Bills Digest no. 47,
2016–17
PDF version [771KB]
Kali Sanyal
Economics Section
29
November 2016
Contents
Glossary
Table 1: Abbreviations and acronyms
Purpose and Structure of the Bill
Committee Consideration
Senate Standing Committee for
Selection of Bills
Senate Standing Committee for the
Scrutiny of Bills
Statement of Compatibility with Human
Rights
Parliamentary Joint Committee on
Human Rights
Schedule 1—Commissioner’s remedial
power
Background
New, limited power allowing
Commissioner to modify operation of taxation law
Breadth of ‘taxation law’
Consultation on the instrument
Key Issues
Consultation
Instrument has effect generally or to
a specified class of entities or in specified circumstances
Commissioner’s powers available if
effect on Budget is ‘negligible’
Financial implications
Position of major interest groups
Key Provisions (Schedule 1)
Commissioner’s Remedial Power
Schedule 2—Primary producer income
averaging
Background
Financial implications
Key Provisions (Schedule 2)
Table 2: Option for re-accessing
income averaging scheme after opting out
Schedule 3—Cars for display by public
institutions
Background
How does the LCT work, in general?
Proposed amendments
Financial implications
Table 3: Financial impact of the
measure in Schedule 3 of the Bill, $m
Main provisions (Schedule 3)
Schedule 4—Miscellaneous amendments
Background
Main provisions (Schedule 4)
Part 1—Community Development
Employment Projects Scheme
Part 2—Other amendments of principal
Acts
Part 3—Amendments of amending Acts
Part 4—Repeals of Excise Tariff Acts
Part 5—Other repeals
Date introduced: 14
September 2016
House: House of
Representatives
Portfolio: Treasury
Commencement: various
days detailed in the body of the Bills Digest.
Links: The links to the Bill,
its Explanatory Memorandum and second reading speech can be found on the
Bill’s home page, or through the Australian
Parliament website. When Bills have been passed and have received Royal
Assent, they become Acts, which can be found at the Federal Register of Legislation
website.
All hyperlinks in this Bills Digest are correct as
at November 2016.
Glossary
Table 1: Abbreviations and acronyms
Abbreviation or acronym |
Definition |
AIA |
Acts Interpretation Act 1901 |
APRA |
Australian Prudential Regulation Authority |
APS |
Australian Public Service |
ASIC |
Australian Securities and Investments Commission |
ATO |
Australian Taxation Office |
CDEP |
Community Development Employment Projects |
CGC Act |
Commonwealth Grants Commission Act 1973 |
Commissioner |
Commissioner of Taxation |
CTA 1995 |
Customs
Tariff Act 1995 |
DGR |
Deductible gift recipient |
ETA 1921 |
Excise Tariff Act 1921 |
GST |
Goods and services tax |
GST Act |
A New Tax System (Goods and Services Tax) Act 1999 |
Income tax averaging |
Averaging rules under Division 392 of the Income Tax
Assessment Act 1997 |
ITAA 1936 |
Income Tax Assessment Act 1936 |
ITAA 1997 |
Income Tax Assessment Act 1997 |
Item 7 |
Item 7 of Schedule 4 to the Customs Tariff Act 1995 |
LA |
Legislation Act 2003 |
LCT |
Luxury car tax |
LCT Act |
A New Tax System (Luxury Car Tax) Act 1999 |
Primary producer |
Taxpayers who carry on a ‘primary production business’ as
defined in section 995–1 of the Income Tax Assessment Act 1997 |
RIS |
Regulation impact statement |
SSA |
Social Security Act 1991 |
SSLA Bill |
Social Security Legislation Amendment (Community
Development Program) Bill 2015 |
TAA |
Taxation Administration Act 1953 |
TFN |
Tax file number |
Purpose and
Structure of the Bill
An identical version of this Bill was introduced into the 44th
Parliament on 17 March 2016.[1]
The Bill lapsed on the prorogation of Parliament in April 2016.[2]
For the purposes of this Bills Digest, that Bill is referred to as the earlier Bill.
The Bill consists of four schedules:
- Schedule 1 amends the Income Tax Assessment
Act 1997 (the ITAA 1997) and the Taxation
Administration Act 1953 (the TAA) to establish a remedial power
to enable the Commissioner of Taxation to make, by disallowable instrument, one
or more modifications to the operation of a taxation law to ensure the law can
be administered to achieve its intended purpose or object
- Schedule 2 amends the ITAA 1997 so that primary
producers can re-access the benefits of income tax averaging ten income years
after choosing to opt out, rather than being permanently excluded from the
scheme as a result of that choice
- Schedule 3 amends the A New Tax System
(Luxury Car Tax) Act 1999 (the LCT Act) to provide tax exemption
to certain public institutions that import or acquire luxury cars for the sole
purpose of public display
- Schedule 4 makes minor
technical amendments to taxation, superannuation and other laws
as part of the government’s commitment to the care and maintenance of the taxation
and superannuation systems.
The structure of this Bills Digest follows the structure
of the Bill, outlining information related to each schedule under separate
headings.
Committee
Consideration
Senate Standing
Committee for Selection of Bills
On 13 October 2016, the Committee resolved to recommend that
the Bill not be referred to a committee for inquiry.[3]
Senate
Standing Committee for the Scrutiny of Bills
The Senate Standing Committee for the Scrutiny of Bills
commented on the earlier Bill in Alert Digest No. 5 of 2016, released on
3 May 2016.[4]
The Committee then repeated those comments in relation to the current Bill.[5]
In both comments, the Scrutiny Committee sought advice from the Minister on
aspects of the Bill. The Minister’s response was included in the Committee’s Eighth
Report of 2016, released on 9 November 2016.[6]
On the measure in Schedule 1 of the Bill, the Committee
commented:
Schedule 1 to this Bill proposes to confer upon the
Commissioner of Taxation a new and significant ‘remedial power’ to modify, by a
disallowable legislative instrument, the operation of a taxation law. Although
the remedial power does not empower the Commissioner to make a textual
amendment to the relevant taxation law, it is akin to a so-called Henry VIII
law as it enables a legislative instrument to modify the operation of primary
legislation. As applied, the power therefore clearly enables the content of the
law to be changed.[7]
The Committee observed that the remedial power is an
extraordinary power and it confers legislative power on an unelected official
to modify the operation of significant primary legislation:
The Explanatory Memorandum... sets out in detail the reasons
why the remedial power is considered necessary (see p. 14). In principle, the Committee
agrees that the complexity of taxation laws may give rise to unintended
outcomes. It is also accepted that where the only response available is to
amend the primary legislation this may (properly) involve a lengthy process.[8]
Nevertheless the Committee had a number of questions and
concerns.
