Treasury Laws Amendment (2020 Measures No. 2) Bill 2020
Bills Digest No.
108, 2019–20
PDF version [685KB]
Andrew Maslaris
Economic Policy Section
17
June 2020
Please note that this is a preliminary Bills Digest discussing Schedules 2 to 6 of the Treasury Laws Amendment (2020 Measures No. 2) Bill 2020.
Contents
Purpose and structure of the Bill
Structure of this Bills Digest
Committee consideration
Statement of Compatibility with Human
Rights
Special appropriations
Schedule 2: Single Touch
Payroll—reporting child support information
Schedules 3 and 5: deductible gift
recipients
Schedule 4: funding capital increases
for the World Bank Group
Schedule 6: tax secrecy
Date introduced: 13
May 2020
House: House of
Representatives
Portfolio: Treasury
Commencement: Sections
1 to 3 on Royal Assent; Schedules 1, 2, 3 and 5 on the first day of the
first quarter to occur the day after Royal Assent; and Schedules 4 and 6 the
day after Royal Assent.
Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.
When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.
All hyperlinks in this Bills Digest are correct as at June 2020.
Purpose and structure of the Bill
The Treasury Laws Amendment (2020 Measures No. 2) Bill 2020 (the Bill) introduces a number of tax related measures and seeks to streamline Australia’s legislative framework for providing funding to the World Bank.[1] The Bill contains six Schedules:
- Schedule 1 makes a series of technical amendments to the hybrid mismatch rules in the Income Tax Assessment Act 1997 (ITAA 1997). The amendments seek to ensure these rules operate as intended so that multinational entities cannot exploit differences in the treatment of instruments or entities in order to defer or avoid tax
- Schedule 2 seeks to amend the Taxation Administration Act 1953 (TAA 1953), the Child Support (Assessment) Act 1989 (CSAA 1989) and the Child Support (Registration and Collection) Act 1988 (CSRCA 1988) to allow employers to report through Single Touch Payroll amounts of child support deductions and garnishments that have been withheld from an employee’s salary and wages
- Schedule 3 amends the ITAA 1997 to create a new deductible gift recipient (DGR) category for ‘community sheds’ (as well as creating a legislative definition of a community shed)—this will enable taxpayers to claim a tax deduction for donations of $2 or more made to community sheds that have applied for and been approved by the Commissioner of Taxation as DGRs
- Schedule 4 streamlines the legislative framework for Australia making contributions to the World Bank (including creating a standing appropriation) and seeks to honour Australia’s obligations to increase funding to the International Bank for Reconstruction and Development and the International Finance Corporation by amending the International Finance Corporation Act 1955 and the International Monetary Agreements Act 1947
- Schedule 5 amends the ITAA 1997 to include eight new organisations as having DGR status and
- Schedule 6 amends the tax secrecy provisions in the TAA 1953 to allow the Australian Taxation Office to share JobKeeper related information with the Fair Work Commission and Fair Work Ombudsman for the purposes of administering the Fair Work Act 2009.[2]
Structure of this Bills Digest
As the matters covered by each of the Schedules are generally independent of one another, the relevant background information and analysis of key provisions are set out under each Schedule number, except for Schedules 3 and 5 which are considered together.
A revision to this Digest which considers Schedule 1 to the Bill will be issued at a later date.
Committee consideration
Senate Standing Committee for the Selection of Bills
On 12 June 2020, the Senate Standing Committee for the Selection of Bills decided that the Bill should not be referred to Committee.[3]
Senate Standing Committee for the Scrutiny of Bills
The Senate Standing Committee for the Scrutiny of Bills raised concerns with Schedule 4 of the Bill.[4] These concerns are discussed below under the heading ‘Schedule 4: funding capital increases for the Word Bank Group’.
Joint Standing Committee on Treaties
In relation to Schedule 4 of the Bill, the Joint Standing Committee on Treaties (JSCOT) has commenced examination of the proposed increases of capital to the International Bank for Reconstruction and Development and the International Finance Corporation. Submissions closed on 5 June 2020, and the Treasury and Department of Foreign Affairs both appeared before JSCOT on 22 May 2020.[5] Further details are available at each inquiry homepage: Capital Increase WBG IBRD and Capital Increase WBG IFC.
Statement of Compatibility with Human Rights
As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[6]
Parliamentary Joint Committee on Human Rights
The Parliamentary Joint Committee on Human Rights had no comment on the Bill.[7]
Special appropriations
Schedule 4 of the Bill proposes to establish standing appropriations that may be drawn upon for Australia’s commitments to capital shares in the International Bank for Reconstruction and Development and the International Finance Corporation which are a part of the World Bank Group (discussed in further detail below under the heading ‘Schedule 4: funding capital increases for the World Bank Group’).[8]
Schedule 2: Single Touch Payroll—reporting child support information
| Schedule 2 amends the Taxation Administration Act 1953 (TAA 1953), the Child Support Assessment Act 1989 (CSAA 1989) and Child Support (Registration and Collection) Act 1988 (CSRCA 1988) to allow employers to voluntarily report to the ATO under the Single Touch Payroll system amounts of child support withheld or garnisheed from an employee’s salary and paid to the Child Support Registrar. This is intended to streamline the reporting of information and reduce the reporting burdens placed on employers. |
What is Single Touch Payroll?
