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Australian Senate Standing Committee for the Scrutiny of Bills - Scrutiny Digests |
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Purpose
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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
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Portfolio
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Treasury
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Introduced
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House of Representatives on 28 March 2018
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Bill status
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Before the House of Representatives
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2.210 The committee dealt with this bill in Scrutiny Digest No. 5 of 2018. The minister responded to the committee's comments in a letter received 31 May 2018. 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.[108]
Initial scrutiny – extract
2.211 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.
2.212 The explanatory memorandum explains that the proposed offences are 'consistent with the existing offences that apply to other failures to comply with taxation obligations.'[110] 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.'[111]
2.213 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.
2.214 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.'[112]
2.215 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.[113]
2.216 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.[114] 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.
2.217 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.[115]
Minister's response
2.218 The minister advised:
Offence for failing to comply with a direction to pay superannuation guarantee charge
Schedule 1 to the Bill applies strict liability to the proposed offence for failing to comply with a direction to pay a superannuation guarantee charge which is subject to a maximum penalty of 50 penalty units or imprisonment for up to 12 months.
This is justified on the basis that the direction to pay will only apply to a narrow subset of employers with serious contraventions of their obligations to pay superannuation guarantee liabilities as required by law and whose actions are consistent with an ongoing and intentional disregard of those obligations. Such behaviour undermines the integrity of the superannuation system and unlike other debts owed to the Commonwealth, the ultimate beneficiaries of the superannuation guarantee payments are individuals.
Employers who dispute the amount of the debt are given full protection from committing an offence for not complying with a direction to pay until after the dispute is resolved.
It is the Government's view that the physical elements of the proposed offence provide the appropriate basis for determining when a person has committed an offence. That is, the fact that an employer (who has failed to pay the underlying superannuation guarantee liability) has been served a notice for the direction to pay that liability and yet still fails to comply cannot be justified. The direction to pay is only intended to be applied to employers who have the capability to pay but have consistently refused to pay. Those who are not capable of paying will be covered by the applicable defence, provided they have taken reasonable steps to try to discharge the liability.
With respect to the substance of the proposed penalties, these have been deliberately set to send the strongest possible signal that appropriately reflects the severity of the behaviour.
In setting these penalties, specific regard was also had to the principle articulated at Chapter 3.1.2 in the Guide that there should be consistent penalties for existing offences of a similar kind or of a similar seriousness. As noted by the Committee, the proposed penalties are comparable to those that apply in respect of similar prohibited behaviours, such as the existing penalties for the failure to comply with certain tax requirements under a taxation law under section 8C of the Taxation Administration Act 1953. These penalties are provided for by section 8E and apply different penalties to first, second, and third or subsequent offences. An employer who commits a first offence is liable to a fine of up to 20 penalty units; a second offence attracts a fine of up to 40 penalty units; and a third or subsequent offence attracts a fine of up to 50 penalty units and/or imprisonment of 12 months.
The penalty of up to 12 months imprisonment for the proposed offence is justified on the basis that the offence relates to continuous failures to pay the superannuation guarantee liability. The penalty is comparable to the highest third and subsequent tiered penalty that currently applies to offences under section 8C.
It is the Government's view that the settings for the proposed penalties are appropriate and necessary to maintain a consistent message that continuously failing to comply with superannuation and taxation obligations is unacceptable.
Offence for failing to comply with a Court order to provide security
Schedule 5 to the Bill applies strict liability to the proposed offence for failing to comply with a Court order to provide the security which is subject to a maximum penalty of 50 penalty units or imprisonment for up to 12 months.
This is justified on the basis that this addresses instances of non-compliance with the security deposit rules which predominantly arise where the value of the security deposit (which reflects the value of the tax related liability) exceeds the existing penalty for failing to provide the security deposit. These taxpayers have already committed an offence under the tax law for failing to comply with the existing security deposit requirement. Therefore the taxpayers who fail to comply with a Court order risk committing a criminal offence resulting in criminal penalties. These consequences provide appropriate incentives to ensure compliance with the Court order and reflect the seriousness of a failure to comply.
