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State Taxation Acts Further
Amendment Bill 2009
Introduction Print
EXPLANATORY MEMORANDUM
General
The Bill amends the First Home Owner Grant Act 2000 to impose a cap on
the value of certain transactions that will be eligible for the First Home
Owner Grant.
The Bill also amends the Land Tax Act 2005 to--
· clarify the scope of the exemption from land tax in relation to
Crown land;
· clarify certain provisions relating to land held on trust;
· confirm who is liable to pay land tax where land is transferred
without valuable consideration but the transfer remains
unregistered and that a refund is available where unoccupied
land is subsequently used as a principal place of residence and
no other principal place of residence exemption had been
claimed;
· require a person who is served with a notice of assessment of
land tax to notify the Commissioner of State Revenue of
certain errors or omissions.
The Payroll Tax Act 2007 is amended to introduce new nexus provisions to
clarify when and where wages are taxable.
The Taxation (Reciprocal Powers) Act 1987 is repealed and the Taxation
Administration Act 1997 is amended to--
· re-enact and modernise the law relating to the reciprocal
enforcement of taxation laws;
· provide for penalties for notification defaults;
561372 1 BILL LA INTRODUCTION 14/10/2009
· permit the disclosure of information obtained under the
administration of a taxation law for the purposes of
administering the First Home Owner Grant 2000 and the
Unclaimed Money Act 2008;
· confirm that the Commissioner of State Revenue is able to
serve Victorian court processes in the same manner that the
Commissioner serves documents for the purposes of a taxation
law.
Clause Notes
PART 1--PRELIMINARY
Part 1 of the Bill outlines the main purposes of the Bill and contains the
commencement provisions.
Clause 1 outlines the main purposes of the Bill.
Clause 2 provides that Part 1 and Part 7 of the proposed Act come into
operation on the day on which the Act receives the Royal Assent.
Part 2, which relates to the First Home Owner Grant Act 2000,
comes into operation on 1 January 2010.
Division 1 of Part 3 is deemed to have come into operation on
1 January 2006. This is the date the land tax trust provisions, to
which this Division relates, came into operation. The purpose of
the amendments is to ensure that trustees of implied and
constructive trusts are not disadvantaged.
Division 2 of Part 3 and Divisions 2 and 3 of Part 5 come into
operation on the day after the day on which this proposed Act
receives Royal Assent.
Part 4 is deemed to have to have come into operation on 1 July
2009, this being the start of the most recent financial year.
Division 1 of Part 5 and Part 6 come into operation on a day to be
proclaimed or 1 October 2010, whichever is the earlier.
PART 2--FIRST HOME OWNER GRANT ACT 2000
Part 2 of the Bill makes amendments to the First Home Owner Grant Act
2000 to cap the value of transactions eligible for the grant but excludes
primary production properties from that cap.
Clause 3 Subclause (1) amends the wording in section 13(1) of the First
Home Owner Grant Act 2000 to make an eligible transaction
subject to the new eligible property value cap.
2
Subclause (2) inserts a new section 13(1A) which provides that
eligibility for the First Home Owner Grant from 1 January 2010
is to be determined by reference to the value of the property
being purchased, so that the consideration for an eligible
transaction with a commencement date that is on or after
1 January 2010 must not exceed $750 000.
Subclause (3) inserts new sections 13(9) and 13(10).
New section 13(9) excludes from the application of the eligible
property value cap an eligible transaction relating to a home that
is on, or to be built on, land referred to in section 65 or 66 of the
Land Tax Act 2005. This relates to land that is situated outside
greater Melbourne that is used primarily for primary production
and primary production land that is situated in greater Melbourne
but not in an urban zone.
New section 13(10) extends the exception from the eligible
property value cap to an eligible transaction relating to a home
that is on, or to be built on, land referred to in section 67(1)(a) of
the Land Tax Act 2005. This relates to land that is primary
production land in an urban zone in greater Melbourne and will
apply if the applicant--
· is, or, when the contract for the purchase of the home or
the comprehensive building contract is completed, will
be, the owner of the land within the meaning of section
67(2)(a) of the Land Tax Act 2005; or
· holds an interest in the shares of a proprietary company
described in section 67(2)(b) (as affected by that
section) of the Land Tax Act 2005 and the interest
entitles the applicant to exclusive occupation of a
specified home owned by the company or which will be
owned by the company, when a contract for the
purchase of the specified home or a comprehensive
building contract for the building of the specified home
is completed. The section also requires that the value of
the shares is not less than the value of the company's
interest in the home.
