Wednesday, 11 May 2022
Bills
State Taxation and Treasury Legislation Amendment Bill 2022
Bills
State Taxation and Treasury Legislation Amendment Bill 2022
Statement of compatibility
Mr PEARSON (Essendon—Assistant Treasurer, Minister for Regulatory Reform, Minister for Government Services, Minister for Creative Industries) (15:35): In accordance with the Charter of Human Rights and Responsibilities Act 2006 I table a statement of compatibility in relation to the State Taxation and Treasury Legislation Amendment Bill 2022.
In accordance with section 28 of the Charter of Human Rights and Responsibilities Act 2006 (Charter), I make this Statement of Compatibility with respect to the State Taxation and Treasury Legislation Amendment Bill 2022.
In my opinion, the State Taxation and Treasury Legislation Amendment Bill 2022 (Bill), as introduced to the Legislative Assembly, is compatible with the human rights as set out in the Charter. I base my opinion on the reasons outlined in this Statement.
Overview
The Bill makes amendments to the Borrowing and Investment Powers Act 1987, the Duties Act 2000, the Essential Services Commission Act 2001, the Land Tax Act 2005, the Payroll Tax Act 2007, the Taxation Administration Act 1997 (Administration Act), and the Windfall Gains Tax and State Taxation and Other Acts Further Amendment Act 2021.
Most of the amendments made by the Bill do not engage the human rights listed in the Charter because they either do not affect natural persons, or they operate beneficially in relation to natural persons. However, the following amendments made by the Bill have been identified as potentially engaging human rights protected by the Charter:
Administration Act:
• Amendments to prescribe authorised recipients of information obtained under or in the course of administering a taxation law.
Human rights issues
The human rights protected by the Charter that are relevant to the Bill are:
• Privacy and reputation, as protected under section 13 of the Charter, which provides that a person has the right to not to have his or her privacy, family, home or correspondence unlawfully or arbitrarily interfered with and not to have his or her reputation unlawfully attacked.
For the reasons outlined below, the Bill is compatible with this right.
Administration Act
Right to Privacy: Section 13(a)
Authorised recipients of information
Division 3 of Part 9 of the Administration Act contains secrecy provisions that prohibit tax officers (which include authorised officers as defined in the Administration Act) from disclosing information obtained in relation to their functions, except as permitted under the Administration Act.
The following provisions may engage the right to privacy under section 13(a) of the Charter:
• Section 92 of the Administration Act prescribes the circumstances in which a tax officer, being a person engaged in the administration of the taxation laws, may disclose information obtained under or in the course of administering a taxation law, and extends the permission to persons and agencies who are ‘authorised recipients’.
Clause 32 of the Bill amends section 92(1)(e) of the Administration Act which permits the disclosure of information to particular persons or for particular purposes (i.e., authorised recipients). In each instance disclosure may engage the right to privacy, but it does not limit that right because the permitted disclosures are not unlawful or arbitrary.
Clause 32(1) extends the existing category of authorised recipients to permit disclosure of information to the Australian Financial Security Authority (AFSA). AFSA is an executive agency in the Attorney-General’s portfolio and manages the application of bankruptcy and personal property securities laws. AFSA fulfils statutory roles created by the Bankruptcy Act 1966 (Cth), such as Inspector-General in Bankruptcy, Official Receiver and Official Trustee in Bankruptcy. Disclosures to AFSA will not be arbitrary as they will be made, at a tax officer’s discretion, for the purpose of AFSA’s investigations into whether a person has committed an offence against the Bankruptcy Act 1966.
Clause 32(1) further amends section 92(1)(e) to permit a tax officer to disclose information to the Australian Transaction Reports and Analysis Centre (AUSTRAC). AUSTRAC sits within the Australian Government’s Home Affairs portfolio and collects financial data from the financial transactions and suspicious matter reports submitted by reporting entities as required by the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act). Enabling disclosure to AUSTRAC would not be arbitrary as any disclosures would be made, at a tax officer’s discretion, to enable AUSTRAC to perform its regulatory and enforcement functions in accordance with legislation; particularly its investigations into individuals, businesses and organisations to ensure they are complying with their obligations under the AML/CTF Act and the Financial Transaction Reports Act 1988 (Cth).
