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House of Representatives

Training Guarantee (Administration) Bill 1990

Training Guarantee (Administration) Act 1990

Training Guarantee Bill 1990

Training Guarantee Act 1990

Explanatory Memorandum

(Circulated by authority of the Minister for Employment, Education and Training, the Hon. John Dawkins, MP)

GENERAL OUTLINE

The Training Guarantee Bill 1990 and the Training Guarantee (Administration) Bill 1990 impose a requirement on employers resident in Australia to spend a minimum amount on structured training every financial year starting 1 July 1990.

The aim of the Training Guarantee scheme is to increase and improve the skills of the Australian workforce thereby improving the productivity and competitiveness of Australian industry. This is to be achieved by requiring non-exempt employers to spend a minimum amount on training. The measure is aimed at improving the efforts of those employers who currently spend little or nothing on structured training. Employers who already invest above this minimum will not be penalised.

Public and private sector employers whose annual national payroll is above a threshold ($200,000 in 1990-91 and indexed annually to average weekly earnings) will be required to spend the equivalent of 1 per cent of payroll on structured training in 1990-91 rising to 1.5 per cent in 1992-93 and thereafter. Employers are free to spend the required minimum amount according to their needs within the definition of training. Exemptions are granted to public benevolent institutions (other than public hospitals), religious institutions in relation to their pastoral activities, international organisations, diplomatic staff and non-resident employers.

Employers who do not spend the required minimum amount on structured training will incur a charge equal to the shortfall. This will be collected by Government and, after deducting administrative expenses, will be used to fund additional industry training.

The expenditure that will count towards the minimum requirement (the eligible training expenditure) comprises all outlays directly attributable to eligible on and off-the-job training programs which are structured and provide employment related skills.

Employers will self-assess as to their obligation under the legislation, and, if they incur a shortfall are required to submit a statement to the Commissioner of Taxation after the end of the financial year. The Commissioner of Taxation has administration of the legislation.

The Minister will issue guidelines from time to time to help on the interpretation of the definition of eligible training programs through disallowable instruments. A training advisory body will be available to provide advice on eligible training programs to the Commissioner of Taxation on the more difficult cases that arise.

Financial Impact

It is estimated that industry investment in structured training will increase by around $400m year as a result of this scheme in 1990-91 rising to $800m in 1992-93. Some of this will be collected by Government from employers who incur a shortfall: around $50m to $lOOm in the first couple of years. The administration costs are estimated at $0.8m in 1989-90, $4.1m in 1990-91 and S3.9m thereafter. Additional funds will be required for the conduct of a training expenditure survey by the Australian Bureau of Statistics (ABS) to monitor expenditure across all employers, by type of training and gender. These are estimated as $0.11m in 1989-90, $1.35m in 1990-91 and $2.90m in 1991-92. These costs will be met out of revenue collected under the scheme.

MAIN FEATURES

Purpose of the Bill

As reflected in its Objects clause, the Bill is focussed on improving the efficiency and international competitiveness of Australian industry by increasing both the level and quality of employment related skills of the Australian workforce in terms of productivity, flexibility and safety.

Skill levels are to be increased by raising the aggregate level of investment in training by employers and by improving the distribution of training effort amongst employers. At the same time, the quality of skills are to be improved by encouraging the adoption of structured training.

These objectives are to be addressed by requiring that all employers to which the Training Guarantee applies, undertake at least a specified minimum expenditure on structured training each year. In addition, the Training Guarantee should have the effect of accelerating change in industry perceptions of the value of employment related training.

It is also intended that the Training Guarantee, as far as possible, involve a minimum administrative burden on employers.

General Application of the Training Guarantee

The Training Guarantee imposes a minimum training requirement on employers set at a percentage of an employer's annual national payroll. The rate is 1 per cent for the year commencing on 1 July 1990 and 1.5 per cent from 1 July 1992. Employers who spend less than the minimum training requirement on eligible training activities in any financial year become liable to pay a training guarantee charge equal to the shortfall. In keeping with Constitutional requirements, the liability to pay the charge is imposed by a separate legislative instrument (the Training Guarantee Act).

Employers with annual national payrolls below a threshold, set at $200,000 for the year beginning 1 July 1990, will be exempt from the Training Guarantee. This threshold is to be indexed to the full-time adult average weekly total earnings (AWE) estimates by the Australian Bureau of Statistics for the March quarter.

Specific exemptions are also given to public benevolent institutions (excluding public hospitals) and to religious institutions in relation to the carrying out of pastoral duties or the practice, study, teaching and propagation of religious beliefs.

International organisations and foreign government representatives are also exempt by the operation of other Commonwealth Acts.

The Training Guarantee will apply to the public sector as well as the private sector. In the Australian Public Service, each Department will be treated as a separate employer.

Each State and Territory Government will be regarded as one employer. State and Commonwealth statutory authorities and government business enterprises, where these are employers in their own right, will be treated as separate employers.

Eligible Training Expenditure

Eligible training is broadly defined to encompass, among other things, structured on-the-job and off-the-job training. Similarly, the range of persons who can receive training is wide including owner managers, managers, other employees and cadets. While it is probable that an enterprise's own employees would account for most of its training expenditure, employers are not limited solely to training their immediate workforce in terms of eligible training expenditure.

A key concept is an eligible training program.

A training program comprises one or more periods of training. It may, for example, be intended to impart a range of skills and competencies to a particular person over a specified time period, or, it may be intended to impart the same particular skills to a number of persons.

An eligible training program can include both on-the-job and off-the-job training, but must:

·
be structured; and
·
have as the principal objective the development, maintenance or improvement of employment related skills and competencies.

The definition of a structured training program requires that:

·
the skills to be acquired by participants in the training program, the means of imparting the skills, and expected program outcomes, are clearly identified before the start of the program; and
·
the training program is either:

-
designed by a person or persons who has a working knowledge of the subject area and has successfully completed at least a short course in trainer training or has experience in the design and conduct of training; or
-
designed by a person without these qualifications or experience but approved by a person or persons with these qualifications or experience.

When a training program includes on-the-job training, it

·
must include a period of instruction; and
·
may include a period of related, closely supervised practice.

However, further periods of generally supervised practice and work experience are not included in an eligible training program.

Eligible training expenditure is any (net) expenditure incurred by the employer which is directly attributable to an eligible training program and arises solely or principally from an eligible training program. Net expenditure is total expenditure less any Government subsidy (for example, the Commonwealth apprenticeship rebates) and reimbursements from other parties.

Expenditure which is directly related to any of the following activities would fall within (but not limit) this broad definition:

·
determining the need for eligible training programs;
·
preparing and reviewing strategic and other training plans;
·
developing, providing, evaluating and administering eligible training programs; and
·
developing and administering accounting and information systems in relation to eligible training programs.

Examples of the type of expenditure which would be eligible include:

·
salary and wages of employees while they are participating in an eligible training program or engaged in the related training activities as outlined in subclause 25(2);
·
travel, accommodation, meals and child care costs which are directly attributable to periods when employees and other persons (including owner managers) are participating in an eligible training program or related training activities as outlined in subclause 25(2);
·
payment of fees for eligible training programs including contributions towards the Higher Education Contribution Scheme;
·
costs of training materials and materials which are consumed in eligible training programs; and
·
expenses incurred on buildings and equipment used solely or principally for the purpose of engaging in eligible training activities.

In addition, amounts paid, and the value of property donated, to other bodies which perform the activities listed in subclause 25(2) would also be counted as eligible training expenditure, provided that the recipient body uses the funds solely to enable it to carry out these activities. Types of bodies which might be eligible include:

·
tertiary education institutions;
·
industry skill centres; and
·
tripartite industry training bodies.

Payments made by employers under specific industry training levies, which use their funds solely for activities outlined in subclause 25(2), would also constitute eligible training expenditure.

To be eligible training expenditure, a particular expense must not only be directly attributable to an eligible training program (in the manner discussed above) but must also arise solely or principally from an eligible training program. This requirement is important in the case of lumpy expenses which are incurred jointly as a result of eligible training programs and other activities. If the eligible training program is the principal cause (i.e. more than half) of the expense, all of the expenditure is eligible. If the eligible training program is not the principal cause, none of the expenditure is eligible. This approach is adopted so there is no need for administratively complex apportionment procedures.

It will normally be possible to determine the length of periods when a person is participating in an eligible training program or engaged in related activities. Wage and salary costs should relate only to these periods. On some occasions an employee may be simultaneously participating in an eligible training program and involved in other work activities. The full wage and salary costs of these periods will be eligible training expenditure, provided:

·
it is not possible to differentiate the time spent on the different activities (e.g. in the case of on-the-job training); and
·
participation in the eligible training program is the principal activity of the person.

For trainees employed under the Australian Traineeship System and apprentices, employers have the option of claiming a minimum allowable amount of expenditure or the actual amount arrived at by applying the general rules.

In the case of a training institution in its capacity as an employer, any expenditures, subsidies and reimbursements of the training institution that are not directly attributable solely or principally to employees of the institution are to be disregarded in calculating eligible training expenditure.

Training advisory body

There is a need for an agency to advise on guidelines for eligible training expenditure, to deal with issues of interpretation with respect to the definition of training and to provide rulings to the Commissioner of Taxation when requested to do so. Agreement of the States and Territories for the National Training Board to fulfill these roles has been sought.

Industry Training agents

Provision is made for industry training bodies and industry associations to act as training agents. Where an industry body elects to take on the role of training agent it will be required to seek registration with the training advisory body.

The function of a training agent will be to advise employers within their industry on eligible training programs and eligible training expenditure. It will be able to issue certificates on whether particular proposed expenditures and programs are eligible and these will have the same status as those issued by the training advisory body.

Training Guarantee Fund

Any revenue collected under the Training Guarantee will be paid into the Training Guarantee Fund, which will be a special trust account within the Consolidated Revenue Fund.

Money in the Fund will be used to reimburse the Commonwealth for administration of the Training Guarantee scheme and for monitoring and reporting on its operation. Refunds of overpayments or payments made in error will also be made from the Fund. Revenue net of the above amounts will be notionally allocated to all States and Territories. A State or Territory which has a training guarantee agreement with the Commonwealth will receive its revenue share as determined above. Where there is no Training Guarantee agreement in force with respect to any State or Territory, the Commonwealth may use the amount that would otherwise have been allocated to the State or Territory for training-related activities consistent with the objectives of the Act.

Provision is also made for the Fund to receive any repayment of revenue paid to a State or Territory that fails to comply with the training guarantee agreement and for the deduction from any subsequent payment to a State or Territory of any unspent part of an earlier payment, or expenditure in contravention of the terms of the agreement.

Training Guarantee Agreements with States and Territories

The Minister is empowered to make agreements with the States and Territories concerning payments to them from the Fund and the conditions attaching to such payments.

Each agreement will include clauses to the effect that the State or Territory supports the Training Guarantee scheme and agrees to spend its share of revenue on additional eligible training activities on the advice of a designated tripartite body.

Failure to comply with Training Guarantee agreement

These clauses provide for the Minister to give notice to a State or Territory of any contravention of the agreement and for possible recovery of all or part of Commonwealth payments made under the agreement. Alternatively, the Minister may deduct from any further payment any amount unspent from a preceding payment or not spent in accordance with the agreement.

Administration

The administration of the training guarantee scheme will rest with the Commissioner of Taxation. Collection and recovery of training guarantee charge provisions, including those relating to penalties for late payment etc., will be modelled on those operating for income tax.

Training guarantee charge year

Liability to the training guarantee charge will be assessed on an annual basis with the charge year being the normal financial year, i.e. 1 July to 30 June. The first "charge year" will be the year ending 30 June 1991.

Self-assessment

Employers will self-assess their liability to pay the training guarantee charge. This will entail calculating the liability and remitting the charge so calculated with an annual training guarantee statement by 30 September following the end of the charge year.

Only those employers who fail to expend the necessary amount on eligible training and therefore will be liable to pay the shortfall charge will be required to lodge a statement, unless specifically requested in writing to do so by the Commissioner.

The lodgement of a training guarantee charge statement will, for all practical purposes, constitute an assessment of an employer's training charge liability. The assessment will be deemed to have been made on the date by which the employer is required to make payment of the charge (30 September). If the statement is furnished after the payment date the assessment will be deemed to have been made on the date the statement is furnished.

If a training guarantee statement is not lodged by the due date and the Commissioner believes that the employer has a liability to pay the training guarantee charge, the Commissioner will be able to make a formal assessment of the training guarantee shortfall and the amount of the training guarantee charge to which, in the Commissioner's opinion, the employer is liable. Alternatively, the Commissioner may require an employer to lodge a training guarantee statement for a particular year.

Amendments

Where an assessment has been made of an employer's training guarantee charge liability, including an assessment deemed to have been made by virtue of the lodging of the employer's training guarantee statement, the Commissioner will be authorised to amend the assessment, broadly according to the rules that apply for assessments made under income tax law.

NOTES ON CLAUSES

TRAINING GUARANTEE (ADMINISTRATION) BILL 1990

STRUCTURE

The Training Guarantee scheme has been broadly described under the main features of this memorandum. A brief outline of the structure of the proposed Act is given below together with a synopsis of the more important provisions in order to assist understanding of the subsequent explanation of each proposed section:

PART 1 - PRELIMINARY
Section 1 specifies that the proposed Act will be cited as the Training Guarantee (Administration) Act 1990
2 provides authority for the proposed Act and therefore the Training Guarantee scheme to commence on 1 July 1990
3 sets out the objects of the proposed Act
4 defines terms used in the Bill
5-8 sets out the meaning of certain terms used in the Bill
PART 2 - LIABILITY AND NOTIONAL LIABILITY TO PAY TRAINING GUARANTEE CHARGE
Division 1 - Liability of employers other than the Commonwealth
Section 11 establishes the liability of an employer to pay training guarantee charge
12 provides for an election by two or more members of a business group to be treated as a single employer in relation to a year
13 specifies that training guarantee charge is not payable unless the employer has a training guarantee shortfall etc.
14 sets out how a training guarantee shortfall is determined
15 sets out the rules for calculating the "minimum training requirement"
16-18 exempts certain employers from training guarantee charge
19 deals with arrangements to avoid or reduce training guarantee charge
Division 2 - Notional liability of the Commonwealth and certain Commonwealth authorities
Section 20-23 ensures that Commonwealth Departments and authorities have the same training guarantee obligations as other employers
PART 3 - ELIGIBLE TRAINING EXPENDITURE AND PROGRAMS
Section 24-26 sets out the meaning and method of calculation of "eligible training expenditure" together with examples of possible eligible training expenditure
27 explains the meaning of an "eligible training program"
28 provides for an election by the employer for the application of a minimum allowable apprentice or trainee amount
29 provides for an election by the employer in relation to approved entry level training
30 authorises the Minister to make guidelines in relation to eligible training programs
31 specifies the circumstances where reimbursements, subsidies, etc. to training institutions are to be disregarded in determining eligible training expenditure
PART 4 - TRAINING GUARANTEE FUND
Section 32-34 deals with the establishment of the Training Guarantee Fund and sets out what moneys may be paid in and out of the Fund
35-36 authorises the Minister to make Training Guarantee agreements with the States and Territories and covers the situation where there is failure to comply with an agreement
PART 5 - ADMINISTRATION
Section 37-38 establishes the fact that the Commissioner of Taxation has the general administration of the proposed Act and requires an annual report and financial statements to be presented to Parliament
39 sets out the secrecy provisions of the proposed Act
PART 6 - TRAINING GUARANTEE STATEMENTS AND ASSESSMENTS
Division 1 - Training guarantee statements
Section 40 specifies when a training guarantee statement must be lodged
41 authorises the Commissioner to require a training guarantee statement to be lodged
42 sets out the requirements for training guarantee statements
Division 2 - Training Advisory Certificates
Section 43 provides that registered industry agents may issue certificates stating that certain proposed activities and expenditures constitutes an eligible training program and eligible expenditure
44 provides that the training advisory body may provide certificates stating whether particular activities constitute an eligible training program
45 states that a certificate issued by the training advisory body or a registered industry agent is binding on the Commissioner
Division 3 - Assessment
Section 46 provides that the first training guarantee statement for a year is to be deemed to be an assessment for that year
47 empowers the Commissioner to make a default assessment where no training guarantee statement has been lodged
48 authorises the Commissioner to make an assessment where there is insufficient information
49 sets out the circumstances in which the Commissioner is authorised to amend assessments
50 authorises the refund of any overpayments
51 provides that an amended assessment is to be taken to be an assessment
52 requires the Commissioner to give notice of assessment
53 provides that an assessment is valid notwithstanding any provision of the proposed Act has not been complied with.
PART 7 - OBJECTIONS, REVIEWS AND APPEALS
Division 1 - Objections to and review of assessment
Section 54 provides that an employer dissatisfied with an assessment may lodge an objection
55 provides that an employer dissatisfied with a decision or objection may refer that decision to either the Administrative Appeals Tribunal or the Federal Court
56 provides an avenue for an employer to apply for an extension of time to lodge an objection or application for review of the decision on objection
57 requires the Commissioner to consider each application for extension of time and to give written notice of that decision
58 outlines the Commissioner's obligations upon receipt of an application for extension of time to lodge an application for review
59 outlines the Commissioner's obligation upon receipt of an application for review of the decision on objection
60 sets out the procedure on review or appeal
Division 2 - Review of certificates issues by training advisory body
Section 61 provides that an employer who has been refused a certificate by a registered industry agent may apply to the training advisory body for a review of the decision
62 provides that an employer dissatisfied with the effect of a certificate issued by the training advisory body may request the matter to be referred to the Tribunal
63 provides an avenue for an employer to apply for an extension of time to lodge a request for referral
64 outlines the Commissioner's obligations upon receipt of an application for an extension of time to lodge an application for review
65 outlines the Commissioner's obligations upon receipt of an request for referral to the Tribunal
66 sets out the procedure on review or appeal
Division 3 - Review of appeal generally
Section 67 provides a mechanism for an employer to give notice to the Commissioner to refer an application for review
68 sets out the powers of the Federal Court on appeal
69 sets out the requirements for implementation of a decision of the Tribunal or a court
70 provides that a pending review or appeal does not interfere or affect the assessment or any recovery action
PART 8 - COLLECTION AND RECOVERY OF CHARGE
Section 71 specifies the date when training guarantee charge becomes due and payable
72 specifies when additional training guarantee charge becomes due and payable
73 authorises the Commissioner to determine the date when training guarantee charge becomes due and payable when the employer is leaving Australia
74 provides for extensions of time and payment by instalments of training guarantee charge
75 provides for an additional charge for unpaid training guarantee charge - i.e., late payment penalty
76 permits the recovery of training guarantee charge
77 allows service of documents by posting the documents to the last known address of an employer in certain circumstances
78 imposes certain duties on liquidators of companies
79 authorises the Commissioner to recover training guarantee charge from the trustee of a deceased employer
80 allows the Commissioner to make an assessment where there is no administration of a deceased estate of an employer
81 empowers the Commissioner to recover training guarantee charge by issuing a garnishee notice
82-83 appoints public officers
PART 9 - PENALTY CHARGE
Section 84 provides for additional training guarantee charge for failure to provide statements or information, i.e., late lodgment penalty
85 provides for additional training guarantee charge for making false or misleading statements
86 provides for additional training guarantee charge for entering into an arrangement to avoid or reduce training guarantee charge
87 ensures that an assessment is made of any additional training guarantee charge
PART 10 - REGISTRATION OF INDUSTRY AGENTS
Section 88 defines a term used in this Part
89 requires the training advisory body to keep a register of industry agents
90-91 provides for persons wishing to act as industry agents to be able to register with the training advisory body which will apply strict guidelines for registration
92-93 requires a registered industry agent to comply with the conditions set in the guidelines for conduct of industry agents or face cancellation
94 enables the Minister to make guidelines relating to the registration of industry agents
95 provides that a person may appeal against decisions made by the training advisory board with regard to this Part of the Bill
PART 11 - MISCELLANEOUS
Section 96 provides for courts etc. to take judicial notice of the signature of the Commissioner
97 sets out evidentiary requirements
98 empowers an officer authorised by the Commissioner to have access to premises, etc.
99 authorises the Commissioner to obtain information and evidence
100 sets out the rules of contribution where more than one person is liable to training guarantee charge
101 specifies the records that must be kept and preserved by employers
102 authorises the Governor-General to make regulations
PART 12 - AMENDMENTS OF CERTAIN ACTS IN RELATION TO THE TRAINING GUARANTEE CHARGE
Section 103 delineates the amendments as set out in the schedule

Notes on the proposed provisions of the Bill follow.

