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House of Representatives

Treasury Laws Amendment (2019 Measures No. 2) Bill 2019

Explanatory Memorandum

(Circulated by authority of the Minister for Housing and Assistant Treasurer, the Hon Michael Sukkar)

Glossary

The following abbreviations and acronyms are used throughout this Explanatory Memorandum.

Abbreviation Definition
ACCC Australian Competition and Consumer Commission
Bill Treasury Laws Amendment (2019 Measures No. 2) Bill 2019
CCA Competition and Consumer Act 2010
CDR Consumer Data Right
CDR Act Treasury Laws Amendment (Consumer Data Right) Act 2019
COAG Council of Australian Governments
Commissioner Commissioner of Taxation
ITAA 1997 Income Tax Assessment Act 1997
LCT luxury car tax
LCT Act A New Tax System (Luxury Car Tax) Act 1999
Vertigan Review Review of Governance Arrangements for Australian Energy Markets

General outline and financial impact

Genuine redundancy and early repayment scheme payments alignment with pension age

Schedule 1 to the Bill amends the tax law to extend the concessional taxation treatment for genuine redundancy and early retirement scheme payments to amounts paid to individuals who are 65 or more years of age provided the dismissal or retirement occurs before they reach pension age.

Date of effect: This measure applies to payments made to individuals who are dismissed or retire on or after 1 July 2019.

Proposal announced: Schedule 1 to the Bill implements the measure announced by the Treasurer in the 2018-19 Mid-Year Economic and Fiscal Outlook (MYEFO) as, 'Genuine Redundancy Payments - aligning access to the tax-free component with the Age Pension age'.

Financial impact: As at the 2018-19 MYEFO, this measure was estimated to have the following cost to revenue:

2018-19 2019-20 2020-21 2021-22
.. -$5m -$6m -$7m

.. not zero, but rounded to zero

Human rights implications: This Schedule does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 6.

Compliance cost impact: This measure will result in a low increase in implementation costs in the short term. There will be no ongoing compliance costs for employers.

Luxury Car Tax Refund Entitlements

Schedule 2 to the Bill amends the LCT refund arrangements for eligible primary producers and tourism operators to provide a full refund of LCT, up to a cap of $10,000, for eligible vehicles.

Date of effect: The amendments apply to cars supplied or imported on or after 1 July 2019.

Proposal announced: This Schedule fully implements the measure 'Luxury Car Tax - increased refunds for eligible primary producers and tourism operators' from the 2019-20 Budget.

Financial impact: As at the 2019-20 Budget, this measure was estimated to reduce revenue by $11.0 million over the forward estimates period, comprising:

2019-20 2020-21 2021-22 2022-23
-$2.0m -$3.0m -$3.0m -$3.0m

Human rights implications: This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 6.

Compliance cost impact: Nil.

Australian Energy Regulator

Schedule 3 to the Bill expands the board of the Australian Energy Regulator from three members to five members and makes other changes to ensure that the expanded board can operate efficiently.

Date of effect: To be set by proclamation.

Proposal announced: This Schedule implements the measure first announced in December 2015, as part of the COAG Energy Council response to the Vertigan Review.

Financial impact: Nil.

Human rights implications: This Schedule does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 6.

Compliance cost impact: Nil.

Consumer Data Right-Deletion requests

Schedule 4 to the Bill creates a requirement that consumer data rules include an obligation on accredited data recipients to delete CDR data in response to a request from a CDR consumer for that CDR data

Date of effect: Day after Royal Assent.

Proposal announced: This Schedule implements the amendment to announced on 1 August 2019.

Financial impact: Nil.

Human rights implications: This Schedule engages human rights. See Statement of Compatibility with Human Rights - Chapter 6.

Compliance cost impact: This measure is expected to result in a minor overall compliance cost impact, comprising a small implementation impact and a small increase in ongoing cost.

Interest on superannuation payments by the Commissioner of Taxation

Schedule 5 to the Bill amends the Superannuation (Unclaimed Money and Lost Members) Act 1999 to correctly allow for regulations to be made to prescribe a rate of interest which is payable on amounts held by the Commissioner which are proactively reunified into a person's superannuation account, as originally intended.

Schedule 5 to the Bill also amends the Superannuation (Unclaimed Money and Lost Members) Regulations 1999 to prescribe a rate of interest payable on inactive low balance accounts and amounts proactively reunified by the Commissioner.

Date of effect: The day after Royal Assent. Interest will be paid on all amounts proactively reunified after this date.

Proposal announced: This Schedule implements part of the Protecting Your Super Package announced in the 2018-19 Budget.

Financial impact: Nil. The cost associated with this amendment was included in the financial impact of the Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018.

Human rights implications: This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 6.

Compliance cost impact: Nil

Chapter 1 - Genuine redundancy and early retirement scheme payments alignment with pension age

Outline of chapter

1.1 Schedule 1 to the Bill amends the tax law to extend the concessional taxation treatment to amounts paid for genuine redundancy and early retirement to individuals who are 65 or more years of age provided the dismissal or retirement occurs before they reach pension age.