Single touch payroll (STP) was first implemented by the Budget Savings (Omnibus) Act 2016. As explained at page 21 of the Revised Explanatory Memorandum to the Budget Savings (Omnibus) Bill 2016, STP was a new reporting framework for employers with twenty or more employees to automatically report payroll and superannuation information to the Commissioner of Taxation.[9] STP generally commenced 1 June 2018 and was extended to employers with less than 20 employees from 1 July 2019. However as explained on the ATO website a number of transitional arrangements currently exist to assist small and micro employers to transition to STP.[10]
One of the more noticeable and practical effects of STP is that employees can access their group certificate (now known as an income statement) from their myGov account.[11]
Current reporting obligations
As explained in the Explanatory Memorandum to the Bill, currently, employers must manually confirm and/or provide information relating to child support withholding payments. This can be highly intensive and involve duplicate reporting requirements.[12]
As such, it is expected that allowing employers to report this information through STP will significantly reduce their administrative burden.[13] Further, as discussed below, once reported through STP, the information does not need to be re-reported to the Child Support Registrar. According to the Explanatory Memorandum:
An automated data-sharing solution will commence from 1 July 2020 which will enable the sharing of data in near real-time between the ATO and other Commonwealth agencies where the law already allows for the sharing of data. This will cover the exchange of child support information reported to the ATO to the Child Support Registrar.[14]
Background to the proposed amendment
In the 2019–20 Budget the Government announced it would extend the information to be reported under STP. The proposed amendment in Schedule 2 formed part of a broader package of changes aimed at simplifying and automating the reporting of employment income for social security purposes.[15]
The Budget also stated that these changes would reduce the compliance burden for employers and individuals reporting information to multiple Government agencies.[16] However, as stated in the Explanatory Memorandum to the Bill, a number of these changes (such as disaggregating gross pay amounts and employee separation information) are being implemented through legislative instruments made by the Commissioner of Taxation and are therefore not part of this Bill.[17]
Treasury commenced consultation on the proposed amendments on 15 January 2020. However, submissions made as part of the consultation process have not been made publicly available on the Treasury webpage.[18]
It should also be noted that the Social Services and Other Legislation Amendment (Simplifying Income Reporting and Other Measures) Act 2020, which has not yet commenced, proposes a number of changes to STP reporting with a view to increasing information sharing between the ATO and Services Australia. Additional information can be accessed in the Bills Digest to the Social Services and Other Legislation Amendment (Simplifying Income Reporting and Other Measures) Bill 2020.[19]
Financial implications
According to the Explanatory Memorandum, the financial impact is ‘Nil’.[20]
Key issues and provisions
Changes to the child support legislation
Items 1 and 2 of Schedule 2 of the Bill propose new subsection 150D(1) of the CSAA 1989 and new subsection 16C(1) of the CSRCA 1988 so as to allow the Child Support Registrar to require the Commissioner of Taxation to provide information about people, including tax file numbers, that the Commissioner is either in possession of, or that comes into the Commissioner’s possession after such a request is made—including requests that are ongoing ones. The proposed amendments are silent as to what is meant by information, however, it should be noted that it adopts the exact same language as current subsection 150D(1) of the CSAA 1989—that is, ‘information about people, including tax file numbers, being information that is in the possession of the Commissioner’. As ‘information’ is not defined, it takes its ordinary meaning.
It should be noted however, that the amendments do not remove the current restrictions that apply to the use of the requested information—for example:
- subsection 150D(2) of the CSAA 1989 only allows information provided to be used to ascertain whether a person may apply for administrative assessment of child support, to make or amend an administrative assessment of child support, to ascertain the happening of a child support terminating event, and/or to identify a person for one of these purposes and
- subsection 16C(2) of the CSRCA 1988 only allows information provided to be used to facilitate the recovery of debts due to the Commonwealth under that Act and identify a person for the purposes of facilitating such debt recovery.
Item 4 of Schedule 2 of the Bill seeks to amend the CSRCA 1988 by inserting proposed subsection 47(1B). Presently, section 45 of the CSRCA 1988 allows the Registrar to instruct an employer to withhold child support amounts from an employee’s salary. Section 47 of the CSRCA 1988 creates an obligation on an employer to make payment of these amounts to the Registrar and to notify the Registrar; subsection 47(1A) requires the employer to notify the Registrar if they fail to make the relevant deductions. Proposed subsection 47(1B) removes these reporting requirements where the information has been provided to the Commissioner of Taxation—that is, it has been voluntarily reported under STP.
Proposed subsection 58(2A) of the CSRCA 1988 specifically excludes the reporting of such information to the Commissioner of Taxation through STP from being an offence under the CSRCA 1988. This allows an employer to choose to automatically report the relevant information once under STP.
Changes to the TAA 1953
Items 6 to 8 of Schedule 2 of the Bill amend Schedule 1 of the TAA 1953 so as to extend STP to include voluntary reporting of child support payment amounts withheld by an employer. Item 8 inserts proposed section 389-30 into Schedule 1 of the TAA 1953 and creates a list of child support deductions (referred to as amounts in the Bill) that employers can report to the ATO through STP. The relevant amounts and their reporting obligations are summarised in Table 1.