Subclause (3) also provides that an applicant must continue
to comply with the conditions under the new section 10(a)(i)
and (ii) (as the case requires) until the end of the period that the
applicant is required under section 12 (residence requirement) to
occupy the home.
3
PART 3--LAND TAX ACT 2005
Part 3 of the Bill makes amendments to the Land Tax Act 2005.
Clause 4 amends the definition of trust to signify that the Land Tax Act
2005 has express provisions relating to an implied or constructive
trust.
Clause 5 inserts a new Division 2B in Part 3 of the Land Tax Act 2005
which provides for the tax treatment of land held under implied
or constructive trusts. The new Division includes two new
sections, sections 46L and 46M.
Section 46L provides for land owned by the trustee of an implied
or constructive trust to be separately assessed as if the land were
the only land owned by the trustee. Where a trustee holds land as
trustee of more than one implied or constructive trust for the
same beneficiary or beneficiaries, the lands held subject to those
trusts are to be assessed as if the lands were the only lands owned
by the trustee. The new section 46M provides the trustee who
has paid land tax assessed on the trust land with an entitlement to
recoup the tax from any trust property that is subject to the trust.
Clause 6 makes various amendments to section 10 of the Land Tax Act
2005 which provides that a lessee of Crown land or a licensee of
Crown land, whether the land is leased or licensed directly from
the Crown or indirectly via a committee of management, is
regarded as an owner.
Subclause (1) amends section 10(b) to deem a person entitled to
land under a lease of Crown land to be an owner for land tax
purposes.
Subclause (2) amends section 10(c) to deem a person entitled to
land under a licence of Crown land (where the person has a right
of acquiring the fee simple) to be an owner for land tax
purposes.
Subclause (3) inserts a new section 10(2) which provides that a
person entitled to land under a sub-lease of Crown land is not an
owner. This ensures that the head lessee is the person deemed to
be the owner and not a sub-lessee.
Clause 7 inserts a new section 16A which deals with disposition of land
for no valuable consideration and broadly intends to replicate
section 49(5) of the Land Tax Act 1958.
Subclause (1) provides that the Commissioner may determine
that a person who has disposed of land is not the owner of that
land if the Commissioner is satisfied that the person has disposed
of the land for no valuable consideration, the disposition of the
4
land was made in good faith and not for the purposes of evading
land tax, and the person to whom the land was disposed of had
taken possession of the land on or before midnight on
31 December in the year preceding the tax year.
Subclause (2) provides that if the Commissioner makes a
determination under subsection (1), the person who disposed of
the land is deemed not to be the owner and the person to whom
the land was disposed for no valuable consideration is deemed to
be the owner.
Subclause (3) provides that subsection (2) applies whether or not
the person to whom the land was disposed of is the registered
proprietor.
Subclause (4) defines dispose of to mean dispose of by way of
settlement, grant, assignment, transfer or conveyance.
Clause 8 amends section 45(1) to replace "lease from the Crown" with
"lease of Crown land".
Clause 9 Subclause (1) substitutes paragraphs (a) and (b) of section
46A(3). The amendment adds an additional condition so that
section 46A does not apply to land subject to a unit trust scheme
or a discretionary trust where an appointment of a nominated
PPR beneficiary for the scheme or the trust is in force, so long as
the land is not used to carry on a substantial business activity.
Subclause (2) provides that the factors referred to in section 62(2)
must be taken into account in determining whether land is used
by a person to carry on a substantial business activity.
Clause 10 inserts new subsections (4) and (5) after section 46I(3).
Subclause (4) provides that subsection (2) does not apply if the
land is used to carry on a substantial business activity.
Subclause (5) provides that the factors referred to in section 62(2)
must be taken into account in determining whether land is used
by a person to carry on a substantial business activity.
Clause 11 amends sections 61(3)(c) and 61(4)(c) to replace the word "Part"
with the word "Division". The amendment addresses an anomaly
and ensures that an owner of unoccupied land, which is
subsequently used as their principal place of residence, is entitled
to a refund of tax paid for the relevant preceding years so long as
the owner was not entitled to a principal place of residence
exemption for any other land.