First, the Committee questioned the breadth of the remedial
power proposed to be conferred on the Commissioner and asked whether
consideration had been given to limit its application or exercise, such as
through identifying, in the legislation, circumstances where Parliamentary
amendment of the primary legislation was required.[9]
The Committee was concerned that nothing in the Bill ensures that the power
will only be used as a complement to, rather than a substitute for,
parliamentary legislative amendment processes. The Committee sought the Minister’s
advice on these issues.[10]
In response, the Minister pointed to the restrictions provided in the Bill on
the exercise of the remedial power:
... the proposed legislation is
subject to strict limitations:
-
the modification must not be inconsistent with the intended
purpose or object of the provision;
- the modification must be considered reasonable, having regard to
both the intended purpose or object of the relevant provision and whether the
costs of complying with the provision are disproportionate to achieving the
intended purpose or object; and
- the Secretary of the Department of the Treasury, Secretary of the
Department of Finance or an authorised APS employee of either department
advises the Commissioner that any impact on the Commonwealth budget would be
negligible.
In addition, a modification will not apply to an entity if it
would produce a less favourable outcome for the entity ... Prior to the
Commissioner contemplating using this proposed power, he would have had to
exhaust his current powers, such as, applying a purposive approach or his
general powers of administration.[11]
The Committee considered that the Minister’s response did
not engage with the issue it had raised regarding the possibility of including legislative
guidance as to the circumstances in which changes to the primary legislation, rather
than use of the remedial power, would be appropriate. Accordingly, the
Committee remained ‘concerned that the full breadth of the remedial power may
not be necessary and that there is scope for further legislative guidance as to
the use of these powers’.[12]
The Committee left the appropriateness of the Bill’s approach to this matter
for the consideration of the Senate as a whole.[13]
Second, the Committee noted that although judicial review
would be available to determine whether or not a determination made by the
Commissioner in exercise of the remedial power exceeded jurisdictional limits,
the scope for testing the reasonableness of the determination would be limited.[14]
In this context, the Committee sought the Minister’s advice on whether breach
of the budget notification requirement in proposed paragraph 370–5(1)(c)
of the TAA (at item 3 of Schedule 1) is intended to result in the
invalidation of the determination.[15]
Proposed subsection 370–5(1) of the TAA sets out the prerequisites for
the exercise of the remedial power by the Commissioner. Proposed paragraph
370-5(1)(c) provides that the Commissioner must receive advice from Treasury or
the Department of Finance that any impact of the proposed modification on the
Commonwealth budget would be negligible.
In response to the Committee’s request, the Minister
explained:
... if the Commissioner acts without this advice, the exercise
of the power would be invalid. However, if the Commissioner acts on advice
given under the paragraph that is for some reason incorrect, the incorrectness
of the advice would not invalidate and is not intended to invalidate the
exercise of the power.[16]
The Committee asked for this information to be included in
the Explanatory Memorandum to the Bill and left the appropriateness of the
limited grounds for review of the Commissioner’s decision to exercise the remedial
power to the Senate as a whole.[17]
Third, the Committee drew attention to the complexity of
application of the ‘less favourable result test’. The Committee recognised (and
welcomed) the need to ensure that changes to the operation of taxation laws
made through exercise of the remedial power do not adversely affect taxpayers.
However, the Committee questioned whether the complexity, and resultant uncertainty,
of applying the remedial power, including the ‘less favourable result test’ could
negate any potential benefits of the proposed regime (given that the scheme
aims to ‘increase certainty in the administration of taxation laws’).[18]
The Minister advised that it was expected that the benefit to taxpayers of the
use of the power would outweigh any costs. She further advised:
... in circumstances where the less favourable test created
onerous requirements on an entity to assess the initial outcomes of a
modification on itself, as well as complicated consequential impacts, the
remedial power would most likely not be appropriate to use.[19]
The Committee asked for information to be included in the
Explanatory Memorandum and left the appropriateness of the proposed approach to
the Senate as a whole.[20]
Fourth, the Committee noted that while all legislative
instruments are subject to the general consultation requirement in section 17
of the Legislation
Act 2003, the Bill itself does not specify a specific consultation
process. The Committee queried whether affected taxpayers will be consulted in
each instance on a proposed exercise by the Commissioner of the remedial power;
whether consideration has been given to including more specific consultation
requirements in the Bill; and whether the validity of the legislative
instrument encapsulating the Commissioner’s exercise of the power should be
contingent on compliance with those requirements.[21]
The Minister advised that consideration had been given to
specific consultation requirements, but this was not determined to be the
preferred course as:
Creating a formal legislative requirement to consult, that
extends beyond the requirements of the [Legislation Act] and which must
be complied with in order for a modification to be validly made, would be
inconsistent with wider processes for resolving tax law issues. This would also
create a requirement that could be used to challenge the legality of the
remedial power's use, creating the opportunity for disputes on issues of
process to impede the remedial power's use to resolve substantive issues.[22]
While noting the Minister’s response, the Committee
reiterated its view that the remedial power was an ‘extraordinary’ one and,
given this, the Committee considered that ‘it would be appropriate to include
more specific consultation requirements in the Bill and make compliance with
these requirements a condition of the validity of the determination’.[23]
Fifth, the Committee considered the retrospectivity of the
application of the remedial power by a non-elected executive:
Retrospective changes to the law may undermine public
confidence in the legal system even if there are strong reasons to justify a
particular change being applied from a date prior to commencement. In light of
the fact that, in this instance, it is the determination of a non-elected
official that may generate retrospective application, the committee seeks
the Minister’s advice as to whether consideration has been given to including
limits in the Bill on the extent of retrospectivity allowed in determinations
made under the remedial power (for example, that laws as modified may only be given
retrospective operation for a limited time).[24]
In response, the Minister pointed out any determination
would be subject to section 12 of the Legislation Act, which provides:
... any retrospective application of the legislative instrument
cannot affect a person's rights so as to disadvantage them, nor can liabilities
be imposed on a person in relation to anything that occurred prior to the
instruments registration.[25]
The Committee thanked the Minister for her response and
left this matter to the consideration of the Senate.[26]
Finally, the Committee sought the Minister’s advice as to
why the Minister’s power to cause a review to be undertaken of the remedial
power provisions within three to five years of them commencing has not been
made mandatory:
Given the extraordinary delegation of legislative power
involved the Committee considers that there should be a mandatory report
provided to the Parliament within three years.[27]
The Minister’s response noted the importance of
maintaining flexibility to ensure the review takes place at an appropriate
time. The Committee remained of the view that the Bill should provide for a
mandatory report to Parliament on the operation of the new remedial power.[28]
Statement
of Compatibility with Human Rights
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011, the Government has assessed the
Bill’s compatibility with the human rights and freedoms recognised or declared
in the international instruments listed in section 3 of that Act. The
Government considers that the Bill is compatible.[29]
Parliamentary
Joint Committee on Human Rights
The Parliamentary Joint Committee on Human Rights considers
that the Bill does not raise human rights concerns.[30]
Schedule 1—Commissioner’s
remedial power
Background
Because of their complexity, there is potential for the