Clause 32(1) also amends section 92(1)(e) to permit a tax officer to disclose information to a prescribed Commonwealth enforcement body, for the purposes of criminal investigations or inquiries, law enforcement activities or public revenue protection activities conducted by the body. The Administration Act’s regulation-making power will be used to prescribe a limited number of authorised recipients; namely Commonwealth law enforcement agencies identified by the Commissioner of State Revenue from time-to-time as appropriate authorised recipients. A disclosure in these instances is not arbitrary as it will be for the purposes of protecting the public revenue. In particular, the right to privacy protected by the Charter will not be limited by the proposed amendment to enable further updates of authorised recipients for Commonwealth law enforcement agencies to be made by regulation. While the preferred approach is that authorised recipients should (and will) remain in the Administration Act, enabling a restricted cohort of authorised recipients to be prescribed in regulations to enable efficient administration (noting that this cohort already exercise coercive powers under Commonwealth legislation to compel the production of information), will not amount to an arbitrary or unlawful interference of an individual’s right to privacy.
Finally, clause 32(1) amends section 92(1)(e) to permit disclosure of information to a body that is a member of the Phoenix Taskforce, for the purposes of law enforcement activities conducted by the Phoenix Taskforce. The Australian Taxation Office established the Inter-Agency Phoenix Forum, a prescribed Taskforce, comprising representatives of several Commonwealth agencies and revenue offices (the Phoenix Taskforce). The Phoenix Taskforce provides a whole-of-government approach to combatting illegal phoenix activity, which has relevance for the Commissioner of State Revenue in relation to the enforcement of payroll tax. Disclosures to the Phoenix Taskforce will not be arbitrary as they will be made where, in a tax officer’s opinion, the information would help the Phoenix Taskforce with monitoring and deterring fraudulent phoenix activity.
These disclosures are not unlawful because they will be permitted by law and limited to a purpose related to the responsibilities of each of the authorised recipients, as discussed above. For these same reasons, the disclosures are also not arbitrary. The secondary disclosure of any information disclosed under this clause will be strictly limited to the instances permitted under existing provisions in the Administration Act. Finally, a tax officer retains their statutory discretion under section 92 of the Administration Act to decide whether or not to disclose information to an authorised recipient.
This constitutes a further safeguard against any arbitrary interference of an individual’s right to privacy, since a request for information by an authorised recipient will not automatically result in a tax officer ceding to that request.
For these reasons, in my opinion, the provisions of the Bill are compatible with the rights contained in section 13(a) of the Charter.
TIM PALLAS MP
Treasurer
Second reading
That this bill be now read a second time.
I ask that the second-reading speech be incorporated into Hansard.
Incorporated speech as follows:
It is my pleasure to introduce this Bill, which delivers an important initiative from the 2022–23 Budget to increase the Government’s support for the provision of wheelchair accessible transport options and empower wheelchair users to access the transport method that best suits their circumstances. The Bill also makes improvements to several taxation and other laws, including the Land Tax Act 2005, Payroll Tax Act 2007, Taxation Administration Act 1997, Windfall Gains Tax and State Taxation and Other Acts Further Amendment Act 2021, as well as the Borrowing and Investment Powers Act 1987 and Essential Services Commission Act 2001, to support their effective operation.
Budget initiative—exemption from motor vehicle duty
In line with the 2022–23 Budget announcement, the Bill amends the Duties Act 2000 to introduce, from 1 July 2022, an exemption from motor vehicle duty for wheelchair accessible commercial passenger vehicles that meet the requirements to provide unbooked services (i.e. taxi rank and hail work) and are less than two years old. Currently, an exemption from motor vehicle duty is available for eligible private motor vehicles that have been, or will be, specially converted to provide wheelchair access. Wheelchair accessible commercial passenger vehicles may also qualify for an existing $24,000 reduction in the dutiable value of a new (previously unregistered) vehicle. The amendment therefore expands, and complements, the current suite of motor vehicle duty exemptions and concessions for the transport of people with a disability, handicap or injury. This measure is expected to cost approximately $2.7 million over the budget forward estimates period.
Land tax amendments
The Bill amends the Land Tax Act 2005 to replace the current refund model for recently constructed or renovated principal places of residence (PPR) with an upfront exemption from land tax. The current refund model is anomalous when compared to other PPR provisions, and imposes a potentially significant financial burden on landowners, as it requires the land tax to be paid upfront until construction or renovation has finished and it can be refunded. The amendment addresses these concerns by legislating a simpler, upfront PPR exemption where a person is absent from land because of the construction or renovation of a residence. The exemption will be available for a maximum of four years in total (from the commencement of construction or renovation) and is subject to certain requirements. A clawback mechanism enables the revocation of the exemption, in full or part, if the requirements of the exemption are not met.