Table 1: amounts which may be voluntary reported through STP
| Amount that may be notified under STP | When notification must occur |
|---|---|
| An amount deducted from an employee’s wages under Part IV of the CSRCA 1988. | On or before the day on which the deduction is made. |
| A nil amount if an employer is issued a notice under subsection 45(1) of the CSRCA 1988 and on a day that the notice is in force/payable (the reporting day) the entity has not withheld an amount from the employee’s pay either because they have failed to do so, or no wage is payable. | On or before the reporting day. |
| An amount an employer paid to the Registrar in accordance with a notice issued to the employer pursuant to section 72A of the CSRCA 1988 (this section allows the Registrar to recover child support payment debts from third persons in a limited range of circumstances). | On or before the day on which payment is made. |
Source: proposed subsection 389-30(1) of Schedule 1 to the TAA 1953
Application
Items 1 and 2 apply in relation to a requirement made by the Registrar after the commencement of Schedule 2 of the Bill (being the first day of the first quarter to occur the day after Royal Assent). Items 3 to 8 apply to amounts where the entitlement to notify the Commissioner arises on or after 1 July 2020.[21]
Schedules 3 and 5: deductible gift recipients
| Schedule 3 amends the ITAA 1997 to create
a new deductible gift recipient (DGR) category for community sheds. Broadly,
a community shed is a public institution that has the dominant purpose of
advancing mental health or addressing social isolation, which provides a
physical location where members of the public can work on projects or
undertake activities in the company of others. The effect of Schedule 3 is therefore to make donations to registered charities operating community sheds tax deductible. Schedule 5 amends the ITAA 1997 to list eight new entities as having specific DGR status, meaning donations and gifts to these entities of $2 or more are tax deductible. |
Background
Schedule 3 implements the Government’s 2019–20 Budget announcement that it would create a new DGR category for men’s and women’s sheds—entities that meet the requirements of the new category will be able to be approved as a DGR by the Commissioner of Taxation.[22]
Schedule 5 partially implements the Government’s 2019–20 Budget announcement that six organisations had been approved as specifically-listed deductible gift recipients from 1 July 2019 to 30 June 2024—five of the six entities announced in the 2019–20 Budget will receive DGR status.[23]
This Bill seeks to confer DGR status on five of those organisations.
- Australian Academy of Law
- Foundation Broken Hill Limited
- Motherless Daughters Australia Limited
- Superannuation Consumers’ Centre Limited and
- The Headstone Project (Tasmania) Incorporated.
In the case of these five entities, DGR status has been extended by one year from the original date in the 2019–20 Budget.[24]
Schedule 5 also seeks to add a further three entities to the specific list of DGR entities:
- the Governor Phillip International Scholarship Trust
- High Resolves and
- CEW Bean Foundation—although currently listed as a DGR, its status expired on 14 November 2007.[25]
DGR status for these three entities was announced in by the Government in the 2018–19 Mid-Year Economic and Fiscal Outlook (MYEFO).[26] In the case of these three entities, DGR status has been extended by two years from the original date in the 2018–19 MYEFO.[27]
What is deductible gift recipient status?
A taxpayer will be entitled to a tax deduction in respect of donations (referred to as gifts and contributions) of at least $2 to organisations that have been approved as DGRs.[28]
To be a DGR, an entity must generally either satisfy one of the categories listed in Division 30 of the ITAA 1997 or alternatively, the entity must be specifically listed by name in Division 30 of the ITAA 1997.[29] The first method enables the Commissioner of Taxation to approve an entity as a DGR under Subdivision 30-BA of the ITAA 1997 if it meets the relevant requirements of a DGR category; if the entity does not meet those requirements, the second method enables the Parliament to list it by name in the ITAA 1997 via legislative amendment.
New DGR category: ‘community sheds’
Position of major interest groups
On 20 January 2020, Treasury commenced consultation on a draft Bill and explanatory memorandum to create a new DGR category for community sheds.[30] A total of eleven submissions were received, eleven of which were published (though the Law Council of Australia’s submission appears to have been incorrectly uploaded to the Treasury webpage as it does not relate to DGR sheds). Ten of the published submissions supported the Government’s decision to create a new DGR category. However, some stakeholders considered that the proposed category could be widened to accommodate other organisations. The following specific points were raised:
- the Australian Men’s Shed Association noted that according to their annual survey, 73 per cent of Sheds intend to apply for DGR status[31]
- Australian Neighbourhood Houses & Centres Association and the Mount Eliza Neighbourhood House considered that DGR status should also be specifically conferred on Neighbourhood Houses, many of which have established and supported community sheds[32]
- the Queensland Men’s Shed Association submitted that the definition of Community Shed should include State and National Associations and that the ATO and the Australian Charities and Not-for-profits Commission (ACNC) should develop ‘clearer guidelines’ on ‘appropriate changes to shed constitutions that may be required for ACNC and ATO ... DGR endorsement’[33]
- Justice Connect was critical of the proposed draft legislation which allowed membership to be limited in some instances based on gender and/or indigeneity, arguing there may be other groups which impose necessary restrictions on membership that should be included—for example, groups limited by a particular criteria for cultural reasons[34] and
- The Men’s Table submitted that the definition of a Community Shed should be expanded and not limited to requiring a project to be undertaken at a physical location.[35]
Financial implications
The Explanatory Memorandum states that the measure is estimated to have the following impact on revenue over the forward estimates period:
| 2018-19 | 2019-20 | 2020-21 | 2021-22 | 2022-23 |
|---|---|---|---|---|
| Nil | Nil | Nil | -$3.0m | -$5.0m |
Source: Explanatory Memorandum, Treasury Laws Amendment (2020 Measures No. 2) Bill 2020, p. 5.