It is the Government's view that the physical elements of the proposed offence provide the appropriate basis for determining when a person has committed an offence. That is, the fact that a taxpayer has been issued with an order by the Federal Court to provide the security and yet still fails to comply cannot be justified. A taxpayer does not commit an offence if they are not capable of complying with the Court order.
With respect to the substance of the proposed penalties, these have been specifically set to send the strongest possible signal that appropriately reflects the severity of the behaviour of disregarding a Court order.
In setting these penalties, specific regard was also had to the principle articulated at Chapter 3.1.2 in the Guide that there should be consistent penalties for existing offences of a similar kind or of a similar seriousness. As noted by the Committee, the proposed penalties are comparable to those that apply in respect of similar prohibited behaviours, such as the existing penalties for refusing to comply with other Court orders under sections 8G and 8H of the Taxation Administration Act 1953.
The penalty of up to 12 months imprisonment for the proposed offence is justified on the basis that 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.
It is the Government's view that the settings for the proposed penalties are appropriate and necessary to maintain a consistent message that refusing to comply with a Court order is unacceptable.
Committee comment
2.219 The committee thanks the minister for this response, and notes the minister's advice that the physical elements of the proposed offences provide the appropriate basis for determining liability. The committee also notes the minister's advice that the offences will generally only apply in cases of deliberate non-compliance or where non-compliance cannot be justified and that, where a person is incapable of complying, the person will not commit the offence or will be covered by a defence. With respect to the offence in proposed subsection 265-92(5), the committee also notes the minister's advice that non-compliance with a direction reflects behaviours that undermine the integrity of the superannuation system, and that may have a significant detrimental impact on individuals.
2.220 The committee further notes the minister's advice that the proposed penalties have been specifically set to send the strongest possible signal that appropriately reflects the severity of the behaviour to which the offences apply. The committee also notes the advice that, in setting the penalties for the offences, specific regard was had to the principle articulated in the Guide to Framing Commonwealth Offences[116] that there should be consistent penalties for existing offences of a similar kind or of a similar seriousness. The committee notes the advice that the proposed penalties are consistent with those that apply in respect of similar prohibited behaviours under the Taxation Administration Act 1953.
2.221 While acknowledging the reasons for applying strict liability, and the advice regarding the magnitude of the proposed penalties, the committee reiterates its longstanding scrutiny view that it is inappropriate to apply strict liability to offences carrying a custodial penalty. The committee also emphasises that it does not consider consistency with existing penalties to be sufficient justification for applying strict liability in circumstances where a term of imprisonment may be imposed.
2.222 The committee requests that the key information provided by the minister be included in the explanatory memorandum, noting the importance of this document as a point of access to understanding the law and, if needed, as extrinsic material to assist with interpretation (see section 15AB of the Acts Interpretation Act 1901).
2.223 The committee draws its scrutiny concerns to the attention of senators and leaves to the Senate as a whole the appropriateness of applying strict liability to offences in circumstances where an individual may be subject to a penalty of up to 12 months imprisonment.
Initial scrutiny – extract
2.224 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.[118] Item 3 of Schedule 1 seeks to include a failure to comply with an education direction in accordance with proposed subsection 384-15(3)[119] 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.
2.225 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.
2.226 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.[120]
2.227 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.'[121]
2.228 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.[122] 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.
2.229 The committee requests the minister's detailed justification, with reference to the principles set out in the Guide to Framing Commonwealth Offences,[123] 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.
Minister's response
2.230 The minister advised:
Schedule 1 to the Bill applies absolute liability to the proposed offence for failing to comply with an education direction. The offence has been inserted into the existing framework in section 8C of the Taxation Administration Act 1953 and the tiered penalties in section 8E. The penalty of 12 months imprisonment will only arise on a third or subsequent offence and can only be applied if the employer has been convicted of two previous offences under section 8C.
