection 916F(1) of the Corporations Act provides that a person authorising a representative to provide a financial service must notify ASIC within 15 business days of that authorisation. Subsection 916F(3) of the Corporations Act provides that a person that has authorised a representative to provide a financial service must notify ASIC within 10 business days if details about that representative change or their authorisation is revoked.

4.53 However, the operation of both subsections 916F(1) and (3) of the Corporations Act is modified by regulation 7.6.04AA of the Corporations Regulations. This regulation extends the timeframes provided for in subsections 916F(1) and (3) to 30 business days instead.

4.54 The amendments improve the readability of the Corporations Act by incorporating the effects of the Corporations Regulations by updating subsections 916F(1) and (3) so that the timeframe for meeting the notice requirements in both provisions is 30 business days.

[Schedule 4, items 23 and 24, subsections 916F(1) and (3) of the Corporations Act]

Division 5—Lodgement of document without payment of fee

4.55 Section 1351 of the Corporations Act provides that fees imposed under the Corporations (Fees) Act and Corporations (Review Fees) Act are payable to the Commonwealth. Of those fees, some are payable for the lodgement of documents (see paragraphs 4(1)(a) and (m) of the Corporations (Fees) Act). Section 1354 of the Corporations Act provides that non-payment of the fee will not invalidate the lodgement of the document.

4.56 The amendments update subsection 1354(2) of the Corporations Act to simplify the provision, which previously contained a triple negative. The changes are editorial in nature and do not impact the operation of the section.

[Schedule 4, item 25, subsection 1354(2) of the Corporations Act]

Division 6—When resignation of directors of registered charities takes effect

4.57 The Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020 introduced a series of reforms to combat illegal phoenixing of companies. These reforms included section 203AA of the Corporations Act.

4.58 Under section 203AA of the Corporations Act, the date that the resignation of a company director takes effect depends on the date that written notice of the resignation is lodged with ASIC (note that the ACNC Act refers to directors as 'responsible entities'). Section 111N of the Corporations Act provides that certain notifications to the ACNC by directors of a company registered with the ACNC is taken to have also been lodged with ASIC. This is because similar notices are instead given to the ACNC, as the regulator of those bodies. However, prior to the amendments, section 111N of the Corporation Act did not extend to resignation notices under section 203AA of the Corporations Act.

4.59 Accordingly, prior to the amendments, the resignation of a director of a company registered with the ACNC cannot take effect until a notice is given to both ASIC (due to the broad application of section 203AA of the Corporations Act) and the ACNC (due to notification requirements under section 65-5 of the ACNC Act). This caused unnecessary administrative burden where two different regulators are notified of one event.

4.60 The amendments ensure that when a director of a company registered with the ACNC notifies the Commissioner of the ACNC that they have ceased to be a responsible entity, that notification will also be taken to have been lodged with ASIC as notification that they have resigned as a director. [Schedule 4, item 27, subsections 111N (5) and (6) of the Corporations Act]

4.61 The amendments modify the broad application of subsection 203AA(1) of the Corporations Act to ensure consistency of policy outcomes for companies regulated by the ACNC and prevent the potential for directors of these companies to backdate their resignation for an extended period of time to prevent illegal phoenixing of companies.

4.62 The timing of when a resignation takes effect is intended to generally operate in a similar manner to subsection 203AA(1) of the Corporations Act.

4.63 If the notice given to the Commissioner of the ACNC complies with paragraphs 65-5(4)(b) or (c) of the ACNC Act, the notice is treated as having been lodged with ASIC on the day the person ceased to be a director of a company registered with the ACNC. If this occurs, the resignation will take effect the day the person stopped being the director. In effect:

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If a notice meets the requirements of paragraph 65-5(4)(b) of the ACNC Act, where that notice is given no later than 28 days after the person has stopped being a director, the resignation takes effect on the date which the person resigned as director.

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If a notice meetings the requirements of paragraph 65-5(4)(c) of the ACNC Act (notice is given no later than 60 days after the person has stopped being a director of 'small registered entities'), , the resignation takes effect on the date which the person resigned as director.