operation of tax law provisions to have unintended consequences. For instance,
business practices may change in ways not contemplated at the time provisions
were drafted. In consequence, taxpayers may incur extra, unintended tax
liabilities or be ‘subject to record keeping or other compliance requirements
that were not intended or are no longer necessary’.[31]
Consistent with section 15AA of the Acts Interpretation
Act 1901 (AIA), the Commissioner of Taxation applies purposive
principles to the interpretation of the taxation laws to give effect to the
purpose or object of the law.[32]
However, there are some instances where an interpretation
that gives effect to the purpose or object of the law is not available from the
words of the law. In these circumstances, the Commissioner would continue to
have a duty to apply the law, even where it may produce outcomes that are not
consistent with its intended purpose or object.[33]
Having regard to this potentiality, the Government
announced on 1 May 2015 that it would provide the Commissioner ‘with a statutory
remedial power to allow for a more timely resolution of certain unforeseen or
unintended outcomes in the taxation and superannuation law’ than is presently
available by way of legislative amendment.[34]
The measures proposed in Schedule 1 of the Bill would
provide the Commissioner with the power to make a
disallowable legislative instrument to modify the operation of a taxation law
to ensure the law can be administered to achieve its intended purpose or
object. The Minister has said that this ‘will help to create flexibility,
allowing the Commissioner to resolve smaller unintended outcomes’, and that the
‘proposed power is to be used as a power of last resort, when unintended
consequences cannot be ameliorated by the Commissioner
in any other way’.[35]
It is proposed that the exercise
of the remedial power would be valid where the modification in question
is not inconsistent with the intended purpose or object of the
provision which is sought to be modified. The Explanatory Memorandum explains
that this limitation would reflect ‘the intention that the power would enable
the Commissioner to administer taxation provisions in accordance with their
intended purpose or object’, and that it would not ‘allow the Commissioner to
alter or extend the intended purpose or object of the law’.[36]
It is proposed that the Commissioner would continue identifying
the intended purpose or object of a taxation law provision objectively,
with regard to the extrinsic materials referred to in subsection 15AB(2)
of the AIA.[37]
However, as stated in the Explanatory Memorandum, in contrast to the approach
to the interpretation of the words of a legislative provision referred to above:
... there would be no requirement for the text of the relevant
provisions of the taxation law to be considered in ascertaining the intended
purpose or object. While these provisions could still be considered, they would
not be given primacy, or a greater weight, in ascertaining the intended purpose
or object of a provision. [38]
New,
limited power allowing Commissioner to modify operation of taxation law
The measures proposed in Schedule 1 of this Bill would
provide the Commissioner with the power to make a
disallowable legislative instrument to modify the operation of a taxation law
to ensure the law can be administered to achieve its intended purpose or
object. The Commissioner could make such an instrument if three
conditions were met (proposed subsection 370–5(1) of the TAA at item
3 of Schedule 1 to the Bill):
- first, the modification must not be inconsistent with the
intended purpose or object of the provision (proposed paragraph 370–5(1)(a)).
If the Commissioner has to determine the purpose or object of a provision,
consideration must be given to any documents referred to in subsection
15AB(2) of the AIA, such as the Explanatory Memorandum, the second
reading speech or a report of a parliamentary committee (proposed section 370–10).
Consideration may also be given to any other material that may be of assistance
(proposed paragraph 370–10(b)). In determining the purpose or object,
the Commissioner is not required to give primacy to the actual words of the
provision (proposed paragraph 370–10(c))
- second, the Commissioner must consider that the modification is
reasonable (proposed paragraph 370–5(1)(b)). In assessing whether a
modification is reasonable, the Commissioner is to have regard to the intended
purpose or object of the provision and whether the cost of complying with the
provision is disproportionate to the intended purpose or object (proposed subparagraphs
370–5(1)(b)(i) and(ii))
- third, any impact on the Commonwealth budget must be negligible, as
advised by either the Treasury or the Department of Finance (proposed paragraph
370–5(1)(c)).
The modification would apply generally, unless expressed
to apply to a specified class of entities or in specified circumstances (proposed
subsection 370–5(3)). A modification could not expressly affect a
single entity.
The modification must not be applied in a way that produces
a less favourable result for a taxpayer (proposed subsection 370–5(4)).
The modification must not take effect before the first day
on which the instrument was no longer liable to be disallowed, or taken to have
been disallowed, by the Parliament (proposed section 370–20). Section 42
of the Legislation
Act 2003 (LA) deals with disallowance of legislative
instruments. It provides that a Member of the House of Representatives or a
Senator may give a notice of motion to disallow a legislative instrument within
15 sitting days of the tabling of that instrument in the relevant House.[39]
If such a notice of motion is given, the legislative instrument will be disallowed
if:
- within 15 sitting days of the relevant House after the notice of
motion was given, that House passes a resolution on the motion that disallows
the instrument (or a provision of the instrument) (subsection 42(1)) or
- at the end of 15 sitting days of the relevant House after the
notice of motion was given, the motion has not been withdrawn and has not been
resolved, the instrument is taken to have been disallowed (subsection 42(2)).[40]
Accordingly, the modification will be able to take effect
no sooner than 15 sitting days have passed for each House since the tabling of
the legislative instrument. However, if a notice of motion to disallow the
instrument is given in either House before the expiry of those 15 sitting days,
the legislative instrument will not be able to take effect unless the motion is
rejected by the House. If the motion is not resolved, the instrument will be
taken to have been disallowed at the end of 15 sitting days after the notice of
motion was given.
Breadth of
‘taxation law’
As explained above, Schedule 1 proposes to give the
Commissioner power to determine a modification of the operation of a provision
of a taxation law. ‘Taxation law’ is defined in section 2 of the TAA
as having the same meaning as that given in the ITAA 1997, where the
term is defined as:
(a)
an Act of which the Commissioner has the general administration
(including a part of an Act to the extent to which the Commissioner has the
general administration of the Act); or
(b)
legislative instruments made under such an Act (including such a part of
an Act); or
(c) the Tax Agent
Services Act 2009 or regulations made under that Act.[41]
As set out in the Explanatory Memorandum:
A taxation law therefore could
include superannuation laws or other laws dealing with matters other than
taxation, provided that the Commissioner has the general administration of the
relevant Act or parts of the relevant Act.[42]
Consultation
on the instrument
The Explanatory Memorandum says that ‘before exercising
the power [to make a disallowable instrument] the Commissioner must be
satisfied that any appropriate and reasonably practicable consultation has been
undertaken’, and that ‘the Commissioner will consult with a technical advisory
group (which will include private sector experts) and the Board of Taxation
prior to any exercise of the power’.[43]
Consultation requirements are not included in the Bill. However, section 17 of
the Legislation
Act 2003 (LA), provides that
before a legislative instrument is made, the rule maker must be satisfied that any
appropriate and reasonably practicable consultation has been undertaken.
Section 17 further provides:
[i]n determining whether any
consultation that was undertaken is appropriate, the rule‑maker may have
regard to any relevant matter, including the extent to which the consultation:
(a) drew on the knowledge of
persons having expertise in fields relevant to the proposed instrument; and
(b) ensured
that persons likely to be affected by the proposed instrument had an adequate
opportunity to comment on its proposed content.[44]
Section 19 of the LA makes it clear that while the Act
encourages appropriate consultation, a failure to undertake consultation does
not affect the validity or enforceability of a legislative instrument. However,
an explanation why no consultation was undertaken must be documented in the
explanatory statement to the instrument (subsection 15J(2) of the LA).