1.2 All legislative references are to the ITAA 1997 unless the contrary is indicated.

Context of amendments

1.3 An individual is entitled to concessional taxation treatment if they receive a genuine redundancy or early retirement scheme payment. A genuine redundancy or early retirement scheme payment is the amount paid upon termination or retirement that exceeds the amount that would be expected to be paid upon voluntary termination or retirement.

1.4 The taxation law provides for part of a genuine redundancy or early retirement scheme payment (the tax free component) to be non-assessable non-exempt income.

1.5 Under section 83-170, the amount of the tax free component of an eligible payment is equal to:

base amount + (service amount x years of service)

1.6 The years of service in the formula above are the number of whole years of employment in the period or the sum of the periods to which the genuine redundancy or early retirement scheme payment relates.

1.7 The base amount and service amount are specified under Subdivision 960-M, and are indexed annually. For the 2019-20 financial year the base amount is $10,638 and the service amount is $5,320.

1.8 An amount paid to an individual is only eligible to be a genuine redundancy payment or early retirement scheme payment if the individual is less than 65 years of age at the time of their dismissal or retirement.

1.9 The table below sets out the age pension qualifying age for men and women:

Table 1.1 : Pension age for men and women (subsections 23(5A) and (5D) of the Social Security Act 1991 ):

Date of Birth Age pension qualifying age
1 July 1952 to 31 December 1953 65 years and 6 months
1 January 1954 to 30 June 1955 66 years
1 July 1955 to 31 December 1956 66 years and 6 months
On or after 1 January 1957 67 years

1.10 The taxable part of a genuine redundancy payment or early retirement scheme payment is an employment termination payment.

1.11 Consistent with other employment termination payments, the rate of income tax payable on the payment is effectively capped through a tax offset up to a specified threshold - see Division 82.

1.12 The amount of this cap for a payment depends on the nature of the payment. Both genuine redundancy payments and early retirement scheme payments are what is referred to as 'excluded payments', which means, broadly, that more generous caps apply (see section 82-10). A payment that would be a genuine redundancy payment but for the age of the recipient is also an excluded payment (see paragraph 82-10(6)(a)).

Summary of new law

1.13 Schedule 1 to the Bill amends Subdivision 83-C to extend concessional taxation treatment for genuine redundancy payments and early retirement scheme payments to include payments made to individuals who are 65 years or older if they are dismissed or retire before they reach pension age.

Comparison of key features of new law and current law

New law Current law
Genuine redundancy payments and early retirement scheme payments are eligible for concessional taxation treatment.

For a payment to an individual to be eligible to be a genuine redundancy payment or early retirement scheme payment, the individual must, in addition to satisfying other criteria, have not reached the age at which they qualify for the age pension on the day of their dismissal or retirement.

Genuine redundancy payments and early retirement scheme payments are eligible for concessional taxation treatment.

For a payment to an individual to be eligible to be a genuine redundancy payment or early retirement scheme payment the individual must, in addition to satisfying other criteria, have been less than 65 years of age on the day of dismissal or retirement.

Detailed explanation of new law

1.14 Genuine redundancy payments and early retirement scheme payments are eligible for concessional taxation treatment.

1.15 Schedule 1 amends the definitions of 'genuine redundancy payment' and 'early retirement scheme payment' in Subdivision 83-C. As a result of the amendments, for a payment to an individual to be eligible to be a genuine redundancy payment or early retirement scheme payment the individual must not have yet reached age pension qualifying age on the day of dismissal or retirement. This replaces the prior requirement that, on the day of dismissal or retirement, the individual must not have reached the age of 65. [Schedule 1, items 1 and 2, subparagraphs 83-175(2)(a)(i) and 83-180(2)(a)(i)]

1.16 The amendments allow payments to individuals who are 65 years of age or more but are below the age at which they are entitled to receive the age pension to be genuine redundancy payments or early retirement scheme payments, subject to satisfying the other eligibility criteria. This means that such payments have a tax free component that is not assessable income and not exempt income. Consistent with the treatment of other genuine redundancy payments or early retirement scheme payments, the remainder of the payment is an employment termination payment that is an 'excluded payment' (see paragraph 1.12 above).

1.17 The amendments also define 'pension age' throughout the ITAA 1997 in the Dictionary in the ITAA 1997 as having the same meaning as in subsection 23(1) of the Social Security Act 1991 (see paragraph 1.9 above). [Schedule 1, item 11, definition of 'pension age' in subsection 995-1(1)]

Example 1.1 : genuine redundancy payment recipient below pension age Eloise is dismissed from her position as Senior Executive Global Director of Shared Worldwide Procurement at XYZ Company on 30 June 2023. This follows, a strategic restructure in which the company's Board decided to withdraw from the shared procurement model. Eloise's skills are considered not to be suited to other roles in the company.Eloise was born on 1 February 1957 and is 66 years and five months old at the date of dismissal. XYZ Company pays Eloise a termination payment upon dismissal of which $50,000 is a genuine redundancy payment.The $50,000 amount is a genuine redundancy payment as Eloise has not reached the pension age of 67 years at the date of termination of her employment on 30 June 2023.As a result, Eloise is not subject to tax on the tax-free component of the payment (which, depending on her period of service, may be the entire payment). Further, to the extent the payment is not solely made up of a tax free component, Eloise is entitled to a tax offset to ensure that the rate of income tax payable on the taxable component of the payment does not exceed the relevant threshold specified in Division 82.