The proposed offence is justified on the basis that the measure provides the Commissioner with additional tools to enforce compliance with the existing obligations in respect of the superannuation guarantee. The additional penalties that can apply under the education direction provide additional incentives to employers to ensure that they are fully compliant with their existing superannuation guarantee obligations. Employer non-compliance with superannuation obligations undermines the integrity of the superannuation system and unlike other debts owed to the Commonwealth, the ultimate beneficiaries of the superannuation guarantee payments are individuals.
It is the Government's view that the physical elements of the proposed offence provide the appropriate basis for determining when a person has committed an offence. That is, the fact that an employer who fails to comply with the direction to attend the specified education course and provide evidence to the Commissioner cannot be justified. An employer will be covered by the applicable defence contained in subsection 8C(1B) of the Taxation Administration Act 1953 which provides that an offence does not occur if an employer is not capable of complying with the education direction.
In setting these penalties, specific regard was also had to the principle articulated at Chapter 3.1.2 in the Guide to Framing Commonwealth Offences that there should be consistent penalties for existing offences of a similar kind or of a similar seriousness. As noted by the Committee, the proposed penalties are comparable and specifically align to those that apply in respect of similar prohibited behaviours, such as the existing penalties for the failure to comply with certain tax requirements under a taxation law under section 8C of the Taxation Administration Act 1953. The penalty appropriately reflects the severity of the behaviour by imposing heavier penalties for subsequent offences.
It is the Government's view that the settings for the proposed penalties are appropriate and necessary to maintain a consistent message that continuously failing to comply with superannuation and taxation obligations is unacceptable.
Committee comment
2.231 The committee thanks the minister for this response. The committee notes the minister's advice that the application of absolute liability is justified on the basis that the proposed offence provides an additional incentive to employers to ensure they are fully compliant with their existing superannuation guarantee obligations. The committee notes the advice that non-compliance with such obligations undermines the integrity of the superannuation system and may have significant detrimental impacts on individuals.
2.232 The committee also notes the minister's advice that the physical elements of the proposed offence provide an appropriate basis for determining liability. The committee notes the advice that the offence will generally only apply where a person fails to comply with a direction in circumstances where non-compliance cannot be justified, and that a person will be covered by a defence where the person is incapable of complying with the direction.
2.233 Finally, the committee notes the minister's advice that, in setting the penalty for the offence, specific regard was had to the principle articulated in the Guide to Framing Commonwealth Offences[124] that there should be consistent penalties for existing offences of a similar kind or of a similar seriousness. The committee notes the advice that the proposed penalties are consistent with those that apply to similar prohibited behaviours under the Taxation Administration Act 1953.
2.234 While acknowledging the reasons for applying absolute liability, and the advice regarding the magnitude of the proposed penalties, the committee reiterates its longstanding scrutiny view that it is inappropriate to apply strict liability to offences carrying a custodial penalty. In this regard, the committee also emphasises that it does not consider consistency with existing penalties to be sufficient justification for applying absolute liability in circumstances where a term of imprisonment may be imposed.
2.235 The committee requests that the key information provided by the minister be included in the explanatory memorandum, noting the importance of this document as a point of access to understanding the law and, if needed, as extrinsic material to assist with interpretation (see section 15AB of the Acts Interpretation Act 1901).
2.236 The committee draws its scrutiny concerns to the attention of senators and leaves to the Senate as a whole the appropriateness of making a failure to comply with an education direction an offence of absolute liability in circumstances where an individual may be subject to up to 12 months imprisonment.
Initial scrutiny – extract
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.
2.237 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[126] and is in an approved form. Proposed subsection 8N(3) provides an identical exception in relation to the offence set out under section 8N.
2.238 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.[127] 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.[128]
2.239 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.
2.240 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.[129]
Minister's response
2.241 The minister advised:
In Schedule 4 to the Bill, the defence ensures that superannuation funds will not be subject to offences of making false or misleading statements if they provide a correct statement in the approved form and within the required period. The superannuation fund has the burden of proof of establishing that the defence is available to them.
