Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023 - Commentary on Ministerial Responses [2023] AUSStaCSBSD 224 (15 November 2023)

• Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 202344
• Reversal of the evidential burden of proof
• Significant matters in delegated legislation45
• Assistant Minister for Competition, Charities and Treasury's response47
• Committee comment

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Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023^[44]

Purpose	The bill seeks to amend: • the Income Tax (Transitional Provisions) Act 1997 to temporarily increase the instant asset write-off threshold; • the Income Tax (Transitional Provisions) Act 1997 to provide small and medium businesses with access to a bonus deduction equal to 20 per cent of the cost of eligible assets or improvements to existing assets that support electrification or more efficient energy use; • the Income Tax Assessment Act 1997 to list and extend deductible gift recipients (DGR); • the Income Tax Assessment Act 1997 to continue to provide the Global Infrastructure Hub with an exemption from the liability to pay income tax on its ordinary and statutory income. The bill also seeks to: • create a new class of community charity trusts and community charity corporations that may apply for DGR endorsement by the Commissioner; • amend the income tax law with respect to general insurance to provide broad alignment with the new accounting standard, AASB 17; • change the rules for non-arm’s length expenses for superannuation entities; and • amend the Corporations Act 2001 to restore the Australian Financial Complaints Authority's jurisdiction to validly receive and resolve complaints which relate to superannuation, irrespective of whether the complaint falls within the definition of a 'superannuation complaint’ in the Corporations Act 2001.
Portfolio	Treasury
Introduced	House of Representatives on 13 September 2023
Bill status	Before the House of Representatives

Reversal of the evidential burden of proof
Significant matters in delegated legislation^[45]

2.69 Existing subsection 426-120(1) of the Taxation Administration Act 1953 (the Act) prescribes liability for an administrative penalty where trustees of an ancillary fund hold the fund out as being endorsed, entitled to be endorsed, or entitled to remain endorsed, as a deductible gift recipient, and the fund is not so endorsed or entitled. Item 12 of schedule 3 to the bill seeks to amend existing section 426-120 to extend the operation of this provision to both ancillary and community charity trust funds.

2.70 Item 11 of schedule 3 to the bill seeks to insert proposed section 426-118 into the Act. Proposed paragraph 426-118(a) provides that the minister must formulate community charity trust guidelines by legislative instrument. These instruments would set out rules that community charity trusts and their trustees must comply with if the trusts are to be, or remain, endorsed as deductible gift recipients. Proposed paragraph 426-118(b) provides that the charity trust guidelines must also set out the amount of the administrative penalty, or how to work out the amount of the administrative penalty^[46] in relation to community charity trusts.

2.71 Existing subsection 426-120(3) of the Act prescribes that the penalty amount incurred under subsection 426-120(1) is specified in guidelines. Item 15 of schedule 3 to the bill seeks to amend existing subsection 426-120(3) of the Act to include community charity trust funds. As per proposed amended subsection 426-120(3), the penalty for the offence in subsection 426-120(1) would be:

• the amount specified in the applicable trust fund guidelines (proposed paragraph 426-120(3)(a)); or

• the amount worked out in accordance with the method specified in the applicable trust fund guidelines (proposed paragraph 426-120(3)(b)); and

• the guidelines may specify different penalties or methods for different circumstances. (426-120(3)).

2.72 Item 34 seeks to insert proposed section 426-195 into the Act. Proposed subsection 426-195(1) prescribes liability for an administrative penalty where a community charity corporation, or a director holds out that:

• the corporation is endorsed as a deductible gift recipient and the corporation is not so endorsed (proposed paragraph 426-195(1)(a)); or

• the corporation is entitled to remain endorsed as a deductible gift recipient but is not so entitled (proposed paragraph 426-195(1)(b)); or

• the corporation will be endorsed as a deductible gift recipient at a particular time and is not so endorsed (proposed paragraph 426-195(1)(c)).

2.73 Proposed subsection 426-195(2) provides that the penalty is the amount specified in the community charity corporation guidelines, or the amount worked out in accordance with the method specified in the community charity corporation guidelines. Proposed subsection 426-195(2) also provides that the guidelines may specify different penalties or methods for different circumstances. Proposed subsection 426-195(3) provides that a director who is liable to the penalty must not be reimbursed the penalty from the corporation.

2.74 In addition, proposed subsection 426-195(4) prescribes an offence-specific defence for the offence set out in proposed subsection 426-195(1). Proposed subsection 426-195(6) provides that the evidential burden of proof is reversed for persons relying on this defence.

2.75 Item 34 of schedule 3 to the bill also seeks to insert proposed section 426-185 into the Act. Proposed paragraph 426-185(a) provides that the minister must formulate community charity corporation guidelines by legislative instrument setting out rules that community charity corporations and their directors must comply with if the corporations are to be, or are to remain, endorsed as deductible gift recipients (DGR). Proposed paragraph 426-118(b) provides that the charity trust guidelines must also set out the amount of the administrative penalty, or how to work out the amount of the administrative penalty, under subsection 426-195(1) in relation to community charity corporations.

2.76 In Scrutiny Digest 12 of 2023 the committee sought the minister’s advice as to:

• the penalty amount(s) that it is anticipated will be set out in delegated legislation in relation to the specified provisions; and

• any further guidance as to how these penalties will be formulated, including whether the bill can be amended to include guidance, factors to be considered, or a cap on the amounts that can be set out in delegated legislation.

Assistant Minister for Competition, Charities and Treasury's response^[47]

2.77 The Assistant Minister for Competition, Charities and Treasury (the assistant minister) advised that the penalty framework in delegated legislation for community charity trusts and corporations in this context will be closely modelled on the ancillary funds guidelines.

2.78 The assistant minister advised that the penalties in the ancillary funds guidelines were formulated in accordance with the Attorney-General Department's Guide to Framing Commonwealth Offences and are consistent with administrative penalties in similar contexts in other schemes. Further, as these are administrative penalties the decision to impose a penalty will be reviewable by the Administrative Appeals Tribunal.

2.79 The assistant minister noted that the relevant penalties in the ancillary funds guidelines range from 10 to 30 penalty units and the ''administrative penalty provisions in the draft community charity guidelines, in turn, will be either identical or very similar'.

Committee comment

2.80 The committee thanks the assistant minister for this further information.

2.81 In light of the above, the committee makes no further comment on this matter.

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^[44] This entry can be cited as: Senate Standing Committee for the Scrutiny of Bills, Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023, Scrutiny Digest 14 of 2023; [2023] AUSStaCSBSD 224.

^[45] Schedule 3, item 11, proposed section 426-118; item 15, proposed subsection 426-120(3); item 34, proposed section 426-185 and 426-195. The committee draws senators' attention to these provisions pursuant to Senate standing order 24(1)(a)(i) and (iv).

^[46] For the purposes of subsection 426-120(1).

^[47] The minister responded to the committee's comments in a letter received by the committee on Monday 6 November 2023. A copy of the letter is available on the committee's webpage (see correspondence relating to Scrutiny Digest 14).