Consequential amendments

1.18 Schedule 1 also makes consequential amendments to the definition of 'pension age' and the use of that term in the ITAA 1997.

1.19 The definitions of pension age in subsections 52-65(3) and 52-105(6) of the ITAA 1997, as well as the reference to these definitions in the Dictionary to the ITAA 1997 are repealed. While these definitions are the same as the definition inserted by these amendments, these definitions did not apply across the ITAA 1997 but only for the purposes of specific provisions. The inclusion of the definition in the Dictionary ensures that it applies throughout the ITAA 1997 (other than in relation to the Abstudy scheme - see paragraph 1.21 below). [Schedule 1, items 8 and 10 and 11, subsections 52-65(3) and 52-105(6), definition of 'pension age' in subsection 995-1(1)]

1.20 The amendments also asterisk references to 'pension age' in Division 52 (certain pensions, benefits and allowances, etc) and insert guidance material explaining that the definition of pension age is the same as in the Social Security Act 1991. [Schedule 1, items 4 to 7 and 9, paragraph (b) of step 1 of the method statements in subsections 52-25(3), 52-30(3) and 52-35(3) and the notes to subsections 52-65(2) and 52-105(5)]

1.21 A note is included to the definition of pension age to point out that a different definition of 'pension age' continues to apply in Subdivision 52-E solely for the purposes of the income tax treatment of payments under the Abstudy scheme. [Schedule 1, item 11, note to definition of 'pension age' in subsection 995-1(1)]

Application and transitional provisions

Application and commencement

1.22 The amendments in Schedule 1 commence on the day after the Bill receives Royal Assent. [Clause 2]

1.23 The amendments apply to genuine redundancy and early retirement scheme payments made to individuals who are dismissed or retire on or after 1 July 2019. [Schedule 1, item 3]

1.24 As a result, the measure has retrospective application. This retrospectivity is wholly beneficial to affected taxpayers and consistent with the original budget announcement. The retrospectivity ensures that taxpayers that receive a relevant payment in the period between 1 July 2019 and the date of commencement are eligible for concessional tax treatment in relation to the payment.

Chapter 2 - Luxury Car Tax Refund Entitlements

Outline of chapter

2.1 Schedule 2 to the Bill amends the LCT refund arrangements for eligible primary producers and tourism operators to provide a full refund of LCT, up to a cap of $10,000 for eligible vehicles.

Context of amendments

2.2 Under the LCT Act, LCT is payable where there is a taxable supply or taxable importation of a luxury car. Generally, a luxury car is a car that has an LCT value that exceeds the relevant LCT threshold.

2.3 Under Division 18 of the LCT Act, eligible primary producers and tourism operators can obtain a partial refund of the LCT they have borne on eligible vehicles. The refund applies to GST-registered primary producers and tourism operators who purchase or import a refund-eligible car.

2.4 Currently, a refund of 8/33rds of the LCT borne on the vehicle is available to eligible primary producers and tourism operators who make a valid claim. This refund effectively reduces the LCT rate from 33 percent to 25 per cent. However, the amount of refund is capped at a maximum of $3,000.

Summary of new law

2.5 Schedule 2 to the Bill increases both the proportion and the maximum LCT refund amount that eligible primary producers and tourism operators are eligible to be paid.

2.6 As a result of the amendments, the refund of 8/33rds of LCT with a maximum cap of $3,000 is increased to a full refund of LCT subject to a new maximum cap of $10,000 per claim.

Comparison of key features of new law and current law

New law Current law
Eligible primary producers and tourism operators will be entitled to a full refund of the total LCT borne on eligible vehicles. This refund is capped at $10,000. Eligible primary producers and tourism operators are entitled to a partial refund of 8/33rds of the total LCT borne on eligible vehicles. This refund is capped at $3,000.

Detailed explanation of new law

2.7 This Schedule amends the LCT Act to increase the amount of refund that eligible primary producers and tourism operators can receive when LCT is borne on the supply or import of an eligible vehicle.

2.8 The amount of the refund available to an eligible primary producer or tourism operator who has purchased or imported an eligible vehicle is equal to the lesser of:

·
the amount of LCT borne by the primary producer or tourism operator on the supply or importation of the vehicle; and
·
$10,000.

[Schedule 2, items 1 and 2, subsections 18-5(3) and 18-10(3) of the LCT Act]

Application and transitional provisions

2.9 The amendments commence on the first day of the first quarter after the day the Bill receives Royal Assent. [Clause 2 of the Bill]

2.10 The amendments made by Schedule 2 apply to cars supplied or imported on or after 1 July 2019. [Schedule 2, item 3]

2.11 The amendments apply retrospectively. Retrospective application is wholly beneficial to eligible primary producers and tourism operators who are affected by the amendments as they provide affected entities with an entitlement to claim an increased refund where they qualify for a refund of more than $3,000.

