House of Representatives

Taxation Administration Bill 1974

Taxation Administration Act 1974

Second Reading Speech

by the Treasurer, the Hon. Frank Crean, M.P.

In my speech on the Banking Bill I have spoken of the reasons for introducing this legislation.

The explanatory memorandum that will be circulated to Honourable Members explains quite fully the scheme of the legislation and outlines some formal amendments that are also proposed by the Bill. Accordingly, and because the legislation is designed to give fresh sanction to screening procedures that have had the approval of the Parliament, I think I can be brief in mentioning the main features of this Bill.

As I indicated when speaking to the Banking Bill, a section proposed by that Bill requires the Reserve Bank, in appropriate cases, to refuse an exchange control application unless there is produced to it a tax clearance certificate issued by the Commissioner of Taxation. The Taxation Administration Bill provides rules for the giving by the Commissioner of such certificates.

Under the banking legislation the treasurer is given authority to declare that classes of transactions with persons in tax havens are to be subjected to tax screening. If a proposed transaction falls within such a class, or if the Reserve Bank considers that an exchange control application should be subjected to screening, the bank is to require the applicant to obtain from the Commissioner, under the Taxation Administration Act, a tax clearance certificate before it grants exchange control approval.

The Commissioner will be entitled to refuse to issue a clearance certificate if the applicant does not satisfy him that the proposed transaction will not involve, assist in or be associated with the avoidance or evasion of Australian tax. For this purpose, the Bill in effect declares that transactions motivated by an aim of securing a tax benefit or advantage fall into the category of tax avoidance or evasion. However, the Bill authorises the issue of a clearance certificate where it is judged that the need to protect the revenue against avoidance and evasion does not warrant refusal of a certificate.

Should the Commissioner decline to issue a tax clearance certificate he is to advise the applicant accordingly and the applicant will have rights of formal objection against this refusal. If the Commissioner does not then issue a certificate the applicant may have the matter referred to a taxation board of review set up under the income tax law. There will be a right of appeal to the High Court on any question of law involved in a decision of a board of review. In short, there will be rights to independent review of the Commissioner's decisions under this Bill, as is the case under other legislation administered by the Commissioner.

Other parts of the Bill contain necessary provisions for the maintenance of secrecy by taxation officers in their handling of applications for tax clearance certificates and for obtaining relevant information.

I commend the Bill to the House.