Treasury Laws Amendment (2018 Measures No 4) Bill 2018 [2018] AUSStaCSBSD 127 (9 May 2018)

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Purpose	This bill seeks to amend various Acts relating to taxation, superannuation, competition and consumers Schedules 1 to 6 seek to: • allow the Commissioner to issue directions to pay unpaid superannuation guarantee and undertake superannuation guarantee education courses where employers fail to comply; • allow the Commissioner to disclose more information about superannuation guarantee non-compliance to affected employees; • extend Single Touch Payroll reporting to all employers; • enable regular reporting by superannuation funds; and • implement data matching in relation to welfare payments Schedule 7 seeks to enable the sharing and verification of tax file numbers Schedule 8 seeks to make a number of miscellaneous amendments and technical changes to various Acts Schedule 9 seeks to add three specifically-listed deductible gift recipients
Portfolio	Treasury
Introduced	House of Representatives on 28 March 2018

Strict liability offences^[92]

1.120 Part 1 of Schedule 1 seeks to amend the Taxation Administration Act 1953 (TAA) to allow the Commissioner of Taxation (Commissioner) to issue directions to employers to pay the Superannuation Guarantee Charge to employees who have not received their full entitlement. Proposed subsection 265-95(2) makes failure to follow a direction to pay the charge and discharge the liability an offence of strict liability, subject to a penalty of 50 penalty units or imprisonment for 12 months, or both.

1.121 The explanatory memorandum explains that the proposed offences are 'consistent with the existing offences that apply to other failures to comply with taxation obligations.'^[93] Further, the explanatory memorandum argues the proposed offences are drafted so that the Commissioner would only issue directions in relation to serious contraventions of the obligation to pay the superannuation guarantee amount, and by 'employers whose actions are consistent with an ongoing and intentional disregard of those obligations.'^[94]

1.122 In addition, in Schedule 5, proposed section 255-120 seeks to create a new strict liability offence for failure to comply with a Federal Court order requiring an entity to comply with a requirement to give security under section 255-100 of the TAA. This offence is also subject to a penalty of 50 penalty units or imprisonment for 12 months, or both.

1.123 The explanatory memorandum argues the penalty 'ensures that appropriate consequences apply to entities that refuse to comply with an order that has been made against them by the Court. The amount of the penalty and the application of strict liability is the same as the offence for refusing to comply with other Court orders and the associated penalty that are already imposed under sections 8G and 8H. Applying the same consequences in respect of security deposits ensures a consistent outcome between the two sets of rules and is appropriate as they both deal with failures to comply with Court orders.'^[95]

1.124 Under general principles of the criminal law, fault is required to be proved before a person can be found guilty of a criminal offence (ensuring that criminal liability is imposed only on persons who are sufficiently aware of what they are doing and the consequences it may have). When a bill states that an offence is one of strict liability, this removes the requirement for the prosecution to prove the defendant's fault. In such cases, an offence will be made out if it can be proven that the defendant engaged in certain conduct, without the prosecution having to prove that the defendant intended this, or was reckless or negligent. As the imposition of strict liability undermines fundamental criminal law principles, the committee expects the explanatory memorandum to provide a clear justification for any imposition of strict liability, including outlining whether the approach is consistent with the Guide to Framing Commonwealth Offences.^[96]

1.125 The Guide to Framing Commonwealth Offences also states that the application of strict liability is only considered appropriate where the offence is not punishable by imprisonment and only punishable by a fine of up to 60 penalty units for an individual.^[97] In this instance, the bill proposes applying strict liability to offences that are subject to up to 12 months imprisonment. The committee reiterates its

long-standing scrutiny view that it is inappropriate to apply strict liability in circumstances where a period of imprisonment may be imposed.