5
The inclusion of the word "Part" has meant that not only did the
owner have to demonstrate that he or she was not entitled to a
principal place of residence exemption for any other land but also
that he or she was not entitled to any exemption under Part 4 of
the Land Tax Act 2005 in respect of any other land, which
includes exemptions for primary production land, rooming
houses and caravan parks.
Clause 12 substitutes paragraph (a) of section 79(2) to exclude land under
a lease of Crown land from being exempt, unless the lease is a
retail premises leases as defined in the Retail Leases Act 2003.
Therefore, a lease of Crown land that is a retail premises lease
is exempt from land tax. The clause also inserts a new
paragraph (c) which excludes Crown land from being exempt
where the land is held by a person who is entitled to the land
under a licence of Crown land under which the person has a
right, absolute or conditional, of acquiring the fee simple.
This addresses an anomaly in the Act whereby a person holding
Crown land under a licence with the right to acquire the fee
simple is deemed to be the owner but section 79 of the Act
applies to exempt the land from land tax. The amendment
rectifies the anomaly and ensures that Crown land is not exempt
in these circumstances.
Clause 13 amends the heading to Division 1 of Part 7 to "Notices and
certificates".
Clause 14 inserts a new section 104A into the Land Tax Act 2005.
Subclause (1) requires the owner of land who is served with a
notice of assessment to notify the Commissioner of any error or
omission in the notice relating to any land owned by the person
(or in the case of an assessment notice for jointly owned land,
any land jointly owned by the joint owners) but not included in
the notice or any land specified in the notice as exempt land that
is not exempt (for example, land that is specified as exempt land
as the principal place of residence of the owner when it is not in
fact used and occupied as their principal place of residence).
Subclause (2) provides that the notification must be made within
60 days from the date of the issue of the assessment notice.
Subclause (3) provides that in the case of joint owners, it is
sufficient compliance with the provision if one of the owners
provides the required information on behalf of all of them.
This allows a joint owner who was not served with the notice to
notify the Commissioner of any errors or omissions in lieu of the
person who was served with the notice.
6
PART 4--PAYROLL TAX ACT 2007
Part 4 of the Bill makes a range of amendments to the Payroll Tax Act 2007
which introduce new nexus provisions. The amendments do not change the
nexus for wages paid or payable for services performed by an employee
wholly in one jurisdiction in a month. They change the nexus for wages paid
or payable to employees who work in more than one jurisdiction in a month.
Clause 15 inserts new definitions into section 3(1) of the Payroll Tax Act
2007:
ABN means the ABN (Australian Business Number) for an entity
within the meaning of the A New Tax System (Australian
Business Number) Act 1999 of the Commonwealth.
Australian jurisdiction means a State or a Territory.
instrument includes a cheque, bill of exchange, promissory note,
money order or a postal order issued by a post office.
registered business address means an address for service of
notices under the A New Tax System (Australian Business
Number) Act 1999 of the Commonwealth on an entity that has an
ABN, as shown in the Australian Business Register kept under
that Act.
Clause 16 substitutes sections 10 and 11.
New section 10 provides that taxable wages are wages
(as defined in section 13 of the Payroll Tax Act 2007) that
are taxable in Victoria, but do not include exempt wages.
New section 11 provides the jurisdictional nexus for determining
whether wages are taxable in Victoria and a number of related
rules on how to apply the nexus.
Subclause (1)(a) provides that wages are taxable in this
jurisdiction if the wages relate to services performed wholly in
this jurisdiction. This is regardless of where the wages are paid
or payable.
Subclause (1)(b) provides the jurisdictional nexus for wages
relating to services performed in two or more Australian
jurisdictions, or partly in one or more Australian jurisdictions and
partly outside all Australian jurisdictions. The nexus in
paragraphs (i) to (iv) must be applied in sequence. The primary
nexus is whether the employee is based in this jurisdiction as
determined by new section 11A. The secondary nexus is whether
the employer is based in this jurisdiction, as determined by new
section 11B. The third nexus is whether the wages are paid or
payable in this jurisdiction, as determined by new section 11C.
7
The last nexus is whether the relevant services are performed
mainly in this jurisdiction.
Subclause (1)(c) provides the jurisdictional nexus for wages
relating to services performed wholly outside all Australian
jurisdictions. The wages are taxable in this jurisdiction if the
wages are paid or payable in this jurisdiction, as determined by
new section 11C. Note that new section 66A exempts wages
paid or payable for services performed wholly in one or more
other countries for a continuous period of more than 6 months.