PART 1 - PRELIMINARY

Clause 1: Short title

This clause provides for the Act to be cited as the Training Guarantee (Administration) Act 1990.

Clause 2: Commencement

But for this clause, the Act would by reason of subsection 5(1A) of the Acts Interpretation Act 1901, come into operation on the twenty-eighth day after the day on which it receives the Royal Assent. This clause provides, however, for the Act to come into operation on 1 July 1990 which is the date it is proposed for the scheme to commence. However, the registration of industry agents (Part 10 of the Bill) and matters relating to industry agents (particularly clauses 43 to 45 and 61 and 62) will come into effect on a day to be proclaimed but no later than 1 January 1990.

Clause 3: Objects

This clause explains the main objectives of this Bill. Section 15AA of the Acts Interpretation Act 1901 provides that where a provision of an Act is capable of more than one construction, the construction that would promote the purpose or object of the Act is to be preferred to one that would not promote that purpose or object.

This clause is a statutory declaration, although not exhaustive, of some of the objects of this Bill.

Subclause 3(1) declares that the principal objective of this Bill is to increase the quantity and improve the quality of employment related skills of the Australian workforce in order that workers may become more productive and flexible and carry out their duties more safely. This is required to increase the efficiency and competitiveness of Australian industry.

Subclause (2) describes other objectives of this Act, which are to be achieved in concert with the principal objective. These objectives include:

·
improving the quality of employment related training by encouraging the adoption of structured training (paragraph (a));
·
encouraging further investment by employers in employment related training (paragraph (b));
·
ensuring a more equitable distribution of the employment related training effort among employers (paragraph (c)), recognising that a substantial proportion of employers spend little or nothing on quality training; and
·
accelerating change in attitudes towards employment related training among employers and industry (paragraph (d)).

Subclause 3(3) states that these objectives are to be achieved by guaranteeing that employers spend a minimum amount on quality employment related training.

Subclause 3(4) demonstrates the intention of Parliament that attention be given, in the implementation of the Bill, to the minimisation of the administrative burden on employers, as far as this is consistent with achieving the objectives of the Act. This requires that recognition be given, in both the administration of the Bill by the Commissioner for Taxation and the interpretation of the provisions of the Bill by such agents as the training advisory body, to the need to keep the administrative requirements on employers simple.

Clause 4: Interpretation - definitions

This clause is an interpretative provision which ascribes particular meanings, unless the contrary intention appears, to words and expressions used in the Bill.

"annual national payroll" means the total of salary or wages paid by an employer during a year, which for the purposes of this legislation means a financial year starting on 1 July and ending on 30 June. The terms salary or wages, employer and year are defined terms.
The salary or wages to be included in payroll comprise payments made by an employer in Australia and those payments made outside Australia for services rendered wholly in Australia. This could arise, for example, where an overseas architect is employed by an Australian employer to supervise a building project in Australia but is paid for those services in his home country.
"apprentice" means a person employed under apprenticeship arrangements determined by State or Territory industrial and commercial legislation only an industrial award, order, determination or agreement in force under Commonwealth or State legislation. The distinctive feature of these persons is that they are serving a period of training in a trade. Hence the term covers persons indentured in an apprenticeable trade, trainee apprentices in New South Wales who are not indentured but are nonetheless serving a period of trade training and persons employed in a non-apprenticeable trade area under voluntary apprenticeship arrangements (including a written contract of training). The term excludes articled clerks, apprentice jockeys, golf professional's apprentices and so on.
"arrangement" is given an extended meaning, common to provisions of other taxation laws, so as to include any agreement, arrangement or understanding, either expressed or implied, whether or not intended to be enforceable under law.
"assessment" is defined to mean the ascertainment of the training guarantee shortfall (a defined term, with a meaning given by clause 14) of an employer in a year (a defined term), and of the training guarantee charge (also a defined term being the charge to be imposed by the Training Guarantee Act 1990) payable on the shortfall or the ascertainment of penalty charge under Part 9 of the Bill. In accordance with the concept of self-assessment, lodgment of a first training guarantee statement for a year under clause 44 will have the effect of an assessment being taken to have been made - see notes on that clause. Formal assessments may also be made in accordance with clauses 45 or 46 - see notes on those clauses.
"authorised officer" is defined to mean an officer or employee within the meaning of the (Commonwealth) Public Service Act 1922 who has been authorised in writing by the Commissioner of Taxation to carry out certain duties. The term is used in clause 87 which requires that an authorised officer be given entry, at all reasonable times, to land or promises to inspect documents etc. - see notes on that clause.
"AWE amount" is the estimate of the full-time adult average weekly earning of persons in Australia as published by the Australian Statistician for a given month in the publication ABS Average Weekly Earnings, Australia (Cat.No.6302.0). The percentage increase in this amount between two consecutive March quarters is applied to update on an annual basis the payroll threshold amount (defined term) for exemptions and the minimum allowable apprentice or trainee amount (defined term). The term has application in clause 5.
"building", when used in a provision of this Bill (e.g., clause 25 which gives examples of possible eligible training expenditure) will include, by definition, a part of a building.
"Commissioner" is a drafting device to shorten references in the Bill to the Commissioner of Taxation.
"Commonwealth Department" means:

·
a Department of State of the Commonwealth; or
·
a Department of the Parliament; or
·
a branch or part of the Australian Public Service in relation to the staff of which a person has, under a Commonwealth Act, the powers of, or exercisable by, a Secretary under the Public Service Act 1922.

Under the provisions of clause 21, this Bill will apply in relation to Commonwealth Departments.
"company" is defined to include any incorporated or unincorporated body or association, but not a partnership.
"data processing device" is defined to mean any article or material from which information is capable of being reproduced with or without the aid of any other article or device (e.g., in an electronic medium such as magnetic tape or computer disc).
"depreciable property" means plant or articles within the meaning of section 54 - the depreciation provision - of the Income Tax Assessment Act 1936. Eligible training expenditure incurred in a year may include expenditure on property that, if the employer so elects, will be depreciable.
"Deputy Commissioner" is defined to mean a Deputy Commissioner of Taxation and when used in the Bill avoids references to the longer expression.
"eligible training expenditure" is a term which is discussed in detail in clauses 25 and 26. Essentially, it means expenses incurred by an employer which can be counted by the employer towards the obligation under the Bill to spend a minimum amount on eligible training. To be eligible, expenses must be directly attributable, solely or principally to eligible training programs (a defined term).
"eligible training program" is a term fundamental to the legislation. Only expenditure which is directly attributable to eligible training programs can be counted as eligible training expenditure. Essentially, a training program, which consists of one or more training activities, is eligible provided it is structured and its objectives are to develop, maintain or improve employment related skills of employees or any other person. This term is explained in detail in the notes on clause 27.
"employee" is defined as a person who receives or is entitled to receive salary or wages, and includes a person employed by a State or Territory government body. The term "salary or wages" (see notes on that term) also includes certain payments such as commissions, bonuses, fees and allowances. For the purposes of this Bill, however, employee does not include an employee of a religious institution whose duties are religious in nature (e.g., a minister of religion). A further qualification is that the person must be a resident of Australia during the whole or a part of the year to be an employee for the purposes of the Bill.
"employer" essentially means a person (including a company, a partnership, any other unincorporated association or body of persons and a State or Territory government body) that pays or is liable to pay salary or wages.
"employment related skill" is a term used in subclause 27(1) as a qualification on the types of training programs that will qualify as eligible. That section states that a training program will be eligible provided that it is structured and that its sole or principal aim is to develop, maintain or improve employment related skills of employees and other persons.
The term skill is separately defined. The concept of employment related draws its meaning in part from subclause 3(1) - Objects - and the notes on that subclause are also relevant.
In essence, employment related skills refers to those skills, knowledge and competence which are used in the workplace, and help workers to work more productively, flexibly or safely (see subclause 3(1)). This includes skills that are used or may be used, occasionally or in the future, by persons:

·
working as employees i.e. in the process of holding any office or appointment, performing any functions or duties, engaging in any work, or doing anything that results in the person being an employee (paragraph (a)); and
·
working in a business, occupation, profession or trade in a capacity other than as employees. This includes people who are self-employed, employers, owner-managers, partners, directors and principals where they are not regarded as employees, contractors, volunteers and other people not regarded as employees (paragraph (b)).

As a result, trainer-training is included within this definition. However, skills which are intended to be used for recreational, hobby, artistic and cultural endeavors are excluded unless they are to be used or will be used by a person in the course of being an employee or working in a business, occupation, profession or trade.
"Federal Court" is a drafting device to shorten references in the Bill to the Federal Court of Australia.
"Fund" is the shortened reference used in various provisions of the Bill for the Training Guarantee Fund, the establishment of which is provided for by clause 32 of the Bill (see also notes on that clause).
"government body" is defined to mean the Commonwealth and its authorities as well as a State or Territory or an authority of a State or Territory. The term has application in Part 9 of the Bill as government bodies generally cannot be made liable for penalty charge.
"higher education institution" is an institution which is specified in Schedule 1 of the Employment, Education and Training Act 1988. In essence, it includes all universities, colleges of advanced education, institutes of technology, and some tertiary colleges which specialise in the teaching of the arts, music and agricultural science.
"indexation factor" obtains its meaning from subclause 5(1). It is the factor which is used to update the threshold amount (a defined term) and the minimum allowable apprentice or trainee amount (a defined term) in line with annual movements in the average weekly earnings.
"industrial instrument" is a term used in the definition of apprentice i.e. an apprentice is a person employed as such under an industrial instrument. The industrial instrument referred to here is a Commonwealth, State or Territory law, or, an award, order, determination or industrial agreement in force under such law. An example of the former is the Industrial Training Act 1975 in Victoria or the Apprenticeship Act 1981 in NSW. An example of an award is the Federal Vehicle Industry Award recognised under the Conciliation and Arbitration Act 1901-1974. The award provides a definition of who is an apprentice for the industry.
"liability to the Commonwealth", where used in the Bill, is to be taken as meaning a liability to Commonwealth taxation, i.e., a liability arising under a law administered by the Commissioner of Taxation.
"liquidator" is defined in relation to a company, and means a person required by law to carry out the winding-up of a company, whether appointed as liquidator or not.
"lodge" when used in this Bill means lodge with or furnish to the Commissioner of Taxation.
"minimum allowable apprentice or trainee amount" is the minimum amount which an employer may claim as eligible training expenditure per year for each apprentice (a defined term) or trainee (a defined term) employed for the whole financial year. The employer is entitled to claim this amount for each employed apprentice or trainee without the need to keep records of expenditure on training for the apprentice or trainee. However, the employer can claim a greater amount if he keeps appropriate records. This is discussed in clause 28. Where an apprentice or trainee is employed for only part of a year, the employer can only claim a pro-rata amount, as discussed in subclause 28(2). The actual minimum (annual) allowable amount is set out in clause 6.
"minimum training rate" is a percentage which, when applied to the annual national payroll (a defined term), gives the minimum amount which an employer is required to spend on eligible training programs (a defined term). This minimum amount is the minimum training requirement (a defined term). The minimum training rate is set out in clause 15(2).
"minimum training requirement" is the minimum amount which an employer is required to spend on eligible training programs (a defined term). If an employer fails to do so, he becomes liable to pay a charge equal to the shortfall. The minimum training requirement is calculated through the formula described in subclause 15(1).
"Minister" when used in this Bill means the Minister for Employment, Education and Training.
"modifications" is defined to include additions, omissions and substitutions. The definition makes it clear that, where modification of a provision of this Bill is required (see for example, clause 12 - Election by members of business groups) a wide interpretation is to be given to the term.
"natural person" for the purposes of the Bill does not include a natural person who is a trustee.
"net eligible training expenditure" equals eligible training expenditure (a defined term) net of subsidies and reimbursements received by the employer in relation to activities which are eligible expenditure. Subsidies and reimbursements are defined terms. The Bill requires that this expenditure be at least equal to the minimum training requirement (a defined term) if the employer is to avoid incurring a charge equal to the shortfall. The term obtains its meaning from subclause 24(1).
"offences against this Act" includes, as well as offences specified in the Bill, offences against the Crimes Act 1914 or the Taxation Administration Act 1953 relating to the Bill.
"person" for the purposes of the Bill, includes a body politic, body corporate, partnership, other unincorporated association or body of persons, and a person in the capacity of trustee.
"proceeding under this Act" includes, as well as a proceeding for an offence against the Bill, a proceeding under the Taxation Administration Act 1953 relating to the Bill.
"register of industry training agents" is the register to be kept by the training advisory body as provided for in clause 89. The training advisory body will be the agency responsible for registering industry agents and maintaining the register.
"registered industry training agent" means a person (a defined term - includes unincorporated and corporate bodies) whose name appears on the register of industry agents (a defined term). Registration is provided for by Part 10 of the Bill. Registered industry agents may issue a training advisory certificate (a defined term).
"reimbursement" should be read in conjunction with the definition of subsidy and eligible training expenditure. It means money or property received by an employer through a fee, charge, donation or contribution or other form of payment, but excludes money received from prescribed sources. The term is used in subclause 24(3) which refers to reimbursements received by an employer in relation to eligible training programs. A reimbursement of this kind occurs, for example, when an employer is reimbursed through a fee by another employer for training it provided or, instead of a fee, receives a donation of money or property.
"remuneration" should be read in conjunction with the definition of "responsible Department". The term "responsible Department" is used in clause 21, the purpose of which is to treat Commonwealth Departments as if they were private employers in respect of training guarantee obligations. Remuneration in relation to a particular Commonwealth employee is to mean only that remuneration received by the employee in his or her capacity as a Commonwealth employee.
"resident of Australia" obtains its meaning from clause 7 - see notes on that clause. Only employers who are residents during the whole or a part of a year will be liable to pay training guarantee charge for the year (see also notes on clause 18).
"responsible Department" is a term used in clause 21 to identify in relation to a particular Commonwealth employee, the Department that is to be responsible for that employee's training guarantee. In the case of an employee whose remuneration (also a defined term) is paid solely or principally out of an annual appropriation, the responsible Department is defined to be the one whose appropriation is charged with that remuneration (paragraph (a)). Where the remuneration of the employee concerned is paid solely or principally out of a standing appropriation (e.g., remuneration of a statutory officeholder that is paid out of money appropriated by the Remuneration Tribunals Act 1973), the responsible Department will generally be the one for which the employee performs duties (subparagraph (b)(i)). However, if the employee concerned does not perform duties for a Department, the responsible Department will be the one that administers that part of the Act under which money is appropriated for the payment of the employee's remuneration (subparagraph (b)(ii)). The Department of Administrative Services will be the responsible Department in the case of employees (e.g., Judges) whose remuneration is paid solely or principally out of money appropriated by the Constitution (paragraph (c) ).
"salary or wages" is defined for the purpose of ascertaining the annual national payroll of an employer - a defined term which is central to the overall operation of the Bill.
The term means salary, wages, commission, bonuses or allowances paid to an employee (also a defined term) in his or her capacity as an employee.
Although the definition is based broadly on the definition of salary or wages (for Pay-As-You-Earn purposes) which is contained in section 221A of the Income Tax Assessment Act 1936 the expression is not as extensively defined for training guarantee purposes. For instance, return to work payments, workers' compensation, superannuation and retiring allowances are not included.
The definition does specifically include a payment made under a contract that is wholly or principally for the labour of the person to whom the payments are made if:

·
the person making the payments is not a natural person (a defined term); or
·
the payments are not wholly or principally of a private or domestic nature.

This has the effect of excluding from the term "salary or wages' payments made to persons who are not employees as such by householders, where the payments are wholly or principally of a private or domestic nature.
Unlike the income tax law, for a payment to fall within the definition of salary or wages in clause 4 of the Bill, it is necessary that the contract require the person to whom the payment is made to personally perform the work - if the contract leaves it open for the person to engage someone else to perform it, it is not a payment to which this definition of salary or wages applies.
Also, unlike in the income tax law, the definition of salary or wages does not apply to payments made to persons who are not employees as such where the payments are not for labour, but for the exercise of creative talent to produce an artistic work. Thus, payments made to an individual for the performance or presentation by the person of, or participation, in any music, play, dance, entertainment address, sport, display promotional activity, exhibition or similar activity involving the exercise by the person of intellectual, artistic, musical, physical or other personal skills or performance of services are not regarded as salary or wages for the purposes of this Bill.
The definition specifically includes two further examples of payments as salary or wages:

·
by a company by way of remuneration to a director of a company - i.e., director's fees; and
·
by way of commission to an insurance or time-payment canvasser or collector.

Fringe benefits within the meaning of the Fringe Benefits Tax Assessment Act 1986 are specifically excluded from the definition of salary or wages. Provision is also made for other payments to be excluded if so prescribed.
"school" has the same meaning as in the Employment, Education and Training Act 1988; namely:

·
a school or similar institution at which full-time primary education or full-time secondary education, or both, is or are provided; or
·
a school or similar institution at which education is provided that includes full-time primary education or full-time secondary education, or both;

but does not include such a school or institution conducted for the profit, directly or indirectly, of an individual or individuals.
"Second Commissioner" is defined to mean a Second Commissioner of Taxation and when used in the Bill avoids references to the longer expression.
"skill" has the standard dictionary meaning, namely, practised ability, expertness and facility and it includes competence and knowledge. It is intended that this term have a wide meaning.
"structured training program" has the meaning given by subclause 27(2). In essence, a training program which consists of one or more training activities is structured when it is properly designed and assessed. These conditions are discussed in the notes on subclause 27(2).
"subsidy" should be read in conjunction with reimbursement and net eligible training expenditure. A subsidy is any financial assistance (rather than a reimbursement) provided by a government body, but does not include assistance prescribed for the purposes of this definition. This term is used in subclause 24(3). An example of a subsidy relevant to that subclause are the payments made to employers under the Apprentice Training Incentive (ATI) component of the Commonwealth Rebate for Apprentice Full-time Training (CRAFT) program.
"taxation officer" is defined for the purposes of clause 82 dealing with false or misleading statements. The term means a person exercising powers, or performing functions under the Training Guarantee (Administration) Act 1990.
"technical and further education institution" has the same meaning as in the Employment, Education and Training Act 1988; namely:

·
any institution (other than a higher education institution or a school) that provides technical and further education, being;

-
an institution in a State conducted by or on behalf of the government of the State; or
-
an institution in a Territory conducted by or on behalf of the government of the Commonwealth (other than an institution declared by the Minister, in writing, not to be such an institution); or

·
an institution, proposed institution, body, authority or instrumentality that, by virtue of a declaration under section 5 of the Employment, Education and Training Act 1988, is a technical and further education institution for the purposes of that Act.