1.126 The committee requests a detailed justification from the minister for the proposed strict liability offences, particularly the imposition of up to 12 months imprisonment, with reference to the principles set out in the Guide to Framing Commonwealth Offences.^[98]

Absolute liability offences^[99]

1.127 Part 2 of Schedule 1 seeks to create a framework under which the Commissioner may issue 'education directions' to a person the Commissioner reasonably believes has failed to comply with certain taxation obligations.^[100] Item 3 of Schedule 1 seeks to include a failure to comply with an education direction in accordance with proposed subsection 384-15(3)^[101] in the list of circumstances in which a person commits an offence under section 8C of the TAA. Pursuant to sections 8C and 8E of the TAA, a failure to comply with an education direction would therefore be an offence of absolute liability subject in the first instance to a maximum penalty of 20 penalty units. Where a person has been previously convicted of two or more relevant offences, a penalty not exceeding 50 penalty units or 12 month's imprisonment, or both, may be imposed.

1.128 Under general principles of the criminal law, fault is required to be proved before a person can be found guilty of a criminal offence (ensuring that criminal liability is imposed only on persons who are sufficiently aware of what they are doing and the consequences it may have). When legislation states that an offence is one of absolute liability, this removes the requirement for the prosecution to prove the defendant's fault. In such cases, an offence will be made out if it can be proven that the defendant engaged in certain conduct, without the prosecution having to prove that the defendant intended this, or was reckless or negligent. The application of absolute liability also prevents the defence of honest and reasonable mistake of fact from being raised, a defence that remains available where strict liability is applied.

1.129 As the imposition of absolute liability undermines fundamental criminal law principles, the committee expects the explanatory memorandum to provide a clear justification for including a failure to comply with an education direction as one that is subject to an offence of absolute liability, including outlining whether the approach is consistent with the Guide to Framing Commonwealth Offences.^[102]

1.130 In this instance, the explanatory memorandum states that extending the existing absolute liability offence under section 8C and the tiered penalties under section 8E of the TAA is 'appropriate as it maintains consistency with the other failures that are already covered by section 8C', and a failure to comply with an education direction is 'directly comparable to the existing requirements to notify the Commissioner of particular matters or attend before the Commissioner or another person.'^[103]

1.131 However, the explanatory memorandum does not explain what are the legitimate grounds for penalising persons lacking fault in this instance, nor why it is appropriate to subject a failure to comply with a direction to an offence of absolute liability as opposed to strict liability (which would allow a defence of honest and reasonable mistake of fact to be raised). The explanatory memorandum also does not explain why it is considered appropriate to apply a penalty of up to 12 months imprisonment to an offence of absolute liability, rather than the 10 penalty units suggested in the Guide to Framing Commonwealth Offences.^[104] The committee's consistent scrutiny position is that a proposed provision is not adequately justified merely by the fact that it is intended to apply, mirror or be consistent with provisions of an existing law.

1.132 The committee requests the minister's detailed justification, with reference to the principles set out in the Guide to Framing Commonwealth Offences,^[105] for making a failure to comply with an education direction an offence of absolute liability, subject to a maximum penalty of up to 12 months imprisonment.

Reversal of evidential burden of proof^[106]

1.19 Subsection 8K(1) of the TAA makes it an offence for a person to make a statement to a taxation officer that is false or misleading in a material particular, and subsection 8K(1B) makes it an offence for a person to make a statement to a taxation officer that omits any matter or thing and the statement is misleading in a material particular because of this omission. Subsection 8N(1) also makes it an offence for a person to make a statement to a taxation officer that is false or misleading in a material particular or omits any matter or thing without which the statement is misleading in a material particular, and the person is reckless as to whether the statement is false or misleading in a material particular.

1.133 Proposed subsection 8K(2B) provides an exception (offence specific defence) to the offences under subsections 8K(1) and (1B), stating that the offences do not apply if the original statement is a member information statement made under section 390-5 of the TAA, the person who made the original statement makes a further statement correcting the original statement in each of the respects in which it is false or misleading in a material particular, and the further statement was made within the grace period determined by the Commissioner under proposed section 390-7^[107] and is in an approved form. Proposed subsection 8N(3) provides an identical exception in relation to the offence set out under section 8N.