2.12 For supplies and imports made on or after 1 July 2019 and prior to commencement of the Bill, affected entities may have already validly claimed or been paid a refund for a vehicle to which the amendments apply.

2.13 In these cases, the claim for a refund remains valid. The claim still satisfies the requirement under section 18-15 of the LCT Act to claim a refund. If an affected entity is entitled to a larger refund under the new amendments, the amount refunded to the claimant after the commencement of the amendments is reduced by any amount already refunded before the commencement of the amendments in relation to the same claim,

2.14 Where this situation occurs, it is expected that the additional entitlement will be provided to affected entities based on their original claim and will not require a further application to be made.

Chapter 3 - Australian Energy Regulator

Outline of chapter

3.1 Schedule 3 to the Bill expands the board of the Australian Energy Regulator from three members to five members and makes other changes to ensure that the expanded board can operate efficiently.

Context of amendments

3.2 The intergovernmental Australian Energy Market Agreement provides for the establishment of several Australian energy market institutions, including the Australian Energy Regulator, which is the independent regulator and enforcement body for the National Electricity Market. The Australian Energy Market Agreement sets out the composition of the board of the Australian Energy Regulator, and the process for appointments to the board (clauses 7.3-7.6).

3.3 Part IIIAA of the Competition and Consumer Act 2010 establishes the Australian Energy Regulator. It contains, among other things, provisions for the Australian Energy Regulator's membership, appointments to its board and the board's decision-making processes.

3.4 Under the current law, the board is composed of:

·
one 'Commonwealth member', who is recommended for appointment by the Chair of the ACCC; and
·
two 'State and Territory members', who are recommended for appointment by the agreement of at least five State and Territory ministers on the COAG Energy Council.

3.5 The Australian Energy Regulator's workload has been constantly increasing over recent years due to market changes and additional rules to administer. Multiple reviews, such as the 2015 Vertigan Review, found that the because of the increasing volume and complexity of the Australian Energy Regulator's work, the size of the board is unsustainable. Those reviews recommended increasing the board from three to five members (see, for example, recommendation 6.5 of the Vertigan Review). The Government has agreed to expand the board, with the proposed board model being approved by the COAG Energy Council on 26 October 2018. Treasury has undertaken targeted consultations with the Australian Energy Regulator and the Department of the Environment and Energy, as well as with the States and Territories via the COAG Energy Council. A public consultation process was not considered necessary, as these amendments are minor and machinery in nature, and the relevant agencies and the States and Territories have been consulted.

Summary of new law

3.6 This Schedule makes a number of amendments to the size and operation of the board of the Australian Energy Regulator. Specifically, it

·
increases the size of the Australian Energy Regulator board to five members (two Commonwealth members and three State/Territory members);
·
allows for the appointment of a Deputy Chair to exercise the powers of the Chair of the board in the Chair's absence;
·
enables the Chair to establish Divisions of the board, which may exercise functions and powers of the Australian Energy Regulator board in relation to a matter;
·
provides that all board members will be associate ACCC members, in place of the current requirement that the Commonwealth board member is also a full member of the ACCC; and
·
removes the requirement that that board members be nominated in accordance with the Australian Energy Market Agreement. This is necessary to allow for the board to have five members, and allow for Commonwealth members to be appointed without being nominated by the Chair of the ACCC.

Comparison of key features of new law and current law

New law Current law
The Australian Energy Regulator board consists of five members: two Commonwealth members and three State/Territory members. The Australian Energy Regulator board consists of three members: one Commonwealth member and two State/Territory members.
The Governor-General may appoint a Deputy Chair to exercise the powers of the Chair in the Chair's absence. No equivalent.
The Chair may establish Divisions of the board, which may exercise functions and powers of the Australian Energy Regulator in relation to a matter. No equivalent.
All members of the Australian Energy Regulator board are Associate Members of the ACCC. The Commonwealth member must be an ACCC Commissioner; State/Territory members are Associate Members of the ACCC.
Members are appointed by the Governor-General. Appointments need not be consistent with the Australian Energy Market Agreement. Members are appointed by the Governor-General. Appointments inconsistent with the Australian Energy Market Agreement are invalid: specifically, Commonwealth members must be nominated by the Chair of the ACCC and there may be only three members.
All members of the Australian Energy Regulator may preside over compulsory examinations under Part XII of the Competition and Consumer Act 2010 in their capacity as Associate Members of the ACCC. The Commonwealth member of the Australian Energy Regulator board may preside over compulsory examinations under Part XII of the Competition and Consumer Act 2010 in their capacity as an ACCC Commissioner.