"this Act" includes anything contained in regulations made pursuant to clause 91.
"threshold amount" is an important parameter as employers with an annual national payroll (a defined term) below this threshold amount are exempt from having to spend a minimum amount on structured training as required under this Bill. The value of the threshold amount is set in clause 8. It will be $200,000 in the first year and, for each subsequent year, it will rise by the March quarter rate of increase in full-time adult average weekly total earnings over the previous year, or, where this is negative, stay at the level for the previous year. Exemption for businesses with a payroll below the threshold is granted in clause 16.
"trainee" means a person employed as a trainee under the Australian Traineeship System (ATS). This is the scheme administered by the Commonwealth and State and Territory governments which offers broad-based entry-level training for young people. This definition should be read in conjunction with that for apprentice. The relevance of this definition is with regard to the special treatment of apprentices and trainees in calculating eligible training expenditure, as discussed in clause 28.
"training" means learning activities which impart skill, knowledge and competence. For the purposes of this Bill, these activities include instruction and closely supervised practice but are not limited to them. Instruction would normally be in the form of lectures, group training sessions, tutorials, audio-visual presentations, demonstrations, self-paced training and correspondence courses. Seminars, conferences, workshops and conventions also qualify as training activities for the purposes of this definition although they are not necessarily an eligible training program by themselves.
The term is used throughout the legislation but particularly in relation to clause 27 - Meaning of eligible training program. As will be clear from that clause not all training counts towards eligible training expenditure. The notes on clause 27 explain which training is eligible.
"training advisory body" is the body which will advise the Minister and the administering agency, the Australian Taxation Office, on issues relating to the definition of training. More precisely, there are three roles envisaged for this body:

·
advise the Minister on the guidelines on what constitutes an eligible training program and in regard to the training arrangements that are approved entry-level training arrangements. The Minister is required to take into consideration any recommendations from the training advisory body. This is covered in subclause 30; and
·
provide, of its own accord or after a request, to the Commissioner of Taxation and to registered industry agents rulings on whether particular activities constitute or are attributable to an eligible training program and on what kind of expenses can be counted against these activities. Where such rulings directly affect a particular employer, they are binding on the Commissioner. This is covered in clause 44.
·
register industry agents, monitor their performance and, where necessary, de-register them. This is covered in clauses 88 to 95.

The training advisory body in both cases will be the National Training Board Ltd. or another body prescribed for the purposes of each of the above clauses.
"Training advisory certificate" means a certificate issued by a registered industry agent (as provided for by subsection 43(2)) or the training advisory body (as provided for by subsections 44(1) and 61(2)). There are two main differences between these certificates:

·
a registered industry agent may only issue a certificate stating that certain activities and expenditures are eligible; whereas the training advisory body may issue a certificate stating that certain activities and expenditures are or are not eligible. However, both sets of certificates are binding on the Commissioner;
·
a certificate issued by a registered industry agent arises as a result of a direct request from an employer; while a certificate issued by the training advisory body arises from a request by the Commissioner or from a registered industry agent or from the training advisory body's own motion. An employer may only request a certificate from the training advisory body where the employer has been refused a certificate from a registered industry agent appropriate to the industry and the employer is appealing in writing against that decision to the training advisory body.

It should be clear that employers do not need to have certificates to be able to claim expenditures against the requirements of the Training Guarantee scheme. In most cases, employers will be able to assess for themselves or on the basis of advice received from the Australian Taxation Office or a registered industry agent whether their expenditures are eligible. Where the situation is clear cut, the claim is not likely to be challenged by the Commissioner. Employers may find certificates useful in those cases where it is more difficult to assess quickly whether expenditures will be eligible.
"training guarantee agreement" means an agreement, made between the Commonwealth government through the Minister and a State or Territory, under which payments are made from the Training Guarantee Fund to States and Territories. This term occurs in clauses 35 and 36.
"training guarantee charge" should be read in conjunction with the definition of training guarantee shortfall. It is a charge imposed on employers who fail to train to the required minimum and equals the shortfall between the minimum training requirement and the net eligible training expenditure. The change is imposed by the Training Guarantee Bill 1990. This shortfall is the training guarantee shortfall (a defined term).
"training guarantee shortfall" has the meaning given by clause 14. It means the difference between the minimum amount that an employer is required to spend on eligible training programs (i.e. the minimum training requirement - a defined term) and the amount the employer spends on eligible training programs, net of reimbursements and subsidies (i.e. the net eligible training expenditure). It cannot be less than zero. This is used to calculate the training guarantee charge (a defined term).
"training guarantee statement" is defined for purposes of Division 1 of Part 6 of the Bill. In accordance with that Division an employer who is liable to pay training guarantee charge will normally be required to lodge a training guarantee statement for a year by 30 September in the following year.
"training institution" means:

·
a higher education institution, a technical and further education institution or a school as defined in this section (paragraph (a));
·
an individual or organisation which conducts training on a commercial basis for profit or reward (paragraph (b)), such as training consultants, business colleges and an employer who develops training for its own employees and makes this available to other employers for a fee; or
·
any other individual or organisation prescribed for the purposes of this definition (paragraph (c)).

"Tribunal" is a drafting device to shorten references in Part 7 of the Bill - Objections, Reviews and Appeals - to the Administrative Appeals Tribunal.
"trustee" is defined to include the following:

·
a person made a trustee by consent, court order or operation of law;
·
an executor, administrator or other personal representative of a deceased person;
·
a guardian or committee;
·
a receiver or receiver and manager;
·
an official manager or liquidator of a company; and
·
any person who:

-
has taken on the administration or control of property affected by any express or implied trust;
-
acts in a fiduciary capacity; or
-
has the possession, control or management of property of a person under a legal or other disability.

"year", for the purposes of this Bill, is defined to mean a financial year - by reason of paragraph 22(e) of the Acts Interpretation Act 1901, this means a period of 12 months commencing on 1 July.

Clause 5: Interpretation - meaning of "indexation factor"

This clause establishes the indexation factor that is to apply in the calculation of the "minimum allowable apprentice or trainee amount" (see notes on clause 6 for a definition and on clause 28 for its application) and the "threshold amount" (see notes on clause 8 for a definition and clause 16 for its application).

By virtue of subclauses (1) and (2), the indexation factor for a year is based on the estimate of the full-time adult average weekly total earnings (the AWE amount) for persons in Australia for the middle month of the March quarter published by the Australian Statistician in relation to the month immediately prior to the particular year.

The factor is to be arrived at by dividing the AWE amount for the March quarter immediately preceding the year for which the factor is to apply, by the AWE amount for the corresponding March quarter of the previous year. However, if the figure arrived at is less than 1, the indexation factor will be 1.

Subclause (3) will make it clear that the estimate of the full time adult average earnings first published is to be used in calculating the indexation factor notwithstanding that an estimate may be published in substitution for a previously published estimate.

Subclause (4) allows the indexation factor to be rounded to 3 decimal places.

Clause 6: Interpretation - meaning of "minimum allowable apprentice and trainee amount"

Rather than require employers of apprentices and trainees to document the net training expenditure of apprenticeship/traineeship training, by virtue of clause 28 an employer may elect instead to claim a set amount per year for each apprentice and trainee employed by him. This amount is the "minimum allowable apprentice and trainee amount". It is a minimum in the sense that it is possible for an employer to claim more provided appropriate records of expenditure are kept.

The minimum allowable apprentice and trainee amount will be $1,000 per year for the financial year commencing 1 July 1990. It will be updated annually by the indexation factor which is defined in clause 5.

Clause 7: Interpretation - meaning of "resident of Australia"

By virtue of clause 18, training guarantee charge is not payable by an employer for a year unless the employer is a resident of Australia during the whole or a part of the year.

Clause 7 specifies that for the purposes of this Bill a person is a resident of Australia if during the whole or that part of the year:

·
the person is a resident of Australia (other than Norfolk Island, the Cocos (Keeling Islands and Christmas Island) for the purposes of the Income Tax Assessment Act 1936; or
·
the person is a company that is not incorporated in Australia but carries on business in Australia.

Subsection 6(1) of the Income Tax Assessment Act sets out the meaning of resident of Australia. The effect of paragraph (a) of this clause is to extend the scope of that term to ensure that companies that carry on business in Australia are treated as residents for purposes of the training guarantee scheme.

The following brief notes, however, are provided to aid understanding of the concept of residency for income tax purposes.

The primary test in deciding whether a person is a resident is whether the person resides in Australia. Whether a person resides in a country is essentially a question of fact and degree and there is no one rule which will determine the issue in every case. Residency in the primary sense is quite different from domicile and nationality; citizenship or nationality do not determine residency for income tax purposes.

A company is a resident of Australia for training guarantee purposes if:

·
it is incorporated in Australia; or
·
although not incorporated in Australia it carries on business in Australia.

Clause 8: Interpretation of "threshold amount"

By virtue of clause 16, employers whose annual national payroll for the year is less than the threshold amount for that year are exempt from having to spend a minimum amount on training. Also the only records that such employers need to keep are those on their annual national payroll (refer Clause 90).

The threshold amount will be $200,000 for the financial year beginning 1 July 1990 and will be adjusted for each subsequent year by the indexation factor, which is described in clause 5.

Clause 9: Act binds Crown

This clause is a technical provision which is required for constitutional reasons. In the absence of express words or necessary implication, Commonwealth statutes are not considered to bind the Crown. This clause, therefore, ensures that the Crown is bound not only in the Commonwealth but in each of the States, the Australian Capital Territory, the Northern Territory and Norfolk Island.

PART 2 - LIABILITY AND NOTIONAL LIABILITY TO PAY TRAINING GUARANTEE CHARGE

Division 1 - Liability of employers other than the Commonwealth

Clause 10: Application of Division

Clause 10 states that the liabilities imposed on employers by this Division do not apply to:

·
the Commonwealth (paragraph (a)); or
·
a Commonwealth authority that cannot, by a Commonwealth law, be made liable to taxation by the Commonwealth (paragraph (b)).

However, the Commonwealth and Commonwealth authorities are required to meet the same obligations in relation to training as other employers by virtue of Division 2, Clauses 20 to 23. The need to separate Commonwealth employers from other employers in this way within the legislation is purely technical in nature. By implication, this Division applies to all other employers (a defined term), including a State or Territory, a State or Territory authority and individual private sector employers.

Clause 11: Charge payable by employer

This clause requires the training guarantee charge which is imposed on a training shortfall of an employer to be paid by the employer.

Clause 12: Election by members of business group

This clause makes provision for corporations which are members of the same business group to be treated as one employer for the purposes of this Bill if they so wish. This option is provided to ease the record keeping and reporting burden on those corporations which operate as a business group and therefore, as a matter of practice, keep records on training expenditure for the group as a whole rather than for each individual corporation.

By subclause (1), any two or more corporations who are members of a business group (defined in subclause (4)) may elect to be treated as a single employer. Therefore, this means that a part of a business group may elect to be treated as a single employer while the remaining corporations of a business group elect to be treated separately.

Subclause (2) provides that an election for a year must be made in writing in the prescribed form and given to the Commissioner by 30 September in the following year. The election may therefore be lodged with a training guarantee statement (see notes on Division 1 of Part 6).

By virtue of subclause (3) if members of a business group make an election the Bill will apply to the members as if they were a single person during the year and the members are jointly and severally liable for payment of any training guarantee charge.

Because of paragraph (a), members of a business group who have elected to be treated as a single employer only need to keep records in aggregate for that nominal single employer (or "group") and to report, where required to do so, as a group.

Subclause (4) stipulates that two or more corporations are members of a business group if they are related corporations within the meaning of the Companies Act 1981.

For example, if company A is a subsidiary of Company B it would be related. Company A would also be related to Company B if it was a holding company of Company B or if Company A was a subsidiary of a holding company of Company B.

Clause 13: Charge not payable unless employer has training guarantee shortfall etc.

The purpose of this clause is to make it clear that:

·
employers who spend at least the required amount on eligible training and hence do not have a shortfall are not liable to pay a training guarantee charge (subclause (1)). This in turn means that while they need to keep records of training expenditure (refer clause 90) they do not need to lodge a statement (as referred to in clause 40).
·
certain classes of employers are exempt from having to pay a training guarantee charge, irrespective of how much they spend on eligible training (subclause (2)). Such employers are therefore not required to keep records of training expenditure and do not need to lodge a statement. However, they need to be able to provide evidence that they satisfy the conditions for exemptions, and this in turn may require some record keeping. The classes of exempt employer are discussed in clauses 16, 17 and 18.

Clause 14: Determination of training guarantee shortfall

This clause defines the meaning of the training guarantee shortfall. This definition is important since a charge is imposed on employers (unless they are exempt) who incur a training guarantee shortfall.

The training guarantee shortfall is the difference between the minimum training requirement (defined in clause 15) and the net eligible training expenditure (defined in clauses 24 to 26) of the employer. For obvious reasons, it cannot be less than zero.

Clause 15: Minimum training requirement

This clause defines what is meant by the term minimum training requirement which was used in clause 14 to define the training guarantee shortfall.

In broad terms, this Bill requires all employers (other than those who are exempt by clauses 16, 17 and 18) to spend a minimum amount on training of the type described in Part 3. This minimum amount is the minimum training requirement.

Subclause (1) provides the formula for calculating an employer's minimum training requirement. Namely, it equals the employer's annual national payroll (a defined term) multiplied by the minimum training rate.

Subclause (2) says that the minimum training rate will be 1 per cent for each of the financial years commencing 1 July 1990 and 1 July 1991 and will rise to 1.5 per cent for each subsequent financial year.

Clause 16: Exemption for employers with small annual national payrolls

This clause provides exemption to employers whose annual national payroll (a defined term) is less than the set threshold amount (a defined term) for the year from having to spend a minimum amount on structural training. The threshold amount is discussed in clause 8. Briefly, this amount is $200,000 in 1990-91 and is indexed annually to average weekly earnings.

This exemption is granted by not requiring such employers to be liable to pay a training guarantee charge. Hence, employers who satisfy this criterion are not required to keep training expenditure records, but need to be able to demonstrate that their payroll is below the threshold for the year. Employers covered by this exemption represent some 80 to 85 per cent of all employers in Australia.

Clause 17: Exemption for particular employers

As a result of this clause, exemption from having to spend a minimum amount on structural training is provided to a:

·
public benevolent institution (other than a public hospital) (Paragraph (a)); or
·
a religious institution in relation to those of its employees whose duties are solely or principally:

-
pastoral duties, or
-
duties directly related to the practice study, teaching or propagation of religious beliefs (paragraph (b)).

The meaning of "public benevolent institution" is the same as under the income tax and fringe benefits tax legislation, and is the meaning established at common law. As a guide, a public benevolent institution needs to satisfy at least all of the following tests:

·
its object is the relief of poverty, sickness, suffering, distress, misfortune, destitution or helplessness;
·
it is carried on without purpose of private gain for particular persons;
·
it is established for the benefit of a section or class of the public; and
·
relief is available without discrimination to every member of that section of the public which the organisation aims to benefit.

This Bill makes no specific provision for the exemption of international organisations or for representatives of foreign Governments in Australia. These are exempt by the operation of other Commonwealth legislation, namely: the International Organisations (Privileges and Immunities) Act 1963; Diplomatic Privileges and Immunities Act 1972; and the Foreign State Immunities Act 1985.

18: Exemption for non-resident employers

This clause provides exemption from having to spend a minimum amount on eligible training programs to "non-resident employers".

An employer is a non-resident employer during a financial year if during any part of that year he or she was not a resident of Australia. Residents of Australia is defined in clause 7.

It should be noted that, as explained in the notes on clause 7, a company which operates in Australia for a part of a year will be a resident employer for the purposes of this Bill even if it is incorporated elsewhere. Hence it is required to meet the requirements of the Bill.

Clause 19: Arrangements to avoid or reduce training guarantee charge

Clause 19 will import into the training guarantee law a general anti-avoidance provision broadly similar in effect to Part IVA of the Income Tax Assessment Act 1936. The clause is intended to apply where, on an objective view of a particular arrangement and its surrounding circumstances, it would be concluded that the arrangement was entered into for the sole or predominant purpose of reducing the amount of training guarantee charge payable by the employer for the year.

The clause provides that where on an examination of the circumstances, it is concluded by the Commissioner that as a result of an arrangement made by an employer with another person, the training guarantee shortfall and charge has been reduced, the Commissioner will be authorised to, in effect, strike out the training guarantee charge advantage sought by the arrangement and restore the situation to what it would have been if the arrangement had not been made.

It should be noted that where the Commissioner applies this clause the employer will be liable for a penalty training guarantee charge - see notes on clause 83.

Division 2 - Notional liability of the Commonwealth and certain Commonwealth authorities

Clause 20: Object of Division

Clause 20 states the object of Division 2 which is to make provision for the notional application of training guarantee charge in relation to:

·
the Commonwealth (paragraph (a)); and
·
Commonwealth authorities that cannot be made liable to taxation by the Commonwealth because of a Commonwealth law (paragraph (b)).

This object is to be achieved, broadly, by ensuring that Commonwealth Departments and authorities have the same obligations in relation to employees' training guarantee as are imposed on employers generally.

Clause 21: Application of Act to Commonwealth Departments

Clause 21 will operate to make the provisions of this Bill (other than this Division), with appropriate variations applicable in respect of training guarantee obligations to Commonwealth employees.

While public servants and other Commonwealth employees are, in practice, assigned to Departments, they are, as a matter of law, employed by the Commonwealth. Accordingly, subclause (1) provides that this Bill is to apply as though a Commonwealth employee were employed by the responsible Department (and not by the Commonwealth) and that each Department were a separate employer.

The broad effect of the application of the provisions of the Bill is that responsible Departments will be required to calculate their training guarantee shortfall (if any) and remit amounts for training guarantee charge on the same basis as corporate employers are required to pay the charge. Responsible Departments will also be subject to the same ancilliary obligations as apply to other employers, e.g., to lodge annual training guarantee statements if they have a liability for the charge.

By virtue of subclause (2), responsible Departments will have same rights of objection as other employers but will not have appeal rights.

Clause 22: Application of Act to certain Commonwealth authorities

Clause 22 is a technical measure which provides that if any authority of the Commonwealth cannot, by a law of the Commonwealth, be made liable to taxation by the Commonwealth, it is to be treated as a Department and thus subject to the provisions of this Bill (other than this Division).

Clause 23: Directions by Minister for Finance

This clause authorises the Minister for Finance to give directions to Departments concerning the implementation of the provisions of the Bill and, in particular, to give directions in relation to the transfer of money within the Public Account.

One important effect of the clause is to allow a degree of flexibility in respect of the transfer of funds between Commonwealth bodies for the payment of training guarantee charge. The Minister for Finance could direct, for example, that a particular Commonwealth Department be reimbursed by a Commonwealth authority for training guarantee charge paid on its behalf.

The clause would allow also for a degree of consistency to be maintained between Commonwealth bodies in relation to the training guarantee scheme. The Minister might direct, for example, that training guarantee records required to be maintained be kept in a particular format.

PART 3: ELIGIBLE TRAINING EXPENDITURE AND PROGRAMS

Introductory Note

This part is fundamental to the operation of the Bill. It describes in detail what constitutes an eligible training program and eligible training expenditure.

Eligible training expenditure is defined as any expenditure which can be attributed directly, and solely or principally, to eligible training programs. It is intended that a wide range of expenditures, consistent with this definition, be eligible and that employers be able to count not only expenditures for their own employees, but also outlays made towards the skill enhancement of the workforce more generally.

However, not all training will count. Consistent with the objective of improving not only the quantity but also the quality of training, the Bill requires that eligible training programs be structured as well as providing employment related skills.

Clause 24: Meaning of net eligible training expenditure

The purpose of this clause is to define the term net eligible training expenditure. This is the expenditure that is used to assess whether the employer has met the minimum training requirement in a given financial year.

Subclause (1) defines net eligible training expenditure as the total eligible training expenditure minus total eligible training subsidies and reimbursements.

Subclause (2) defines total eligible training expenditure as the sum of eligible expenditures (as defined in the next clause) incurred by the employer over a financial year.

Subclause (3) defines total eligible training subsidies and reimbursements as the sum of all such payments received by the employer over a financial year. The notes on the definitions of subsidy and reimbursement should be referred to. Furthermore, only those subsidies and reimbursements received towards eligible training programs (and related activities) count.

Clause 25: Meaning of eligible training expenditure

Subclause (1) provides the fundamental definition of eligible training expenditure for the purpose of the Bill. Only expenditure that satisfies this definition will count towards meeting the employer's obligation under the Bill.

Under this definition, expenditure will be eligible training expenditure if it is incurred by the employer and is directly, as well as solely or principally, attributable to eligible training programs. These terms are discussed below.

Expenditure must be incurred by the employer. Expenditure met by employees or other persons cannot be claimed. For example, if an employee attends a training program in his or her own time, the employer cannot claim salary or wage costs.