1.134 The offences under subsections 8K(1) and (1B) carry a maximum penalty of 20 penalty units in the first instance, and 40 penalty units where a person has previously been convicted of a relevant offence.^[108] The offence under subsection 8N(1) carries a maximum penalty of 30 penalty units in the first instance, and a penalty not exceeding 50 penalty units or 12 month's imprisonment, or both, where the person has previously been convicted of a relevant offence.^[109]

1.135 Subsection 13.3(3) of the Criminal Code Act 1995 provides that a defendant who wishes to rely on any exception, exemption, excuse, qualification or justification bears an evidential burden in relation to that matter.

1.136 At common law, it is ordinarily the duty of the prosecution to prove all elements of an offence. This is an important aspect of the right to be presumed innocent until proven guilty. Provisions that reverse the burden of proof and require a defendant to disprove, or raise evidence to disprove, one or more elements of an offence, interferes with this common law right.

1.22 While in this instance the defendant bears an evidential burden (requiring the defendant to raise evidence about the matter), rather than a legal burden (requiring the defendant to positively prove the matter), the committee expects any such reversal of the evidential burden of proof to be justified. The reversals of the evidential burden of proof in proposed subsections 8K(2B) and 8N(3) have not been addressed in the explanatory materials.

1.23 As the explanatory materials do not address this issue, the committee requests the minister's advice as to why it is proposed to use offence-specific defences (which reverse the evidential burden of proof) in this instance. The committee's consideration of the appropriateness of a provision which reverses the burden of proof is assisted if it explicitly addresses relevant principles as set out in the Guide to Framing Commonwealth Offences.^[110]

Charges in delegated legislation^[111]

1.137 Item 3 of Schedule 8 seeks to repeal and replace subsections 43-10(7) and (8) of the Fuel Tax Act 2006 relating to the determination of the rate of road user charge. Proposed subsection (7) provides that the amount of road user charge for a taxable fuel is to be worked out using the rate determined under subsection (8) that applies to taxable fuel. Proposed subsection (8) seeks to allow the Transport Minister to determine, by legislative instrument, a rate of road user charge for taxable fuels for which duty is payable at a rate per litre of fuel, a rate per kilogram of fuel, or a rate expressed in a unit of measurement other than litres or kilograms.

1.138 The explanatory memorandum states that the proposed amendments are intended to 'streamline the process of applying the [Road User Charge (RUC)] to fuels sold in kilograms and provide ongoing structural flexibility for the Transport Minister to determine rates for the RUC in litres, kilograms and other units of measurement of fuel.'^[112] The committee notes that the proposed amendments would have the effect of continuing the Transport Minister's current power to determine, by legislative instrument, the rate of road user charge^[113] while providing greater flexibility with respect to determining rates for fuels sold in different units of measurement.

1.139 One of the most fundamental functions of the Parliament is to impose taxation (including duties of customs and excise).^[114] The committee's consistent scrutiny view is that it is for the Parliament, rather than makers of delegated legislation, to set a rate of tax. The committee notes that the Fuel Tax Act 2006 imposes a public consultation requirement on the Transport Minister prior to determining an increased rate of road user charge,^[115] and that proposed new subsection 43-10(12)^[116] would prevent the road user charge from being increased more than once in a financial year for each class of taxable fuel. However, no guidance is provided on the face of the bill as to the method of calculating the road user charge rate, nor are maximum charges specified. Where charges are to be determined by legislative instrument, the committee considers that, at a minimum, some guidance in relation to the method of calculation of the charge and/or a maximum charge should be provided on the face of the primary legislation, to enable greater parliamentary scrutiny.

1.140 The committee requests the minister's advice as to why there are no limits on the road user charge specified in primary legislation and whether guidance in relation to the method of calculation of the charge and/or a maximum charge can be specifically included in the bill.