Key Issues
As a general proposition, it is for the Parliament to
amend laws, including in order to address unintended consequences. Where
executive government is given the power to alter the operation of primary
legislation, the Parliament will want appropriate checks in place. Exposure of
the legislative instrument embodying the exercise of remedial power to the risk
of disallowance is one such measure. It is for Parliament to determine whether that,
and the following measures proposed in the Bill, represent a sufficient check on
the exercise by the Commissioner of the power.
Consultation
As noted above, the LA does not mandate
consultation in all cases, contemplating in section 19 that consultation may
not occur, and providing, in that event, that non-consultation does not affect
the validity or enforceability of an instrument. A recent illustration that the
scope of the consultation requirement is not free from doubt is provided by the
fact that section 17 is also the provision under which the Attorney-General is
required to consult before making Legal Services Directions.[45]
Instrument
has effect generally or to a specified class of entities or in specified
circumstances
As set out above, any modification made by the
Commissioner would apply generally, unless expressed to apply to a specified
class of entities or in specified circumstances (proposed subsection 370–5(3)).
The Explanatory Memorandum says:
The Remedial Power cannot be used to modify the operation of
a taxation law for a particular entity. This includes exercising the power in
relation to a class that is so narrowly defined that it could practically only
consist of a particular entity. This can be distinguished from a class that
may be capable of consisting of many entities but actually only applies at any
given time to one particular entity (emphasis added).[46]
Commissioner’s
powers available if effect on Budget is ‘negligible’
As discussed above, proposed paragraph 370–5(1)(c) provides
that one of the prerequisites for the exercise of the Committee’s modification
power is that the Treasury or the Department of Finance has advised that the
impact of the proposed modification on the Commonwealth budget would be ‘negligible’.
The Oxford Dictionary defines ‘negligible’ as ‘of a thing, quantity, etc.: able
to be neglected or disregarded; unworthy of notice or regard; spec. so small or
insignificant as not to be worth considering’.[47]
The effect on the Budget may be ‘negligible’ while still
involving material dollar amounts.
Budget Paper No.1 records estimated outgoings for
2016–17 at about $451 billion.[48]
The Commissioner might regard an amount of less than, say, one thousandth of the
Budget, as being negligible, but it could still be a material amount to
affected entities, particularly if the class of entities affected by an
instrument is small. (As set out above, under proposed subsection 370-5(4)
only non-negative impacts on entities would be given effect to.)
In the end it will be a question for Parliament whether
the convenience offered by the proposed remedial instrument-making power
outweighs the burden on Parliament of considering amendments to the primary
legislation. On this point, the Minister’s second reading speech says of the
volume of such changes:
The challenge of effecting primary law change is illustrated
by the 92 announced changes to the tax law that had not been enacted at the
time the government was elected in September 2013. Had the remedial power
existed, it may have been able to address some of these smaller unintended
outcomes and could have allowed constrained legislative resources to deal with
more significant primary law change.[49]
Financial
implications
The Government has stated that this measure has no impact
on revenue over the forward estimates period.[50]
Position of major interest groups
The Commissioner of Taxation
has reportedly said that he:
... welcome[s] this move by government to give me the ability
to resolve some issues for taxpayers where tax and super law has unintended
consequences. The powers can only be used to resolve issues in a way consistent
with the purpose or object of the law and it must have a beneficial outcome for
taxpayers. This will increase certainty for taxpayers, allowing these types of
issues to be resolved more quickly, with less red tape.[51]
Chartered Accountants Australia and New Zealand
have also expressed their support for this measure, indicating:
The remedial power will allow the Commissioner to provide
greater certainty for taxpayers. This will benefit individuals and the business
community. This power would have been helpful in the past where some of the
announced but un-enacted taxation measures created a burden and backlog for Parliament,
and which prolonged the uncertainty in the tax laws. The statutory remedial
power will build-in the necessary flexibility to make the tax system more agile
and responsive where the words in the law produce unintended outcomes that are
contrary to the original intent. This should enhance productivity within the
tax system.[52]
The Rule of Law Institute of Australia has
indicated that it is encouraged by the safeguards that are built in to the
remedial powers. However, the Institute considers that the Commissioner’s power
to limit the application of a determination undermines the principle that laws
are to be applied equally and fairly. The Institute argues that the Bill
proposes to allow the Commissioner to exercise the power in relation to a class
so narrowly defined that it could practically only consist of a particular
entity:[53]
The Institute considers that, as currently phrased, section
370-5(3) does not meet this principle of equal application of laws, insofar as
it permits the Commissioner to identify a specified class of entities, or
specified circumstances, for which a determination may operate. This deviates
from the equal application of laws, and raises the possibility of the planned
Remedial Power being exercised in a preferential or discriminatory manner. This
is so, notwithstanding the ‘no less favourable’ test of section 370-5(4), as
any modification of the law which is favourable to one may produce an
unfavourable effect on the rest who are subject to the law unmodified.[54]
The Institute also considers that the reporting mechanisms
surrounding the planned remedial power should be strengthened to maintain
transparency and accountability:
The Institute notes, for example, that the Australian
Securities and Investments Commission regularly reports on the use of their
relief powers, including their power under section 926A of the Corporations
Act 2001 (Cth) to exempt persons or products from the operation of that
Act, or to modify the application of that Act.[55]
As noted, the Bill proposes that the ATO annual report
must set out information on the exercise of the Commissioner’s remedial power during
the relevant year.[56]
The Australian Institute of Superannuation Trustees
is broadly supportive of the proposed remedial power, noting that, in some
instances, it will help cut red tape. The Institute suggests that the ATO be
required to report at least annually on any cases in which the power was used,
including the justification for its use.[57]
The Head of Policy and Technical in AMP’s self-managed
superannuation fund division, Peter Burgess, is positive about the proposed
powers saying:
I think [the new powers] are a good news story for the
industry: it’s all about providing more certainty and reducing complexity.[58]
Representing the Chartered Accountants Australia and New
Zealand in the consultation process, Greenwoods Herbert Smith and Freehills
Lawyers state that the proposed remedial power will result in beneficial outcomes
for relevant taxpayers:
The SRP [statutory remedial power], if appropriately
utilised, will allow the Commissioner to provide greater certainty for
taxpayers, which should in turn be beneficial for both individuals and
business. The SRP should allow the Commissioner to deal with certain issues in
a timely manner, though the requirement that the Commissioner’s power be
exercised through making a disallowable instrument means it will involve a
degree of formality. On the other hand, it means that the decisions will be
public and contestable in the Parliament.[59]
The Tax Institute observes that there are limited
circumstances in which the remedial power could be utilised ‘particularly as
the impact on revenue must be negligible’.[60]
Key
Provisions (Schedule 1) Commissioner’s Remedial Power
Item 2 inserts proposed subsection 3B(1AA)(e)
into the TAA to require details of the exercise of the Commissioner’s
remedial power to be included in the ATO’s annual report. It is expected that these
details would include information regarding the process for deciding that
particular matters would be subject to an exercise of the remedial power, and those
matters that were not, as well as consultation undertaken prior to an
application of the power.[61]
Item 3 inserts a new Part 5–10 and Division
370 into Schedule 1 of the TAA to accommodate the Commissioner’s proposed
remedial power.