Detailed explanation of new law

Changes in the number of board members

3.7 Under the new law, the board of the Australian Energy Regulator will consist of five members. Of the five members, two are appointed as Commonwealth members and three are appointed as State/Territory members. The current law provides that the Australian Energy Regulator consists of one Commonwealth member and two State/Territory members. [Schedule 1, items 10, 11, 12, 15, 26, and 31, paragraphs 44AG(a) and 44AG(b), heading to section 44AM, subsections 44AM(2), 44AU(1) and (2), subsection 44AAE(1), Competition and Consumer Act 2010]

3.8 A quorum consists of three members (which must include the Chair). Currently, a quorum consists of two members. [Schedule 1, item 28, subsection 44AAD(3), Competition and Consumer Act 2010]

3.9 Under the new law, decisions may be made by a simple majority of members present and voting. The Chair has a deliberative vote. In the event of a tie, the Chair also has a casting vote. Currently, questions must be determined by a unanimous vote of the members present and voting. [Schedule 1, items 29 and 30, subsections 44AAD(4) and (4A)), Competition and Consumer Act 2010]

New Deputy Chair position

3.10 The new law requires the appointment by the Governor-General of a full time member of the Australian Energy Regulator as the Deputy Chair of the board. The Deputy Chair holds office as Deputy Chair for the period specified in the instrument of appointment, which cannot exceed 5 years.

3.11 Providing for a Deputy Chair to automatically fill the Chair's role during absences will simplify the board's operations. The Deputy Chair will automatically fill the role of the Chair during a vacancy in the office of the Chair and during all periods when the Chair is absent from duty or from Australia or is for any reason unable to perform the duties of the office. At all other times, the Deputy Chair will have the same status as other members. [Schedule 1, item 22, sections 44ARA and 44ARB, Competition and Consumer Act 2010]

3.12 The Deputy Chair may resign as Deputy Chair by resigning in writing to the Governor-General. A person's resignation as Deputy Chair does not affect the person's appointment as a member of the Australian Energy Regulator board. [Schedule 1, item 27, subsection 44AZ(3), Competition and Consumer Act 2010]

3.13 Given that the new law provides for a new Deputy Chair, the new law removes the Minister's power to appoint an Acting Chair of the Australian Energy Regulator board. However, the Minister may, by written instrument, appoint an Australian Energy Regulator member to act as the Deputy Chair. [Schedule 1, item 23, section 44AS, Competition and Consumer Act 2010]

Divisions of the board

3.14 Under the new law, the Chair is empowered to establish one or more Divisions of the board. The Chair may do this by means of a direction, empowering the Division to exercise all or any of the Australian Energy Regulator's functions and powers in relation to a matter. The Chair may also revoke or amend the Direction, including with regard to membership of the Division. [Schedule 1, item 32, subsections 44AAEB(1) and (3) and 44AAEC(1) and (3) , Competition and Consumer Act 2010]

3.15 Within the limitations of the direction, the Division may exercise the powers and carry out the functions and powers of the full board by making decisions. The Division may also make recommendations to the full board. More than one Division may perform the same functions and powers of the Australian Energy Regulator at the same time. [Schedule 1, item 32, subsections 44AAEB(1), (2), (4) and (9) and 44AAEC(1), (2), (4) and (9) , Competition and Consumer Act 2010]

3.16 The new power for the Australian Energy Regulator Chair is equivalent to the existing power of the ACCC chair to establish Divisions (see section 19 of the Competition and Consumer Act 2010).

3.17 A Division must consist of the Chair and at least two other members of the Australian Energy Regulator board specified in the direction establishing the Division. Two members form a quorum. The quorum need not include the Australian Energy Regulator Chair or Deputy Chair, neither of whom are required to attend a meeting of a Division if they do not think fit to do so. At a meeting at which neither the Chair or Deputy Chair are presiding, a member nominated to preside by the Chair is to preside. [Schedule 1, item 32, subsections 44AAEB(1) and (5)-(8) and 44AAEC(1) and (5)-(8) , Competition and Consumer Act 2010]

3.18 This new power to establish Divisions applies for the purpose of any functions and powers of the Australian Energy Regulator under a law of the Commonwealth. [Schedule 1, item 32, section 44AAEB, Competition and Consumer Act 2010]

3.19 The power to establish Divisions also applies for functions and powers under a State/Territory energy law or a local energy instrument. However, this is subject to the State/Territory energy law providing that this section extends to and has effect for the purposes of the State/Territory energy law or local energy instrument. With respect to functions and powers under a local energy instrument, the local energy instrument may also provide that this section extends to and has effect for the purposes of the local energy instrument. [Schedule 1, item 32, subsections 44AAEC(1), (10) and (11), Competition and Consumer Act 2010]

Commonwealth board members are associate ACCC members and not full time ACCC members

3.20 Currently, the Commonwealth Australian Energy Regulator member is also a full-time ACCC Commissioner (see sections 44AM and 44AN, Competition and Consumer Act 2010). Given the workload of the Australian Energy Regulator, it is no longer desirable to require one person to perform two full time roles.