[Schedule 4, item 27, paragraph 111N(6)(b) of the Corporations Act]

4.64 However, if the notice given to the Commissioner of the ACNC does not meet the requirements of either 65-5(4)(b) or (c) of the ACNC Act, the notice is treated as having been lodged with ASIC on the day it was given to the Commissioner of the ACNC. This may occur when the director of a company registered with the ACNC does not give the relevant notice within 28 days (or within 60 days for directors of companies that are a 'small registered entity') of their resignation. Where this occurs, the resignation will only take effect on the day that the notice was given to the Commissioner of the ACNC. This is a reflection of the general policy outcome under paragraph 203(AA)(1)(b) of the Corporations Act.

[Schedule 4, item 27, paragraph 111N(6)(c) of the Corporations Act]

4.65 The Commissioner of the ACNC must give details of the resignation to ASIC. This applies in relation to notices of both resignation from responsible entities (i.e. directors) and acting responsible entities (i.e. acting directors) who are directors of a company registered with the ACNC. This requirement reflects the overall framework of section 111N of the Corporations Act (i.e. in subsections 111N(2) and (4)), in circumstances where notification is made to the ACNC instead of to ASIC.

[Schedule 4, item 27, subsection 111N(7) and paragraph 111N(9)(f) of the Corporations Act]

4.66 The amendments only alleviate the administrative burden caused by the broad application of section 203AA of the Corporations Act (prior to the amendments) to the extent that provision caused a doubling up of required notification to the ACNC and to ASIC. As a result, the existing mechanisms in subsections 203AA(2) to (8) apply in relation to bodies corporate that are registered with the ACNC. This includes allowing a director of a body corporate registered with the ACNC to apply to the Court or ASIC to affix another resignation date where appropriate. If the Court or ASIC has fixed another application date, the amendments ensure that the ASIC notifies the Commissioner of the ACNC regarding the resignation date fixed by the Court or ASIC.

[Schedule 4, item 27, subsection 111N(8) of the Corporations Act]

4.67 The amendments also clarify that acting responsible entities within the meaning of subdivision 100-C of the ACNC Act are directors of a company and are subject to the same notification obligations. ASIC is treated as being notified once an acting responsible entity gives written resignation to the Commissioner of the ACNC. This resignation takes effect as set out in subsection 100-50(2) of the ACNC Act.

[Schedule 4, item 27, subsection 111N(9) of the Corporations Act]

4.68 The amendments also include, in the definitions, the ACNC as a defined term for the purposes of the Corporations Act.

[Schedule 4, item 26, section 9 of the Corporations Act]

4.69 These amendments only apply to director resignation notices given to the Commissioner of the ACNC on or after commencement of the Division.

[Schedule 4, item 28, section 1704 of the Corporations Act]

Division 77—Inspector-General of Taxation Act 2003

4.70 Division 7 of Part 1 of Schedule 4 to the Bill amends the IGT Act to streamline actions by the IGT by allowing the IGT to delegate certain powers relating to day-to-day functions.

4.71 The IGT Act provides the IGT with certain powers in dealing with complaints. These include the power to:

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decline or discontinue investigations (section 9 of the IGT Act);

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transfer non-taxation complaints to the Commonwealth Ombudsman (section 10 of the IGT Act); and

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request, record and provide TFNs to the Commissioner for complaint investigations (section 37B of the IGT Act).

4.72 Without these amendments, the IGT Act does not empower the IGT to delegate any of these powers. The inability to delegate these powers means that the power must be exercised personally by the IGT. This is administratively onerous and leads to unnecessary delay when dealing with newly lodged complaints.

4.73 In the 2023-24 financial year, the IGT received 1,705 complaints and completed 1,193 dispute investigations. The absence of a mechanism to delegate routine investigatory powers to staff also diverts resources from investigating complaints by taxpayers about the administration of taxation laws. These amendments provide that the IGT's powers under sections 9, 10 and 37B of the IGT Act are able to be delegated.

4.74 To ensure that powers are exercised by officers with appropriate skills and experience, the amendments only allow the IGT to delegate powers conferred under section 9 and 10 of the IGT Act to an employee at the EL or SES.

[Schedule 4, item 29, subsections 42(1A) and (1B) of the IGT Act]

4.75 Providing the IGT with the power to delegate these functions to EL and SES staff is appropriate, noting the limited degree of discretion provided to a decision maker particularly under section 10 of the IGT Act.

4.76 Section 9 of the IGT provides a discretion to not investigate certain complaints. This discretion may only be exercised in limited circumstances, including where the IGT is of the opinion that the complaint is frivolous, vexatious, or if further investigation of the action is not warranted having regard to all the circumstances.