No-invalidity clause^[117]

1.141 Proposed section 353-25 provides that the Commissioner may give an offshore information notice requesting a person give any information or produce any documents the Commissioner reasonably believes is offshore information and is relevant to the assessment of any tax administered by the Commissioner. Proposed subsection 353-30 sets out that there are evidentiary consequences for a failure to comply with this request, such that the offshore information or contents of offshore documents or copies will not be admissible in evidence in proceedings under Part IVC of the TAA on a review or appeal relating to a tax-related liability. Proposed subsection 353-30(4) provides that if, before any hearing of a proceeding on such an appeal or review, the Commissioner forms the view that the applicant has refused or failed to comply with a request in an offshore information notice and the Commissioner is unlikely to give consent that the information be made admissible, the Commissioner must, by notice in writing, inform the applicant that the Commissioner has formed those views. However, a failure to so notify an applicant does not affect the validity of the Commissioner's decision not to consent to the admissibility of the evidence. A legislative provision that indicates that an act done or decision made in breach of a particular statutory requirement or other administrative law norm does not result in the invalidity of that act or decision, may be described as a 'no-invalidity' clause.

1.142 The committee notes that whether or not the Commissioner consents to the relevant evidence being admissible in Part IVC proceedings may have important consequences for the conduct of those proceedings. Proposed subsection 353-30(4), in requiring the Commissioner to inform the person that consent to adduce that withheld information is not likely to be given, may thus be seen as facilitating a fair hearing in the Part IVC proceedings, given the effect that not consenting to the admissibility of the evidence may have on their ability to present their case.

1.143 The default position in the law is that non-compliance with requirements designed to facilitate a fair hearing will result in the invalidity of the decision. There are significant scrutiny concerns with no-invalidity clauses, as these clauses may limit the practical efficacy of legal or administrative review to provide a remedy for administrative errors. Consequently, the committee expects a sound justification for the use of a no-invalidity clause to be provided in the explanatory memorandum. In this instance, the explanatory memorandum provides no explanation for the inclusion of the no-invalidity clause.

1.144 The committee therefore seeks the minister's advice as to why the Commissioner's failure to notify a taxpayer of a decision to refuse to admit certain evidence in proceedings on review or appeal, will not affect the validity of the decision, particularly in light of the potential effect on a taxpayer's opportunity to present their case.

[92] Schedule 1, item 1, proposed subsection 265-95(2) and Schedule 5, item 14, proposed subsection 255-120(2). The committee draws senators' attention to these provisions pursuant to Senate Standing Order 24(1)(a)(i).

[96] Attorney-General's Department, A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, September 2011, pp 22–25.

[97] Attorney-General's Department, A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, September 2011, p. 23.

[98] Attorney-General's Department, A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, September 2011, pp. 22–25.

[99] Schedule 1, item 3. The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(i).

[100] These apply to failures to comply with obligations arising from the payment of the superannuation guarantee charge payable under the Superannuation Guarantee (Administration) Act 1992 (SGAA) or related estimates of the charge that are payable under the TAA, or other obligations under the SGAA or the TAA as it relates to the SGAA. See explanatory memorandum, p. 21.

[102] Attorney-General's Department, A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, September 2011, pp. 22-25.

[104] Attorney-General's Department, A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, September 2011, p. 23.

[105] Attorney-General's Department, A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, September 2011, pp. 22–25.

[106] Schedule 4, items 1 and 2. The committee draws senators’ attention to these provisions pursuant to Senate Standing Order 24(1)(a)(i).

[110] Attorney-General's Department, A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, September 2011, pp. 50-52.

[111] Schedule 8, item 3. The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(iv) and (v).

[113] Noting that currently section 43-10(7) of the Fuel Tax Act 2006 provides that the amount of road user charge for taxable fuel is 21 cents for each litre of fuel, unless the Transport Minister has determined a different rate via a legislative instrument.

[114] This principle has been a foundational element of our system of governance for centuries: see, for example, article 4 of the Bill of Rights 1688: 'That levying money for or to the use of the Crown by pretence of prerogative without grant of Parliament for longer time or in other manner than the same is or shall be granted is illegal'.

[117] Schedule 8, item 19, proposed subsection 353-30(4). The committee draws senators' attention to this provision pursuant to Senate Standing Order 24(1)(a)(iii).

Australian Senate Standing Committee for the Scrutiny of Bills - Scrutiny Digests