The defence is framed as an offence-specific defence, which means that the evidential burden for proving that the defendant (being the superannuation fund) has made a member information statement and makes a further statement to correct the original member information statement to the Commissioner is placed on the defendant. This approach is justified on the basis that the defendant would be best placed to know if they made an error in the statement and the actions the defendant is taking to correct a member information statement are peculiarly within the knowledge of the defendant. It would be significantly more difficult and costly for the prosecution to disprove these actions than for the defendant to establish them.
Committee comment
2.242 The committee thanks the minister for this response. The committee notes the minister's advice that reversing the evidential burden of proof is justified on the basis that the actions the defendant is taking to correct the relevant member information statement are peculiarly within the defendant's knowledge, and it would be significantly more difficult and costly for the prosecution to disprove these actions than for the defendant to establish them.
2.243 The committee requests that the key information provided by the minister be included in the explanatory memorandum, noting the importance of this document as a point of access to understanding the law and, if needed, as extrinsic material to assist with interpretation (see section 15AB of the Acts Interpretation Act 1901).
2.244 In light of the information provided, the committee makes no further comment on this matter.
Initial scrutiny – extract
2.245 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.
2.246 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.'[131] 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[132] while providing greater flexibility with respect to determining rates for fuels sold in different units of measurement.
2.247 One of the most fundamental functions of the Parliament is to impose taxation (including duties of customs and excise).[133] 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,[134] and that proposed new subsection 43-10(12)[135] 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.
2.248 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.
Minister's response
2.249 The minister advised:
Limit on the road user charge
The Committee has sought information with regards to the absence of an obvious limit on the road user charge specified in primary legislation.
The Australian Government levies fuel excise and duties at various rates set in the Schedule to the Excise Tariff Act 1921. Fuel tax credits provide a rebate to businesses for the tax that is embedded in the price of fuel used for certain business activities, effectively removing or reducing the amount of fuel tax on business inputs. The road user charge then reduces the amount of fuel tax credit that is claimable for fuel used on-road in a heavy vehicle.
The amount of the road user charge is effectively limited to the rate of fuel tax credits applying to the relevant fuel. Where the road user charge exceeds the fuel tax credit rate, there is no liability for the excess.
Guidance in relation to the method of calculation of the charge and/or maximum charge
The Committee has sought further information about whether guidance in relation to the method of calculation of the charge and/or maximum charge can be specifically included in the Bill.
It would not be appropriate to provide guidance on the method of calculation of the road user charge due to the current framework which involves a cooperative Council of Australian Government (COAG) process.
Under the current framework, the road user charge is determined by the Transport Minister in consultation with Cabinet. In practice, the Transport Minister's determinations follow agreements by transport ministers of the States and Territories at the COAG Transport and Infrastructure Council, informed by advice from the National Transport Commission.
Commonwealth, State and Territory governments have agreed to pursue heavy vehicle road reform. As part of that reform, options are being explored with the States and Territories that may involve amendments to the current framework for the heavy vehicle road user charge.
Committee comment
2.250 The committee thanks the minister for this response, and notes the minister's advice that the amount of the road user charge is effectively limited to the rate of fuel tax credits applying to the relevant fuel and that, where the charge exceeds the fuel tax credit rate, there is no liability for the excess.
2.251 The committee also notes the minister's advice that it would not be appropriate to provide guidance on the method of calculation of the road user charge due to the current framework which involves a cooperative Council of Australian Governments (COAG) process. Finally, the committee notes the advice that Commonwealth, State and Territory governments have agreed to pursue heavy vehicle road reform and that, as part of this reform, options are being explored that may involve amendments to the framework for the heavy vehicle road user charge.
2.252 The committee requests that the key information provided by the minister be included in the explanatory memorandum, noting the importance of this document as a point of access to understanding the law and, if needed, as extrinsic material to assist with interpretation (see section 15AB of the Acts Interpretation Act 1901).
2.253 In light of the information provided, the committee makes no further comment on this matter.
Initial scrutiny – extract
2.254 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.
2.255 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.
2.256 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.
2.257 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.
Minister's response
2.258 The minister advised:
Schedule 8 to the Bill includes amendments rewriting provisions regarding offshore information notices from the Income Tax Assessment Act 1936 into Schedule 1 to the Taxation Administration Act 1953. Consistent with the current law, the rewritten provisions provide that 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.