4.77 Section 10 of the IGT Act provides for the transfer of complaints to the Commonwealth Ombudsman. A transfer must occur where the complaint, or part of a complaint, made to the IGT is wholly about action other than tax administration action, and unless the Commonwealth Ombudsman advises otherwise.

4.78 The amendments also allow the IGT to delegate the power to request a person to quote their TFN and the power to provide the person's TFN to the Commissioner under section 37B of the IGT Act to an officer within the organisation. Allowing for the delegation to IGT staff at each officer level facilitates the lodgement of complaints by telephone, where IGT case officers request a complainant's TFN to assist with the investigation. IGT case officers seek to quote TFNs to the Commissioner when conducting investigations into the complaint to facilitate ready identification of the complainant to allow the matter to be reviewed in a timely manner.

4.79 It would be administratively burdensome to limit this delegation to EL or SES staff, who do not generally perform case officer functions. The power is also limited in scope as it only enables the delegate to request a TFN but does not impose an obligation on the complainant to provide it.

[Schedule 4, item 29, subsection 42(1B) of the IGT Act]

4.80 A further limitation is imposed under which the IGT may only delegate the power under section 37B of the IGT Act if the IGT is satisfied that the person has appropriate qualifications, training or experience to exercise the power.

[Schedule 4, item 29, subsection 42(1C) of the IGT Act]

4.81 Consequential amendments are also made to ensure the effective operation of the amendments.

[Schedule 4, item 30, subsection 42(2) of the IGT Act]

4.82 These amendments more closely align the delegation powers of the IGT with those of the Commonwealth Ombudsman, as granted under the Ombudsman Act 1976 which allows the Commonwealth Ombudsman to delegate all powers except those under sections 15, 16, 17, 19 and 20ZJ to provide administrative flexibility.

4.83 These amendments to the IGT Act ensure the IGT can use its resources in the most efficient manner possible, while allowing the IGT to delegate the power to perform routine administrative functions.

4.84 The amendments apply to delegations made on or after the day after Royal Assent of the Bill.

[Schedule 4, item 31]

Part 2 – Amendments commencing first day of next quarter after Royal Assent

Division 1—Specialist disability services

4.85 Division 1 of Part 2 of Schedule 4 to the Bill amends the GST Act to ensure that the supply of disability services funded under the DSI Act is GST-free.

4.86 Section 38-40 of the GST Act provides that the supply of disability services that are funded under the DS Act or under complementary State or Territory laws is treated as GST-free.

4.87 The former DS Act was repealed and replaced by the DSI Act, effective from 1 January 2024. However, the reference to the former DS Act in section 38-40 of the GST Act was not updated.

4.88 The amendments ensure that the supply of disability services funded under the DS Act, the new DSI Act or under complementary State or Territory laws is GST-free. The amendments preserve the GST-free treatment of services where the supplier received funding under the former DS Act. The amendments also ensure that services where the supplier received funding under the new DSI Act on or after its application on 1 January 2024 are treated as GST-free, reflecting the continuation of the existing policy for disability supports and services.

4.89 The retrospective application of the amendments to supplies made on or after 1 January 2024 ensures that the existing GST-free treatment of supplies of services under the former DS Act and the more recent DSI Act as well as complementary state and territory laws continues to apply. This existing treatment is wholly beneficial to recipients of such supplies.

[Schedule 4, items 32 to 34, section 38-40 and subsection 38-40(2) of the GST Act]

Division 2—Tax credits

4.90 Division 2 of Part 2 of Schedule 4 to the Bill amends provisions in the GST Act relating to the attribution of input tax credits to tax periods. Equivalent amendments are also made to similar provisions in the FT Act relating to the attribution of fuel tax credits to tax periods and fuel tax return periods. The amendments ensure the provisions operate as intended and that credits can be attributable to appropriate tax periods. The amendments are not intended or expected to be detrimental to taxpayers.

4.91 Input tax credits for creditable acquisitions are ordinarily attributable to tax periods under subsections 29-10(1), (2) or (3) of the GST Act. Similarly, fuel tax credits are ordinarily attributable to tax periods or fuel tax return periods under subsections 65-5(1) to (3) of the FT Act. Current subsection 29-10(4) of the GST Act and subsection 655(4) of the FT Act provide attribution rules for cases where the GST return or fuel tax return for a tax period or fuel tax return period did not take into account an input tax credit or fuel tax credit that would otherwise be attributable to that period. In such cases, the input tax credit or fuel tax credit ceases to be attributable to that tax period and is instead attributable to the first tax period or fuel tax return period for which the taxpayer gives the Commissioner of Taxation a return that does take it into account (subject to the entitlement time limit rules in Division 93 of the GST Act or Division 47 of the FT Act).