Key issues and provisions
Item 1 of Schedule 3 of the Bill inserts proposed item 1.1.9 into the table in subsection 30-20(1) of the ITAA 1997, which states that a community shed that is a registered charity is a DGR entity.[36] Item 3 of Schedule 3 of the Bill inserts a new definition of community shed into the Dictionary at subsection 995-1(1) of the ITAA 1997. A community shed is defined as a public institution that satisfies all of the following requirements:
- its dominant purposes are advancing mental health and preventing or relieving social isolation
- it seeks to achieve those purposes principally by providing a physical location where it supports individuals to undertake activities, or work on projects, in the company of others and
- there are no criteria for membership of the institution unless those criteria relate only to gender and/or Indigenous status.
As such, to be a community shed, an important pre-requisite is the existence of a physical location where activities and projects are undertaken in the presence of others and membership is open to all, with exceptions existing for gender specific community sheds and/or community sheds that are only open to Indigenous persons for cultural reasons.
Pages 54 to 57 of the Explanatory Memorandum provide additional explanation of the proposed definition.
Application
The amendments apply to gifts and contributions made on or after 1 July 2020.[37]
New specifically listed DGRs
Summary of the proposed amendments
The following table summarises the proposed amendments. As stated above, the effect of these amendments is that donations of at least $2 to these organisations will generally be tax deductible.[38] Table 2 summarises the purpose of each proposed DGR and the relevant period of time that taxpayers will be able to receive a tax deduction for donations to them.
Table 2: specifically listed DGRs
| Name | Purpose | Dates DGR status conferred[39] |
|---|---|---|
| Governor Phillip International Scholarship Trust | Registered charity that provides scholarships to master’s degree students. Scholarships cover students’ university and college fees, and student accommodation costs. | 1 July 2018 to 30 June 2025. |
| High Resolves | Registered charity that designs and delivers citizenship and leadership learning experiences for young people. | 1 July 2018 to 30 June 2025 |
| C E W Bean Foundation | Registered charity that honours war correspondents, photographers and artists that captured and recorded Australian activities in war. | 1 July 2018 to 30 June 2025 |
| Australian Academy of Law | Registered charity that promotes legal scholarship, legal research, legal education, legal practice, and the administration of justice. The Academy provides scholarships and research grants that advance legal education and the discipline of law, and promote ethical conduct and professional responsibility. | 1 July 2019 to 30 June 2025 |
| Foundation Broken Hill Limited | Registered charity that provides loans and grants to support employment opportunities and social development in Broken Hill and the surrounding region. | 1 July 2019 to 30 June 2025 |
| Motherless Daughters Australia Limited | Registered charity that provides support to girls and women whose mothers have died. | 1 July 2019 to 30 June 2025 |
| Superannuation Consumers Centre Limited | Registered charity that supports Australian consumers to access quality superannuation advice and manage their retirement savings. | 1 July 2019 to 30 June 2025 |
| The Headstone Project (Tasmania) Incorporated | Registered charity that locates the unmarked graves of Tasmanian veterans of the First World War and installs headstones. | 1 July 2019 to 30 June 2025 |
Source: Items 1 to 5 of Schedule 5 to the Bill and Explanatory Memorandum, op. cit., pp. 67–68.
Additional information can be found at pages 67 to 71 of the Explanatory Memorandum to the Bill.
Financial implications
The Explanatory Memorandum states:
The component of the MYEFO measure being implemented by this Schedule was estimated to have a cost to revenue of $0.6 million over the forward estimates period at the time of the MYEFO. The component of the Budget measure being implemented by this Schedule was estimated to have a cost of revenue of $0.1 million over the forward estimates period at the time of the Budget. The extension of the deductible gift recipient status of these entities to 30 June 2025 (inclusive) has no financial impact over the current forward estimates period.[40]
Schedule 4: funding capital increases for the World Bank Group
|
Schedule 4 amends the International Finance Corporation Act 1955 (IFCA 1955) and the International Monetary Agreements Act 1947 (IMAA 1947) to:
|
The World Bank
Overview
Founded at the 1944 Bretton Woods conference, the World Bank is an international financial institution that provides financial and technical assistance to developing countries.[41] The World Bank comprises of 189 member countries and is focussed on fighting poverty, supporting economic growth and ensuring sustainable gains in the quality of people’s lives in developing countries.[42]
As stated on the World Bank website, it provides:
...low-interest loans, zero to low-interest credits, and grants to developing countries. These support a wide array of investments in such areas as education, health, public administration, infrastructure, financial and private sector development, agriculture, and environmental and natural resource management. Some of our projects are cofinanced with governments, other multilateral institutions, commercial banks, export credit agencies, and private sector investors.