3.21 As such, under the new law, all five Australian Energy Regulator members are instead automatically taken to be Associate Commissioners of the ACCC. This is consistent with the current status of State/Territory Members of the Australian Energy Regulator. [Schedule 1, items 1-9, 14, 16 and 17, definition of 'Commonwealth AER member' in subsection 4(1), the notes to subsection 7(2) and subsection 8AB(1), subsections 8AB(1)-(3), definition of 'Commonwealth AER member' in section 44AB, the note to subsection 44AM(1), subsections 44AM(3) and (4) and section 44AN, Competition and Consumer Act 2010]

3.22 Currently, the Commonwealth member of the Australian Energy Regulator is paid as a member of the ACCC, and receives no additional remuneration for the role as Commonwealth Australian Energy Regulator member. Under the new law, Commonwealth members of the Australian Energy Regulator are paid as determined by the Remuneration Tribunal. This is consistent with the current arrangements for State/Territory members. [Schedule 1, items 24, 25, and 26, subsections 44AT(1), (2) and (4) and subsections 44AU(1) and (2), Competition and Consumer Act 2010]

3.23 Under the new law, the Chair and Deputy Chair must be full time members of the Australian Energy Regulator, while the remaining members may be appointed as either full time or part time members. Currently, the Commonwealth member must be full time - this requirement will be removed, so that all members of the Australian Energy Regulator (other than the Chair or Deputy Chair) may be full time or part time members. [Schedule 1, items 13, 17 and 21, subsection 44AM(1), section 44AN and subsections 44AR(2) and 44ARA(2), Competition and Consumer Act 2010]

Appointment of members of the Australian Energy Regulator

3.24 Currently, members of the Australian Energy Regulator are appointed by the Governor-General, but must be appointed in accordance with the Australian Energy Market Agreement to be eligible (section 44AM, Competition and Consumer Act 2010). Clause 7.3 of that agreement limits the Australian Energy Regulator to three members and provides that the Commonwealth member is to be recommended for appointment by the Chair of the ACCC. As the Australian Energy Regulator will be expanded to five members and Commonwealth members will no longer be required to also be ACCC Commissioners, it is appropriate to remove this requirement.

3.25 Under the new law, appointments of members of the Australian Energy Regulator are valid even if they are inconsistent with the Australian Energy Market Agreement. However, the requirement that persons have knowledge of or experience in industry, commerce, economics, law, consumer protection or public administration to be eligible to be appointed to the Australian Energy Regulator will be applied in relation to the nomination of all members. Currently it only applies in relation to State/Territory members. [Schedule 1, item 16 and 19, subsections 44AM(3) and 44AP(3), Competition and Consumer Act 2010]

3.26 Similarly, the current requirement that the Australian Energy Regulator Chair be nominated for appointment in accordance with the Australian Energy Market Agreement no longer applies under the new law. However, the new law still provides that the Chair must be a full-time member of the Australian Energy Regulator. [Schedule 1, item 21, subsection 44AR(2), Competition and Consumer Act 2010]

Appointment of acting members of the Australian Energy Regulator

3.27 Appointments of acting Commonwealth members of the Australian Energy Regulator are, under the new law, made by the Minister instead of by the Chairperson of the ACCC. Acting Commonwealth members of the Australian Energy Regulator no longer need to be members of the ACCC. However, they must have knowledge of or experience in industry, commerce, economics, law, consumer protection or public administration. [Schedule 1, item 18, section 44AO, Competition and Consumer Act 2010]

3.28 Appointments of acting State/Territory members of the Australian Energy Regulator will be valid even if they are inconsistent with the Australian Energy Market Agreement. This is necessary for the reasons outlined above (see paragraph 3.24). Appointments of acting State/Territory members of the Australian Energy Regulator will continue to be made by the Minister. It will continue to be a requirement that they have knowledge of or experience in industry, commerce, economics, law, consumer protection or public administration. [Schedule 1, item 20, section 44AQ, Competition and Consumer Act 2010]

Compulsory Examinations

3.29 Under the new law, all Members of the Australian Energy Regulator may preside over compulsory examinations under Part XII of the Competition and Consumer Act 2010 in their capacity as Associate Members of the ACCC. Currently, only the Commonwealth member may preside over compulsory examinations in their capacity as an ACCC Commissioner. This allows the ACCC to draw upon the skills and expertise of Australian Energy Regulator members, when appropriate, when conducting compulsory examinations. [Schedule 1, item 33, paragraph 155(1)(c), Competition and Consumer Act 2010]

Application and transitional provisions

3.30 The new law commences on a date set by proclamation. This mechanism is used so that the commencement date can align with appointment and administrative processes related to the expansion of the Australian Energy Regulator board.

3.31 If a date is not proclaimed within six months of the Bill receiving Royal Assent, the new law commences automatically at the end of six months. This is a standard provision to ensure that laws which have not commenced do not sit on the statute books indefinitely.

3.32 The new law also includes transitional provisions that are intended to ensure that changes made by the new law do not negatively impact the current operation of the Australian Energy Regulator board. In particular, the new law provides for the continuity of both appointments and acting appointments as follows:

·
if, immediately before the commencement of the new law, a person held the office of Commonwealth member, State/Territory member, or Australian Energy Regulator Chair, the continuity of the person's appointment is unaffected by the new law; and
·
if immediately before the commencement of the new law, an acting appointment of a Commonwealth member or a State/Territory member is force, the appointment has effect as if it had been made under the new law.
[Schedule 1, items 34 and 35]

Chapter 4 - Consumer Data Right-Deletion requests

Outline of chapter

4.1 The Treasury Laws Amendment (Consumer Data Right) Act 2019 commenced on 13 August 2019. The Act amended the Competition and Consumer Act 2010 to provide individuals and businesses with a right to efficiently and conveniently access information held by businesses about the transactions they enter into as consumers and to authorise secure access to this data by trusted and accredited third parties. The Consumer Data Right also requires businesses to provide public access to information on the products that they have on offer.