Subclause (2) provides that, in determining the question of
whether wages are taxable in this jurisdiction, regard must be had
only to the services performed during the month in respect of
which the question arises, subject to new section 11.
Subclause (3) deems wages paid or payable by an employer in
respect of an employee in a particular month to be related to
services performed by that employee in respect of the employer
during that month. A note is included to provide an example of
how the provision operates.
Subclause (4) operates when no services are performed by an
employee during the month in which wages are paid or payable.
In determining whether the wages are taxable in this jurisdiction,
the nexus must be applied by reference to services performed by
the employee during the most recent prior month in which the
employee did perform services in respect of the employer.
The wages are deemed to be related to services performed by
that employee in that most recent prior month.
Subclause (5) operates when no services have been performed by
an employee during the month in which wages are paid or
payable or in any prior month. For the purpose of determining
whether the wages are taxable in this jurisdiction, services are
deemed to have been performed at a place or places where it may
be reasonably expected that the services will be performed; and
the wages are deemed to be related to services performed by the
employee in the month in which the wages are paid or payable.
Subclause (6) provides that, for the purpose of determining
whether the wages are taxable in this jurisdiction, all amounts of
wages paid or payable in the same month by the same employer
in respect of the same employee are to be aggregated. A note is
included to provide an example how the provision operates.
Subclause (7) provides that if wages are paid in a different month
from the month in which they are payable, the question of
whether the wages are taxable in this jurisdiction is to be
determined by reference to the earlier month.
8
New section 11A sets out the principles to be applied to
determine in which jurisdiction an employee is based. They are
relevant to the application of the nexus in new section 11(1)(b)(i).
Subclause (1) provides that the jurisdiction in which an employee
is based is where the employee's principal place of residence is
located.
Subclause (2) provides that, to determine the jurisdiction in
which an employee is based, regard must be had only to the state
of affairs existing during the month in which the relevant wages
are paid or payable.
Subclause (3) clarifies that, if more than one jurisdiction would
qualify as the jurisdiction in which an employee is based during a
month, the question must be determined by having regard to the
state of affairs existing on the last day of that month.
Subclause (4) provides that, if an employee does not have a
principal place of residence, the employee is taken not to be
based in an Australian jurisdiction.
Subclause (5) provides that, in the case of wages paid or payable
to a corporate employee, the jurisdiction in which the employee
is based is to be determined pursuant to the new section 11B.
This ensures that, when an employee is a corporate employee as
opposed to a natural person, the principles in new section 11B are
used to determine the jurisdiction in which the corporate
employee is based.
Subclause (6) defines a corporate employee to mean a company
that is taken to be an employee under section 34 or 39, or a
company to whom a payment is made that is taken to be wages
under section 42 or 47.
New section 11B sets out the principles to be applied to
determine in which jurisdiction an employer is based. They are
relevant to the application of the nexus in new section
11(1)(b)(ii).
Subclause (1) provides that the jurisdiction in which an employer
is based is where the employer's registered business address is
located or, if the employer does not have an ABN, the
jurisdiction in which the employer's principal place of business
is located.
Subclause (2) provides that if an employer carries on a business
under a trust, the employer's registered business address is the
trust's registered business address or, if the trust does not have an
ABN, the trustee's registered business address.
9
Subclause (3) ensures that, if an employer has registered business
addresses in different jurisdictions at the same point in time, the
jurisdiction in which the employer is based at that point is where
the employer's principal place of business is located.
Subclause (4) provides that, to determine the jurisdiction in
which an employer is based, regard must be had only to the state
of affairs existing during the month in which the relevant wages
are paid or payable.
Subclause (5) clarifies that if more than one jurisdiction would
qualify as the jurisdiction in which an employer is based during a
month, the question must be determined by having regard to the
state of affairs existing on the last day of that month.
Subclause (6) provides that if an employer has neither a
registered business address nor a principal place of business, the
employer is taken not to be based in an Australian jurisdiction.
New section 11C sets out the principles to be applied to
determine the place and date of payment of wages. They are
relevant to the application of the nexus in new section
11(1)(b)(iii) and 11(1)(c).
Subclauses (1) and (2) provide a method for determining the
place and date, respectively, that wages are taken to have been
paid, where the payment is made by way of an instrument or
transfer or crediting in accordance with an instruction.
The provisions are similar to the former section 10(3) of the
Payroll Tax Act 2007.