4.92 Where:

•

a taxpayer's GST return or fuel tax return for a tax period or fuel tax return period did not take into account an input tax credit or fuel tax credit that would otherwise be attributable to that period; and

•

the taxpayer wished for the credit to be taken into account in that period;

the Commissioner of Taxation and taxpayers had an historical practice of allowing taxpayers to lodge an amended GST return or fuel tax return so that the input tax credit or fuel tax credit was taken into account in that purported GST return or fuel tax return for that tax period or fuel tax return period. This was understood to make the credit attributable to that period. This administrative practice was broadly consistent with the policy intention.

4.93 The decision of the High Court in Commissioner of Taxation v Travelex Limited [2021] HCA 8 and the preceding Federal Court decisions confirmed that there could not be an amended GST return. Two notable consequences for GST flowed from this:

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The administrative practice outlined above is not administrable.

•

If an input tax credit is ordinarily attributable to a particular tax period and is not taken into account in the taxpayer's GST return for that tax period, then the input tax credit could never be attributable to that tax period. The input tax credit could only be attributable to a later tax period by the input tax credit being taken into account in a GST return for that later period (subject to the entitlement time limit rules in Division 93 of the GST Act). This result created significant administrative inflexibility for taxpayers and the Commissioner of Taxation.

4.94 While fuel tax credits were not specifically addressed in these decisions, given the relevant provisions are largely identical the same outcome would likely follow.

4.95 The amendments repeal subsection 29-10(4) of the GST Act and substitutes new subsections 29-10(4) to (6). Similarly, for the FT Act, subsection 65-5(4) of that Act is repealed and replaced with new subsections 65-5(4) to (6). The new provisions provide rules for the attribution of an input tax credit or fuel tax credit to the extent it has not been taken into account in the taxpayer's assessment for the tax period or fuel tax return period to which it would ordinarily be attributable under subsections 29-10(1), (2) or (3) of the GST Act or subsections 65-5(1), (2) or (3) of the FT Act. The new provisions align with the prior understanding of the law and ensure flexibility for taxpayers by:

•

focusing on whether an input tax credit or fuel tax credit that would ordinarily be attributable to a particular tax period or fuel tax return period has been taken into account in an assessment for that period (rather than a GST return or fuel tax return for that period); and

•

where the input tax credit or fuel tax credit is not taken into account in that assessment, the credit remains attributable to the original period, but the taxpayer may elect in the approved form for the credit to be attributable to a later tax period or fuel tax return period.

[Schedule 4, items 37 and 40, subsections 29-10(4), (5) and (6) of the GST Act and subsections 65-5(4), (5) and (6) of the FT Act]

4.96 Under the amendments, to the extent that an input tax credit or fuel tax credit that is ordinarily attributable to a tax period or fuel tax return period is not taken into account in a taxpayer's assessment for that period, the taxpayer may elect for the credit to instead be attributable to a later specified tax period. The election must be made in the approved form to the Commissioner of Taxation and cannot be amended or revoked. It is expected that one of the approved forms for this purpose would form part of the business activity statement, allowing taxpayers to make the choice by including the credit in the amount reported in a business activity statement for a subsequent period. It is not expected that the Commissioner of Taxation would require any specific indication of the election beyond the inclusion of the credit in the total amounts reported in the business activity statement. Consistent with the current law, taxpayers remain subject to tax record keeping obligations under section 382-5 in Schedule 1 to the TAA.

[Schedule 4, items 37378 and 40, subsections 29-10(4), (5) and (6) of the GST Act and subsections 65-5(4), (5) and (6) of the FT Act]

4.97 The provisions in Division 93 of the GST Act and Division 47 of the FT Act continue to provide a time limit on a taxpayer's entitlements to an input tax credit for creditable acquisitions and fuel tax credits. Under these provisions, a taxpayer's entitlement to an input tax credit or a fuel tax credit ceases to the extent that it has not been taken into account in an assessment within a certain period (generally, four years after the day the taxpayer was required to lodge the GST return or fuel tax return for the tax period or fuel tax return period to which the credit would ordinarily be attributable). Any election under the new rules does not extend or alter the application of the entitlement time limit. As a result, any election effectively must be made within the entitlement time limit and in relation to a tax period or fuel tax return period within the time limit. Otherwise, the taxpayer will have ceased to be entitled to the input tax credit.