The Bill also introduces an exemption from land tax for land on which a specialist disability accommodation (SDA) enrolled dwelling is being constructed. This ‘construction-phase’ exemption will be available for a maximum of two tax years. Although a discrete exemption has been available since the 2020 land tax year for land that is occupied, or available for occupation, as an SDA enrolled dwelling, the exemption was not extended to land in the construction-phase. This is out of step with the treatment of other specialist accommodation types, including supported residential services, which are eligible for an exemption for up to two tax years whilst the land is in the construction-phase. For consistency, the construction-phase exemption for SDA enrolled dwellings will operate retrospectively from the 2020 land tax year onwards. Retrospectivity will not have an adverse impact on landowners, as the exemption is beneficial in nature.
Payroll tax—exemption for employment agents
The Bill amends the Payroll Tax Act 2007 to confirm that an exemption applies to certain wages paid under an employment agency contract and other related arrangements, where the agent on-hires their common law employees to a client exempt from payroll tax (for example, a charity or public hospital). The amendment responds directly to the decision of the Queensland Court of Appeal in Compass Group Education Hospitality Services Pty Ltd v Commissioner of State Revenue [2021] QCA98, and confirms the long-standing policy that wages paid for services performed under an employment agency contract by a service provider who is an employee of the employment agent are exempt from payroll tax where those services are provided to a client exempt from payroll tax. In addition, to ensure the exemption continues to operate as intended, the amendment enables the Governor in Council to prescribe, by regulation, specific circumstances, and persons, eligible for the exemption. This will enable the Government to respond quickly and effectively to evolving industry practices and developments in case law.
Taxation Administration Act amendments
The Bill amends the Taxation Administration Act 1997 (TAA) in relation to deemed assessments of dutiable transactions processed using the on-line duty payment system. Under the current provisions, a deemed assessment is taken to have been made and served when the Commissioner of State Revenue (the Commissioner) validates the information submitted by the user for the purpose of payment of the duty, including a nil payment. As ‘validates’ is not defined by the TAA or the Duties Act 2000, there are several possible points in time at which the Commissioner could be characterised as having validated the information submitted, which causes unnecessary confusion for users. Accordingly, the amendment clarifies that the point in time at which a deemed assessment is taken to have been made and served if a person uses the on-line duty payment system; that is, the later of the making of an irrevocable commitment to pay duty or to not pay duty (as the case requires) or the completion of the dutiable transaction. The amendment also confirms that an estimate of duty provided by an on-line duty payment system is not an assessment of tax, delivering further certainty to users and ensuring that revenue laws evolve to reflect the current operational environment.
The Bill also amends the TAA to allow the State Revenue Office (SRO) to disclose tax-related information to the Australian Financial Security Authority and the Australian Transaction Reports and Analysis Centre. The Bill also authorises disclosure to member bodies of the Phoenix Taskforce, where the disclosure is in connection with their law enforcement or public revenue protection activities. Under the TAA, information collected by the SRO can only be disclosed to agencies that are expressly stated to be authorised recipients of that information. Permitting the SRO to disclose relevant information to these agencies will support and assist them in their compliance and enforcement activities, and help to protect the public interest.
The Bill further amends the TAA to enable additional Commonwealth enforcement bodies to be prescribed as authorised recipients by regulation, thereby allowing the SRO to respond efficiently and effectively to potential future information requests. Any disclosure to a prescribed authorised recipient is restricted to being for the purposes of criminal investigations or inquiries, law enforcement activities or public revenue protection activities conducted by the prescribed body.
The Bill also amends the TAA to expressly allow a person to whom the SRO has disclosed sensitive information to further disclose that information if they have the consent of the person to whom the information relates. This will remedy an unintended consequence of the existing provisions, which prohibit the secondary disclosure of SRO information in most circumstances and could therefore stop a taxpayer from on-disclosing their own information to a third party (such as an accountant or lawyer).