4.2 The Government has committed to applying the CDR to the banking, energy and telecommunications sectors, and eventually across the economy.

4.3 The ACCC has the power to make rules to determine how the CDR functions in each sector.

4.4 Schedule 4 to the Bill creates a requirement that consumer data rules include an obligation on accredited data recipients to delete CDR data in response to a request from a CDR consumer for that CDR data.

4.5 All legislative references in this Chapter are to the CCA unless otherwise stated.

Context of amendments

4.6 These amendments are consistent with the strong privacy and information security provisions in the CDR, and the ACCC's broad power to make consumer data rules that deal with when, and how, CDR data must be deleted.

Summary of new law

4.7 These amendments create a requirement that consumer data rules include an obligation on accredited data recipients to delete CDR data in response to a request from a CDR consumer for that CDR data.

Comparison of key features of new law and current law

New law Current law
Consumer data rules must include a requirement that an accredited data recipient delete CDR data in response to a valid request by a CDR consumer for that CDR data.

Consumer data rules may be made on all aspects of the CDR regime including when, and how, CDR data must be deleted.

Detailed explanation of new law

4.8 An integral element of the CDR system is the protection of consumers' CDR data. These amendments support this by requiring the ACCC, when it makes consumer data rules, to include a requirement that accredited data recipients delete all or part of CDR data in response to a valid request by a CDR consumer for that CDR data. [Schedule 2, item 1 and 2, subsection 56BAA(1)]

4.9 To give effect to this obligation on accredited data recipients the consumer data rules may cover a range of matters including: how requests must be made; what constitutes a valid request; how CDR data is to be deleted; when an accredited data recipient may refuse to delete CDR data; and how a recipient is to notify a CDR consumer about the outcome of a deletion request. [Schedule 2, item 1, subsection 56BAA(3)]

4.10 The consumer data rules may also include matters that are incidental to the requirement to delete CDR data in response to a request from a CDR consumer.

4.11 The consumer data rules cannot require an accredited data recipient to delete CDR data where:

·
the accredited data recipient is required to keep the data under an Australian law, or as a result of an order of a court or tribunal; or
·
the CDR data relates to a current or anticipated legal proceeding or dispute resolution proceedings to which the accredited data recipient, or the CDR consumer, is a party.
[Schedule 2, item 1 and 3, subsection 56BAA(2) and section 56BJ]

4.12 The requirement to include a deletion right in the consumer data rules applies despite other CDR provisions, and does not limit the ACCC's power to make rules dealing with the deletion of CDR data more broadly. [Schedule 2, item 1, subsections 56BAA(4) and (5)]

Application provisions

4.13 Schedule 4 to the Bill commences on the first day following the day of Royal Assent. [Subclause 2(1), table item x]

Chapter 5 - Interest on superannuation payments by the Commissioner of Taxation

Outline of chapter

5.1 Schedule 6 amends the Superannuation (Unclaimed Money and Lost Members) Act 1999 to allow the Commissioner to pay interest on amounts held by the Commissioner that are proactively reunified with a person's active superannuation account under section 24NA of that Act.

5.2 Schedule 6 to the Bill also amends the Superannuation (Unclaimed Money and Lost Members) Regulations 1999 to prescribe the rate of interest payable on inactive low balance accounts and amounts proactively reunified by the Commissioner.

Detailed explanation of new law

Amendments to the Superannuation (Unclaimed Money and Lost Members) Act 1999

5.3 Section 24NA of the Superannuation (Unclaimed Money and Lost Members) Act 1999 enables the Commissioner to proactively reunify amounts held by the Commissioner as unclaimed money, lost member accounts or inactive low balance accounts with a person's active superannuation account.

5.4 However, amendments made to the Superannuation (Unclaimed Money and Lost Members) Act 1999 by the Treasury Laws Amendment (Protecting Your Superannuation Package) Act 2019 did not correctly provide for interest to be paid by the Commissioner.

5.5 Schedule 6 amends the Superannuation (Unclaimed Money and Lost Members) Act 1999 in line with the original policy intent to provide that interest is payable on amounts proactively reunified with superannuation accounts at a rate prescribed in the regulations. [Schedule 6, item 1, subsection 24NA(4) and 24NA(5) of the Superannuation (Unclaimed Money and Lost Members) Act 1999]

5.6 No amounts have yet been paid and the first payments are due to be made later this year after the first scheduled statement date since section 24NA of the Superannuation (Unclaimed Money and Lost Members) Act 1999 took effect.