[Schedule 4, items 37 and 40, note to subsection 29-10(5) of the GST Act and note to subsection 65-5(4) of the FT Act]

4.98 The amendments apply in relation to input tax credits and fuel tax credits that are ordinarily attributable to tax periods or fuel tax periods that start on or after 1 July 2012, being the date on which the previous attribution rules came into effect. The retrospective application helps ensure the legislation conforms with past practice, avoiding uncertainty for taxpayers and the Commissioner of Taxation by confirming past actions had the effect they were understood to have at the time.

[Schedule 4, subitems 43(1) and (5)]

4.99 Transitional provisions support the retrospective application of the amendments and help ensure unintended consequences do not arise. Firstly, the provisions limit the retrospective application of the amendments to ensure they do not revive past disputes in relation to old input tax credits or fuel tax credits that, as at 27 July 2023 (the date the exposure draft legislation for this measure was released), had never been taken into account in an assessment and were outside the usual four-year time limit provided in Division 93 of the GST Act or Division 47 of the FT Act. While the exposure draft legislation did not include corresponding amendments to the FT Act, the exposure draft explanatory material made clear that equivalent treatment would apply.

[Schedule 4, subitems 43(2) and (6)]

4.100 Secondly, the provisions provide a transitional rule to ensure that where input tax credits were taken account into account in a GST return or included in a request for an amendment to an assessment in the approved form, then this will be appropriately recognised in the retrospective application of the new law. This will ensure these past actions are validated and the previously understood outcomes are preserved.

[Schedule 4, subitems 43(3), (4), (7) and (8)]

4.101 The amendments make a number of technical consequential amendments to the GST Act, the FT Act and the TAA. These consequential amendments include updates to legislative references and to editorial updates in support of these amendments.

[Schedule 4, items 36367, 38, 39, 41 and 42, paragraph 29-10(3)(b) and subparagraph 133-5(2)(a)(iii) of the GST Act, note to subsection 46-5(4) of the FT Act, and paragraphs 382-5(3)(a) and (b) of Schedule 1 to the TAA]

4.102 The retrospective application and transitional provisions are not expected to result in detriment to taxpayers. The amendments ensure the provisions operate as intended and that credits can be attributable to appropriate tax periods.

Division 3—Attribution rules

4.103 Under subsection 29-25(1) of the GST Act, the Commissioner of Taxation can determine the tax period to which an input tax credit for a creditable acquisition is attributable. Prior to the amendments, the legislation did not adequately address the interactions between subsection 29-25(1) and the time limit rules in Division 93 of the GST Act.

4.104 Under the amendments, subsection 93-10(1) of the GST Act addresses this issue by providing that, if the Commissioner of Taxation makes such a determination, a taxpayer only ceases to be entitled to the input tax credit if it has not been taken into account in an assessment of theirs within four years after they were required to lodge the GST return for the tax period to which the input tax credit is attributable under the determination. This time limit is broadly consistent with other time limits in Division 93 of the GST Act (for example, subsection 93-5(1) of the GST Act provides a four-year time limit).

[Schedule 4, items 44 to 50, section 93-10 of the GST Act]

4.105 The amendments apply in relation to input tax credits that would ordinarily be attributable to a tax period that starts on or after 1 July 2012, being the date on which the current version of Division 93 of the GST Act came into effect. The retrospective application ensures the legislation conforms with past administrative practice and taxpayers' expectations, and it is not expected to be detrimental to taxpayers in any way.

[Schedule 4, item 51]

Division 4—Income tax deduction for GST paid by reverse charge

4.106 GST that constitutes a cost to business should generally be deductible for income tax purposes, to the extent that the cost cannot otherwise be recouped via an input tax credit.

4.107 Under subsection 27-15(1) of the ITAA 1997, a taxpayer is not able to claim an income tax deduction for the payment of GST under Division 33 of the GST Act, subject to certain exceptions. Currently, GST payable by way of reverse charge is not explicitly provided for as an exception, meaning a deduction for income tax purposes is not available.