Only expenditure directly attributable to eligible training programs counts as eligible training expenditure. Directly attributable to eligible training programs means that:

·
the expenditure arises directly as a result of, or is caused by, persons:

(a)
participating in an eligible training program; or
(b)
taking part in activities which are integral to, and are undertaken in direct support of, eligible training programs. Examples of these types of activities are provided in subclause 2.

·
indirect and peripheral expenses are excluded. For instance, the time spent by a supervisor in close supervision of a subordinate participating in training is a direct expense. However, further layers of supervision above this are not considered direct expenses, unless they also involve close supervision of the training program. Similarly, organisation-wide costs, such as overheads, are unlikely, in most cases, to be direct expenses.

In addition, the expenditure must arise solely or principally from an eligible training program. This requirement is meant to cover the case in which an expenditure arises jointly as a result of a number of other activities as well as an eligible training program.

Rather, the key decision is whether the expenditure arises principally from the eligible training program, where principally means more than half. If so, all of the expenditure is eligible. If not, none of the expenditure is eligible. Two examples will help to illustrate how this requirement should operate.

Example 1: An employer paying for the travelling expenses to attend a training program and to undertake some other activity at the same location, may claim the whole expenses for the travel to and from the location as eligible training expenditure provided the eligible training program was the principal reason for the travel. Similarly, if the eligible training program is not the principal reason for the travel, then none of the travel expenses to and from the location are to be counted as eligible training expenditure.

Example 2: It will normally be possible to determine the length of periods when a person is participating in an eligible training program or engaged in related activities. Salary or wage expenses should relate only to these periods. On some occasions an employee may be simultaneously participating in an eligible training program and involved in other work activities. The full wage and salary costs of these periods will be eligible training expenditure, provided:

·
it is not possible to differentiate the time spent on the different activities (e.g., in the case of on-the-job training); and
·
participation in the eligible training program is the principal activity of the person.

Eligible Training activities

The purpose of subclause (2) is to indicate some activities which would fall within the broad definition in subclause (1). Again the requirement is that the expenditure should be directly attributable, solely or principally, to these activities. It is not intended to be an exhaustive list.

The following activities are eligible (refer paragraphs (a) to (d)):

·
determining the need for eligible training programs through activities such as training needs analysis and similar techniques.
·
preparing and reviewing strategic and other plans in relation to eligible training programs. The purpose of strategic training plans is to integrate the training needs and the business goals of the enterprise. A strategic training plan comprises a broad outline of how the firm's training needs will be met, indicating the priority areas, the time frame for achieving the objectives, the training methods to be used and the skills to be taught (namely the who, when, how and what of training). Training plans may also be prepared to cover only some occupations within the enterprise or part of the company's activities.
·
developing, providing, evaluating and administering eligible training programs. The meaning of these are as follows.
Developing a training program involves

-
preparing the objectives of the training program, in terms of skills and competencies to be achieved, the means of achieving them and the evaluation
-
process which will be used to test whether the skills and competencies have been achieved
-
the development and establishment of the necessary infrastructure, such as teaching materials, equipment and training centres

Providing the training program includes instruction and closely supervised practice as well as assessment and certification (if any) of the individuals.
Evaluating a training program means appraising the effectiveness of the training program, such as in terms of whether a different or modified approach would be more useful.
Administering a training program means the administrative activities directly attributable to developing, providing and evaluating the training programs. It includes the time spent by a training manager and support staff in co-ordinating and managing one or more training programs. It does not include routine administrative tasks which are not directly, and solely or principally, attributable to the training programs.
·
developing and administering accounting and information systems in relation to eligible training programs. Under the Bill, firms are required to keep records to show that they have met their minimum training requirement. The expenses incurred in developing and monitoring these systems will count. Firms will also be able to use these systems to evaluate the effectiveness of the individual training programs and of the overall training plan and training activities.

Donations of money and property for eligible training

The purpose of subclause (3) is to make clear that amounts paid and the value of property donated, to other bodies which perform the activities listed in subclause (2) would also be counted as eligible training expenditure, provided that the recipient uses the funds solely to enable it to carry out these activities.

The intention is to encourage employers to increase their financial support for tertiary education institutions and industry training bodies that play an important role in advising, organising and providing training at an industry/occupational/regional level. These bodies may include:

·
tertiary education institutions;
·
tripartite industry training bodies;
·
skill centres, organised at an industry, occupational or regional level, which provide structured off-the-job training; and
·
group training schemes which primarily administer apprenticeship and traineeships for small business and which are jointly funded by industry and governments.

A number of industries are considering the introduction of their own training levies, usually with the co-operation of State Governments. Contributions which an employer makes to an industry-based training levy, whether voluntary or compulsory, would be eligible expenditure under this Bill provided that the funds collected are used solely for the activities outlined in subclause (2).

Only payments which are solely directed to training activities as referred to in subclause (2) will count as eligible training expenditure. Recipient bodies which undertake a range of activities need to indicate what proportion of payments to them by employers is for these activities.

To keep administration as simple as possible, the provisions of this subclause follow, except with regard to depreciable property as discussed below, the standard tax law with regard to gifts and donations. Hence, money payments count and so does the value of property provided. Property has the same wide meaning as applies in income tax legislation, and therefore includes plant and equipment and goods of various kinds, such as airfares. However, the value of services provided are excluded. Consequently, time donated by an employer or his employees to the activities of an education and training body is not allowed.

Regarding the value of depreciable property, the amount claimable is its value as determined by the Commissioner at the time it is given. Unlike gifts of property under tax provisions, where a gift of property must have been purchased by the donor not more than 12 months before the gift is made a donation of property will count irrespective of when it was purchased. Donations of goods produced by a firm (referred to as gifts of trading stock in tax law) are valued at the market value of the stock.

Payroll tax diversions

The purpose of subclause (4) is to disallow as eligible expenditure any amounts paid as payroll tax. The reason for including this subclause is to exclude schemes in which employers can request that a stipulated proportion of their payroll tax be diverted by the State Government into an Education and Training Foundation which uses the funds to encourage innovative training projects. As the level of payroll tax remains unchanged, the cost to the employer is zero.

However, voluntary donations by employers to these Foundations, over and above payroll tax diversions, will count as eligible training expenditure, provided the funds are used for activities discussed under subclause (2).

Clause 26: Examples of possible eligible training expenditure

The purpose of this clause is to provide examples of the kind of eligible training expenditures that an employer may incur as a direct result of eligible training programs. The list in this clause is not exhaustive but it is likely to represent the main areas of eligible expenditure.

Subclause (1) lists a number of allowable expenditures, which are covered in paragraphs (a) to (k):

·
paragraphs (a) to (c) relate to expenditures attributable to participation in eligible training programs, such as by being trainees or trainers; and
·
paragraphs (d) to (k) relate to expenditures attributable to activities referred to in paragraphs 25(a), (b), (c) and (d).

Salary or wages of participants in eligible training programs

The salaries or wages incurred by the employer that is directly attributable to a period during which an employee was solely or principally engaged in participating in an eligible training program is eligible training expenditure. This comprises all items of salary or wages, including such items as bonuses, overtime payments, penalty rates and pro-rata sick and holiday leave payments. Items which are not salary or wages (such as payroll tax and workers compensation payments) are not to be included consistent with the exclusion of on-costs from the definition of national payroll for the employer.

For the purposes of this paragraph, salary or wages can be claimed for all employees, including managers, and for directors, whose remuneration is covered under the definition of payroll. No salary or wages can be claimed for those who do not receive salary or wages from the employer, namely owner-managers, sole traders and partners. Payments to such persons are also excluded from the definition of payroll.

The meaning of solely or principally given in Clause 25(1) is also relevant to the interpretation of all paragraphs of this subclause.

Accommodation, meals and child care expenses

This comprises accommodation, meals and child care expenses incurred by the employer which are directly attributable to periods when employees and other persons (including owner-managers) are participating in an eligible training program. Expenses must be solely or principally related to that participation.

Travel expenses

This comprises travel expenses incurred by the employer solely or principally for the purpose of enabling an employee or another a person to participate in an eligible training program. This can include the travel expenses (such as airfares) from the usual place of employment or residence to the city where the training is being provided (but see notes on subclause 25(1)) as well as travel expenses, such as taxis, for travel within that city.

Course Fees and HECS

By virtue of paragraph (d), expenditure incurred by an employer in the form of payments or reimbursement of fees and payments in relation to the Higher Education Contribution Scheme (HECS) are eligible training expenditures where they are incurred in relation to eligible training programs.

Fees will mainly be incurred in relation to participation by employees or other persons in eligible training programs provided by fee-charging training providers or by way of payments made to commercial training providers for the development, provision, evaluation and administration of eligible training programs and for related activities as referred to in subclause 25(2).

Under the Higher Education Contribution Scheme (HECS) most higher education students are liable to make a contribution to the cost of their education. They can either:

·
pay the institution up-front 85 per cent of their estimated liability for the semester; or
·
ask the Commonwealth to pay their contribution to the institution and agree to repay the Commonwealth through the taxation system.

Employers who pay or reimburse students for part of or the whole of their liability under HECS will be able to count these payments as eligible training expenditure.

Salary or wages for training-related activities

Salary or wages paid to an employee which are directly attributable to a period during which the employee is solely or principally engaged in eligible training activities outlined in subclause 25(2) is eligible expenditure.

Travel expenses for training-related activities

Travel, meals, accommodation and child care expenses directly attributable to a period when an employee or other person (including owner-managers) was solely or principally engaged in eligible training activities as discussed in subclause 25(2) is eligible expenditure.

Expenses on consumables

Expenditure for consumables whose use is directly attributable solely or principally to eligible training activities as defined in subclause 25(2) is eligible training expenditure. Consumable includes:

·
teaching materials, such as books, videos, boards and manuals; and
·
materials normally used in production which are consumed in eligible training programs.

Expenditure on these items is to be claimed only in the year in which it is incurred.

Capital expenditure for buildings and depreciable property

Expenditure directly attributable to the acquisition, construction, extension, alteration or improvement of buildings or depreciable property used (or intended for use) solely or principally for eligible training activities, as defined in subclause 25(2), will count as eligible training expenditure. Full expenditure on these items is allowed in the year in which it occurs and no depreciation is applied. Expenditures made before the commencement of this scheme do not therefore count. This is different to the treatment within tax law, but the intention within this Bill is to make the task for employers in assessing their eligible training expenditure as simple as possible.

Buildings includes part of a building, such as a training room or workshop within a factory. Depreciable property includes plant and equipment.

Rent for buildings

Payments in the form of rent and expenditure directly attributable to rent for building premises (as discussed above) which are solely or principally used in eligible training activities as defined in subclause 25(2) is eligible training expenditure.

Lease and hire of equipment

Expenditure incurred which is directly attributable to the leasing or hiring of equipment used solely or principally on eligible training activities as defined in subclause 25(2) is eligible training expenditure.

Subclause (2) will allow an employer who is a taxpayer and who incurs eligible training expenditure of a capital nature (while broadly speaking would be depreciable property for income tax purposes) to claim the cost over the life of the property instead of in relation to the year in which it was incurred. It is expected that many employers who have satisfied their minimum training requirement for a year without taking capital expenditure of a kind referred to in paragraph (1)(h) into account will choose to take up this option. There is no need for the employer to lodge a formal election with the Commissioner where the option is taken up.

The purpose of subclause (3) is to make it clear that the previous examples of eligible training expenditure are not exhaustive. Employers may incur other expenses which come within the general definition of eligible training expenditure.

The purpose of subclause (4) is to emphasise that in cases where the examples discussed above are inconsistent with the general definition given in clause 25 - Meaning of eligible training expenditure, the examples prevail.

Clause 27: Meaning of eligible training program

Introductory Note

The Bill seeks a definition of eligible training that is consistent with the objective of encouraging economically valuable and productive training. Moreover, it aims to improve the quality of training, such as through the introduction of competency-based training and the infusion of planning into the training process to replace ad hoc approaches.

These considerations have led to the adoption of the concept of a structured training program, whose objectives are to enhance employment-related skills, competencies and knowledge as the unit of training which qualifies for eligibility (subclause (1)). Subclause (2) goes on to define what is meant by a structured training program. Subclause (3) notes that an eligible program can be undertaken in-house as well as in education and training institutions and that it may consist of on-the-job training. Subclause (4) defines more precisely what aspects of on-the-job training count.

Eligible training program

Subclause (1) defines what is meant by an eligible training program.

Training is a defined term.

A training program consists of one or more training activities. For example, a training program for an individual worker may combine a course, a conference, several seminars and some on-the-job training or just one of these. It may be developed for one individual or may apply for a group of persons, and it may be intended to impart a single skill or a range of skills, competencies and knowledge.

A training program by itself is not an eligible training program. To classify as an eligible training program, it must satisfy two conditions:

(a)
be structured, as discussed in subclause (2); and
(b)
the sole or principal objective of the program is to develop, maintain or improve employment-related skills of employees and other persons and that a significant objective of the program is not recreational or other non-employment related matters.

Sole or principal, in this case, means that while a training program may include objectives and outcomes other than those of developing, maintaining or improving employment-related skills, the latter objective ("the training objective") must outweigh all others put together. This is particularly relevant in the case of on-the-job training, during which some output will be produced as part of the training. This training will only count where the training objective is the principal objective rather than being merely an incidental one.

A training program with a significant component of recreational or other non-employment related matters will not count. This is aimed mainly at excluding conventions and conferences with a high proportion of time devoted to recreational and social activities.

Where a training program includes a significant component of recreational and non-employment matters, none of the program will count.

Employment-related skills is a defined term. Basically, employment related skills (which includes competencies and knowledge) of employees and other persons are those skills which help employees and other persons to work more productively, flexibly or safely in a work environment. This includes English language skills, basic literacy and numerary skills, health and safety and Industrial Relations knowledge and skills.

Employees and other persons comprise all employees (including managers), owner-managers, directors and other individuals. The training program can relate to any of these and there is no presumption that it needs to be related only to manual workers.

Structured training program

Subclause (2) defines the conditions that are necessary for a training program to be considered structured. All conditions must be satisfied:

·
by virtue of paragraph (a), the training program is either:

-
designed by a person or persons who has a working knowledge of the subject area and has successfully completed at least a short course on trainer training or is experienced in the design or conduct of training programs. Initially, a short course is to mean, as a minimum, a course of 2-3 days' duration and experienced is to mean experience gained over 3 years; or
-
designed by a person without these qualifications but approved by a person or persons with these qualifications or experience; and

·
as part of the training program, the following are clearly identified before the training program begins:

-
the skills, knowledge and competencies to be acquired by participants of the program (paragraph (b))
-
the means by which these skills are to be imparted (paragraph (c)); that is, whether by attending a specific course or by on-the-job training (which is clearly described) or by other means
-
expected program outcomes are clearly formulated or the extent to which the program has enhanced the productivity of the participants is clearly formulated before the program begins (paragraph (d))

It is not necessary for each element of a training program to be structured, provided the program as a whole is.

As a consequence of subclause 27(2), an eligible training program can therefore be either:

·
a single training activity which satisfies all of the conditions in paragraphs (a) to (d); such as a course which has an appropriately designed syllabus, and an assessment process
·
a group of learning activities which individually may not satisfy all of the conditions in paragraph (a) to (d), but are linked into a training program which as a whole satisfies all of the conditions.

For example, an employer develops a training program for an individual worker which consists of a formal course, a conference, several seminars and periods of on-the-job training. Some of these activities could themselves be an eligible training program (e.g., the course). However, the conference and seminars are unlikely to be structured as outlined above. Provided the program as a whole is structured, then the program is an eligible training program. All of its component activities then count.

The requirements regarding the design of training programs that incorporate at least some on-the-job training could be met in a number of ways. These include:

·
a supervisor who has the appropriate training qualifications or experience would be eligible to design a program for persons whom he/she supervises, as he/she has a working knowledge of the subject matter;
·
a supervisor without the appropriate training qualifications or experience could work with another person who has these qualifications to design the training program;
·
a supervisor without the appropriate training program design qualifications or experience could design the program and then have it checked and approved by someone with appropriate qualifications. This person could be an employee of the organisation or someone from outside the organisation (e.g., from an industry training body or an industry association); and
·
industry training bodies or industry associations may design structured on-the-job training programs which are generally applicable in their industry.

Training program may consist of off and on-the-job training

The purpose of subclause (3) is to make it clear that eligible training programs can be organised in-house by the employer, or can be undertaken in an education institution, or purchased from commercial education and training providers, or provided by industry skill centres or through other inter-firm co-operative arrangements. Moreover, the training program may consist of off-the-job and on-the-job training provided it is structured as discussed above.

On-the-job training

The purpose of subclause (4) is to explain that when a training program includes on-the-job training, it:

·
must include a period of instruction (paragraph (a)); and
·
may include a period of related, closely supervised practice (paragraph (b)); but
·
cannot include any generally supervised practice or work experience (paragraph (c)).

The term closely supervised practice refers to periods of practice during which an instructor or supervisor is principally engaged in supervising, monitoring and assessing the person(s) participating in the practice. Conversely, generally supervised practice refers to periods of practice which are not closely supervised.

A further implication of this subclause is that closely supervised practice may only count when it is related to periods of instruction. Furthermore, all forms of work experience do not count as part of an eligible training program.

Clause 28: Election by Employer for Application of Minimum Allowable Apprentice or Trainee Amount

This section states that employers have two options available to them in the way they claim for training provided to their apprentices and trainees employed under the Australian Traineeship System (ATS). They may:

·
claim actual expenditure derived according to the general definition and guidelines, less any government subsidy received for the apprentice or trainee in that year; or
·
adopt a rule of thumb which does not require employers of apprentices and trainees to document their training expenditure but rather allows employers (including host employers of apprentices and trainees employed by group training schemes) to count as net expenditure towards the Training Guarantee a rate of $1000 p.a., indexed according to AWE, for each apprentice and trainee. If this option is adopted, the employer need not deduct any government subsidy received for the apprentice or trainee for the year.

Subclause (1) notes that the employer may elect for the rule of thumb option.

Subclause (2) notes that under this option, the employer may claim the minimum allowable apprentice or trainee amount (which is $1000 p.a. in 1990-91 and is indexed by AWE thereafter) on a pro-rata basis, for the number of months in the financial year for which the person was an apprentice or trainee with the employer. This amount is claimable as net expenditure towards the Training Guarantee.

Clause 29: Election by employer in relation to approved entry-level training arrangement

This clause makes similar provisions to those for apprentices and trainees (as discussed in the notes on clause 28) for employers who have employees undertaking some other form of approved entry-level training.

Under these circumstances, an employer may choose to claim the actual expenditure on training derived by using the standard rules, or may, instead, elect to claim a set amount per year for each employee (this is referred to as the approved amount). Where the employee was participating in an approved training arrangement for less than 12 months, than a pro-rata amount, based on the number of months, can be claimed (subclause (2)).

The meaning of approved entry-level training arrangements to which this section applies will be the subject of guidelines from the Minister (refer subclause 30(2)). The Minister will also determine the employees who are to be covered by an approved entry-level training arrangement and the amount that employers are allowed to claim.

Entry-level training arrangement means post-school training arrangements which prepare persons for work in an occupation or an industry. It may include periods of training within industry after a course of study in an education and training institution. Entry-level training arrangements are structured and generally of around 12 months duration or more.

Clause 30: Guidelines by Minister in relation to eligible training programs

This section enables the Minister for Employment, Education and Training to make guidelines in relation to what constitutes an eligible training program. This allows for changes to be made to these conditions consistent with the terms of the legislation over time, so that they may better reflect the intent of the legislation within a changing industrial and training environment.

Subclause (1) empowers the Minister to make guidelines on what constitutes an eligible training program within the general framework of the existing definition. This includes explaining in more detail what is intended by the existing definition and setting more precise conditions and requirements on the parameters of the definition. The guidelines are to be followed by employers and the Commissioner in the administration of the Act. They will be tabled in Parliament as disallowable instruments and disseminated widely for use by industry.