Subclause (3) provides that wages are taken to be payable at the
place at which they are paid, subject to new section 11.
Subclause (4) provides a method for determining the place that
wages are taken to be paid, when wages become payable but are
not paid by the end of the month. The wages are taken to be
payable at the place where wages were last paid or, if no wages
have been previously paid, the place where the employee last
performed services in respect of the employer.
Subclause (5) ensures that, if wages are paid or payable by the
same employer in respect of the same employee in more than one
Australian jurisdiction during one month, the Australian
jurisdiction in which the highest proportion of the wages are paid
or payable is considered to be the jurisdiction in which those
wages are paid or payable.
10
Clause 17 inserts a new subclause (3) to section 13 to clarify that the nexus
provisions apply to wages referred to in section 13(1)(a) to (e) in
the same way as they apply to wages paid or payable to an
employee, as if a reference to an employee in this Act included a
reference to any such person.
Clause 18 omits section 24(4) which is a deeming provision in relation to
wages constituted by the grant of shares or options to a director
where no services are performed. A new note is inserted to
clarify that the nexus provisions apply to such wages and to refer
to new section 11 which deems wages to be paid or payable for
services performed.
Clause 19 omits section 25 which deems when services are considered to
have been performed in relation to wages constituted by the grant
of shares and options for the same reasons above.
Clause 20 substitutes the note at the end of section 26(2) with a new note,
as a consequence of the amendment to the nexus provisions, to
clarify that section 26(2) will be relevant to applying the nexus
in new section 11(1)(b)(iii) and 11(1)(c).
Clause 21 inserts new Division 9 in Part 4 to exempt wages paid or payable
in relation to services performed wholly in one or more other
countries for a continuous period of more than 6 months. This is
not a new exemption as such wages are excluded from taxable
wages under the former section 10(1)(a)(ii) of the Payroll Tax
Act 2007.
Clause 22 inserts new clause 16 in Schedule 3 to set out transitional
provisions associated with the enactment of the amendments.
Subclause (1) provides that the amendments apply in respect of
taxable wages paid or payable on or after 1 July 2009.
Subclause (2) clarifies that the amendments are to be applied for
the purpose of determining the correct amount of payroll tax
(within the meaning of section 82) payable by an employer for
the financial year commencing on 1 July 2009.
Subclause (3) provides that section 9 continues to apply in
respect of expired months as if the amendments had not been
made. The effect of subclauses (2) and (3) is that employers are
not required to adjust payroll tax in respect of expired months
until the annual adjustment stage.
Subclause (4) defines the meaning of an expired month.
11
PART 5--TAXATION ADMINISTRATION ACT 1997
Part 5 of the Bill makes amendments to the Taxation Administration Act
1997 including enacting modernised provisions for the reciprocal
enforcement of taxation laws across jurisdictions as previously contained in
the Taxation (Reciprocal Powers) Act 1987.
Clause 23 amends section 1 of the Taxation Administration Act 1997 to
extend the purpose of this Act to include the reciprocal
enforcement of recognised laws.
Clause 24 inserts new definitions into section 3 of the Taxation
Administration Act 1997.
corresponding Commissioner is defined as the person who
is responsible for the general administration of the law that
corresponds with the Taxation Administration Act 1997.
This is--
· the Commissioner for Australian Capital Territory
Revenue in the Australian Capital Territory;
· the Chief Commissioner of State Revenue in New South
Wales;
· the Commissioner of Territory Revenue in the Northern
Territory;
· the Commissioner of State Taxation in South Australia;
and
· the Commissioner of State Revenue in Tasmania;
Western Australia, and Queensland.
recognised jurisdiction means the Commonwealth, another State
or Territory; and
recognised law means a law administered by a corresponding
Commissioner which relates to the imposition of a tax, duty or
levy; or is declared by the Governor in Council, by Order
published in the Government Gazette, as provided under new
section 3(2), to be a recognised law.
Together, these terms delineate the scope of the provisions which
facilitate the reciprocal enforcement of recognised laws.
Clause 25 amends the definition of a taxation law in section 4 of the
Taxation Administration Act 1997 to remove the reference to
the Taxation (Reciprocal Powers) Act 1987.
12
Clause 26 amends section 7(1) of the Taxation Administration Act 1997
to clarify that the Taxation Administration Act 1997 also
provides for the reciprocal enforcement of recognised laws.
Clause 27 substitutes the heading of section 76 of the Taxation
Administration Act 1997 to reflect the nature of the powers
provided by this section.