Proposed subsection 370–5(1) provides that, subject
to certain prerequisites, the Commissioner may, by legislative instrument, determine
a modification of a provision of a taxation law. (The breadth of
this term and its potential to include laws dealing with matters other than
taxation is discussed above.) Prerequisites include that the Commissioner
considers the modification to be reasonable; that the cost of complying with it
would be reasonable having regard to the intended purpose or object of the
provision; and that any impact on the Commonwealth budget would be negligible. Proposed
subsection 370–5(2) provides that, if the Commissioner determines a modification
of the operation of a provision of a taxation law under proposed subsection
370–5(1), the provision will operate with the modification.
Proposed subsection 370–5(3) provides that a
modification applies generally unless the determination states that it only
applies to a specified class of entities or in specified circumstances. The
Explanatory Memorandum states that this is consistent with the LA, which
allows a person granted a legislative instrument making power to exercise it in
relation to a class.[62]
Under proposed subsection 370–5(4) an entity (the
first entity) must treat a modification made under the power as not applying to
it and any other entity if the modification would produce a result for the
first entity that is less favourable than would have been the case had the
relevant provision not been modified. The particular modification will
therefore have no effect for an entity if it would produce a less favourable
result, although it can still be valid and apply to entities that do not have a
less favourable outcome from the modification.[63]
The Explanatory Memorandum indicates that ‘favourable’ is
to be understood in the context of taxation laws, and that it could mean, for instance,
that a tax liability or the costs of complying with the taxation law are
reduced or that overall, taking into account changes in liabilities and
compliance costs, the modification is favourable.[64]
Under proposed subsection 370–5(5) a determination
made under the remedial power would not apply to an entity where it would
affect a right or liability of that entity under an order made by a court
(including any judgment, conviction or sentence) before the commencement of the
determination. The Explanatory Memorandum notes:
Ensuring that a determination would not apply in such
circumstances reflects the importance of the separation of powers, and ensures
that there is not an interference with federal judicial power in a manner that
is inconsistent with the Constitution.[65]
Item 4 provides that the Minister may cause a
review to be undertaken of proposed Subdivision 370–A within three to
five years of the commencement of the provisions. Following receipt of a review
report, the Minister must table the report in each House of Parliament within
15 sitting days.
Schedule 2—Primary
producer income averaging
Background
Income tax averaging
‘smooths out’ the income tax liability of eligible individuals from year to
year.[66]
When a farmer’s average income is less than their basic taxable income, they receive
an averaging tax offset. When their average income is more than their basic
taxable income, they must pay extra income tax on the averaging component of
their basic taxable income.
The basic taxable income is
constituted by a farmer’s taxable income, excluding the following amounts:
- net
capital gains
- certain
superannuation lump sums and death benefit termination payments and
- above-average
income of an author, inventor, sportsperson or other special professional.
Deductions excluded under
the non-commercial loss provisions are excluded from the calculation of basic
taxable income.
The averaging rules take
into account:
- the comparison rate of tax—the rate of tax that a taxpayer would
pay in the current year at basic rates of tax on their average income. Medicare
levy is not included in the basic rate of tax
- the averaging component—that part of their basic taxable income
that can be subject to an averaging adjustment (made up of both taxable primary
production income and taxable non-primary production income) and
- the gross averaging amount—the difference between the tax payable
at the comparison rate and the tax payable at basic rates.[67]
Under the current income tax
law averaging scheme, farmers can elect to even out income over a maximum
five-year period. Farmers who opt out of the farm-averaging scheme cannot
re-enter. [68]
In 2015, in recognition of
the need for greater flexibility for farmers in this regard, the Government
announced a proposed policy change that would permit farmers to opt back into the
income tax averaging scheme ten years after they had elected to opt out:
Income tax averaging should be as accessible as possible for
primary producers. The Government recognises the changing circumstances of
primary producers and will now allow farmers to opt back into income tax
averaging 10 years after they have elected to opt-out. Income tax
averaging relieves the burden of high marginal tax rates in high-income years
and ensures farmers pay tax at rates representative of their average level of
income. In a rapidly changing world with increasing climate and price
volatility, income averaging is more important than ever for smoothing farm
income tax liabilities over time. Increasing the flexibility of tax averaging
allows farmers to pay a fairer amount of tax when business circumstances
change. Setting a 10 year period for opting back in will help ensure this new
flexibility is being used for the intended purpose.[69]
Financial
implications
The Explanatory Memorandum states that the measure will
have no determinable impact on revenue over the forward estimates period.[70]
Key
Provisions (Schedule 2)
Division 392 of the ITAA 1997 deals with the
long-term averaging of primary producers’ tax liability. Section 392‑5
of the ITAA 1997 provides an overview of the averaging process and subsection
392–5(6) explains that no adjustment will be made in certain circumstances. Item
1 of Schedule 2 amends subsection 392–5(6) of the ITAA 1997
by omitting the phrase ‘the rest of life’ and substituting the words ‘10 income
years’, in order to enable taxpayers to re-access the income tax averaging system
after ten years of opt out.
Item 2 inserts proposed subsection 392–10(3) into
the ITAA 1997 to provide that, if a primary producer has opted
out of the averaging system, none of the years in the ten year opt-out period can
be counted for the purposes of income tax averaging after the opt-out period has
ended.
Item 3 amends subsection 392–25(1) of the ITAA
1997 to allow primary producers who opted out of the averaging to re-access
the system after ten income years. However, they may again opt out where averaging
does not suit their purpose due to changes in circumstances. If they choose to
do this, their choice will apply for the subsequent ten income years.
Table 2 below outlines how the proposed measure would work
for a primary producer who opted out of income averaging in 2006–07, or any
previous income year.
Table 2: Option
for re-accessing income averaging scheme after opting out
Income year |
Year |
Measure |
2006–07
|
1
|
Primary producer has permanently opted out of income tax
averaging for this income year (or any previous income year).
|
2007–08
2008–09
2009–10
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
|
2
3
4
5
6
7
8
9
10
|
Ten-year waiting period.
|
2016–17
|
1
|
Income tax averaging automatically starts to reapply as
if they were a new primary producer.
|
2017–18
|
2
|
Year two: offset becomes available if the basic
conditions are met.
|
Source: Explanatory
Memorandum, Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill
2016, p. 71.
The ten-year waiting period in the above example applies
to primary producers who opted out in any subsequent income years. For example,
if a primary producer opted out in 2009–10, under the proposed measure they are
eligible to re-access income tax averaging in the 2019–20 income year.
Furthermore, if they run a primary production business for two years in a row
(after the ten year opt out period) and in the second year their basic taxable
income is more than or equal to the first year, they are eligible for a tax
offset. No tax offset applies if the income for the two years is the same. This
means that the earliest time at which they would be eligible for a tax offset after
re-entering the averaging system would be the 2020–21 income year.