4.108 Generally, GST is included in the purchase price of a good or service and remitted to the Commissioner of Taxation by the supplier. When considering the relevant amount of a deduction in the hands of the purchaser, the GST amount is included in the outgoing. Where GST is reverse charged, the GST is an additional amount paid by the purchaser, rather remitted by the supplier, as the price of the good or service did not include GST. GST may be payable by reverse charge in certain situations. For example, where the recipient was registered for GST and the supply was of intangible or low-value imported goods where the recipient does not solely have a creditable purpose, or a supply from a non-resident, or a supply of valuable metals. The amendments ensure consistent outcomes to the deductibility of GST amounts between how GST is generally charged and for GST that is reverse charged.

4.109 GST payable by way of reverse charge is a legitimate cost that a taxpayer can incur in deriving assessable income. The amendments ensure that a taxpayer is able to deduct the amount of GST payable by way of reverse charge, to the extent that:

•

the GST amount is greater than any input tax credits or reduced input tax credits they are entitled to; and

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the requirements for income tax deductions in the ITAA 1997 are satisfied.

[Schedule 4, item 52, section 27-15 of the ITAA 1997]

4.110 The amendments apply in relation to assessed net amounts that are payable in the income that includes 1 July 2023 and later income year.

[Schedule 4, item 53]

4.111 Assessed net amounts payable in the first income year may include assessed net amounts from before the start of the income year. For example, the quarterly tax period beginning 1 June starts before the 2023-24 income year, but under section 33-3 of the GST Act assessed amounts from that period are payable in the 2023-24 income year.

Part 3 – Amendments with other commencements: excise tariff alterations

4.112 Part 3 of Schedule 4 to the Bill amends the Excise Act to align with similar arrangements in the Customs Act regarding tariff proposals.

4.113 An Excise Tariff or an Excise Tariff alteration is usually considered by Parliament as a tariff proposal. These proposals can lower or raise duty rates, and add, remove or alter the description of goods which are subject to excise duty. A tariff proposal must be ratified by Parliament to remain effective.

4.114 Prior to the amendments, if a tariff proposal containing an Excise Tariff or Excise Tariff alteration was proposed when the House of Representatives was not sitting, section 160B of the Excise Act provided for a proposed alteration to be notified in the Commonwealth Gazette and to be done by the 'CEO', defined in section 4 of the Excise Act as the Commissioner.

4.115 The amendments change the person who provides a notice of intention to propose a tariff proposal from the CEO (the Commissioner) to the Minister. As the Minister would propose an excise tariff or excise tariff alteration in Parliament, it is more appropriate for the Minister to make the notification, rather than the Commissioner. Furthermore, this arrangement aligns with the Customs Act.

[Schedule 4, item 58, subsection 160B(1) of the Excise Act]

4.116 The amendments also require the Minister to make a notifiable instrument, rather than publication of a notice in the Commonwealth Gazette. This amendment improves the clarity of the law.

[Schedule 4, items 56 to 61, subsection 160B(1), paragraphs 160B(1)(a) and (b), and subsection 160B(2) of the Excise Act]

4.117 To ensure that a person is able to know the exact time that an instrument under section 160B of the Excise Act is registered, it is intended that the time (including a reference to the time zone) and date of registration of any instrument made under section 160B will be published on the Federal Register of Legislation.

4.118 As the Excise Act is administered by the Commissioner, section 114 of the Excise Act protects the Commissioner from proceedings being commenced for any action taken to collect an amount set by a tariff proposal for a specified period. This includes protecting the Commissioner from actions when collecting amounts set by a tariff proposal under section 160B. The Bill makes consequential amendments to section 114 to preserve this protection following the amendments that clarify the notice requirements as a notifiable instrument.

[Schedule 4, items 54 and 55, subsection 114(2) and paragraph 114(2)(a) of the Excise Act]

4.119 The amendments only apply to a notice published after the commencement of Division 1 of Part 3. In practice, this will be the day after a 28-day period following the day of Royal Assent. A delayed commencement allows the Minister and the Commissioner to know in advance when the provisions will commence, and so who on a particular day, has the power to publish a notice or make a notifiable instrument.

[Schedule 4, item 62]

Commencement, application, and transitional provisions

4.120 Part 1 of Schedule 4 to the Bill commences on the day after Royal Assent.

4.121 Part 2 of Schedule 4 to the Bill commences on the first 1 January, 1 April, 1 July or 1 October to occur after the day of Royal Assent.

4.122 Part 3 of Schedule 4 to the Bill commences on the 28th day after Royal Assent.