Clause 28 inserts a new Division 2A into Part 9 of the Taxation
Administration Act 1997 which facilitates investigations by
corresponding Commissioners in Victoria and clarifies the
Victorian Commissioner of State Revenue's power to seek to,
and conduct authorised investigations in other jurisdictions.
This Division also replaces Part 2 of the Taxation (Reciprocal
Powers) Act 1987.
The new section 90A of the Taxation Administration Act 1997
provides that the Commissioner may enter into an agreement
with a corresponding Commissioner, which authorises the
exercise of the investigative powers and functions found in
Division 2, Part 9 of the Taxation Administration Act 1997, for
the purposes of a recognised law in Victoria. Subclause (1)(a)
provides that the authorisation may be granted in respect of an
investigation conducted by the corresponding Commissioner, or
as permitted under subclause (1)(b), by the Commissioner on
behalf of the corresponding Commissioner. Subclause (2) makes
it clear that any agreement formed between the Commissioner
and the corresponding Commissioner may be subject to
conditions imposed by either of the parties.
Example
A Company Pty Ltd is a Victoria-based company that operates in
both New South Wales and Victoria and pays payroll tax in both
jurisdictions. The NSW Chief Commissioner of State Revenue
(NSW Chief Commissioner) wishes to visit the head office of
A Company in Victoria to examine its compliance with the
Payroll Tax Act 2007 (NSW).
The NSW Chief Commissioner can do this by entering into an
agreement with the Victorian Commissioner of State Revenue
(Victorian Commissioner) under clause 90A(1)(a) which would
authorise the NSW Chief Commissioner to exercise any of the
functions found in Division 2, Part 9 of the Taxation
Administration Act 1997 for the purposes of investigating, in
Victoria, A Company's compliance with the Payroll Tax Act
2007 (NSW).
The new section 90B of the Taxation Administration Act 1997
provides for the exercise of functions under Division 2.
13
Subclause (1) provides that for the purposes of an investigation
authorised under clause 90A, and conducted by use of the powers
and functions contained in Division 2, Part 9 of the Taxation
Administration Act 1997, the terms "tax", "tax liability",
"taxation law" and "offence against a taxation law" found within
this Division will be read in the context of the recognised law.
Subclause (2) applies where a corresponding Commissioner is
authorised to exercise a function under Division 2, Part 9 of the
Taxation Administration Act 1997 in respect of a recognised
law. The terms "Commissioner", "authorised officer" and
"authorised officer's identity card" will be read as a reference to
the equivalent terms under the recognised law.
Example
The NSW Chief Commissioner has been authorised to exercise
any of the functions found in Division 2, Part 9 of the Taxation
Administration Act 1997 for the purposes of conducting an
investigation into the compliance of A Company with the Payroll
Tax Act 2007 (NSW). Within this context, the following
references in Division 2, Part 9 of the Taxation Administration
Act 1997 should be read as follows:
· any reference to "tax" will be read as a reference to
payroll tax (as levied under the Payroll Tax Act 2007
(NSW));
· any reference to "tax liability" will be read as a
reference to a "payroll tax liability" under the Payroll
Tax Act 2007 (NSW);
· any reference to "taxation law" will be read as a
reference to the Payroll Tax Act 2007 (NSW);
· any reference to "offence against a taxation law" will be
read as a reference to an "offence against the Payroll
Tax Act 2007 (NSW)";
· any reference to "the Commissioner" will be read as a
reference to the NSW Chief Commissioner;
· any reference to "an authorised officer" will be read as a
reference to an "authorised officer" under section 68 of
Taxation Administration Act 1997 (NSW); and
14
· any reference to "authorised officer's identity card" will
be read as a reference to an identity card provided to the
"authorised officer" under section 69 of the Taxation
Administration Act 1997 (NSW).
The new section 90C of the Taxation Administration Act 1997
enables an authorised officer to transfer an item seized under a
search warrant granted under section 77 of the Taxation
Administration Act 1997 (Vic) to the corresponding
Commissioner or an authorised person acting on behalf of the
corresponding Commissioner.
The new section 90D of the Taxation Administration Act 1997
provides the Commissioner with the power to enter into
agreements with corresponding Commissioners which enable the
Commissioner to conduct investigations into taxation laws in
recognised jurisdictions.
