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Tax Laws
Amendment (2012 Measures No. 6) Bill 2012
Introduced into the
House of Representatives on 29 November 2012
Portfolio: Treasury
1.1
The committee considers that the differential tax treatment of native
title benefits is a measure that seeks to achieve substantive equality and
reflects relevant differences between Indigenous and non-Indigenous peoples and
promotes the rights of self-determination of Indigenous peoples. As such, the
committee considers the bill is compatible with guarantees of equality and
non-discrimination.
1.2
This bill amends income tax legislation to make it clear that native
title benefits are not subject to income tax (including capital gains tax) and
to add and expand entities that are entitled to claim deductible gift recipient
status.
Compatibility with human rights
1.3
The explanatory memorandum includes separate and self-contained
statements of compatibility for each Schedule to the bill. There are changes
made by two Schedules that raise human rights issues.
Native title benefits not subject
to income tax (Schedule 1)
1.4
The statement of compatibility in relation to Schedule 1[1]
identifies a number of rights which are engaged by this part of the bill, in
particular the right to self-determination and the rights to equality and non-discrimination.[2]
It also refers to the provisions of the Declaration on the Rights of Indigenous
Peoples,[3]
noting that while the Declaration ‘is not included in the definition of ‘human
rights’ under the Human Rights (Parliamentary Scrutiny) Act 2011, it provides
some useful elaboration on how human rights standards under the international
treaties apply to the particular situation of Indigenous peoples.’
1.5
This Schedule amends existing legislation ‘to clarify that certain
native title benefits provided to Indigenous persons, or to Indigenous holding
entities, for the loss or impairment of their native title rights are not
subject to income tax (including capital gains tax).’[4]
The statement of compatibility notes that the primary purpose of the
legislation is to clarify the status of such payments under income tax law, and
that the measures follow broad consultation with different sectors.
1.6
The statement of compatibility notes that the rights to equality and
non-discrimination are engaged because the Schedule 'applies only to a certain
group of persons within the population and draws a distinction between persons
who have native title rights (namely, Indigenous people) and persons who do not
(namely, non-Indigenous people).’ The justification offered for this differential
treatment based on race and ethnicity is that native title rights are unique,
that only Indigenous people possess them and that ‘native title has special
qualities that require a different tax treatment from other forms of title,
independently of which racial groups are eligible to hold native title.’[5]
The statement of compatibility notes that tax-exempt status applies only to
‘that part of a native title benefit that relates to the extinguishment or
impairment of native title.’
1.7
The argument appears to be that where native title is extinguished or
impaired, and financial compensation is provided as a result, it would be
inappropriate to reduce the amount of the compensation by subjecting it to
income tax. Such an approach embodies a substantive equality approach,
reflecting that there are relevant differences between the holders of native
title interests and the holders of other property interests that may give rise
to income or capital gains that may be taxable. This is the basis on which the
native title legislation is built and reflects the special position of
Indigenous peoples in Australia.
Special measures
1.8
The statement of compatibility suggests that the amendments may also be
justified as a ‘special measure’ within the meaning of articles 1(4) and 2(2)
of the International Convention on the Elimination of All Forms of Racial
Discrimination (ICERD). [6]
Article 1(4) of the Convention defines ‘special measures’ in the following
terms:
Special measures taken for the sole purpose of securing
adequate advancement of certain racial or ethnic groups or individuals
requiring such protection as may be necessary in order to ensure such groups or
individuals equal enjoyment or exercise of human rights and fundamental
freedoms shall not be deemed racial discrimination, provided, however, that
such measures do not, as a consequence, lead to the maintenance of separate
rights for different racial groups and that they shall not be continued after
the objectives for which they were taken have been achieved.
1.9
The proposed tax treatment of native title is intended to reflect a
substantive difference between native title holders and the holders of other
forms of title to land. However, it is clear that the provisions are meant to
be permanent and not a temporary arrangement, so the use of the category of
special measures to justify them would appear to be inappropriate. Rather, the
basis for the legitimacy of the measures as non-discriminatory is because there
are relevant differences between Indigenous holders of native title and others
and that differential treatment reflecting these differences is not
discriminatory.
1.10
The UN Committee on the Elimination of Racial Discrimination has commented
on the meaning and scope of special measures in the ICERD:
The obligation to take special measures is distinct from the
general positive obligation of States parties to the Convention to secure human
rights and fundamental freedoms on a non-discriminatory basis to persons and
groups subject to their jurisdiction; this is a general obligation flowing from
the provisions of the Convention as a whole and integral to all parts of the
Convention.
Special measures should not be confused with specific rights
pertaining to certain categories of person or community, such as, for example
the rights of persons belonging to minorities to enjoy their own culture,
profess and practise their own religion and use their own language, the
rights of indigenous peoples, including rights to lands traditionally occupied
by them, and rights of women to non-identical treatment with men, such
as the provision of maternity leave, on account of biological differences from
men. Such rights are permanent rights, recognized as such in human rights
instruments, including those adopted in the context of the United Nations and
its specialized agencies. States parties should carefully observe distinctions
between special measures and permanent human rights in their law and practice.
The distinction between special measures and permanent rights implies that
those entitled to permanent rights may also enjoy the benefits of special
measures.[7]
Specification of deductible gift
recipients (Schedule 2)
1.11
The granting of deductible gift recipient status to an organisation
leads to a preferred tax status for the organisation. While it does not appear
that there is any issue arising from the listing of the organisations specified
in the Schedule, the granting of such preferential status may give rise to
human rights issues if any organisation granted this status engages in
activities which would involve an impermissible infringement of the rights of
others.
1.12
The committee considers that Schedule 2 as such does not appear
to give rise to any human rights issues.
1.13
The committee notes that:
(a) the differential tax treatment of native title benefits is
consistent with guarantees of equality and non-discrimination because it is a
measure to achieve substantive equality that reflects relevant differences
between Indigenous and non-Indigenous peoples and promotes the rights of
self-determination of Indigenous peoples; and
(b) the reference to the category of ‘special measures’ in the
statement of compatibility to justify such differential treatment does not
appear appropriate or consistent with the meaning of that term in the ICERD.
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