We also provide or facilitate financing through trust fund partnerships with bilateral and multilateral donors. Many partners have asked the Bank to help manage initiatives that address needs across a wide range of sectors and developing regions.[43]
Australia has been a member of the World Bank since 5 August 1947.[44]
Organisational structure
The World Bank Group is comprised of five distinct but complimentary organisations:
- The International Bank for Reconstruction and Development (IBRD)—the largest development bank in the world, it provides loans, guarantees, risk management products, and advisory services to middle-income and creditworthy low-income countries, as well as coordinating responses to regional and global challenges.[45]
- The International Finance Corporation (IFC)—specifically focused on increasing private sector- investment in, and development of, developing and less developed countries.[46]
- The International Development Association (IDA)—one of the largest sources of assistance for the world’s seventy-six poorest countries, it aims to reduce poverty by providing no, or low-interest loans and grants for programs that boost economic growth, reduce inequalities, and improve people’s living conditions.[47]
- The Multilateral Investment Guarantee Agency (MIGA)—seeks to promote cross-border investment in developing countries by providing guarantees to protect investors and lenders from non-commercial risks, such as political risk or non-payment by a sovereign entity.[48]
- The International Centre for Settlement of Investment Disputes (ICSID)—an international arbitration institution focussed on resolving disputes amongst international investors.[49]
The proposed amendments in Schedule 4 of the Bill specifically relate to Australia’s obligations and interactions with the IBRD and IFC.
Australia’s commitment to purchase capital shares
In April 2018, the World Bank Group proposed a US$82.6 billion capital increase for the IBRD and IFC. On 27 September 2018 the Treasurer, in his capacity as Australia’s Governor to the World Bank, voted to approve the resolutions.[50]
Subsequently the World Bank Group announced endorsement of the IBRD capital increase on 1 October 2018 and the IFC capital increase on 16 April 2020.[51]
As a result, Australia now has obligations to the IBRD and IFC.
Australia’s IBRD obligations
Australia was allocated an additional 7,462 shares in the IBRD at US$120,635 per share, and is required to pay the World Bank a proportion of the share value over a five year period, with a callable capital component attached to the unpaid amounts (meaning the World Bank may call upon Australia to pay that amount).[52] The Explanatory Memorandum explains Australia’s obligations as follows:
Australia’s subscription comprises 3,243 shares under a ‘general capital increase’, and 4,219 shares under a ‘selective capital increase’ (with different payment arrangements applying to the different increases). Australia’s contribution to the IBRD capital increase results in around A$154 million payable over five years starting 2019-20 and a callable capital component of A$1,016.2 million.[53]
Australia’s IFC obligations
The World Bank resolution relating to the IFC means that Australia may purchase an additional 102,370 shares at a price equivalent to US$1,000 each.[54] According to the Explanatory Memorandum:
Australia’s contribution would be around A$144 million payable over five years. The IFC also proposes to convert its retained earnings into paid-in capital and so Australia will also receive fully paid in shares to the value of US$313.5 million (around A$402.6 million).[55]
Key provisions and issues
Payments to the IBRD are regulated by the IMAA 1947 and payments to the IFC by the IFCA 1955. Schedule 4 to the Bill seeks to modify how these payments are currently authorised.
New framework under the IMAA 1947
The IMAA 1947 approves Australia’s membership of the IBRD and sets out, amongst other things, that the Consolidated Revenue Fund can be appropriated by the Treasurer to buy not more than 7,128 additional shares of capital bank stock.[56] As noted in the Explanatory Memorandum, this authorised the purchase of additional bank stock in 2010.[57]
The IMAA 1947 does not contain a standing appropriation allowing the Treasurer to use funds from the Consolidated Revenue Fund (CRF) to buy additional shares of capital stock in the IBRD. As such, Parliament must specifically approve such a request by amending section 9 of the IMAA 1947 to authorise such an appropriation.[58]
Item 8 of Schedule 4 to the Bill seeks to amend this by repealing section 9 of the IMAA 1947 and replacing it with a new standing appropriation (also known as a special appropriation). It is proposed this will be facilitated by creating a power in section 9 of the IMAA 1947 to allow the relevant Minister (usually the Treasurer) to enter into one or more agreements with the IBRD to buy additional IBRD capital stock, and to draw these funds from the CRF.[59]
This means that the IMAA 1947 will not need to be amended every time Australia seeks to purchase additional stock in the IBRD under the IMAA 1947. The Explanatory Memorandum states this new approach is consistent with all other agreements and their related appropriations covered by the IMAA 1947:
‘[a]ppropriations in these contexts are appropriate because they ensure that Australia is able to comply with any international obligations it has under an agreement to make payments of a particular kind’.[60]
The Explanatory Memorandum contends that the proposed amendment does not provide the Treasurer with an unfettered discretion to enter into such agreements and draw down the Consolidated Revenue Fund. The Explanatory Memorandum states that entering into such an arrangement or agreement constitutes treaty action and is therefore required to be tabled in Parliament with a National Interest Analysis for consideration by the JSCOT and approved by the Governor-General:
These processes will apply to the current share subscription that these amendments are specifically intended to facilitate, as well as any future subscriptions proposed by the IBRD or IFC that Australia chooses to adopt. The processes ensure there is appropriate Parliamentary scrutiny of any decision of the Government to enter into agreements to subscribe to additional shares in the capital stock of the IBRD and IFC. In addition to the standard JSCOT processes, the Minister is required to provide details about any payments to the IBRD through the annual reporting requirements in section 10 of the IMAA 1947.[61]
However, the Scrutiny of Bills Committee had concerns with this aspect of the proposed amendments—those concerns are discussed below. Ultimately, whether such a standing appropriation and the above safeguards are suitable will be a question for Parliament to resolve when considering this Bill.