Subclause (1)(a) enables the Commissioner to form an agreement
which confers upon the Commissioner the power to exercise the
investigative functions provided under a recognised law, for the
purposes of a taxation law.
Subclause (1)(b) enables the Commissioner to form an agreement
under which the corresponding Commissioner will, on behalf of
the Commissioner, exercise the investigative functions provided
under a recognised law, for the purposes of a taxation law.
Subclause (2) provides the Commissioner with the power to
authorise any person who is authorised to exercise a function
under Division 2, Part 9 of the Taxation Administration Act
1997 to exercise, on behalf of the Commissioner, any of the
investigative functions conferred upon the Commissioner under
subclause (1)(a).
Subclause (3) provides that an investigative function includes any
function under a recognised law which corresponds to the
functions found in Division 2, Part 9 of the Taxation
Administration Act 1997.
Example
B Company Pty Ltd is a NSW-based company which operates in
both New South Wales and Victoria and pays payroll tax in both
jurisdictions. As part of this year's compliance program, the
Victorian Commissioner of State Revenue would like to visit
B Company's head office in Sydney to examine its compliance
with the Payroll Tax Act 2007 (Vic).
15
To do this, the Commissioner exercises the Commissioner's
power under the new section 90D(1)(a) and enters into an
agreement with the NSW Chief Commissioner of State Revenue
which authorises the Commissioner to exercise any of the
investigative functions found in Division 2, Part 9 of the Taxation
Administration Act 1996 (NSW), which contains the functions
which correspond to those found in Division 2, Part 9 of the
Taxation Administration Act 1997 (Vic), to investigate the
compliance of B Company with the Payroll Tax Act 2007 (Vic).
The Commissioner subsequently, under section 90D(2),
authorises Marc and Robert, both of whom are authorised to
exercise the powers under Division 2, Part 9 of the Taxation
Administration Act 1997 (Vic), to exercise the powers
conferred upon the Commissioner under the agreement with the
NSW Chief Commissioner of State Revenue, to visit
B Company's office and examine its compliance with the Payroll
Tax Act 2007 (Vic).
The new section 90E of the Taxation Administration Act 1997
provides for a certificate of authority for investigations by a
corresponding Commissioner in Victoria.
Subclause (1) provides that the Commissioner must issue a
certificate of authority to any person who is authorised by a
corresponding Commissioner to exercise a function under
Division 2, Part 9 of the Taxation Administration Act 1997,
for the purposes of a recognised law.
Subclause (2) provides that any person who seeks to exercise
a function under Division 2, Part 9 of the Taxation
Administration Act 1997 on behalf of a corresponding
Commissioner for the purposes of a recognised law, must
produce a certificate of authority.
Clause 29 Subclause (1) amends section 92(1)(c) of the Taxation
Administration Act 1997 to permit the disclosure of information
obtained under or in relation to a taxation law to a recognised
jurisdiction where it is for the purposes of administering a
recognised law, including any legal proceedings.
These provisions bring section 92(1)(c) into line with the
language used in Division 2A, Part 9 of the Taxation
Administration Act 1997.
Subclause (2) inserts subparagraphs (vg), (vh) and (vha) into
section 92(1)(e) of the Taxation Administration Act 1997.
The new subparagraphs will permit a tax officer to disclose
information obtained under or in relation to a taxation law to the
Australian Crime Commission, the Australian Securities and
Investments Commission and the Australian Taxation Office.
16
Disclosure to these organisations was previously allowed under
section 7(1) of the Taxation Reciprocal Powers Act 1987.
In particular, subparagraph (vg) permits disclosure to the
Australian Crime Commission for the purposes of enabling it to
perform its statutory functions under the Australian Crime
Commission Act 2002 of the Commonwealth. The Australian
Crime Commission is the principal Australian agency responsible
for monitoring and assisting other Australian law enforcement
agencies to investigate nationally significant crime.
The amendment will allow a tax officer to disclose information
obtained under the administration of Victoria's taxation laws,
which may assist the Commission in its monitoring and
investigation of criminal activity.
Subparagraph (vh) permits disclosure to the Australian Securities
and Investments Commission (ASIC) for the purpose of enabling
it to perform its functions as Australia's corporate, markets and
financial regulator. ASIC is responsible for maintaining the
fairness and transparency of the Australian financial system and
the entities within it, and promoting investor and consumer
confidence with this system. These responsibilities include
monitoring compliance with and prosecuting breaches of the
Corporations Act 2001 of the Commonwealth. This amendment
will allow a tax officer to disclose information obtained under the
administration of Victoria's taxation laws which may assist ASIC
in prosecuting serious corporate crime.