The subclause identifies the three areas in which guidelines may be made consistent with the terms of the Bill:

·
the objective of the training program such as those discussed in subclause 27(1); for instance, guidelines may be made on programs with a recreation component (paragraph (a))
·
the conditions to be satisfied by a structured training program as discussed in subclause 27(2); for instance, a guideline may be issued on what constitutes an assessment process and what are acceptable qualifications for a person designing or approving a training program (paragraph (b))
·
the conditions to be satisfied by a training program that involves or consists of on-the-job training as discussed in subclause 27(4); for instance, a guideline may be issued on how to determine more precisely the periods of closely supervised practice (paragraph (c)).

Subclause (2) enables the Minister to make guidelines, to be followed in the administration of this Bill, in relation to:

·
what are approved entry-level training arrangements to which clause 29 applies;
·
the employees to whom these approved entry-level training arrangements apply; and
·
the amount that an employer can claim (as a minimum) for each employee covered by the training arrangement per year (referred to as the approved amount).

Subclause (3) requires the Minister to take into account any advice or recommendation from the training advisory body (a defined term) before making any guidelines. This allows for the Minister to seek the advice of the training advisory body on matters of relevance to the guidelines and for the training advisory body to recommend to the Minister that certain guidelines be developed. It would be expected that this is the way guidelines will generally come into being.

This role of the training advisory body is complementary to that of providing advice to the Commissioner which is discussed in the notes on section 43.

Subclause (4) states that a guideline made under subsection (1) is a disallowable instrument under section 46A of the Acts Interpretation Act 1901. It has to be tabled in Parliament and hence may be disallowed;

·
the conditions to be satisfied by a training program that involves or consists of on-the-job training as discussed in subclause 26(4); for instance, a guideline may be issued on how to determine more precisely the periods of closely supervised practice (paragraph (c)).

Subclause (2) requires the Minister to take into account any advice or recommendation from the training advisory body (a defined term) before making any guidelines. This allows for the Minister to seek the advice of the training advisory body on matters of relevance to the guidelines and for the training advisory body to recommend to the Minister that certain guidelines be developed. It would be expected that this is the way guidelines will generally come into being.

This role of the training advisory body is complementary to that of providing advice to the Commissioner which is discussed in the notes on section 44.

Subclause (3) states that a guideline made under subsection (1) is a disallowable instrument under section 46A of the Acts Interpretation Act 1901. It has to be tabled in Parliament and hence may be disallowed.

Clause 31: Application of Part to training institutions

A training institution (a defined term) includes tertiary higher education institutions, TAFE colleges, schools and persons and organisations which provide training for profit or reward. If these institutions were treated in the same way as other employers, training expenditure incurred on all students (as well as reimbursements and subsidies) would need to be taken into account in estimating their training guarantee shortfall. This would lead to anomalies such as where a net profit from the provision of commercial courses would need to be subtracted from the expenditure on training of own employees. Hence, this clause makes provision for special treatment of training institutions.

As a result of subclause (1), a training institution is to take into account only expenditure, reimbursements and subsidies on its own employees and is to disregard any expenditure, reimbursement or subsidy relating to other persons it may train, such as students.

In addition, by virtue of subclause (2), it can count donations of money and property (as per subclause 24(3)) made to other bodies and persons provided this is spent on activities outlined in subclause 24(2). The notes on subclause 24(3) should be read in this context.

An organisation which develops training for its own employees and then offers its courses to other organisations on a profit or reward basis, is, by virtue of the definition of a training institution, a training institution for the purposes of this section.

Subclause (2) states that subclause 25(3) is to apply to it. This means that payments of money and the value of property donated by a training institution to another person for the purpose of conducting eligible training to persons who are not its employees counts as eligible expenditure (expenditure on employees of the training institution are covered by subclause (1)). This provision simply allows training institutions (which includes employers who sell their training) an option which is available to other employers.

Subclause (3) allows for certain types of prescribed persons to be treated as employees for the purposes of this section.

PART 4: TRAINING GUARANTEE FUND

Clause 32: Establishment of Fund

By subclause (1) of this clause, the Training Guarantee Fund is created.

By subclause (2), the Training Guarantee Fund is to be a trust account for the purposes of section 62A of the Audit Act 1901. This means that moneys standing to the credit of the Training Guarantee Fund will be deemed to be moneys standing to the credit of the Trust Fund. The Trust Fund is one of the three separate funds that make up the Commonwealth Public Account. The other two funds are the Consolidated Revenue Fund and the Loan Fund.

Clause 33: Payments into Fund

This clause identifies the amounts that shall be paid into the Training Guarantee Fund. Because the first payments by employers are not expected to be received for 15 months after the commencement of the scheme and the costs of administering the scheme are to be reimbursed from the Fund (see notes on clause 34) it will be necessary initially for an appropriation to be made from Consolidated Revenue. The following payments are to be paid into the Fund:

·
amounts paid to the Commonwealth in respect of training guarantee charge and additional training guarantee charge payable by way of penalty under clause 75 or Part 9; and
·
amounts paid to the Commonwealth for the purposes of the Fund, e.g., voluntary payments and donations; and
·
money appropriated by law for the purposes of the Fund i.e., from the Consolidated Revenue Fund; and
·
interest from the investment of money in the Fund.

Amounts paid in satisfaction or partial satisfaction of penalties imposed by courts will be paid into the Consolidated Revenue Fund and not into the Training Guarantee Fund.

Clause 34: Application of Fund

This clause is complementary to clause 33 in that it specifies the purposes for which moneys standing to the credit of the Training Guarantee Fund may be applied.

Subclause (1) provides that money may be used for:

·
reimbursing the Commonwealth for :

-
the cost of administering the proposed Act during any period; and
-
costs incurred by the Commonwealth during any period in monitoring the effectiveness of the operation of the Training Guarantee scheme, e.g., a survey by the Bureau of Statistics; and

·
making payments under training guarantee agreements with States and Territories (see notes on clause 35); and
·
repayment of amounts that should not have been paid into the Fund or that are refundable, e.g., because of an amendment of a training guarantee assessment.

By subclause (2) the Minister for Finance may, from time to time, determine the amount of reimbursements to the Commonwealth for costs of administering and monitoring the scheme in relation to a period and on the basis as the Minister considers appropriate. However, this would not include interest on money appropriated in accordance with paragraph 33(c).

Subclause (3) authorises the Minister for Employment, Education and Training to use funds which would normally have been paid under a training guarantee agreement with a State or Territory in relation to a period if such an agreement had been in force. Where an agreement is not in force the Minister may use the funds in accordance with the objects of the Act (see notes on clause 3).

The Minister for Employment, Education and Training, is also given authority by subclause (4) to allocate funds forfeited by a State or Territory for failing to comply with a training guarantee agreement (see notes on clause 36).

Clause 35: Training guarantee agreements with States and Territories

Subclause 35(1) gives authority to the Minister for Employment, Education and Training to enter into an agreement with a State or Territory about making payments to the State or Territory out of the Training Guarantee Fund and the expenditure of those funds on eligible training programs.

Subclause 35(2) states that an agreement must include clauses to the effect that the State or Territory:

·
supports the Training Guarantee scheme, (paragraph (a));
·
agrees to disburse the money it receives from the Commonwealth under the agreement on the advice of a tripartite body (that is, a body involving representation from the State or Territory, employers and unions) which is specified in the agreement (subparagraph (b)(i)) and agrees to ensure that the money is spent on eligible training programs subparagraph (b)(ii));
·
agrees not to use this money in a way which substitutes for existing or future State or Territory funding of training (paragraph (c)).

Subclause (3) states that the agreement between the Commonwealth and the State or Territory may contain other matters as well as those discussed in subclause (2).

Clause 36: Failure to comply with training guarantee agreement

This clause gives power to the Minister for Employment, Education and Training to impose penalties on a State or Territory which is in contravention of the conditions of an agreement of the type discussed in clause 35.

Subclause (1) states that an agreement as per clause 35 is made on the condition that if the Minister notifies the State or Territory that he is satisfied that the State or Territory has contravened the agreement, then the Minister may impose a monetary penalty to be paid by the State or Territory. This penalty cannot exceed the total payment made by the Commonwealth under the agreement between the Commonwealth and the State or Territory.

Subclause (2) deals with a special type of contravention by the State or Territory, namely, where the State or Territory has not spent part or all of the payment made by the Commonwealth under a training guarantee agreement or has not done it in accordance with the agreement. Where the Minister is satisfied that this has occurred, then the Minister may either act as provided for by subclause (1) or may instead decide to deduct from any further payment to be made to the State or Territory under the agreement (or any subsequent training guarantee agreement) an amount not greater than the amount which the State failed to spend or which it spent other than in accordance with the agreement. This provision is intended to give greater flexibility to the Minister to deal with a State or Territory which has not complied with the conditions of the agreement.

This subclause does not imply that all funds received by State or Territory must be spent in the year that they are received. The agreement is to specify the period within which the funds are spent.

PART 5 - ADMINISTRATION

Clause 37: General administration of Act

Under this clause, the Commissioner of Taxation is to be responsible for the general administration of the laws relating to the training guarantee.

Clause 38: Annual report

As mentioned in the notes on clause 37, the Commissioner will have the general administration of the Bill. This clause will, as is customary in Australian taxation laws, require the Commissioner to furnish an annual report on the working of the Bill to the Treasurer for presentation to the Parliament. The Commissioner will also be required to supply financial statements in relation to the operation of the Training Guarantee Fund (see notes on Part 4).

Clause 39: Secrecy

This clause contains secrecy provisions consistent with those in other Commonwealth Acts of which the Commissioner has the general administration. It will impose an obligation of secrecy on persons who, in the course of their duties related to the administration of the Bill, have acquired information with respect to the affairs of another person.

Subclause (1) is an interpretative provision which ascribes particular meanings to terms used in this clause unless a contrary intention appears.

"court" includes any tribunal, authority or person with power to require production of documents or information.
"person to whom this section applies" is defined to mean a person who is or has been:

·
the Commissioner, a Second Commissioner or a Deputy Commissioner; or
·
the training advisory body (a defined term - see notes on clause 4); or
·
an officer or employee of the Australian Taxation Office or the training advisory body; or
·
otherwise appointed or employed by or a provider of services for the Commonwealth.

"produce" is a term used in subsection (5) and is given an extended meaning to include "permit access to".
"protected document" means a document that contains information concerning a person and is obtained or made by a person to whom clause 39 applies in the course of, or because of, the person's duties under or in relation to this Bill.
"protected information" means information that concerns a person and is disclosed to or obtained by a person to whom clause 39 applies in the course of, or because of, the person's duties under or in relation to this Bill.

Subclause (2) will oblige persons not to make a record of, or divulge or communicate protected information except in the course of their duties or if it is necessary to do so for the purpose of giving effect to the provisions of the Bill.

In recognition of the serious nature of any breach of this provision, the Bill provides for gaol for a period not exceeding 2 years on conviction of an offence.

By virtue of subclause (3), however, the Commissioner, a Second Commissioner or a Deputy Commissioner or a person authorised by them is not prevented from communicating protected information to:

·
the training advisory body or an officer or employee of that body for the purpose of administering the Bill; or
·
a person performing duties under or in relation to an Act of which the Commissioner has general administration or under regulations made under such an Act to enable the person to perform the duties.

Subclause (4) makes it clear that if a person divulges or communicates protected information to any Minister, an offence has been committed under subclause (2).

By virtue of subclause (5), except where it is necessary to do so for the purpose of carrying into effect the provisions of the Bill, a person is not required to divulge or communicate protected information to a court or to produce a protected document in court.

Subclause (6) will ensure that nothing in an Act administered by the Commissioner should be taken to prohibit the Commissioner, a Second Commissioner, a Deputy Commissioner or a person authorised by them from communicating any information to a person performing duties under this Bill or to enable a person to perform those duties.

Subclause (7) is identical to subclause (6) except that it authorises the disclosure of information or documents to a court where it is for the purpose of this Bill.

Subclause (8) makes provision for a person to take an oath or declaration to maintain secrecy in conforming with the secrecy provisions.

PART 6 - TRAINING GUARANTEE STATEMENTS AND ASSESSMENTS

Division 1 - Training guarantee statements

Clause 40: Annual training guarantee statements

This clause, together with clause 41, sets out the requirements for lodgement of training guarantee statements. It should be read in conjunction with clause 69 which has the effect of requiring an employer to remit the training guarantee charge payable with the annual training guarantee statement.

A significant consequence of the provision is that in accordance with the concept of self-assessment, only those employers who do not expend the required amount on eligible training programs (see notes on clause 27 will be required to furnish statements and pay the appropriate charges.

By virtue of this clause, an employer who is liable to pay training guarantee charge for a financial year will be required to furnish to the Commissioner an annual training guarantee statement. Unless a statement has previously been furnished in compliance with clause 41, the statement must be furnished by 30 September in the year following the financial year ended 30 June or where a later date has been allowed by the Commissioner for lodgement, that later date.

Clause 41: Other training guarantee statements

Clause 41 authorises the Commissioner to serve a written notice on a person to furnish a training guarantee statement for a year. The person, whether an employer or not, must lodge the statement in accordance with the notice whether the person has lodged, or is or was required to lodge a statement under clause 40 or this clause in relation to the year.

One important effect of this provision is that the Commissioner may require a training guarantee statement from a person who does not have a training guarantee charge liability.

Clause 42: Requirements for training guarantee statements

Training guarantee statements lodged in accordance with clause 40 or clause 41 are by clause 42, to be in a form approved by the Commissioner, to be lodged in accordance with any relevant regulations and be signed by, or by authority of, the person giving the statement.

In addition to any other information required to complete the training guarantee statement that are prescribed, the statement must specify:

·
the annual national payroll of the employer in the year concerned (a defined term - see notes on clause 4); and
·
the minimum training requirement of the employer in the year (see notes on clause 15); and
·
the net eligible training expenditure of the employer in the year (see notes on clause 24); and
·
the training guarantee shortfall of the employer in the year (see notes on clause 14); and
·
the training guarantee charge payable on the shortfall - by reason of clause 6 of the Training Guarantee Bill 1990 the amount of the charge is the amount of the shortfall.

Division 2 - Training advisory certificates

Introductory Note

While employers are expected to assess for themselves whether particular activities and expenditures constitute eligible training programs and eligible training expenditure, there will be situations where an employer will seek a formal assurance before they make a claim against the Training Guarantee that what they do and spend will count. To assist employers in this area, a provision is being made to register industry agents who will be able to issue training advisory certificates which state that certain activities and expenditures are eligible.

There is also a need for a body to provide advice in the form of certificates to the Commissioner for Taxation on the interpretation of the definition of training in the more complex cases. Provisions being made in this case for a training advisory body to fulfill this role. This is similar to the approach taken in the administration of tax concessions for eligible research and development activities under the Income Tax Assessment Amendment (Research and Development) Act 1986, where the Industry Research and Development Board has as one of its functions, the role of providing advice to the Commissioner on the eligibility of research and development activities.

The industry agents will also be able to refer their more complex cases to the training advisory body.

Certificates issued by industry agents and the training advisory body are binding on the Commissioner.

Clause 43: Training advisory certificates given by registered industry agent

Subclause (1) enables an employer to apply in writing to an appropriate registered industry agent (a defined term) seeking a training advisory certificate as to whether particular activities constitute an eligible training program or whether particular expenditure constitutes eligible training expenditure.

By virtue of subclause (2), industry agent must give the employer a certificate if the agent is satisfied that the activities constitute an eligible training program or that the expenditure constitutes eligible training expenditure (as the case may be). If the industry agent is not satisfied that this condition applies than be must refuse a certificate and notify the employer accordingly (subclause (3)). Thus, a certificate issued by an industry agent is a certificate of approval of particular activities and expenditure.

Clause 44: Training advisory certificate given by training advisory body

Subclause (1) enables the training advisory body to provide advice of its own accord to the Commissioner or a registered industry agent. This situation may arise where, for instance, the training advisory body may decide that, as a result of its own investigations or on the basis of queries it has received from the Commissioner or from registered industry agents, certain types of training do not qualify within the meaning and intent of the Act. It may then issue a certificate to this effect to the Commissioner or to the registered industry agent to help in the administration of the Act.

The matters on which the training advisory body may issue a certificate or is required to issue a certificate are confined to whether particular activities constitute an eligible training program, or are activities attributable to eligible training programs, and the type of expenditure that counts against these. This includes providing advice on all matters covered in sections 24 to 27 except the setting of a money value on them. Hence, the training advisory body may provide advice on such matters as whether a training program has been properly structured, whether its components satisfy the requirement that they constitute training and provide employment related skills and what elements of expenditure may count against this training program. This means that the training body will advise only on issues of what constitutes eligible training, while it will be up to the Commissioner to determine the actual money value of expenses to allow against that training.

The training advisory body has a parallel function, given by section 30, in which it advises the Minister on the issuing of guidelines on the requirements to be satisfied for a training program to be an eligible training program. These guidelines are expected to deal with broad and general issues, whereas the advice to the Commissioner is likely to focus on specific cases and employers.

Whereas subclause (1) enables the training advisory body to issue a certificate of its own motion, subclause (2) requires that the training advisory body must issue a certificate to the Commissioner or a registered industry agent if one or the other so requests.

The most likely situations in which the Commissioner will ask for a ruling from the training advisory body is as a result of an assessment or audit of an employer. Where the Commissioner requests for a ruling in writing, the training advisory body must comply with the request and issue a certificate.

It should be noted that the responsibility for providing advice to an employer rests with the Commissioner. The employer should contact the Commissioner, who may then ask the advice of the training advisory body before providing an answer to the employer.

Subclause (3) requires that where a certificate issued by the training advisory body directly affects a particular employer, the training advisory body must also give a copy at the same time to the affected employer.

Subclause (4) requires that when a training advisory body gives a certificate to a registered industry training agent, it must also give a certificate to the Commissioner. This ensures that the Commissioner is informed of the policy being pursued by the training advisory body.

Clause 45: Training advisory certificates binding on Commissioner

By this clause, a certificate which is issued by the training advisory body to an employer or which directly affects a particular employer is binding on the Commissioner for the first and the following year. Hence, the Commissioner must abide by its conclusions when assessing the employer.

Clause 46: First training guarantee statement for year taken to be assessment

The assessment arrangements for training guarantee charge will be similar to those applying for company income tax and fringe benefits tax. That is an assessment will be taken to have been made on the date the training guarantee charge is due unless the training guarantee statement is lodged late, in which case the assessment will be deemed to have been made on the date of lodgement. Where a statement is lodged late the employer will be liable for additional charge under clause 84 for failure to furnish a statement.

By clause 46, where an annual training guarantee statement is lodged by an employer in compliance with an obligation under clauses 40 or 41 (and no previous statement of that year has been lodged and no assessment raised) the Commissioner will be taken to have made an assessment of the employer's training guarantee shortfall of the employer and the training guarantee charge payable thereon, both amounts as specified in the statement:

·
if the employer lodges the statement by 30 September - on that day; or
·
if the employer lodges the statement after 30 September - on the day the statement is lodged.

The statement will be taken to be a notice of the assessment signed by the Commissioner and given to the employer on that day.

Clause 47: Default assessments

If a training guarantee statement for a year is not furnished by the due date, the Commissioner will be authorised by clause 47 to make an assessment of the employer's training guarantee shortfall and of the training guarantee charge payable on the shortfall, which in the Commissioner's opinion, the employer is liable in respect of the year.

Clause 48: Assessments where Commissioner has insufficient information

This clause is complementary to clause 47. It applies in circumstances where the Commissioner does not have sufficient information to make an assessment of the training guarantee shortfall of an employer in a year. In such a case, by virtue of subclause (1), the shortfall that, in the opinion of the Commissioner, might reasonably be expected to be the shortfall shall be taken to be the shortfall for the purpose of making an assessment.

Subclause (2) is a technical provision which is required to ensure that an assessment made in accordance with this section is valid should an objection subsequently be lodged against the correctness of the assessment. Its effect is to deem the exercise of any discretion, opinion or judgment of the Commissioner at the time of considering an objection - when the Commissioner is fully informed of all the facts surrounding an issue - to have occurred at the time of making the assessment.