The Bill amends the TAA to place a maximum five-year time limit on the late lodgement of an out of time objection. Currently, the TAA provides that a taxpayer must lodge an objection within 60 days after the date of service of a notice of assessment or a payroll tax decision. The Commissioner may, however, permit the late lodgement of an objection after 60 days. There is currently no time limit on the Commissioner’s discretion to extend the ordinary 60-day period for lodgement of an objection. Although the amendment has the potential to affect a limited number of taxpayers who do not (or could not) seek an exercise of the Commissioner’s discretion within the fresh five-year limit, the amendment balances this risk against the twin policy imperatives of finality in the resolution of taxation disputes and certainty in the collection of revenue. The amendment also ensures consistency with the broader administrative framework, including a five-year period of retrospectivity for assessments, a five-year time limit on the withdrawal of assessments and issuing of reassessments, a five-year time limit on applications for refund and five-year record-keeping obligations.
Windfall Gains Tax amendment
The Bill amends the Windfall Gains Tax and State Taxation and Other Acts Further Amendment Act 2021 (Amendment Act) to provide an exemption from windfall gains tax (WGT) on land owned by a university in certain circumstances. The WGT will apply to rezoning decisions made after 1 July 2023 that generate a value uplift in land above $100,000. The Amendment Act provides for several exemptions to the WGT, including an exemption for residential land up to 2 hectares in size. Also, a waiver exists for charities, including universities, in relation to land that continues to be owned, used and occupied by a charity exclusively for charitable purposes for 15 years after a rezoning event.
Following consultation with various stakeholders, including during the passage of the Amendment Act, the Government will legislate a further, discrete exemption from the WGT on land owned by a university, where that university is a charity and the Commissioner is satisfied that the revenue derived from the rezoned land will be spent in fulfilling their charitable purpose—whether it be a campus relocation, a new research project, or the day to day running of the university.
Borrowing and Investment Powers Act amendment
The Bill amends the Borrowing and Investment Powers Act 1987 (BIP Act) to provide financial accommodation with an associated statutory guarantee to local councils under the BIP Act, and to replace the mechanisms that specify all the persons and bodies to which certain powers apply under the Act with a power for such bodies to be prescribed by regulation. In effect, the amendment will bring local councils under the BIP Act. This will mean that when the Treasury Corporation of Victoria (TCV) makes a loan under the Government’s local council borrowing programme, appropriation is available from the Consolidated Fund for any liability to TCV arising under the loan.
The Bill also makes the process of lending to local councils more administratively efficient, reducing legal costs and make funding available to TCV in the event of a default. In the absence of the amendment, specific guarantee documentation will have to be drafted for each loan or group of loans. This approach is only suitable for one-off guarantee requests, not an on-going lending program across a sector as large as local government.
The Regulations will be easier and quicker to amend in the event that new entities are added, or powers are amended as compared to the existing process. All authorities including councils will be listed with their powers in the Regulations rather than being spread across Schedule 1 to the BIP Act and the Government Gazette. This means that there will be one mechanism for specifying all the persons and bodies to which the BIP Act applies, rather than an approach where some persons/bodies are listed in the BIP Act and others are specified in Orders in Council published in the Government Gazette. As the Bill does not authorise any new borrowing or investments, it has no financial impact. The amendment is designed to ease the administrative burden of the BIP Act.
Essential Services Commission Act amendment
The Bill amends the Essential Services Commission Act 2001 to clarify funding arrangements under the Essential Services Commission (ESC) Enforcement Fund, which was recently established in response to the Government’s Energy Fairness Plan to help fund litigation and other enforcement action that the Commission undertakes, such as against energy retailers. However, the provisions as currently enacted do not provide sufficient flexibility to enable enforcement action to be funded with respect to legislation administered by the ESC, such as the Victorian Renewable Energy Act 2006 and Victorian Energy Efficiency Target Act 2007. Further, as drafted, there is uncertainty around whether the ESC’s enforcement action can be funded if the balance in the Enforcement Fund is insufficient as well as in relation to how appropriations are handled.
The Bill therefore addresses these matters by enabling the Enforcement Fund to be used to fund enforcement action under the Victorian Renewable Energy Act 2006 and Victorian Energy Efficiency Target Act 2007, as well as clarifying that the ESC’s Operating Fund can be used to fund enforcement action and that appropriations for the ESC’s Enforcement Fund and Operating Fund are paid into those funds.
I commend the Bill to the house.
Mr BATTIN (Gembrook) (15:35): I move:
That the debate be now adjourned.
Motion agreed to and debate adjourned.
Ordered that debate be adjourned for two weeks. Debate adjourned until Wednesday, 25 May.