Treasury Laws Amendment (2017 Measures No 2) Bill 2017 - Commentary on Ministerial Responses [2017] AUSStaCSBSD 263 (9 August 2017)

• Treasury Laws Amendment (2017 Measures No. 2) Bill 2017
• Retrospective application146

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Treasury Laws Amendment (2017 Measures No. 2) Bill 2017

Purpose	This bill seeks to amend various Acts relating to taxation, superannuation, personal insolvency and corporate insolvency Schedule 1 includes amendments relating the superannuation reform package, including amendments to: - the transfer balance cap; - concessional and non-concessional contribution rules; - the objective of superannuation; - the transition to retirement income stream rules; - capital gains tax relief for superannuation funds; and - administrative processes Schedule 2 includes amendments relating to insolvency
Portfolio	Treasury
Introduced	House of Representatives on 25 May 2017
Bill status	Received the Royal Assent on 22 June 2017
Scrutiny principle	Standing Order 24(1)(a)(i)

2.325 The committee dealt with this bill in Scrutiny Digest No. 6 of 2017. The Minister responded to the committee's comments in a letter dated 27 June 2017. Set out below are extracts from the committee's initial scrutiny of the bill and the Minister's response followed by the committee's comments on the response. A copy of the letter is available on the committee's website.^[145]

Retrospective application^[146]

Initial scrutiny – extract

2.326 Item 27 of Schedule 1 is an application provision that provides that the amendment made by item 5 of Schedule 1 (relating to assumptions about income streams in relation to superannuation) applies in relation to non-concessional contributions for the 2013-2014 financial year and later years.

2.327 The explanatory memorandum explains that this 'change aligns the application of the updated review rules with that for the review rights for the discretion for concessional contributions, which applies from the 2013-2014 financial year'.^[147]

2.328 No further explanation is given and it is unclear why these amendments are intended to apply retrospectively. The committee has a long-standing scrutiny concern about provisions that apply retrospectively, as it challenges a basic value of the rule of law that, in general, laws should only operate prospectively. The committee has a particular concern if the legislation will, or might, have a detrimental effect on individuals.

2.329 Generally, where proposed legislation will have a retrospective effect the committee expects the explanatory materials should clearly set out the reasons why retrospectivity is sought, and whether any persons are likely to be adversely affected and the extent to which their interests are likely to be affected.

2.330 The committee requests the Minister's advice as to why this measure is intended to apply retrospectively from the 2013-2014 financial year and whether this will cause any detriment to any individual.

Minister's response

2.331 The Minister advised:

By way of summary, the amendment addresses an application issue associated with earlier changes to certain objection rights available to individuals. The amendment will not cause any detriment to any individual because the associated changes expand the matters that can be objected to where an individual is dissatisfied with certain decisions of the Commissioner of Taxation.
I note that the amendment does not relate to item 5 of Schedule 1 to the Bill itself (which is about assumptions relating to income streams). Rather, the amendment relates to item 9 of Schedule 3 to the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 (the 'Fair and Sustainable Super Act'), which legislated the Government's superannuation reform package announced in the 2016-17 Budget.
Item 9 of Schedule 3 to the Fair and Sustainable Super Act is the application rule (the 'original application rule') for item 5 of Schedule 3 to that Act. Item 5 clarified the objection rights available to individuals for certain decisions about non-concessional contributions by making it clear that individuals can object to a decision of the Commissioner not to make a determination to disregard or reallocate a contribution to another financial year. Individuals request such determinations to prevent or reduce breaches of their non-concessional contributions cap.
Prior to the changes made by item 5, the objection rights available to individuals only covered objections to determinations that the Commissioner had actually made.
However, the original application rule for those changes was ineffective because it referred to 'working out the non-concessional contributions cap', whereas the changes to objection rights applied in respect of non-concessional contributions (which are different to the cap).
Item 27 of Schedule 1 to the Bill addresses this issue by amending the original application rule to ensure that the changes to objection rights apply in respect of non-concessional contributions. Applying the changes from the 2013-2014 financial year also aligns them with equivalent changes that were made for concessional contributions.
As noted above, the expansion of these objection rights is wholly beneficial to individuals as it ensures that individuals are able to formally object to a wider range of decisions than may have previously been the case.

Committee comment

2.332 The committee thanks the Minister for this response. The committee notes the Minister's advice that the retrospective application of this amendment will not cause any detriment to any individual because the associated changes expand the matters that can be objected to where an individual is dissatisfied with certain decisions of the Commissioner of Taxation. The Minister advised that the expansion of these objection rights is wholly beneficial to individuals as it ensures that individuals are able to formally object to a wider range of decisions than may have previously been the case.

2.333 The committee notes that it would have been useful had this information been included in the explanatory memorandum.

2.334 In light of the explanation provided that the retrospective application of these amendments will not cause any detriment to any individual, and the fact that the bill has already passed both Houses of Parliament, the committee makes no further comment on this matter.

2.1

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[145] See correspondence relating to Scrutiny Digest No. 8 of 2017 available at: www.aph.gov.au/senate_scrutiny_digest.

[146] Schedule 1, item 27. The committee draws Senators' attention to this provision pursuant to principle 1(a)(i) of the committee’s terms of reference.

[147] Explanatory memorandum, p. 25.