New framework under the IFCA 1955
The IFCA 1955, amongst other things, approves Australia’s membership in the IFC, sets out the Articles of Agreement giving rise to the IFC and authorises the appropriation of funds to purchase shares in the IFC.[62]
Item 1 of Schedule 4 to the Bill seeks to repeal and substitute a new definition of ‘Agreement’ in section 3 of the IFCA 1955. Presently, section 3 defines ‘Agreement’ as per the full Articles of Agreement and amendments to it, which are replicated as Schedules to the Act. The proposed new definition significantly reduces the length of the IFCA 1955 by incorporating the relevant Articles of Agreement by reference (consistent with modern drafting approaches).[63] Further, this new definition corrects two omissions from the previous list of Agreements. As such, this not only reduces the length of the IFCA 1955 but also corrects errors with the existing definition of ‘Agreement’. Items 4 to 7 repeal Schedules 1 to 4 of the IFCA 1955 as the Agreement will be incorporated by reference.
Item 2 of Schedule 4 to the Bill repeals section 5 of the IFCA 1955 and inserts:
- new section 5 creating a standing appropriation under which the CRF may be appropriated to meet Australia’s obligations to subscribe to shares in the IFC
- new subsection 5A(1) enabling the Treasurer to update the list of Agreements through a legislative instrument—that is, if the Articles underpinning the IFC are updated, the Treasurer can incorporate this into the IFCA 1955 through a legislative instrument, rather than through an Act of Parliament (the Scrutiny of Bills Committee expressed concerns (discussed below) about whether a sufficient level of Parliamentary scrutiny will exist with the proposed new framework)
- new subsection 5A(2) providing that such a legislative instrument cannot commence until after the disallowance period for the instrument has passed.[64] This deferred commencement provides Parliament with the opportunity to consider whether any amendments are needed before the instrument takes effect[65] and
- new subsections 5B(1) and (2) allowing the relevant Minister (usually the Treasurer) to enter into an arrangement to purchase additional shares of capital in the IFC and creating a new standing appropriation under which the CRF may be appropriated for the purposes of buying the additional shares—this creates a standing appropriation for future purchases of IFC stock.
However, similar to the proposed section 9 of the IMAA 1947, this constitutes a treaty action and will therefore be required to be tabled in Parliament with a National Interest Analysis for consideration by the Joint Standing Committee on Treaties and approved by the Governor-General.[66]
Scrutiny of Bills Committee concerns
The Scrutiny of Bills Committee expressed concern that the proposed amendment would enable future capital increase to the IBRD or the IFC to occur:
- where the minister enters into an agreement with the IBRD or the IFC that provides for Australia to buy additional shares of the capital stock of the IBRD or the IFC or
- where the Treasurer has, by legislative instrument, given notice of an amendment of the Articles of Agreement of the IFC that imposes obligations on Australia to subscribe to shares in the IFC and the disallowance period for the instrument has passed.[67]
In particular, the Committee expressed the view that it does not generally consider consistency with existing provisions to be sufficient justification for limiting parliamentary oversight and did not consider possible scrutiny through the JSCOT as an appropriate substitute for the level of scrutiny inherent in the passage of a Bill through both Houses of the Parliament. [68]
Accordingly, the Committee drew its scrutiny concerns to the attention of senators and left it to the Senate as a whole to consider the appropriateness of removing the requirement to amend primary legislation to facilitate Australia making additional capital contributions to the IBRD and the IFC.[69]
Financial implications
The Explanatory Memorandum states: ‘Australia’s capital contributions will have no direct impact on underlying cash as the payment will be classified as an equity investment in financial assets’.[70]
Joint Standing Committee on Treaties
The Joint Standing Committee on Treaties (JSCOT) has commenced examination of the proposed increases of capital to the IBRD and IFC. Submissions closed on 5 June 2020, and the Treasury and Department of Foreign Affairs both appeared before JSCOT on 22 May 2020.[71] Further details are available at each inquiry homepage: Capital Increase WBG IBRD and Capital Increase WBG IFC.
Schedule 6: tax secrecy
| Schedule 6 amends the TAA 1953 to ensure that the disclosure of JobKeeper information by the ATO to the Fair Work Commission and Fair Work Ombudsman is not an offence under the tax secrecy provisions of the TAA 1953. |
Overview
Presently, section 355-25 of Schedule 1 to the TAA 1953 creates a general offence where a taxation officer discloses protected information to another entity, punishable by up to two years imprisonment. Protected information is broadly defined in section 355-30 of the same Act to be information disclosed or obtained under a taxation law (other than the Tax Agent Services Act 2009) that relates to an entity and identifies, or is reasonably capable of identifying, that entity.