Item 5 provides that the amendments apply for the
2016–17 income year and later years. That is, Schedule 2 applies prospectively,
with the first possible averaging year being 2016–17, and the benefit of the
tax offset being available, at the earliest, from the 2017–18 income year. The
Explanatory Memorandum explains that ‘the tax offset will not be available
until the second year after commencement because income from two income years
must be averaged in order for the Commissioner of Taxation to pay an averaging
tax offset’.[71]
Schedule 3—Cars
for display by public institutions
Background
In 2000, A New Tax System
(Luxury Car Tax) Act 1999 (the LCT Act) was introduced as a part
of the Goods and Services Tax (GST) tax reform package. Before the introduction
of the A New Tax
System (Goods and Services Tax) Act 1999 (the GST Act), items
such as expensive cars, furs, jewellery and electronics were all subject to wholesale
sales tax. The Government’s 2015 Re:think:
Tax Discussion Paper outlined the origins of the luxury car tax (LCT):
Since 1979, luxury cars had been subject to a wholesale sales
tax of 45 per cent. Following the introduction of the GST and the abolition of
the wholesale sales tax regime, the LCT was introduced at a rate of 25 per cent
of the GST exclusive value of the car to maintain the higher rate of taxation.
The aim of this tax was to ensure that the price of luxury cars did not fall
dramatically. The LCT applies to a range of vehicles including passenger cars,
station wagons, four wheel drives and limousines.[72]
How does
the LCT work, in general?
Currently, the LCT Act provides for the application
of LCT to cars sold in or imported into Australia for home consumption, where
the value of a car exceeds a GST inclusive threshold (some limited exemptions are
detailed below). The rate of LCT is currently 33 per cent of the GST‑exclusive
value of the car (including accessories) when it exceeds the LCT threshold. For
the 2015–16 financial year, the threshold for regular vehicles was $63,184 and for
fuel-efficient vehicles, $75,375.[73]
As explained in the 2015 tax discussion paper, the LCT
applies to both domestic and foreign-manufactured vehicles:
Some stakeholders have raised concerns that the LCT falls
mainly on imported cars originating from a limited number of jurisdictions and
is therefore a barrier to trade. However, the LCT applies to all cars purchased
in Australia, regardless of where the car is manufactured and therefore does
not discriminate against imports.
Whilst the LCT does not discriminate between domestic and
foreign manufactured vehicles, the majority of LCT revenue is derived from
imported vehicles. Industry estimates indicate that in 2014 around 94 per cent
of vehicles subject to LCT were imported. This has increased from around 89 per
cent in 2005.[74]
The LCT is levied against the vendor, not the buyer. The vendor
will then often pass this cost on to the buyer by adding the amount of LCT to
the car’s retail price.
Current concessions and exemptions from LCT
A car, specifically fitted out for transporting a person
with a disability seated in a
wheelchair, is not a luxury car and is not subject to LCT. However, if
the car is GST-free under GST law, then LCT will apply.[75]
A number of exemptions may be available if the entity is
registered for GST and the car is usually held as a trading stock, used in
research and development, or reimported after paying the LCT.[76]
Under related provisions of the Customs Tariff Act
1995 (the CTA 1995), the sale of such cars for the use of
foreign governments; foreign military service use; personal effects of
travellers or crew; warranty and safety recalls; repair and export and deceased
estate are also exempt from the LCT.[77]
Similarly, supplies of luxury cars by a GST-registered
supplier in Australia may not be taxable if the car is more than two years old
or the car is re-exported and the export is GST-free.[78]
Exemptions from customs duty for works of art or
collectors’ pieces
Schedule 4 to the CTA 1995 sets out concessional
rates of duty that are payable on certain goods that are imported into
Australia. Item 7 of Schedule 4 provides that no duty is payable on works of
art or collectors’ pieces that are covered by:
and which are consigned to a library, museum, gallery or
other institution that is endorsed as a Deductible Gift Recipient (DGR).
A luxury car may come within the definition of a work of
art or collector’s piece that is not liable to customs duty on importation into
Australia. [81]
Deficiencies of the current regime
The Productivity Commission views the LCT as a ‘higher
cost and less efficient method of raising revenue than more broadly based
taxes’. The Productivity Commission recommended that, as part of the
Government’s Taxation White Paper project, consideration be given to removing
the LCT and replacing it with ‘more efficient sources of revenue’.[82]
The Government’s 2015 tax discussion paper noted that the ‘LCT
has a narrow tax base, is complex and is the Australian Government’s only
luxury tax on a specific good or service’.[83]
This complexity is more evident when it interacts with the GST.
Proposed amendments
In the 2015–16 Budget, the Government announced that certain
institutions will be LCT-exempt when importing cars for display only, effective
from the day the Bill receives Royal Assent.[84]
The proposed changes, set out in Schedule 3 to the Bill, are expected to provide
relief from LCT to public institutions that import or acquire luxury cars for
the sole purpose of public display. The proposed exemption would apply to importations
and acquisitions by museums, galleries, and libraries that are registered for
GST and that have been endorsed as deductible gift recipients.[85]
Schedule 3 also provides for a decreasing LCT adjustment
to recipients of luxury cars for LCT paid on the supply of a luxury car, and
other adjustment rules to increase the importer or recipient’s liability to LCT
where the car is used for a purpose other than public display, or supplied to
another entity.[86]
Financial
implications
This measure is estimated to have a negative $0.8 million
impact on revenue over the forward estimates period.[87]
Table 3: Financial
impact of the measure in Schedule 3 of the Bill, $m
2014–15 |
2015–16 |
2016–17 |
2017–18 |
2018–19 |
Nil |
-$0.5 |
- $0.1 |
- $0.1 |
- $0.1 |
Source: Explanatory
Memorandum, Tax and Superannuation Laws Amendment (2016 Measures No. 2)
Bill 2016, p. 6.
Main provisions
(Schedule 3)
The amendments in Schedule 3 provide an additional
exception to when an importation of a luxury car is a taxable importation under
the LCT rules.
Section 7 of the LCT Act sets out circumstances when
a taxable importation of a luxury car is deemed to have occurred. Basically,
such an importation will have occurred if a car whose value exceeds the luxury
car tax threshold (referred to above) is imported into Australia and entered
for home consumption (subsection 7–10(1)). Subsection 7–10(3) then sets out
circumstances where, despite meeting the requirements in section 7–10(1), an
importation of a luxury car is not considered to be taxable. Item 1
inserts proposed paragraph 7–10(3)(ba) to provide that an importation of a
luxury car will not be taxable under the LCT Act if the car is a work of
art or collectors’ piece covered by item 7 of Schedule 4 to the CTA 1995
(as discussed above), that has been imported by the relevant library, museum,
gallery or institution for the sole purpose of public display.
Division 15 of the LCT Act provides that
circumstances that occur after a luxury car has been supplied or imported may
mean that too much or too little LCT was originally imposed. In these
circumstances, adjustments need to be made to ensure that the correct amount of
LCT is paid. Section 15–30 deals with adjustments that are required to deal
with changes to how a luxury car will be used. Item 2 inserts proposed
subsection 15–30(1A) into the LCT Act to provide that an
entity that is supplied with a luxury car in circumstances that, had the entity
imported the car, the importation would have been covered by proposed paragraph
7–10(3)(ba), is entitled to a ‘decreasing adjustment’ of LCT. In simple terms
this means that a relevant library, museum, gallery or institution that obtains
a luxury car for the sole purpose of public display, but does not directly
import the car, will receive a refund of any LCT paid when the car was supplied.