5.7 A consequential amendment is required to section 24NB of the Superannuation (Unclaimed Money and Lost Members) Act 1999 to require a superannuation provider to repay an amount of interest that was paid to the provider if it is not credited to an account. Section 24NB already requires the provider to repay an amount that has been proactively reunified by the Commissioner but has not been credited to a member's account. [Schedule 6, item 2, paragraph 24NB(1)(a) of the Superannuation (Unclaimed Money and Lost Members) Act 1999]

Amendments to the Superannuation (Unclaimed Money and Lost Members) Regulations 1999

5.8 Schedule 6 to the Bill also amends the Superannuation (Unclaimed Money and Lost Members) Regulations 1999 to prescribe the rate of interest payable on:

·
inactive low balance accounts being paid out by the Commissioner on the direction of the member or a member's beneficiary; or
·
amounts being proactively reunified with an active superannuation account on the Commissioner's own initiative.

[Schedule 6, items 3 to 12, regulation 4Fof the Superannuation (Unclaimed Money and Lost Members) Regulations 1999]

5.9 Schedule 6 to the Bill amends the Superannuation (Unclaimed Money and Lost Members) Regulations 1999 to amend existing regulation 4F which sets out the interest payable on unclaimed money and lost members accounts.

5.10 The interest payable is based on the Consumer Price Index.

5.11 The Regulations are time critical. The timetable for Executive Council consideration does not allow for the Regulations to be made by the required time.

Chapter 6 - Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Genuine redundancy payments and early retirement scheme payments alignment with pension age

6.1 Schedule 1 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

6.2 Schedule 1 to the Bill amends the tax law to extend concessional taxation treatment for genuine redundancy and early retirement scheme payments made to individuals that are 65 years or older provided the dismissal or retirement occurs before they reach pension age.

Human rights implications

6.3 Schedule 1 to the Bill does not engage any of the applicable rights or freedoms.

Conclusion

6.4 Schedule 1 to the Bill is compatible with human rights as it does not raise any human rights issues.

Luxury Car Tax Refund Entitlements

6.5 Schedule 2 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

6.6 Schedule 2 to the Bill amends the LCT Act to increase the amount of refund that eligible primary producers and tourism operators can receive when LCT is borne on the supply or import of an eligible vehicle.

6.7 The amount of the refund available to an eligible primary producer or tourism operator who has purchased or imported an eligible vehicle is equal to the lesser of:

·
the amount of LCT borne by the primary producer or tourism operator on the supply or importation of the vehicle; and
·
$10,000.

Human rights implications

6.8 Schedule 2 to the Bill does not engage any of the applicable rights or freedoms.

Conclusion

6.9 Schedule 2 to the Bill is compatible with human rights as it does not raise any human rights issues.

Australian Energy Regulator Board Expansion

6.10 Schedule 3 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

6.11 Schedule 3 to the Bill makes a number of amendments to the size and operation of the board of the Australian Energy Regulator. Specifically, it:

·
increases the size of the Australian Energy Regulator board to five members (two Commonwealth members and three State/Territory members);
·
allows for the appointment of a Deputy Chair to exercise the powers of the Chair of the board in the Chair's absence;
·
enables the Chair to establish Divisions of the Australian Energy Regulator board, which may exercise functions and powers of the board in relation to a matter;
·
provides that all board members will be associate ACCC members, in place of the current requirement that the Commonwealth board member is also a full member of the ACCC; and
·
provides that Members need not be nominated in accordance with the Australian Energy Market Agreement. This is necessary to allow for the board to have five members, and to allow for Commonwealth members to be appointed without being nominated by the Chair of the ACCC.

Human rights implications

6.12 Schedule 3 to the Bill does not engage any of the applicable rights or freedoms.

Conclusion

6.13 Schedule 3 to the Bill compatible with human rights as it does not raise any human rights issues.

Consumer Data Right-Deletion Requests

6.14 Schedule 4 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

6.15 Schedule 4 to the Bill amends the Competition and Consumer Act 2010 to require the ACCC, when it makes consumer data rules, to include a requirement that an accredited data recipient of CDR data delete all or part of the CDR data in response to a valid request by a CDR consumer.

Human rights implications

6.16 Schedule 4 to the Bill positively engages the right to protection from unlawful or arbitrary interference with privacy under Article 17 of the International Covenant on Civil and Political Rights because it further strengthens the privacy and information security provisions in the CDR.

Conclusion

6.17 Schedule 4 to the Bill is compatible with human rights as it supports, rather than limits, human rights.

Interest on superannuation payments by the Commissioner of Taxation

6.18 Schedule 5 is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

6.19 Schedule 5 amends the Superannuation (Unclaimed Money and Lost Members) Act 1999 to allow the Commissioner to pay interest on amounts held by the Commissioner that are proactively reunified with a person's active superannuation account.

6.20 Schedule 5 to the Bill also amends the Superannuation (Unclaimed Money and Lost Members) Regulations 1999 to prescribe a rate of interest payable on inactive low balance accounts that are being reunited with a member, beneficiary or superannuation account.

Human rights implications

6.21 Schedule 5 does not engage any of the applicable rights or freedoms.

Conclusion

6.22 Schedule 5 is compatible with human rights as it does not raise any human rights issues.


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