A number of exceptions to the offence exist, including (but not limited to) disclosure of publicly available information,[72] where disclosure was required in performing duties,[73] making certain disclosures to a Minister[74] and for other Government purposes (for example providing taxation information to other government departments, agencies, regulatory bodies or courts and tribunals).[75]
Key change: enabling JobKeeper information to be disclosed
Item 1 of Schedule 6 inserts new item 5AB into the table in subsection 355-65(8) of Schedule 1 to the TAA 1953 which details ‘other Government purposes’ tax secrecy exceptions. This will enable disclosure of information that relates to the JobKeeper scheme (within the meaning of the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020) to the Fair Work Commission and Fair Work Ombudsman which is required for the purpose of administering the Fair Work Act 2009.[76] As stated in the Explanatory Memorandum to the Bill, the proposed amendments allow:
...protected information related to the JobKeeper scheme to be disclosed to the Fair Work Commission and the Fair Work Ombudsman for the purposes of the administration of the Fair Work Act 2009. This allows these entities to receive information from the Commissioner of Taxation relating to the JobKeeper scheme that is required to appropriately address issues concerning compliance with obligations under the Fair Work Act 2009 (including instruments made under that Act).[77]
Importantly, the proposed amendments are not limited to the period that the JobKeeper scheme operates—that is, they are operative until repealed.[78] The reason for this is explained in the Explanatory Memorandum to the Bill:
However, while the JobKeeper scheme only operates for a limited period, information sharing is not restricted to this period. Instead, the amendments allow the sharing of protected information in relation to the JobKeeper scheme with the Fair Work Commission and the Fair Work Ombudsman after the final payments are made under the JobKeeper scheme. This flexibility allows for effective administration in relation to disputes, investigations and other outstanding matters regarding the JobKeeper scheme that may continue after all payments have been made.[79]
Application
The proposed amendments will apply to information disclosed or records made on or after the day of commencement of Schedule 6, whether the information was obtained before, at or after commencement.[80]
Financial implications
The Explanatory Memorandum states that this proposal has ‘nil’ financial impact.[81]
[1]. M Sukkar, ‘Second reading speech: Treasury Laws Amendment (2020 Measures No. 2) Bill 2020’, House of Representatives, Debates, 13 May 2020, p. 3248.
[2]. Ibid.
[3]. Senate Standing Committee for the Selection of Bills, Report, 5, 2020, The Senate, Canberra, 12 June 2020, p. [3].
[4]. Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 7, 2020, The Senate, Canberra, 10 June 2020, pp. 28–30.
[5]. Joint Standing Committee on Treaties (JSCOT), Inquiry into the International Bank for Reconstruction and Development (IBRD) General Capital Increase and Selective Capital Increase (Washington DC, 1 October 2018 (Capital Increase WBG IBRD), Inquiry website, n.d.; JSCOT, Capital Increase WBG IFC, Parliament of Australia website, 27 May 2020.
[6]. The Statement of Compatibility with Human Rights can be found at pages 77 to 86 of the Explanatory Memorandum to the Bill.
[7]. Parliamentary Joint Committee on Human Rights, Human rights scrutiny report, 6, 2020, 20 May 2020, p. 22.
[8]. Items 2 and 8 of Schedule 4 to the Bill.
[9]. Revised Explanatory Memorandum, Budget Savings (Omnibus) Bill 2016, p. 21. See also, Australian Taxation Office (ATO), ‘Single Touch Payroll: For employers’, Fact Sheet, ATO website.
[10]. ATO, ‘Single Touch Payroll employer reporting guidelines – About Single Touch Payroll’, ATO website, last updated 27 March 2020.
[11]. Ibid.
[12]. Explanatory Memorandum, Treasury Laws Amendment (2020 Measures No. 2) Bill 2020, pp. 45–46.
[13]. Ibid., p. 46.
[14]. Ibid.
[15]. Australian Government, ‘Part 2: Expense measures’, Budget measures: budget paper no. 2: 2019–20, pp. 158 and 170.
[16]. Ibid.
[17]. Explanatory Memorandum, op. cit., p. 46.
[18]. Australian Government, ‘Single Touch Payroll Reporting – Child support information’, Treasury webpage.
[19]. M Klapdor, Social Services and Other Legislation Amendment (Simplifying Income Reporting and Other Measures) Bill 2020, Bills digest, 85, 2019–20, Parliamentary Library, Canberra, 2020.
[20]. Explanatory Memorandum, op. cit., p. 4.
[21]. Subitems 9(1) and (2) of Schedule 2 to the Bill.
[22]. Australian Government, ‘Part 1: Revenue measures’, Budget measures: budget paper no. 2: 2019–20, p. 20.
[23]. Ibid., p. 20.
[24]. Ibid; items 1 to 4 of Schedule 5 of the Bill.
[25]. ITAA 1997, table item 5.2.26 in subsection 30-50(2).
[26]. J Frydenberg (Treasurer) and M Cormann (Minister for Finance and the Public Service), Mid-year economic and fiscal outlook—2018–19, p. 127.
[27]. Ibid; items 1 and item 5 of Schedule 5 of the Bill.
[28]. Income Tax Assessment Act 1997 (ITAA 1997), sections 8-5 and 30-15. Section 30-15 imposes specific rules about the deductibility of particular gifts and contributions.
[29]. Ibid., section 30-120.
[30]. Australian Government, ‘New Deductible Gift Recipient (DGR) category for Men’s Sheds and Women’s Sheds’, Treasury webpage.
[31]. Australian Men’s Shed Association, Submission to Treasury, Deductible Gift Recipient Category – Community Sheds, 13 February 2020, p. [2].