Clause 49: Amendment of assessments

Clause 49 provides authority for the Commissioner to amend an assessment.

Subclause (1) is a general grant of power enabling the Commissioner, at any time, to amend an assessment by making such alterations or additions as the Commissioner considers necessary. The Commissioner is not precluded from amending an assessment by the fact that training guarantee charge assessed under the assessment has been paid.

However, as the wording of the subclause makes clear, the exercise of this general power is made subject to the operation of the other subclauses which govern the various circumstances in which an amended assessment may be issued.

Subclause (2) allows the Commissioner to amend an assessment where there has been an avoidance of training guarantee charge.

By paragraph (2)(a) the Commissioner is authorised to amend an assessment at any time where the avoidance of training guarantee charge is in the opinion of the Commissioner, due to fraud or evasion. Paragraph (2)(b) applies to any case where paragraph (a) does not apply; in this circumstance the Commissioner may amend the assessment within 4 years from the date on which the assessment is made.

Subclause (3) specifies 4 years to be the period within which an amendment effecting a reduction in the liability of an employer under an assessment can be made.

Subclause (4) will allow the Commissioner, in respect of an assessment that has been amended in any particular, to make a further amendment in respect of that particular in order to reduce an employer's liability as is considered justified, within 4 years from the day on which training guarantee charge became due and payable under the previous amendment.

Subclause (5) has the effect of extending the general 4 year period for the making of an amended assessment. The Commissioner may amend the assessment at any time if the employer:

·
applies for an amendment within the 4 years; and
·
supplies the Commissioner with sufficient information within that period to enable the application to be processed.

By subclause (6), the Commissioner may amend an assessment at any time if the amendment:

·
is to give effect to the decision of the Administrative Appeals Tribunal or a Court; or
·
results from consideration of an objection against the assessment.

Clause 50: Refund of overpaid amounts

This clause authorises the refund of any training guarantee charge overpaid in cases where an amendment of an assessment has reduced a person's charge liability - including additional training guarantee charge imposed either by late payment penalties under clause 75 or for a breach of one of the penalty clauses in Part 9. It also stipulates that, where additional training guarantee charge for late payment has been imposed the amount of that additional charge is to be recalculated as though the amount by which the charge has been reduced on amendment was never payable.

The overpaid amount is required to be refunded or alternatively if there is an amount due by the person in respect of liabilities under some other Act administered by the Commissioner applied to meet that liability either in whole or in part.

Clause 51: Amended assessment to be an assessment

The purpose of clause 51 is to ensure that the various provisions of the Bill relating to original assessments are also to apply to amended assessments, unless it is provided to the contrary.

Clause 52: Notice of assessment

This clause will require the Commissioner to give written notice of an assessment on the person liable to pay the training guarantee charge as soon as practicable after making the assessment. It has no application to a deemed notice of assessment taken, by clause 46, to have been given to an employer.

Clause 53: Validity of assessment

Clause 53 is a customary measure in taxation laws and declares that an assessment is valid despite the fact that a provision of the Bill has not been complied with. The purpose is to ensure that in any objection or dispute relating to an assessment, the objector may challenge the correctness of the assessment but not any act or omission of the Commissioner in making the assessment.

PART 7 - OBJECTIONS, REVIEWS AND APPEALS

Introductory Note

Under this Part, an employer will have rights, broadly consistent with those pertaining under the income tax law, to object against a training guarantee charge assessment. That is, against either a deemed assessment constituted by the lodging of a training guarantee statement or an assessment formally made by the Commissioner.

If dissatisfied with an assessment, the employer may object in writing within 60 days after notice of the assessment is given or deemed to have been given. The Commissioner will be required to consider the objection and either disallow it or allow it wholly or in part. The employer, if dissatisfied with that decision, may within a further 60 days, request the Commissioner either to refer the decision to the Administrative Appeals Tribunal or the Federal Court of Australia.

If an objection relates to the eligibility of training expenditure and programs etc., the Commissioner will be able to request the advice of the training advisory body (refer clause 44). Such advice will be binding on the Commissioner. Therefore, where a dissatisfied employer requests a reference to the Tribunal and that reference concerns a certificate issued by the training advisory body under clause 43, that body will take the place of the Commissioner in the proceedings.

Division 1 - Objections to and review of assessments

Clause 54: Objections

This clause sets out the first step that an employer must take to dispute an assessment. By subclause (1) an employer may, within 60 days after receiving a notice of assessment, lodge a written objection against the assessment setting out fully the grounds of the objection.

Subclause (2) stipulates that the Commissioner is required to consider the objection and either disallow it or allow it wholly or in part.

Subclause (3) requires the Commissioner to give the employer a notice in writing of the decision.

An employer may not further object against an amended assessment except to the extent that it imposes a new liability or increases an existing one (subclause (4)).

By virtue of subclause (5) where an assessment of training guarantee charge and one or more assessments of additional training guarantee charge are incorporated on the same notice of assessment, the assessments are regarded as one assessment for the purposes of the objection and appeal provisions. An employer, therefore, does not have to object or appeal independently against each assessment to contest the total training guarantee charge liability for the year. The notice of objection can cover both the training guarantee charge and the additional charge. The subclause also has the effect of preventing an employer from say, appealing to a court in relation to training guarantee charge and to the Administrative Appeals Tribunal in relation to the additional charge.

Clause 55: Request for referral

This clause provides that an employer dissatisfied with the Commissioner's decision under clause 52 may request the Commissioner to refer the decision to the Administrative Appeals Tribunal. Alternatively, the employer may request the Commissioner to refer the decision to the Federal Court. The request must be in writing and be lodged within 60 days after the Commissioner has given notice of the decision to the employer.

It should be noted that under Part IVAB of the Taxation Administration Act 1953 a request for reference must be accompanied by a fee. Currently the amount of the fee is $300.

Clause 56: Applications for extension of time

Clause 56 enables an application to be made for an extension of time to be granted for lodging an objection under clause 54 or requesting referral under clause 55.

Subclause (1) allows an employer where the time limit for lodging objections has expired to lodge an application for an extension of time with the Commissioner. This application must be in writing and must be accompanied by the objection.

Subclause (2) is complementary to subclause (1). It allows an employer to lodge a written application for an extension of time to lodge a request for referral under clause 55. This application must be in writing and also be accompanied by the request.

By virtue of subclause (3) it is necessary for the employer, in the application for the extension of time, to provide full details of the reasons the objection or request for referral was not lodged within the 60 day time limit.

Clause 57: Consideration of applications for extension of time for lodging objections

Clause 57 enables the Commissioner to make a decision on the application for an extension of time in which to lodge an objection and confers on the Administration Appeals Tribunal power to review the Commissioner's decision.

Subclause (1) requires the Commissioner to consider the application for an extension of time and to either grant or refuse the application. Circumstances in which an extension of time could be expected to be granted would include delay in lodgement of the objection caused by illness of the employer or other factors outside the employer's control such as a delay in the post.

The Commissioner is required to give the employer written notice of the decision on the application for an extension (subclause (2)).

The Commissioner's refusal to grant an extension of time is subject to review by the Administrative Appeals Tribunal (subclause (3)). An application for review should be made direct to the Tribunal.

Subclause (4) provides that an employer is to be treated as having lodged the objection within the 60 days if the application for an extension of time has been granted.

Clause 58: Consideration of applications for extension of time for lodging requests for referral

This clause confers on the Administrative Appeals Tribunal (referred to as "the Tribunal") and the Federal Court of Australia discretion to extend the time for lodging a request for referral to the Tribunal or Court.

By subclause (1) an application for an extension of time relating to a request for a referral to the Tribunal is to be sent by the Commissioner to the Tribunal. Where the application relates to an appeal to the Federal Court, the Commissioner is required to refer the application to the Court.

By virtue of subclause (2) once an application is sent to the Tribunal by the Commissioner, it is to be treated as an application to the Tribunal to extend the time for lodgement. This has the effect of bringing into operation subsections 29(7) to (10) of the Administrative Appeals Tribunal Act 1975 and, if the Commissioner wishes to oppose the granting of the extension, requires the Tribunal to conduct a hearing into the matter.

Subclause (3) is similar to subclause (2) in that it provides that an application sent to the Court is to be treated as an application to the Court to extend the time for lodgement.

Subclause (4) will authorise the Tribunal or Federal Court to grant or refuse an application for an extension of time. In considering an application, the Tribunal or Court would rely on the accepted principles applied by the Courts in entertaining applications for extensions of statutory time limits. In brief, those principles include questions of public interest in the finality of decision-making, the likelihood or otherwise of prejudice to the respondent, the extent of the delay in the application for the extension of time and the question of the onus on an applicant to prove that an extension of time should be granted.

Subclause (5) ensures that, where an application for an extension of time to lodge a request is granted by the Tribunal or Court, the request is to be treated as having been lodged in time.

Clause 59: Referral to Tribunal or Federal Court

If a request for referral to the Tribunal or Court is received within the 60 day limit prescribed by clause 55, or is treated as having been received in time by reason of an extension of time being granted under clause 58, the Commissioner will be obliged by subclause (1) to refer the request to the Tribunal or Court in accordance with the request.

By subclause (2), a referral received by the Tribunal from the Commissioner is to be treated by the Tribunal in the same manner as an application made direct to the Tribunal. The provisions of the Administrative Appeals Tribunal Act 1975 relating to the review of decisions will therefore apply, in reviewing the Commissioner's decision on the objection.

Clause 60: Procedure on review or appeal

By clause 54, an objection against an assessment must be in writing and must state fully and in detail the grounds upon which the employer relies in disputing the assessment. Clause 60 stipulates that the employer is limited to the grounds stated in the objection unless the Tribunal or Federal Court orders otherwise and that the employer has the burden of proving that an assessment is excessive.

It is expected that, in exercising its discretion of the Tribunal or Court, the general principles on which courts have permitted amendments of pleadings in other areas of the law will generally be applied. For example, the discretion is likely to be exercised where the need for an amendment of the grounds of objection arises as a result of the Commissioner relying on arguments in defence of an assessment where the particular basis was not adverted to at the time of issuing an assessment.

Subclause (2) is complementary to subclause (1). It allows an employer to lodge a written application for an extension of time to lodge a request for referral under clause 51. This application must be in writing and also be accompanied by the request.

By virtue of subclause (3) it is necessary for the employer, in the application for the extension of time, to provide full details of the reasons the objection or request for referral was not lodged within the 60 day time limit.

Division 2 - Review of certificates issues by training advisory body

Clause 61: Review of industry agent's refusal to give training advisory certificate

As discussed in clause 43, an employer can seek to obtain a certificate from a registered industry agent stating that particular activities of the employer constitute an eligible training program or that particular expenditure constitutes eligible training expenditure. The industry agent must give the certificate if the agent is satisfied that the activities and expenditures are eligible; alternatively, if the agent is not satisfied, the agent must refuse to give the certificate. This clause provides for the employer to seek a review by the training advisory body of the decision by the industry agent.

The employer first needs to apply in writing to the training advisory body seeking a review of the agent's decision. On considering the application, the training advisory body is required to issue a certificate stating whether or not the activities and the expenditures specified in the application constitute an eligible training program or eligible training expenditure, as the case may be. The training advisory body must also give the Commissioner a copy of the certificate. By virtue of clause 45, this certificate is binding on the Commissioner.

Clause 62: Request for referral to Tribunal

As pointed out in the introductory note to this Part, the Commissioner and a registered industry agent will be able to request the advice of the training advisory body whether particular activities constitute an eligible training program or particular expenditure constitutes eligible training expenditure. Such advice is binding on the Commissioner. This clause provides that an employer dissatisfied with the effect of a certificate issued by the training advisory body under clause 44 or clause 61 may request that the matter be referred to the Administrative Appeals Tribunal. The request must be in writing and be made within 60 days of being given a copy of the certificate under clause 44. The request must state fully and in detail the ground on which the employer is seeking a review.

Clause 63: Applications for extension of time

This clause is similar to clause 56 in that it enables an application to be made for an extension of time to be granted for requesting referral to the Tribunal.

Subclause (1) allows an employer to lodge a written application for an extension of time to lodge a request for referral under clause 62. The application must be in writing and also be accompanied by the request.

By virtue of subclause (2) it is necessary for the employer, in the application for the extension of time, to provide full details of the reasons the request for referral was not lodged within the 60 day time limit.

Clause 64: Consideration of application for extensions of time

This clause is the counterpart of clause 58 which deals with applications for extensions of time when the referral is in respect of an objection to and review of an assessment. It confers on the Administrative Appeals Tribunal (the "Tribunal") discretion to extend the time for lodging a request for referral to the Tribunal.

By subclause (1) an application for an extension of time relating to a request for a referral to the Tribunal, is to be sent by the Commissioner to the Tribunal.

By the operation of subclause (2) once an application is sent to the Tribunal by the Commissioner, it is to be treated as an application to the Tribunal to extend the time for lodgement. As explained in the notes on clause 58, if the Commissioner wishes to oppose the granting of the extension, the Tribunal must conduct a hearing into the matter.

Subclause (3) will authorise the Tribunal to grant or refuse an application for an extension of time. As explained in the notes on clause 58, the Tribunal would rely on accepted principles in considering an application.

Subclause (4) will ensure that the request is treated as having been lodged on time where an application is granted by the Tribunal.

Clause 65: Referral to Tribunal

By virtue of subclause (1) the Commissioner will be obliged to refer a request for referral to the Tribunal in accordance with the request as long as it is received within the 60 day limit prescribed by clause 62, or is treated as having been received in time by reason of an extension of time being granted under clause 64.

Because of subclause (2), the provisions of the Administrative Appeals Tribunal Act 1975 relating to the review of decisions will apply in reviewing the Commissioner's decision on the decision - i.e., a referral received by the Tribunal from the Commissioner is to be treated by the Tribunal in the same manner as an application made direct to the Tribunal.

Clause 66: Procedure on review

By clause 62 a request for referral by an employer who is dissatisfied with the effect of a certificate issued by the training advisory body under clause 44 or clause 61 must be in writing. Clause 66 stipulates that the employer is limited to the grounds stated in the request for referral.

Division 3 - Review or appeal generally

Clause 67: Notice to refer

If the Commissioner does not comply with a request under clause 55 to refer the Commissioner's decision on an objection or the Commissioner does not refer a request under clause 62 to the Tribunal or the Federal Court, the employer may at any time after the expiration of 60 days give the Commissioner further notice in writing to do so. The Commissioner must then refer the request within 60 days after being given notice (subclause (1)).

Where an extension of time to lodge a request for referral has been granted under clause 56, or subclause 60(1), the 60 day period (after which an employer is entitled to give notice to the Commissioner under subclause (1) to have the request sent on to the Tribunal or Federal Court) commences on the day the extension application is granted (subclause (2)).

By virtue of subclause (3) if within 60 days after receiving a request for a referral, the Commissioner requires the employer making the request to give information relating to the objection or request, the Commissioner is not bound to refer the request to the Tribunal or the Federal Court until the expiration of 60 days after receipt of the information requested.

Clause 68: Powers of Federal Court on appeal

Clause 68 makes it clear that the Federal Court hearing an appeal under Part 7 of the Bill is reviewing the Commissioner's decision on the objection or the effect of a certificate issued by the training advisory body under clause 44 or clause 61 and may make an order only in relation to the decision of the Commissioner on the objection or the certificate that has been referred to the Court. The Court cannot for example, make an order allowing an employer's appeal and at the same time amend the assessments under appeal. The Commissioner will under proposed clause 69, be required to give effect to the Court's order including, where appropriate by amending the assessment - see following notes on clause 69.

Clause 69: Implementation of decisions

As previously explained the powers of the Tribunal and Federal Court will broadly be limited to confirming or varying a decision on an objection or the effect of a certificate issued by the training advisory body and will not extend to making or amending assessments.

Clause 69 will require the Commissioner, where necessary, to give effect to a decision of the Tribunal or Court (such as, for example, by amending an assessment) no later than 60 days after the decision on the review or appeal has become final. A decision will not be regarded as having become final until all subsequent appeals, if any, have become finalised. Where no appeal has been lodged against a decision, the decision will become final upon the expiration of the time required for lodging an appeal (not including any such further time as may be allowed by the Court).

Subclause (2) contains special provisions that apply only where a decision is able to be appealed from by special leave of the High Court. This could occur, for example, where a decision of the Tribunal is taken on appeal to the Full Federal Court. As a decision of the Full Federal Court is only able to be appealed from by special leave of the High Court and, because, technically, special leave may be applied for at any time, the subclause makes it clear such a decision of the Full Federal Court will be taken as having become final upon the expiration of 30 days after the decision is given, unless an application for special leave has been lodged with the High Court within that time.

Clause 70: Pending review or appeal not to affect assessment

This clause makes it clear that the requirement to pay training guarantee charge or additional training guarantee charge is not suspended pending the outcome of an appeal against or a review of, the Commissioner's decision on an objection to which the assessment relates or the effect of a certificate issued by the training advisory body.

PART 8 - COLLECTION AND RECOVERY OF CHARGE

Clause 71: When training guarantee charge becomes due and payable

Clause 71 stipulates the time for payment of training guarantee charge payable under the Bill. Although the charge should be paid by 30 September each year, the due date for payment of the training guarantee charge depends on the date of lodgement of the training guarantee statement.

Under clause 71 if an employer who is liable to pay training guarantee charge for a year lodges the training guarantee statement on or before 30 September in the following year, the training guarantee charge becomes due and payable on 30 September. If, however, the employer lodges the training guarantee statement for a year after 30 September in the following year, the training guarantee charge becomes due and payable on the day on which the statement is lodged, i.e., the date of the deemed assessment under clause 46 (see earlier notes on that clause). The effect of this is that any penalty for unpaid training guarantee charge under clause 75 does not begin to accrue on amounts unpaid until the statement is lodged. However, the employer will be liable for additional training guarantee charge under clause 84 for failure to provide a statement.

Clause 72: When additional training guarantee charge becomes due and payable

Clause 72 stipulates that additional training guarantee charge is due and payable on the date specified in the notice of assessment of such additional training guarantee charge. In this clause additional training guarantee charge refers to additional training guarantee charge under Part 9 - i.e., penalty charge.

Clause 73: Employer leaving Australia

This clause will apply in a similar way to section 205 of the Income Tax Assessment Act 1936 by modifying the effect of clauses 71 and 72 if the Commissioner believes an employer liable to pay the training guarantee charge is about to leave the country before the due date for payment. In such a case, the Commissioner may require the employer to pay the training guarantee charge (including penalty charge under Part 9) by a date notified to the employer.

Clause 74: Extension of time and payment by instalments

This clause empowers the Commissioner to grant an extension of time for the payment of training guarantee charge, or to permit the payment of such charge to be made by instalments.

Under subclause (1) the Commissioner may extend the time permitted for payment of training guarantee charge in such circumstances as the Commissioner thinks fit. If the Commissioner does extend the time for payment, the training guarantee charge becomes due and payable on the date so determined by the Commissioner.

The Commissioner may also, under subclause (2), permit the payment of training guarantee charge to be made by instalments in such circumstances as the Commissioner thinks fit. The amounts and timing of the instalments are to be as determined by the Commissioner. Each instalment is due and payable at the time determined in relation to that instalment.

Subclause (3) stipulates that where the Commissioner has permitted payment of the training guarantee charge by instalments the whole of the amount outstanding immediately becomes due and payable if default occurs and an instalment is not paid by the due date for payment of the instalment.

Subclause (4) ensures that payment of additional training guarantee charge under subclause 75(2) (interest) and Part 9 (penalty charge), can likewise be extended, paid by instalment and, upon any default of any arrangement the balance of additional training guarantee charge becomes due and payable at the time of the default.

Clause 75: Penalty for unpaid training guarantee charge

Clause 75 is similar in operation to other provisions of taxation laws that impose late payment penalty of 20 per cent. However, the clause also provides for a lesser rate, equivalent to interest, to apply where an amended assessment is issued and as a result late payment penalty becomes payable.