This aspect of the offshore information notice provisions has not changed and is therefore not dealt with in the explanatory memorandum for the Bill. Information about the original provisions may be found in the explanatory memorandum for the Taxation Laws Amendment (Foreign Income) Bill 1990.
Committee comment
2.259 The committee thanks the minister for this response, and notes the minister's advice that proposed subsection 353-30(4) does not deviate from the old law (that is, it only re-writes it) and is therefore not dealt with in the explanatory memorandum. The committee also notes the minister's advice that information on the original provisions may be found in the explanatory memorandum to the Taxation Laws Amendment (Foreign Income) Bill 1990 (1990 Bill).
2.260 While noting this advice, the committee emphasises that although proposed subsection 353-30(4) may not alter the substantive effect of the law, it is nevertheless a provision in a new bill currently before the Parliament. The committee would therefore expect the explanatory memorandum to provide a full explanation of the operation and effect of the provision, and to justify why the inclusion of a no-invalidity clause is appropriate. The committee does not consider it reasonable to require parliamentarians and members of the public to locate this information in explanatory materials dating back 28 years.
2.261 In any event, the committee notes that the explanatory memorandum to the 1990 bill[137] does not appear to justify including a no-invalidity clause in the provision corresponding to proposed subsection 353-30(4) (subsection 264A(15) of the Income Tax Assessment Act 1936). It appears only to restate the operation and effect of the relevant provisions. As noted in the committee's original comments, given that no-invalidity clauses may limit the practical efficacy of legal or administrative review, the committee would expect a sound justification for the use of such clauses to be included in the explanatory memorandum.
2.262 Finally, the committee notes that the taxation law is subject to continuous change, and has undergone a number of substantial reforms since the explanatory memorandum to the 1990 Bill was drafted. Without further information, it is unclear to the committee that a document drafted 28 years ago remains relevant in the context of the current taxation law.
2.263 As the information provided by the minister does not adequately address the committee's concerns, the committee again requests the minister's detailed justification for the no-invalidity clause in proposed subsection 353-30(4), which provides that 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 that decision.
[108] See correspondence relating to Scrutiny Digest No. 6 of 2018 available at: www.aph.gov.au/senate_scrutiny_digest
[109] 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).
[110] Explanatory memorandum, pp. 12-13.
[111] Explanatory memorandum, p. 13.
[112] Explanatory memorandum, p. 83.
[113] Attorney-General's Department, A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, September 2011, pp 22–25.
[114] Attorney-General's Department, A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, September 2011, p. 23.
[115] Attorney-General's Department, A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, September 2011, pp. 22–25.
[116] Attorney-General's Department, A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, September 2011, p. 39.
[117] Schedule 1, item 3. The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(i).
[118] 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.
[119] Schedule 1, item 4.
[120] Attorney-General's Department, A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, September 2011, pp. 22-25.
[121] Explanatory memorandum, pp. 25-26, 119-120.
[122] Attorney-General's Department, A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, September 2011, p. 23.
[123] Attorney-General's Department, A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, September 2011, pp. 22–25.
[124] Attorney-General's Department, A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, September 2011, p. 39.
[125] Schedule 4, items 1 and 2. The committee draws senators’ attention to these provisions pursuant to Senate Standing Order 24(1)(a)(i).
[126] Schedule 4, item 5.
[127] TAA, section 8M.
[128] TAA, section 8R.
[129] Attorney-General's Department, A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, September 2011, pp. 50-52.
[130] Schedule 8, item 3. The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(iv) and (v).
[131] Explanatory memorandum, p. 99.
[132] 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.
[133] 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'.
[134] Fuel Tax Act 2006, subsection 43-10(9).
[135] Schedule 8, item 5.
[136] 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).
[137] The committee's research indicates that the explanatory memorandum to the 1990 Bill appears to be available on the Australasian Legal Information Institute (AUSTLII) website. See http://www6.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/bill_em/tlaib1990378/ memo_0.html.
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