Treasury Laws Amendment (2021 Measures No 2) Bill 2021 [2021] AUSStaCSBSD 83 (21 April 2021)

• Treasury Laws Amendment (2021 Measures No. 2) Bill 2021
• Significant matters in delegated legislation
• Broad discretionary power53

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Treasury Laws Amendment (2021 Measures No. 2) Bill 2021

Purpose	Schedule 1 to this bill seeks to amend the Income Tax Assessment Act 1997 to require a fund, authority or institution to, as a precondition for deductible gift recipient endorsement, be a registered charity, an Australian government agency, or operated by either of these entities Schedule 2 to this bill seeks to amend Australia's offshore banking unit (OBU) regime to remove the concessional tax treatments for OBUs, remove the interest withholding tax exemption, and close the regime to new entrants by removing the Minister's ability to declare or determine an entity to be an OBU
Portfolio	Treasury
Introduced	House of Representatives on 17 March 2021

Significant matters in delegated legislation
Broad discretionary power^[53]

1.115 The bill seeks to establish transitional arrangements that will apply to bodies that are currently deductible gift recipients (DGRs), in order to give them a longer period to comply with new requirements for receiving endorsement as a deductible gift recipient as set out in Schedule 1. The transitional rules give existing DGRs at least 12 months after the application date,^[54] to become a registered charity or operated by a registered charity before the amendments in Schedule 1 affect their entitlement to DGR endorsement. If an entity needs a longer period to satisfy the new requirements they may apply to the Commissioner for an 'extended application date'.^[55]

1.116 Subitem 16(7) provides that the minister, may, by legislative instrument, prescribe the criteria and matters that the Commissioner must be satisfied of, and have regard to, when assessing a request for an extended application date.

1.117 The committee's view is that significant matters, such as the criteria and matters that the Commissioner must be satisfied of and have regard to when assessing a request for an extended application date, should be included in primary legislation unless a sound justification for the use of delegated legislation is provided. In this instance, the explanatory memorandum states:

This flexibility is necessary to ensure the relevant criteria and matters remain fit for purpose, as it will allow the Government to respond quickly to evolving industry practices and needs as required.^[56]

1.118 While noting this explanation, the committee has generally not accepted a desire for administrative flexibility to be a sufficient justification, of itself, for leaving significant matters to delegated legislation. The committee notes that allowing criteria and matters for assessing an application for an extended application date to be specified in a legislative instrument provides the minister with a broad discretionary power to determine the scope of which existing DGRs may benefit from an extended application date. It is unclear to the committee why at least high-level guidance in relation to these matters cannot be provided on the face of the bill.

1.119 The committee notes that a legislative instrument, made by the executive, is not subject to the full range of parliamentary scrutiny inherent in bringing proposed changes in the form of an amending bill.

1.120 In light of the above, the committee requests the Assistant Treasurer's more detailed advice as to:

• why it is considered necessary and appropriate to provide the minister with a broad power to determine the criteria and matters that the Commissioner must be satisfied of and have regard to when assessing a request for an extended application date;

• why it is considered necessary and appropriate to leave these matters to delegated legislation; and

• whether the bill can be amended to include additional guidance regarding the relevant criteria and matters, and the exercise of the power by the minister, on the face of the primary legislation.

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[53] Schedule 1, subitem 16(7). The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(ii) and (iv).

[54] Item 12 of Schedule 1 defines application date as the day that is 3 months after the day on which the Act receives the Royal Assent.

[55] See subitem 16(3) and explanatory memorandum, p. 9.

[56] Explanatory memorandum, p. 11.