Item 3 inserts proposed subsections 15–30 (3A)
and (3B) into the LCT Act, to provide that an entity that obtained a
luxury car and had a decreasing LCT adjustment due to the operation of proposed
subsection 15–30(1A) (discussed above), will be subject to an ‘increasing LCT
adjustment’ if they use the car, or allow it to be used, in a manner which
would have disqualified them from obtaining an exemption from LCT; or if they
supply the car to another entity (proposed subsection 15–30(3A)). However, the
first entity will not be subject to an increasing LCT adjustment if the entity
to which they supply the car (the second entity) would have been entitled to an
LCT exemption on the same basis as the first entity (proposed subsection 15–30(3A)).
This means that no LCT is payable if, for example, a public art gallery that
obtained the car for the sole purpose of public display supplies the car to a
public museum for the sole purpose of public display. Item 4 applies
equivalent amendments to those in item 3, but applies to entities that directly
imported the car.
Item 5 inserts proposed paragraph 15–35(4)(c)
into the LCT Act to ensure that, if the importer is liable to an
increasing LCT, the amount payable is such that they will be returned to the
position that they would have been in had they not claimed the LCT.[88]
Item 6 provides for these measures to apply to
supplies made, or importations occurring, the day after the Act receives the
Royal Assent.
Schedule 4—Miscellaneous
amendments
Background
Schedule 4 contains miscellaneous amendments to taxation,
superannuation and other laws. They include style and formatting changes; the
repeal of redundant provisions; the correction of anomalous outcomes, and
corrections to previous amending Acts.[89]
The Explanatory Memorandum states that the amendments
address technical deficiencies and legislative uncertainties within the
taxation regime, superannuation and associated laws.[90]
The amendments have various commencement and application
dates. The dates are set out at relevant points in Chapter 4 of the Explanatory
Memorandum. Most amendments commence from the first quarter beginning on or
after the day the Bill receives Royal Assent.
The proposed amendments in Schedule 4 are contained in the
following parts:
- Part
1: Community Development Employment Projects (CDEP) Scheme
- Part
2: Other amendments of principal Acts
- Part
3: Amendments of amending Acts
- Part
4: Repeals of Excise Tariff Acts and
- Part
5: Other repeals.
Main
provisions (Schedule 4)
Part 1—Community
Development Employment Projects Scheme
The CDEP scheme was originally introduced in 1977 to
assist Indigenous job seekers to find and retain employment. The scheme was
absorbed into the Remote Jobs and Communities Program in July 2013 and, with
effect from 1 July 2015, the scheme ceased operation.[91]
The Social Security Legislation Amendment (Community
Development Program) Bill 2015 (the SSLA Bill) will, if enacted, amend the
social security law to reflect the cessation of the CDEP Scheme. However, the
SSLA Bill lapsed on the dissolution of the 44th Parliament and at the time of
writing this Digest has not been reintroduced.[92]
If the Bill is not reintroduced and enacted, Part 1 of Schedule 4 to the Bill
will not commence (see clause 2 of the Bill—commencement information).
Part 1 of Schedule 4 proposes amendments to the taxation
law to remove redundant references to the CDEP Scheme.
Item 8 is an application provision, which provides
that the existing (unamended) provisions continue to apply in relation to
payments made under the CDEP scheme before it is discontinued by the SSLA Bill.
Part 2—Other
amendments of principal Acts
Part 2 addresses technical issues in various
provisions of the TAA 1953, ITAA 1997, ITAA 1936 and the GST
Act to improve the clarity in the taxation law.
Items 9 to 83, and 86 to 91 propose technical
amendments to provisions of the GST Act; the Commonwealth Grants
Commission Act 1973; the ITAA 1936, the ITAA 1997 and the TAA.
Item 84 proposes an amendment to section 42 of the Product
Grants and Benefits Administration Act 2000 to remove an incorrect
reference to section 350–10 in Schedule 1 of TAA.
Item 85 changes an incorrect reference to the ITAA
1936 to the ITAA 1997 in the Superannuation (Unclaimed Money and
Lost Members) Act 1999.
Part 3—Amendments
of amending Acts
This Part proposes technical amendments to provisions of the
Indirect Tax Laws Amendment (Assessment) Act 2012, the Tax and
Superannuation Laws Amendment (2014 Measures No. 7) Act 2015, the Tax
and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015, and the Treasury
Legislation Amendment (Repeal Day) Act 2015. Further information is
available at pages 96 to 107 of the Explanatory Memorandum to the Bill.[93]
Part 4—Repeals
of Excise Tariff Acts
Items 99 to 143 of Schedule 4 repeal 45
amending Acts that the Government considers to be ‘largely redundant’.[94]
Items 144 to 148 include general savings
provisions to preserve the rights and obligations of taxpayers, despite the
repeals proposed in Part 4 of Schedule 4.
Part 5—Other
repeals
Item 149 of Schedule 4 proposes repeal of
the Income Tax (War-time Arrangements) Act 1942 as it is already
inoperative.
[1]. Parliament
of Australia, ’Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill
2016 homepage’, Australian Parliament website.
[2]. Ibid.
[3]. Senate
Standing Committee for Selection of Bills, Report,
8, 2016, The Senate, 10 November 2016.
[4]. Senate
Standing Committee for the Scrutiny of Bills, Alert
digest, 5, 2016, The Senate, 3 May 2016, p. 23.
[5]. Senate
Standing Committee for the Scrutiny of Bills, Alert
digest, 7, 2016, The Senate, 12 October 2016, p. 95.
[6]. Senate
Standing Committee for the Scrutiny of Bills, Report,
8, 2016, The Senate, 9 November 2016, p. 504.
[7]. Ibid.,
p. 504.
[8]. Ibid.,
p. 505–506.
[9]. Ibid.,
p. 506.
[10]. Ibid.
[11]. Ibid.,
pp. 507–508.
[12]. Ibid.,
p. 508.
[13]. Ibid.
[14]. Ibid.,
pp. 508–509.
[15]. Ibid.,
p. 509.
[16]. Ibid.
[17]. Ibid.
[18]. Ibid.,
p. 510.
[19]. Ibid.,
p. 510.
[20]. Ibid.
[21]. Ibid.,
p. 511.
[22]. Ibid.,
p. 512.
[23]. Ibid.,
p. 513.
[24]. Ibid.
[25]. Ibid.,
p. 514.
[26]. Ibid.
[27]. Ibid.
[28]. Ibid.,
p. 515.
[29]. There
are separate Statements of Compatibility with Human Rights for each Schedule of
the Bill. The Statement for Schedule 1 is at page 38 of the Explanatory
Memorandum to the Bill. The Statements for Schedules 2, 3 and 4 are at
pages 74, 92 and 109 of the Explanatory Memorandum.
[30]. The
Committee commented on the earlier Bill in: Parliamentary Joint Committee on
Human Rights, Thirty-seventh
report of the 44th Parliament, 2 May 2016, p. 2; and on the current
Bill in Parliamentary Joint Committee on Human Rights, Report,
7, 2016, The Senate, 11 October 2016, p. 100.