[32]. Australian Neighbourhood House and Centres Association (ANHCA), Submission to Treasury, undated, p. [4]; Mount Eliza Neighbourhood House, Submission to Treasury, Submission regarding DGR status for Men’s Sheds and Women’s Sheds, undated; ANHCA, ‘Neighbourhood Houses and Centres’, ANHCA website.
[33]. Queensland Men’s Shed Association, Submission to Treasury, Submission to The Treasury on the draft bill and explanatory memorandum for the new deductible gift recipient (DGR) general category for Men’s Sheds and Women’s Sheds prepared by the Queensland Men’s Shed Association Inc (QMSA), 14 February 2020, p. [1]
[34]. Justice Connect, Submission to Treasury, New Deductible Gift Recipient (DGR) category for Men’s Sheds and Women’s Shed, 13 February 2020, pp [1–2].
[35]. The Men’s Table, Submission to Treasury, Submission: New Deductible Gift Recipient (DGR) category for Men’s Sheds and Women’s Sheds, undated, pp. [3–4].
[36]. Under subsection 995-1(1) of the ITAA 1997 registered charity means an entity that is registered under the Australian Charities and Not-for-profits Commission Act 2012 as the type of entity mentioned in column 1 of item 1 of the table in subsection 25-5(5) of that Act—namely, a charity. ‘Charity’ is defined in section 5 of the Charities Act 2013. For further information see: Australian Charities and Not-for-profits Commission (ACNC), ‘Legal meaning of charity’, ACNC website.
[37]. Item 4 of Schedule 3 of the Bill.
[38]. ITAA 1997, section 8-5, see section 30-15 for specific rules about the deductibility of gifts and contributions.
[39]. That is, donations of at least $2 made to the entity during this period will be tax deductible.
[40]. Explanatory Memorandum, op. cit., p. 7.
[41]. World Bank, ‘What we do’, ‘What is the difference between the World Bank Group and the IMF?’ and ‘Bretton Woods Monetary Conference, July 1-22, 1944’, World Bank webpages.
[42]. World Bank, ‘History’, op. cit, and World Bank, ‘Member Countries’, op. cit.
[43]. World Bank, ‘What we do’, op. cit.
[44]. World Bank, ‘Members’, World Bank website.
[45]. World Bank, ‘International Bank For Reconstruction And Development’, World Bank website.
[46]. International Finance Corporation (IFC), ‘Overview’, IFC website.
[47]. International Development Association (IDA), ‘What is IDA’, IDA website.
[48]. Multilateral Investment Guarantee Agency (MIGA), ‘About us’, MIGA website.
[49]. International Centre for Settlement of Investment Disputes (ICSID), ‘About’, ICSID website.
[50]. Explanatory Memorandum, op. cit., p. 59–60
[51]. Ibid., p. 60
[52]. Ibid.
[53]. Ibid.
[54]. Ibid.
[55]. Ibid.
[56]. International Monetary Agreements Act 1947 (IMAA 1947), section 9.
[57]. Explanatory Memorandum, op. cit., p. 60.
[58]. Ibid, pp. 60–61.
[59]. The Bill also seeks to remove the reference to the previous appropriation issued in 2010. Pursuant to section 19 of the Acts Interpretation Act 1901 , the reference to the ‘Minister’ includes the Treasurer and any other Minister in the Treasury portfolio who administers the IMAA 1947.
[60]. Explanatory Memorandum, op. cit., p. 60–61.
[61]. Explanatory Memorandum, op. cit., p. 64.
[62]. International Finance Corporation Act 1955 (IFCA 1955), sections 3, 4 and 5.
[63]. Explanatory Memorandum, op. cit., p. 65.
[64]. Proposed subsection 5A(2) of the IFCA 1955 proposes that the instrument commences at the later of: the earliest day applicable under subsection 12(1) if the Legislation Act 2003 (dealing with commencement of legislative instruments); or the start of the day immediately after the last day on which a resolution referred to in subsection 42(1) of the Legislation Act (dealing with disallowance) disallowing the instrument could be passed.
[65]. Explanatory Memorandum, op. cit., p. 66.
[66]. Ibid., p. 66.
[67]. Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, op. cit., p. 30.
[68]. Ibid.
[69]. Ibid.
[70]. Explanatory Memorandum, op. cit., p. 6.
[71]. JSCOT, Capital Increase WBG IBRD, op. cit.; JSCOT, Capital Increase WBG IFC, op. cit.
[72]. Section 355-45 of Schedule 1 of the TAA 1953.
[73]. Section 355-50 of Schedule 1 of the TAA 1953.
[74]. Section 355-55 of Schedule 1 of the TAA 1953.
[75]. Section 355-65 of Schedule 1 of the TAA 1953.
[76]. Item 1 of Schedule 6 to the Bill which inserts new item 5AB into the table in subsection 355-65(8) of Schedule 1 to the TAA 1953.
[77]. Explanatory Memorandum, op. cit., p. 74
[78]. Proposed table item 5AB of subsection 355-65(8) of Schedule 1 to the TAA 1953.
[79]. Explanatory Memorandum, op. cit., p. 75
[80]. Item 2 of Schedule 6 to the Bill.
[81]. Explanatory Memorandum, op. cit., p. 7.
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