Subclause (1) is the operative provision which will impose by way of penalty, additional training guarantee charge at the rate of 20 per cent per annum on any training guarantee charge (including penalty charge under Part 9) that remains unpaid after the due date for payment. Where the Commissioner has granted an extension of time for payment of the training guarantee charge or has permitted it to be paid by instalments the penalty period will be as adjusted by the Commissioner.

Where an assessment is amended to increase the employer's liability, subclause (2) operates to reduce the rate of late payment penalty from 20 per cent per annum to the rate that applies when interest is payable under the Taxation (Interest on Overpayments) Act 1983 - currently 14.026 per cent (see notes on subclause (3)).

However, the rate of late payment penalty is only reduced where the amendment which increased the employer's liability to additional training guarantee charge was not due to false or misleading statements, or to an arrangement to avoid or reduce training guarantee charge.

Paragraphs (a), (b) and (c) outline the circumstances which must exist before the lower rate of late payment penalty applies. Paragraph (a) stipulates that this clause is to apply where the Commissioner has amended an assessment. Paragraph (b) requires that the training guarantee charge payable under the amended assessment exceed the training guarantee charge payable under the former assessment. Paragraph (c) defines the non-penalised amount (the amount to be subject to the lower rate) to be the whole or part of the excess of training guarantee charge payable as a result of the amended assessment (i.e., the underpaid training guarantee charge) that arose as a result of circumstances which would not make the employer liable to penalty charge for false or misleading statements or arrangements to avoid charge under clauses 85 and 86 respectively.

Paragraphs (d) and (e) set out the period over which the additional charge that is attributable to the non-penalised amount is to be calculated at the lower rate. The period will run from the original assessment date until the 30th day after the amended assessment was made. If an extension of time has been granted in respect of the original assessment or he employer has been permitted to pay by instalments, the period will not commence until the substituted due date.

Subclause (3) sets the rate of interest applicable under subclause (2) at 14.026 per cent per annum unless regulations to change the rate are made under the Taxation (Interest on Overpayments) Act 1983.

Subclause (4) authorises the Commissioner to remit the whole or part of any late payment penalty under this clause, where the Commissioner is satisfied the circumstances warrant such a remission.

By paragraph (a) the Commissioner will be permitted to remit the whole or part of any late payment penalty payable by an employer if the Commissioner is satisfied that the circumstances that led to the delay in payment of the training guarantee charge were not caused by an act or omission of the employer and the employer has taken reasonable action to mitigate the effect of the circumstances that led to the delay. For example, paragraph (a) would permit the Commissioner to remit late payment penalty in a case where the late payment of training guarantee charge was caused by adverse factors beyond the employer's control, such as, loss of property or trading stock through an accident or a natural disaster. The power to remit the late payment penalty will, however, only be available if the employer has taken any action reasonably available to mitigate the effects of the adverse factors. Action that an employer could be expected to take in mitigation would include payment of as much as practicable of the outstanding training guarantee charge and making arrangements with the Commissioner for the payment of the outstanding training guarantee charge.

Paragraph (b) authorises the Commissioner to remit the whole or part of any late payment penalty in appropriate cases, notwithstanding that the circumstances which led to the delay in payment of the training guarantee charge were caused by the employer. Remission of the late payment penalty will be possible if the Commissioner is satisfied that the employer has taken all reasonable action to mitigate the effects of those circumstances and that it is fair and reasonable to remit the late payment penalty in view of the nature of those circumstances.

A situation to which paragraph (b) may apply could arise out of financial difficulties caused by a business decision taken by the employer which, although it might have been a reasonable decision to take at the time, resulted in a loss of other adverse consequences for the employer.

By paragraph (c) the Commissioner will be able to remit late payment penalty where the Commissioner considers that there are other special circumstances to justify that course.

A situation to which paragraph (c) may apply and where the Commissioner may remit the late payment penalty could be where the amount of late payment penalty was very small.

Subclause (5) will ensure that late payment penalty continues to accrue notwithstanding that judgment for its payment has been given or entered in a court. Where the judgment debt itself carries interest, the late payment penalty otherwise payable is to be reduced by the amount of interest that relates to the unpaid training guarantee charge.

Subclause (6) will make clear that late payment penalty is to be calculated on both primary charge and any additional penalty charge that may be imposed under Part 9.

Clause 76: Recovery of training guarantee charge

By the operation of this clause, training guarantee charge payable by an employer is given the status of a debt due to the Commonwealth and requires that such training guarantee charge be paid to the Commissioner. The Commissioner or a Deputy Commissioner will have authority to sue for recovery of the training guarantee charge in a court of competent jurisdiction.

Subclause (2) defines training guarantee charge to include additional training guarantee charge for unpaid training guarantee charge under clause 75 (late payment penalty) and additional training guarantee charge under Part 9 (penalty charge).

Clause 77: Substituted service

This clause will enable the Commissioner, when taking any recovery action, to serve a document if the Commissioner is satisfied that an employer is absent from Australia or cannot be found. Service may be effected by posting the document or a sealed copy to the employer's last known private or business address in Australia.

Clause 78: Liquidators

Clause 78 follows the principles of section 215 of the Income Tax Assessment Act 1936, and applies for the purpose of determining the status of training guarantee charge debts in liquidations of employers that are companies.

The clause imposes a personal liability on a company liquidator, receiver or receiver and manager (referred to as the asset holder) who fails to retain assets of the company sufficient to provide for the amount of training guarantee charge and prescribed tax. Prescribed tax in this context means other taxes and charges, the collection of which is the responsibility of the Commissioner - for a list of taxes see notes on subclause (10).

Broadly, this clause will require an asset holder, to notify the Commissioner of his or her appointment and the Commissioner in turn to notify the asset holder as soon as possible of the amount of any training guarantee charge debt that is or will become owing. The asset holder must then set aside sufficient assets to pay the amount of training guarantee charge notified by the Commissioner and any amount of prescribed tax.

By subclause (1), an asset holder is required to notify the Commissioner, in writing within 14 days of his or her appointment as liquidator or in the case of a receiver or receiver and manager that he or she has taken possession of assets.

Subclause (2) requires the Commissioner, as soon as practicable, to notify the asset holder of an amount which appears to the Commissioner to be sufficient to provide for any training guarantee charge that is or may become payable by the employer (in this clause referred to as the "notified amount").

Subclause (3) sets out the asset holder's responsibilities concerning the company's assets. Apart from paying secured creditors (see notes on subclause (5)) the asset holder, by paragraph (a) must not part with any of the assets of the company until notified by the Commissioner.

Paragraph (b) contains a formula for determining the pro-rata entitlement of the Commissioner, as an ordinary creditor in respect of training guarantee charge and prescribed taxes (see notes on subclause (10)) to be paid out of the assets available for the payment of ordinary debts. Assets to the value so calculated are required to be set aside.

The following example illustrates the way the Commissioner's entitlement is to be calculated:

Total value of assets of the company $ 500,000
Secured creditors 100,000
Total value of assets available to pay ordinary debts 400,000
Amount notified by the Commissioner as income tax payable 400,000
Amount notified by the Commissioner as fringe benefits tax payable 50,000
Company's notified tax 450,000
Amount notified by the Commissioner under proposed subsection 75(2) as training guarantee charge payable (the notified charge amount) 2,000
Sum of company's other ordinary debts 500,000
Total ordinary debt 952,000

Value of assets to be set aside (for training guarantee charge under proposed subsection 75(3))

Value of assets to be set aside = (Total Value of assets available to pay ordinary debts * notified charge amount)/(notified charge amount + company's notified tax + sum of company's other ordinary debts)

i.e.,

(400,000)/(952,000) * 2000 = $840

Subclause (4) stipulates that the asset holder is liable as trustee to pay the training guarantee charge to that extent.

Under subclause (5) an asset holder is expressly permitted to part with assets of the company to the extent necessary for the purpose of paying debts of the company which are not ordinary debts of the company.

An "ordinary debt" is defined in subclause (6) as meaning a debt which is an unsecured debt and is not a debt that, under a Commonwealth, State or Territory law is payable in priority to some or all of the other debts of the employer.

Subclause (7) makes it an offence for an asset holder to refuse or fail to comply with this clause. On conviction, the maximum penalty is $l,000. An asset holder who refuses or fails to pay the training guarantee charge for which the asset holder is liable under subclause (3) is also personally liable to pay the charge, to the extent of the value of the assets required to be set aside.

Subclause (8) makes it clear that an obligation or liability of the asset holder arising otherwise than under this clause is not to be limited by the operation of this clause.

Subclause (9) ensures that if there is more than one asset holder, the obligations and liabilities attaching to the asset holder under this clause attach to those persons jointly.

Subclause (10) defines the following terms used in clause 78.

"company's notified tax" is used specifically in the formula set out in subclause (3). It is the amount of which the company or the respective asset holder has been notified under a prescribed tax provision (see below)
"prescribed tax" means

·
fringe benefit tax;
·
income tax;
·
unpaid company tax;
·
trust recoupment tax;
·
sales tax;
·
Territories pay-roll tax;
·
petroleum resource rent tax;
·
tobacco charge; and
·
wool tax

"training guarantee charge" is defined to include late payment penalty imposed under clause 75 or penalty charge imposed under Part 9. Both of these penalties are referred to as additional training guarantee charge.

Clause 79: Recovery of training guarantee charge from trustee of deceased employer

This clause will require the trustee of a deceased employer's estate to lodge any statements and information which the Commissioner may require in order to determine the deceased employer's outstanding training guarantee charge liability (including additional training guarantee charge). The Commissioner has the same powers and remedies for assessment and recovery of training guarantee charge after the date of an employer's death as existed before it.

By subclause (1), two conditions must be satisfied at the time of an employer's death before the proposed section can apply:

·
the employer must not have paid the whole of any training guarantee charge incurred before the death of the employer; or
·
additional training guarantee charge under Part 9, (i.e., penalty charge) for which the employer is liable must not have been assessed or paid.

Subclause (2) confers on the Commissioner the same powers and remedies for the assessment and recovery of training guarantee charge (including penalty) from the trustee of the employer's estate as the Commissioner would have had against the employer.

By virtue of subclause (3) the trustee will be obliged to lodge any training guarantee statements or information that the employer would normally have had to furnish and lodge any other training guarantee statements or information that the Commissioner may require.

Subclause (4) deals with the situation where the trustee is unable, refuses or fails to lodge a training guarantee statement for a year. In such a case the Commissioner is authorised to make a default assessment of the training guarantee shortfall of the employer for the year and the amount of the training guarantee charge payable on the shortfall. Similar authorisation is given for default assessments when the employer is alive - see notes on clause 47.

Subclause (5) stipulates that the trustee is subject to late payment penalty and penalty charge to the same extent as the employer would have been.

Subclause (6) operates to ensure that the training guarantee charge payable by the trustee is a first charge on the employer's estate in the trustee's hands other than a charge in relation to a debt payable to the Commissioner.

Subclause (7) ensures that a reference to training guarantee charge in this clause includes a reference to late payment penalty and penalty charge.

Clause 80: Recovery of charge from unadministered deceased estates

Clause 80 facilitates the recovery of training guarantee charge owing by a deceased employer where probate has not been granted by authorising the Commissioner to make an assessment of the amount of training guarantee charge up to the date of death.

Subclause (1) authorises the Commissioner to make a default assessment of the training guarantee shortfall on which training guarantee charge was payable by the employer at the time of his or her death and the amount of the training guarantee charge payable on the shortfall where a grant has not been made of probate of the will, or of letters of administration of the estate of a deceased employer within 6 months after the death of the employer.

Where a default assessment has been made subclause (2) requires the Commissioner to publish notice of the assessment twice in a daily newspaper circulating in the State or Territory in which the deceased employer resided.

Subclause (3) permits a written objection or a request for reference to be lodged against the assessment or the effect of a certificate made by the training advisory body by a person who claims an interest in the deceased employer's estate within 60 days after the first publication of the notice of assessment. The objection or request must state fully and in detail the grounds on which the person relies.

Subclause (4) serves a similar purpose to subclause 97(1). It is an evidentiary provision which has the effect of declaring the assessment to be conclusive evidence of the liability of the deceased employer to training guarantee charge, subject to any amendment being made.

Subclause (5) is similar in operation to the recovery mechanism specified in subsection 220(5) of the Income Tax Assessment Act 1936. It provides that the Commissioner may, by order in the prescribed form, authorise a member of a police force or any other person specified in the order to levy the amount of training guarantee charge together with costs by seizing and selling any property of the deceased employer.

Subclause (6) needs to be read in conjunction with subclause (5). It confers the power to levy, as prescribed, the amount specified in the order to a person authorised in that order.

Subclause (7) covers the situation where at any time after the assessment has been made in accordance with subclause (2) probate is granted, or letters of administration are taken out. In such a case the executor or administrator may, within 60 days after such grant, etc. lodge an objection against the assessment or request a referral. The objection or request must state fully and in detail the grounds on which the executor or administration relies. An objection or request for referral which complies with the above conditions may be lodged despite the fact that training guarantee charge has been recovered by seizing and selling the deceased employer's property.

Subclause (8) has the effect of treating any objection or request for referral lodged in accordance with this clause as if it had been lodged by the deceased employer. All the provisions of Part 7 of the Bill - which relate to objections, reviews and appeals - therefore apply in the normal fashion.

Subclause (9) makes it clear that in this clause training guarantee charge includes additional training guarantee charge payable by way of penalty under clause 75 or Part 9.

Clause 81: Commissioner may collect training guarantee charge from person owing money to person liable to training guarantee charge

This clause is the counterpart of the customary "garnishee" provisions contained in other taxation laws - see for example, section 218 of the Income Tax Assessment Act 1936.

It will authorise the Commissioner to collect training guarantee charge and other specified debts (see notes on subclause (12)) owing by an employer from any person, who broadly, owes money to the employer, or has authority to pay money to the employer without having regard to recovery proceedings through a court.

Subclause (1) is the operative provision which sets out the circumstances under which the Commissioner is authorised to give a written notice to a "debtor" to pay the "garnisheed amount" to the Commissioner at or before the "payment time".

In this clause a "debtor" is a person:

·
who owes, or may subsequently owe money to an employer; or
·
who holds, or may subsequently hold, money for or on behalf of an employer, or for or on account of another person for payment to an employer; or
·
who has, or may subsequently have, authority from another person to pay money to an employer.

The "garnisheed amount" is an amount equal to:

·
the whole of the money, or so much of it as is sufficient to pay the training guarantee charge due by the employer whichever is the lesser; or
·
the amount specified in the notice to be paid by instalments out of each payment to be made to the employer, until the amount of training guarantee charge is paid.

The "payment time" specified in the notice may not be retrospective.

By virtue of subclause (2), the Commissioner may revoke or vary a notice under subclause (1) by giving a further notice in writing.

Subclause (3) requires the Commissioner to give any notices to the debtor together with copies to the employer.

Subclause (4) makes it an offence for a person to fail to comply with a notice under this clause. A maximum penalty of $l,000 is provided upon conviction.

Under subclause (5) if a person (referred to as a "convicted person") is convicted of an offence under subclause (4), the court may, in addition to imposing a penalty, order the convicted person to pay to the Commissioner the amount in default.

Subclause (6) operates to ensure that any person making payment pursuant to a notice is deemed to have been acting under the authority of the employer and is indemnified in respect of the payment.

Where an employer makes any payment in relation to the outstanding training guarantee charge before payment is made by a person who has been given a garnishee notice, subclause (7) requires the Commissioner to give further notice in accordance with subclause (2).

By the operation of subclause (8) the garnisheed amount is given the status of a debt due to the Commonwealth and as such is recoverable in a court of competent jurisdiction.

Subclause (9) makes it clear that, where money is on deposit in a building society account in circumstances whereby the deposit technically constitutes part of the share capital of the society and a withdrawal would constitute the redemption, cancellation or withdrawal of that share capital, that money will be taken to be money that is due and that may become due by the building society to the depositor and hence available to satisfy an outstanding training guarantee liability in accordance with subclause (1). Thus building society accounts are to be treated for these purposes on the same footing as investments in other financial institutions.

Subclause (10) has the effect that for the purpose of this clause money will be treated as being due to a person or repayable on demand notwithstanding that some pre-condition for the obtaining of the money (e.g., the production of a pass book) has not been fulfilled.

Subclause (11) covers the situation where a garnishee notice is to be given to the Commonwealth, a State or Territory. In this case the notice may be given to a person who under a law of the Commonwealth, a State or Territory has a duty of disbursing public money.

Subclause (12) is an interpretative provision which gives the meaning of two terms used in the clause.

"building society" means a society registered or incorporated as such under the law, or as a co-operative housing or similar society.
"training guarantee charge" is defined to make it clear that the term includes for the purposes of collection under this clause:

·
additional training guarantee charge under clause 75 or Part 9 - i.e., late payment penalty or penalty charge; and
·
a judgment debt or costs in relation to training guarantee charge or additional training guarantee charge; and
·
any fine or costs imposed by a court in respect of an offence against this Bill; and
·
any amount ordered by a court to be paid by a person to the Commissioner, for an offence against the Bill.

Clause 82: Public officer of company

For the purposes of the Income Tax Assessment Act 1936, every company carrying on business or deriving property income in Australia must, unless specifically exempted, at all times have a public officer. The public officer of a company is answerable for the doing of all such things as are required to be done by the company under that Act and, if in default, is liable to the same penalties.

By virtue of the operation of subclause (1), the person who is the public officer of a company for the purposes of the Income Tax Assessment Act is the public officer of the company for the purposes of this Bill. The address for service of the public officer under that Act is also the address for service under this Bill.

Subclause (2) proposes that service of any notice or other document at the address for service of the public officer, or on the public officer, is sufficient service on the company. If there is not a public officer at any time, service on any person acting or appearing to act in the company's business is sufficient.

The public officer is answerable for the doing of all things as are required to be done by the company under this Bill and the Acts Interpretation Act 1953 and, in case of default is liable to the same penalties (subclause (3)).

Subclause (4) stipulates that everything required to be done by a public officer in that capacity shall be taken to have been done by the company.

Subclause (5) provides that this Bill applies in relation to the company as if there were no requirement to appoint a public officer if at any time there is not a public officer.

The company is deemed to be liable jointly with the public officer for any penalty imposed on the public officer as a result of any proceedings taken under this Bill or (because of clause 4) the Taxation Administration Act 1953 relating to this Bill against the public officer: subclause (6).

Subclause (7) qualifies the operation of clause 82 by providing that if the Commissioner thinks fit, any notice, process or proceeding under this Bill or the Taxation Administration Act may, instead of being served on or brought against the public officer, be served on or brought against another officer of the company, any director or secretary, attorney or agent of the company. In such a case, that person has the same liability in relation to the notice, process or proceedings as the company or public officer would have had if it had been given or brought against the company or public officer.

Clause 83: Public officer of trust estate

The provisions of this clause, which is complementary to clause 82, are to the same effect and for the same purpose as that clause except they provide for the particular circumstances of a trust estate rather than a company (see notes on the previous clause).

PART 9 - PENALTY CHARGE

Clause 84: Failure to provide statements or information

The effect of clause 84 is that an employer who refuses or fails to duly furnish a training guarantee statement or any information relevant to assessing the training guarantee charge for a year, is liable to additional training guarantee charge by way of penalty. The amount of the additional training guarantee charge is double the amount of training guarantee charge payable by the employer in respect of the year, or $20 if the amount of the additional charge otherwise payable would be less.

Subclause (1) is the operative provision which will impose by way of penalty, an additional training guarantee charge equal to double the amount of training guarantee charge payable by the employer for the year if the employer - not being a government body (a defined term) - refuses or fails to provide, when and as required to do so under the law, a training guarantee statement or information relevant to assessing the employer's liability to pay training guarantee charge for a year.

Consistent with the system of self assessment under this Bill only a limited amount of information will need to be provided in the training guarantee statement which must be lodged in accordance with clause 40 or clause 41, in the form specified in clause 42 (see notes on that clause). Other information such as accounts, documents, certificates or notices which may be used to calculate the employer's liability to pay training guarantee charge for a year or represents information which supports or verifies the information contained within the training guarantee statement will be required to be retained by an employer.