[31]. K
O’Dwyer, ‘Second
reading speech: Tax and Superannuation Amendment (2016 Measures No. 2) Bill
2016 ’, House of Representatives, Debates, 14 September 2016, p. 859.
[32]. Explanatory
Memorandum, Tax and Superannuation Laws Amendment (2016
Measures No. 2) Bill 2016, p. 10.
[33]. Ibid.
[34]. J
Frydenberg (Assistant Treasurer), Providing
more certainty and better outcomes for taxpayers, media release, 1 May
2016.
[35]. O’Dwyer,
‘Second reading speech: Tax and Superannuation Amendment (2016 Measures No. 2)
Bill 2016, op. cit., pp. 859–860.
[36]. Explanatory
Memorandum, Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill
2016, op. cit., p. 48.
[37]. These
materials include, but are not confined to, relevant committee reports, the Explanatory
Memorandum to the Bill and the Minister’s second reading speech.
[38]. Explanatory
Memorandum, Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill
2016, op. cit., p. 49.
[39]. Section
38 of the LA requires all legislative instruments to be tabled in each
House of Parliament within six sitting days of registration.
[40]. J
Odgers, H Evans and R Laing, Odgers'
Australian Senate practice, 13th edn, Department of the Senate,
Canberra, 2012, p. 421.
[41]. Income Tax
Assessment Act 1997, Dictionary at section 995–1.
[42]. Explanatory
Memorandum, Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill
2016, op. cit., p. 15.
[43]. Ibid.,
p. 11.
[44]. Legislation Act
2003 (Cth),
section 17.
[45]. E
Brooks, ‘Solicitor-General
resigns over "broken" relationship with Brandis’, Huffington
Post, (online edition), 24 October 2016.
[46]. Explanatory
Memorandum, Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill
2016, op. cit., p. 25.
[47]. Oxford
English Dictionary, ‘Negligible,
adj.’, 3rd edn, Oxford University Press, Oxford, 2003.
[48]. Australian
Government, ‘Statement
5: expenses and net capital investment’, Budget measures: budget paper
no. 1: 2016–17.
[49]. O’Dwyer,
‘Second reading speech: Tax and Superannuation Amendment (2016 Measures No. 2)
Bill 2016 ’, op. cit.
[50]. Explanatory
Memorandum, Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill
2016, op. cit., p. 4.
[51]. C
Jordan quoted in F Anderson, ‘Tax
Commissioner Chris Jordan gets new power to close tax loopholes’, The Australian
Financial Review, (online edition), 1 May 2015, and ‘ATO
chief gets power to unilaterally close loopholes’, The Australian
Financial Review, 2 May 2015, p. 10.
[52]. Chartered
Accountants Australia and New Zealand, ‘Commissioner
to be given statutory remedial power’, media release, 1 May 2015, updated 6
September 2016.
[53]. Explanatory
Memorandum, Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill
2016, op. cit., p. 25.
[54]. The
Rule of Law Institute of Australia, ‘Submission regarding the Commissioner of
Taxation’s power to modify taxation laws’, Submission
to the Treasury consultation on the Exposure Draft, Commissioner’s power to
modify law, 8 January 2016, p. 2.
[55]. Ibid.
[56]. Item
2 of Schedule 1 of the Bill; see also Explanatory Memorandum, Tax and
Superannuation Laws Amendment (2016 Measures No. 2) Bill 2016, op. cit., p. 24.
[57]. Australian
Institute of Superannuation Trustees, ‘Re: Commissioner of Taxation’s power to
modify law’, Submission
to the Treasury consultation on the Exposure Draft, Commissioner’s power to
modify law, 15 January 2016.
[58]. P
Burgess quoted in, ‘ATO
details new commissioner powers’, Accountants Daily, (online edition),
2016.
[59]. A
White and G Cooper, ‘Statutory
remedial power for Commissioner’, Greenwoods Herbert Smith and Freehills
Lawyers website, 5 May 2015.
[60]. The
Tax Institute, ‘Tax Laws Amendment (2016 Measures No. 1) Bill 2016:
Commissioner’s remedial power (Exposure Draft)’, Submission to the Treasury consultation on the Exposure Draft, Commissioner’s
power to modify law, 28 January 2016, p. 2.
[61]. Explanatory
Memorandum, Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill
2016, op. cit., p. 24.
[62]. Legislation
Act 2003 (Cth), subsection 13(3); Explanatory Memorandum, Tax and
Superannuation Laws Amendment (2016 Measures No. 2) Bill 2016, op. cit., p. 25.
[63]. Explanatory
Memorandum, Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill
2016, op. cit., p. 26.
[64]. Ibid.,
p. 25.
[65]. Ibid.,
p. 30.
[66]. Ibid.,
p. 69.
[67]. Ibid.
[68]. See
Australian Taxation Office (ATO), ‘Tax
averaging for primary producers’, ATO website, last modified 24 August
2016.
[69]. Department
of Agriculture, Agriculture
competitiveness, White paper, The Department of Agriculture, Canberra,
July 2015, p. 44.
[70]. Explanatory
Memorandum, Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill
2016, op. cit., p. 5.
[71]. Explanatory
Memorandum, Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill
2016, op. cit., p. 74.
[72]. Australian
Government, Re:think:
tax discussion paper: better tax system, better Australia, The
Treasury, Canberra, March 2015, p. 162.
[73]. ATO,
‘Luxury
car tax rate and thresholds’, ATO website, last modified 27 May 2016.
[74]. Australian
Government, Re:think: tax discussion paper, op. cit., p. 162.
[75]. ATO,
‘Exemption
from luxury car tax’, ATO website, last modified 7 October 2016.
[76]. Explanatory
Memorandum, Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill
2016, op. cit., p. 78.
[77]. Ibid.,
p. 78.
[78]. Ibid.
[79]. Agreement
on the Importation of Educational, Scientific and Cultural Materials (Florence
Agreement), done in New York 22 November 1950, [1992] ATS 12 (entered
into force for Australia 5 March 1992).
[80]. Protocol
to the Agreement on the Importation of Educational, Scientific or Cultural
Materials of 22 November 1950, done in Nairobi on 26 November 1976,
[1992] ATS 13 (entered into force for Australia 5 September 1992).
[81]. Explanatory
Memorandum, Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill
2016, op. cit., p. 80.
[82]. Productivity
Commission (PC), Australia's
automotive manufacturing industry, Inquiry report, 70, PC, Canberra, 31
March 2014, p. 17.
[83]. Australian
Government, Re:think: tax discussion paper, op. cit., p. 157.
[84]. Australian
Government, Budget
measures: budget paper no. 2: 2015–16, p. 23.
[85]. Explanatory
Memorandum, Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill
2016, op. cit., p. 5
[86]. Ibid.,
p. 82.
[87]. Ibid.,
p. 6.
[88]. Ibid.,
p. 90.
[89]. Ibid.,
p. 93.
[90]. Ibid.
[91]. Ibid.,
p. 94.
[92]. Parliament
of Australia, ‘Social
Security Legislation Amendment (Community Development Program) Bill 2015
homepage’, Australian Parliament website.
[93]. Explanatory
Memorandum, Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill
2016, op. cit.
[94]. Ibid.,
p. 107.
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