Subclause (2) specifies that the employer is liable to pay additional training guarantee charge by way of penalty, equal to double the amount of training guarantee charge, if an employer fails to:

·
keep a record of the basis of calculation of the following amounts specified in a training guarantee statement (paragraph (a))

-
the employer's annual national payroll in the year;
-
the employer's minimum training requirement in the year;
-
the employer's net eligible training expenditure in the year;
-
the employer's training guarantee shortfall in the year.

·
produce a document or record containing particulars of the basis of calculation of the above amounts and any liability to training guarantee charge when and as required by the Commissioner (paragraph (b)).

By the operation of subclause (3) the minimum penalty payable under this clause will be $20.

Clause 85: False or misleading statements

This clause will impose a penalty by way of additional training guarantee charge where an employer makes a statement that is false or misleading, and less training guarantee charge would be payable than if the statement was not false or misleading. It is similar in operation to the penalty tax provisions of other taxation laws relating to false or misleading statements. Like those provisions, it imposes a strict requirement on the maker of a statement to ensure that the statement is not false or misleading. This reflects the need for administration of tax laws to be able to rely on the accuracy of statements that affect liability to tax, and the ability of the maker of a statement to be accurate.

Subclause (1) will apply where an employer - other than a government body - makes a statement for the purposes of the Bill that is false or misleading in a material particular or which, by virtue of any omission, is rendered misleading. If, in such a case, the training guarantee charge properly payable by the employer exceeds the training guarantee charge that would have been payable if the statement were correct, the employer will be liable to pay by way of penalty, additional training guarantee charge equal to double the excess.

By the operation of subclause (2), the minimum penalty under this clause will be $20.

The penalty imposed by subclause (1) will apply to statements made to a taxation officer (as defined in clause 4) or other person for a purpose connected with the Bill and, for that purpose subclause (3) will define the term "statement made to a taxation officer" to mean an oral or written statement, or one made on a data processing device (as defined in clause 4) or in any other form. In particular, the subclause will ensure that statements contained in an objection against an assessment will be penalisable where such statements are false or misleading. The term will also include any statement whether or not furnished in accordance with provisions of the Bill - whether, in a document given to a taxation officer, any answer to a question asked by a taxation officer or any information furnished to a taxation officer.

Subclause (4) augments subclause (3) to extend the application of subclause (3) to statements made to a person other than a taxation officer.

Clause 86: Penalty training guarantee charge where arrangement to avoid training guarantee charge

This clause will impose on participants of training guarantee charge avoidance arrangements struck down by clause 19 a penalty of additional training guarantee charge of double the training guarantee charge sought to be avoided.

It will apply where:

·
in making an assessment the Commissioner has calculated the training guarantee charge that is assessable to the employer in relation to a year (in this clause called the "amount payable"); and
·
in making that calculation the Commissioner has taken into account an arrangement entered into by the employer to reduce the employer's training guarantee shortfall in terms of clause 19; and
·
the amount of training guarantee charge is greater that it would have been had the adjustment not been made to eliminate the reduction in the training guarantee shortfall (in this clause called the "notional amount").

Where those conditions apply, clause 86 will impose on the employer a liability to pay by way of penalty, additional training guarantee charge equal to double the difference between the training guarantee charge properly payable and the training guarantee charge that would have been payable if the assessment were made without the application of clause 19.

Clause 87: Assessment of additional training guarantee charge

Subclauses (1) and (2) of this clause impose an obligation on the Commissioner to make an assessment of the additional training guarantee charge payable by an employer under a provision of this Part, but notice of the assessment may be incorporated in another notice of assessment that is being made in respect of the employer.

By subclause (3) the Commissioner may, either before or after making an assessment of additional training guarantee charge, remit the whole or any part of the additional training guarantee charge.

PART 10 - REGISTRATION OF INDUSTRY TRAINING AGENTS

This Part provides for the registration of industry training agents who are empowered to issue training advisory certificates (as discussed in clause 43). As clause 2 points out, this aspect of the Training Guarantee scheme will come into effect on a day to be proclaimed but no later than 1 January 1991.

The Part consists of the following clauses:

Clause 88: Interpretation

Clause 89: Register of industry training agents

Clause 90: Application for registration of industry training agent

Clause 91: Registration of industry training agents

Clause 92: Registration subject to conditions

Clause 93: Cancellation of registration

Clause 94: Guidelines

Clause 95: Review of decisions

To be registered as an industry training agent, a person (including corporate and unincorporated bodies) need to apply in writing to the training advisory body in the form (if any) prescribed by the guidelines which will be issued by the Minister.

If satisfied that the person qualifies under the guidelines to be registered as an industry training agent, the training advisory must then register the person as an industry training agent and enter particulars about the person on the register of industry training agents which it is required to keep.

If the training advisory body is not satisfied that there person qualifies under the guidelines, then it must refuse the application for registration and notify the person in writing accordingly.

Registration of a person as an industry training agent is conditional on the person complying with set conditions specified in the guidelines made by the Minister expressly for the purpose. The training advisory body may cancel a person's registration as an industry training agent if the training body is satisfied that the person has contravened a condition to which the registration is subject.

The training advisory body may also cancel the registration if empowered to do so by the guidelines. This is intended to cover such situations as where the person so desires, or where the person has died or gone out of business. When the training advisory body cancels a registration, it must immediately inform the person in writing.

The Bill enables the Minister to make guidelines to give effect to the process of registration of industry training agents. These guidelines are a disallowable instrument.

Guidelines will be required on:

·
the criteria to be used by the training advisory board for the registration of persons;
·
the conditions which registered industry training agents will need to abide if they are to retain registration;
·
the monitoring to be undertaken by the training advisory body to measure performance against those conditions;
·
criteria to be used in determining whether a registration should be cancelled.

In making these guidelines, the Minister is required to take into consideration any relevant recommendation made to the Minister by the training advisory body.

Decisions made by the training advisory body under this Part can be appealed against by making an application to the Administrative Appeals Tribunal. Matters that can be appealed against include refusal or cancellation of registration.

PART 11 - MISCELLANEOUS

Clause 96: Judicial notice of signature

This clause requires notice to be taken by a Court or Tribunal of the signature of a person who holds or has held the office of Commissioner, Second Commissioner or Deputy Commissioner. This provision will apply to official documents required for the purpose of this Bill.

Clause 97: Evidence

Subclauses (1) to (4) of this clause specify the evidentiary value of certain documents and copies of documents issued or given, or purporting to be issued or given, under the hand of the Commissioner, a Second Commissioner or a Deputy Commissioner, while, subclause (5) applies similarly to a training guarantee statement made or signed by an employer.

The rules in subclauses (1) to (4) are as follows:

·
the production of a notice of assessment or document purporting to be a copy of such a notice is conclusive evidence of the due making of the assessment. Also, that the amounts and all particulars of the assessments are correct except in proceedings relating to an objection, reference or appeal concerning an assessment;
·
the production of a document is prima facie evidence of its being issued or given;
·
the production of a document purporting to be a copy of, or extract from, a training guarantee statement or notice of assessment is evidence of the matters in the document to the extent that the original document would be if produced;
·
the production of a signed certificate that a specific sum was due and payable at the date of the certificate as training guarantee charge or penalty is prima facie evidence of the matter stated.

The rule in subclause (5) is that a training guarantee statement purporting to be made or signed by or on behalf of an employer is prima facie evidence that the statement was made by or on the authority of the employer.

Clause 98: Access to premises etc.

Clause 98 follows the procedural form common to other taxation law. It provides for a power to enter and to obtain access to documents subject to procedural requirements, by not requiring a warrant. The provision is necessary to ensure that the training guarantee scheme is administered in a fair and equitable fashion. In order to ensure that expenditure claimed by an employer does properly qualify as eligible training expenditure, for example, it may be necessary for the Commissioner to inspect documents which may not otherwise be available for inspection if this provision was not included in the Bill.

Subclause (1) will require that an officer duly authorised by the Commissioner be given entry at any reasonable time, to land or premises, full and free access to all books, records and other documents held by any person, and the right to inspect, examine or make copies therefrom.

By subclause (2) an officer is not entitled to remain on land or premises unless a written authority signed by the Commissioner is produced on the request of the occupier.

Subclause (3) will require any occupier of land or premises entered or proposed to be entered by a duly authorised officer to provide that officer with all reasonable facilities and assistance to carry out official duties. An authorised officer will thus be entitled to reasonable use of photocopying, telephone, fax and light and power facilities and of work space and facilities to extract relevant information stored on computer. In addition, the officer will be entitled to reasonable assistance in the form of, for example, advice as to where relevant documents are located and the provision of access to areas where such documents are located.

The maximum penalty on conviction for failure to comply with clause 98 is a fine of $1,000.

Clause 99: Obtaining information and evidence

This clause is complementary to clause 98. Both clauses are similar in operation to comparable provisions in other Taxation Acts - see for example, sections 263 and 264 of the Income Tax Assessment Act 1936. The clause is also necessary to ensure that the training guarantee scheme is administered in a fair and equitable manner and that the objects of the Bill as set out in clause 3 are achieved as far as possible. As explained in the notes on clause 98 it may be necessary, for example, for the Commissioner to obtain certain information and evidence to ensure that expenditure claimed by an employer does properly qualify as eligible training expenditure.

Clause 99 will enable the Commissioner to require, by notice in writing, any person to furnish information, to attend before the Commissioner and answer questions on oath or otherwise, or to produce any documents in the custody or under the control of that person.

It also provides that the regulations must prescribe scales of expenses to be allowed to persons required to attend.

Clause 100: Right of contribution

Clause 100 will apply in cases where two or more persons are liable to pay an amount of training guarantee charge or additional training guarantee charge, either jointly or jointly and severally, and only one of these persons has either fully or partially paid the charge.

Under this clause the person who contributed towards the charge will be able to recover from the other liable person or persons an amount considered just and equitable by a court of competent jurisdiction.

Clause 101: Records to be kept and preserved by employers

This clause requires an employer to keep records that record and explain all transactions and acts relevant for the purpose of ascertaining the employer's liability under the Bill.

By subclause (1), an employer must keep records that record and explain all transactions and other acts engaged in by the employer under the proposed Act.

Subclause (2) explains the type of records which are required to be kept. These include documents relating to the employer's annual national payroll in a year (paragraph (a)) and the employer's net eligible training expenditure in a year (paragraph (b)). For example, although no specific documents are set out in the legislation an employer may find it convenient to keep a register which records separately eligible training expenditure and payments of salary or wages for purposes of the training guarantee scheme. This would avoid the necessity of extracting the relevant vouchers, statements etc. which form the basis of the employer's normal books of account.

Subclause (3) obliges an employer to keep records:

·
by paragraph (a) - in the English language or, if not in written form (e.g., in an electronic medium such as magnetic tape or computer disc), in a form which is readily accessible and convertible into writing in English; and
·
by paragraph (b) so as to enable the employer's liability under the Bill to be readily ascertainable.

Where records are required to be kept or obtained under or for purposes of the Bill, subclause (4) requires an employer who has possession of those records to retain them for 5 years. The 5 year period runs from the day on which the records were prepared or obtained or from when the transactions or acts to which those records relate were completed, whichever is the later.

By subclause (5) an employer need not retain records where:

·
the Commissioner has notified the employer that retention of the records is not required (paragraph (a)); or
·
in the case of a company, the company has gone into liquidation and been finally dissolved (paragraph (b)).

Subclause (6) qualifies the operation of clause 90 by providing that the record keeping requirements of subclauses (1), (2) and (3) have effect subject to any guidelines that the Minister for Employment, Education and Training may make in accordance with subclause 30(3).

By reason of subclause (7) the maximum penalty on conviction for failure to comply with clause 90 without reasonable excuse is a fine of $3,000.

Clause 102: Regulations

This clause will authorise the Governor-General to make regulations prescribing matters required or permitted to be prescribed or necessary or convenient to be prescribed for administering the Bill.

The clause also provides for the prescription by regulations of penalties not exceeding $500 for offences against the regulations.

PART 12 - AMENDMENTS OF CERTAIN ACTS IN RELATION TO THE TRAINING GUARANTEE CHARGE

Clause 103: Amendments

This clause proposes amendments to certain Acts that are consequential upon the proposed introduction of the training guarantee charge on employers. The Acts specified in the Schedule will be amended as set out in that Schedule.

NOTES ON SCHEDULE

An explanation of the amendments to various Acts proposed in the Schedule is contained in the following notes.

ADMINISTRATIVE DECISIONS (JUDICIAL REVIEW) ACT 1977

The Bill will amend the Administrative Decisions (Judicial Review) Act 1977 to exclude from review under that Act decisions of the Commissioner of Taxation related to liability for training guarantee charge or the effect of a certificate issued under clause 43 by the training advisory body. These will be reviewable instead under the separate objection, review and appeal provisions contained in Part 7 of this Bill.

CRIMES (TAXATION OFFENCES) ACT 1980

The Crimes (Taxation Offences) Act 1980 came into operation on 4 December 1980 and provides criminal sanctions against persons who engage in stripping transactions designed to ensure that a company or trust is rendered incapable of paying income tax or sales tax. Such schemes became known as "bottom of the harbour" schemes. Since that time the Act has been amended on a number of occasions to include other taxes such as petroleum resource rent tax within the categories of taxes subject to the Crimes (Taxation Offences) legislation.

The Bill will include training guarantee charge in the category of taxes mentioned above. It will, therefore, be an offence to enter into an arrangement with a purpose of securing that a company or trustee will be, or will be likely to be, unable to pay training guarantee charge that is then payable, or that will or may reasonably be expected to become payable in the future.

FRINGE BENEFITS TAX ASSESSMENT ACT 1986

Liquidations etc.

The Bill proposes an amendment to section 96 of the Fringe Benefits Tax Assessment Act 1986 which is consequential on the enactment of clause 78 - Liquidators.

INCOME TAX ASSESSMENT ACT 1936

Losses and outgoings

The Bill proposes the addition of a new subsection (7) to section 51 of the Income Tax Assessment Act 1936 - the general deduction provision that allows deductions for losses and outgoings to the extent to which they are incurred in gaining or producing assessable income or in carrying on a business for that purpose.

The effect of new subsection 51(7) will be that training guarantee charge will not be deductible for income tax purposes.

Objects of this Part

Section 202 of the Income Tax Assessment Act 1936 sets out the objects of Part VA of that Act - Tax File Numbers. They are:

·
to increase the effectiveness and efficiency of the matching of information reports given to the Commissioner with information disclosed in returns by taxpayers; and
·
through that improved information matching, to prevent evasion of tax; and
·
to facilitate administration of the Higher Education Contribution Scheme.

The Bill specifies a further object of Part VA. It acknowledges that the arrangements for obtaining file numbers may apply to facilitate the administration of any legislation enacted by the Parliament to impose charge equal to any shortfall in the amount spent by employers in training employees.

Liquidators, etc.

The Bill also proposes an amendment to section 215 which is consequential as the enactment of clause 77 - Liquidators.

PAYROLL TAX (TERRITORIES) ASSESSMENT ACT 1971

Liquidators

The Bill proposes an amendment to section 30 of the Payroll Tax (Territories) Assessment Act 1971 which is consequential on the enactment of clause 77 - Liquidators.

PETROLEUM RESOURCE RENT TAX ASSESSMENT ACT 1987

Liquidators

The Bill proposes an amendment to section 88 of the Petroleum Resource Rent Tax Assessment Act 1987 which is consequential on the enactment of clause 77 - Liquidators.

SALES TAX ASSESSMENT ACT (No. 1) 1930

Liquidators, etc.

The Bill proposes an amendment to section 32 of the Sales Tax Assessment Act (No. 1) 1930 which is consequential on the enactment of clause 77 - Liquidators.

TAXATION ADMINISTRATION ACT 1953

Part III of the Taxation Administration Act 1953 contains offences and prosecution provisions which create a number of offences which are of general application to the various Commonwealth tax laws and makes provision for their prosecution.

Two technical amendments to Part III are proposed by this Bill to extend the lists of provisions of various taxation laws contained in subsections 8J(2) and 82E(3) of that Act to include references to the corresponding provisions in this Bill.

In addition, subsection 8WB(1) of that Act is to be amended to ensure that the customary offences relating to the unauthorised use of tax file numbers will extend to the proposed use of file numbers in the administration of the training guarantee scheme.

Finally, sections 14ZAB and 14ZB are to be amended to ensure that Part IVAB - Requests for reference (i.e. referral) and Part IVB - Review of Decisions by Administrative Appeals Tribunal have effect in relation to decisions of the training advisory body to issue a training advisory certificate.

TAXATION (INTEREST ON OVERPAYMENTS) ACT 1983

The Taxation (Interest on Overpayments) Act 1983 provides for the payment of interest on certain refunds of tax made as a result of a successful objection or appeal by a person against an assessment or other specified decision of the Commissioner.

The effect of the amendments proposed by the Bill will be to authorise the payment of interest (currently at the rate of 14.026 per cent per annum) on amounts of training guarantee charge refunded by the Commissioner:

·
following a successful objection or appeal by an employer against a training guarantee charge assessment; or
·
following a successful referral by an employer who is dissatisfied with the effect of a certificate issued by the training advisory body; or
·
where the Commissioner decides of the Commissioner's own motion to amend a training guarantee charge assessment to reduce an employer's liability.

TOBACCO CHARGES ASSESSMENT ACT 1955

Liquidators, etc.

The Bill proposes an amendment to section 27 of the Tobacco Charges Assessment Act 1955 which is consequential on the enactment of clause 78 - Liquidators.

WOOL TAX (ADMINISTRATION) ACT 1964

Liquidators, etc.

The Bill proposes an amendment to section 47 of the Wool Tax (Administration) Act 1964 which is consequential on the enactment of clause 78 - Liquidators.

TRAINING GUARANTEE BILL 1990

This Bill will formally impose training guarantee charge liability on a training guarantee shortfall of an employer as determined under the Training Guarantee (Administration) Bill 1990. The Bill will also declare the rate of training guarantee charge that is to apply to the employers liable to pay the charge.

Clause 1: Short title

This clause provides for the Act to be cited as the Training Guarantee Act 1990.

Clause 2: Commencement

By this clause the Act is to come into operation on the same day as the proposed Training Guarantee (Administration) Act 1990. As explained in the explanatory notes relating to that proposed Act this will be on 1 July 1990. But for this clause the Act would come into operation on the twenty-eighth day after Royal Assent by virtue of subsection 5(1A) of the Acts Interpretation Act 1901.

Clause 3: Incorporation of Training Guarantee (Administration Act)

This clause requires the two complementary Bills - the Training Guarantee (Administration) Bill and the Training Guarantee Bill - to be incorporated and read as one. This mirrors the position under other taxation laws where, for Constitutional reasons, there are related assessment and rating Acts.

Clause 4: Act binds Crown

This clause is similar to clause 9 of the Training Guarantee (Administration) Bill. It is a technical provision which is required for Constitutional reasons.

Clause 5: Imposition of charge

This clause formally imposes charge in respect of any training guarantee shortfall of an employer in a year.

The term "training guarantee shortfall" is defined in clause 4 of the Training Guarantee (Administration) Bill as explained earlier in the notes on that Bill. Briefly, it is the amount by which the minimum training requirement is not met by the employer in a year.

Clause 6: Amount of charge

Clause 6 stipulates that liability to training guarantee charge is to be assessed annually on the training guarantee shortfall of an employer as referred to in the notes on clause 5.

The charge that is to be imposed is an amount equal to the amount of the shortfall.

Clause 7: Severability

Section 114 of the Constitution precludes the imposition by the Commonwealth of a tax on the property of a State.

Liability for training guarantee charge is to be imposed on all employers - including State governments and their agencies - who do not meet the minimum training requirement. Against any possibility that this could be held to constitute in any circumstances the imposition of a tax contrary to section 114, clause 7 expresses that it is the intention of the Parliament that the imposition of charge under clause 5 should be given effect as if it did not impose tax on the property of a State.


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