Subparagraph (vha) permits the disclosure of information to the
Australian Taxation Office (ATO) for the purpose of enabling it
to perform its functions as the Commonwealth's principal
revenue collection agency. The ATO is responsible for the
administration of federal taxes, excises and superannuation,
which includes the investigation and prosecution of serious tax
evasion and fraud under the various federal taxation Acts
including the Income Taxation Assessment Act 1936 of the
Commonwealth and the Taxation Administration Act 1953 of the
Commonwealth. This amendment will allow a tax officer to
disclose information obtained under the administration of
Victoria's taxation law which may assist the ATO in managing
the Commonwealth revenue system and protecting the public
revenue.
These amendments are intended to facilitate certain disclosures
previously allowed under section 7 of the Taxation (Reciprocal
Powers) Act 1987. They are not intended to alter the scope of
disclosures previously permitted under that provision.
17
Clause 30 inserts new definitions into section 3 of the Taxation
Administration Act 1997.
notification default is defined to mean--
· a failure to lodge a notice under section 46K of the
Land Tax Act 2005. Section 46K of the Land Tax Act
2005 requires a trustee to notify the Commissioner on
the happening of certain events, including when a
person becomes trustee of land in Victoria, or a trustee
disposes land that is subject to trust; or
· a failure to notify the Commissioner of an error or
omission in accordance with section 104A of the Land
Tax Act 2005. Section 104A is inserted by clause 14 of
this Bill.
Clause 31 makes various amendments to section 29 of the Taxation
Administration Act 1997.
Subclause (1) omits the word "tax" from the heading to
section 29 to indicate that the section applies to both tax defaults
and notification defaults.
Subclause (2) omits the words "in addition to the amount of tax
unpaid" from section 29(1) so that the singular purpose of this
section is to impose penalty tax where a tax default occurs.
Subclause (3) inserts a new section 29(1A) which provides that
a taxpayer will be liable to pay penalty tax where a notification
default occurs. The effect of this amendment is to provide an
effective deterrent and penalty for non-compliance with
sections 46K and 104A of the Land Tax Act 2005.
Subclause (4) amends section 29(4) to provide that penalty tax
imposed under Division 2 of Part 5 of the Taxation
Administration Act 1997 is payable in addition to interest and
any amount of tax unpaid.
Clause 32 makes various amendments to section 30(1) of the Taxation
Administration Act 1997.
Subclause (1) inserts a new section 30(1A), which provides the
amount of penalty tax payable in respect of a notification default
is 25% of the additional amount of tax that the taxpayer would
have been assessed as liable to pay had the notification default
not occurred. Accordingly, penalty tax is not payable where the
taxpayer would have been assessed as liable to pay the same, or a
lesser amount, of tax notwithstanding that a notification default
has occurred.
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Subclause (2) inserts a new section 30(2A) into the Taxation
Administration Act 1997. The new section establishes the
amount of penalty tax which is payable where a notification
default is caused wholly or partly by the intentional disregard by
the taxpayer (or a person acting on the taxpayer's behalf) of
section 46K or 104A of the Land Tax Act 2005. Under section
30(2A) the amount of penalty tax payable is 75% of the
additional amount of tax that the taxpayer would have been
assessed as liable to pay had the notification default not occurred.
Subclause (3) amends section 30(3) of the Taxation
Administration Act 1997 to ensure that it applies to both tax
defaults and notification defaults. Under section 30(3) of the
Taxation Administration Act 1997 the Commissioner can
determine that no penalty tax is payable if the taxpayer (or a
person acting on the taxpayer's behalf) took reasonable care to
comply with a taxation law, or the default occurred because of
circumstances beyond their control.
Clause 33 Subclause (1) amends section 31(1) of the Taxation
Administration Act 1997 to ensure that it applies to both tax
defaults and notification defaults. Section 31(1) of the Taxation
Administration Act 1997 allows the Commissioner to reduce
the amount of penalty tax by 80% where a taxpayer makes a
voluntary disclosure to the Commissioner before an investigation
commences.
Subclause (2) amends section 31(2) of the Taxation
Administration Act 1997 to ensure that it applies to both tax
defaults and notification defaults. Section 31(2) of the Taxation
Administration Act 1997 allows the Commissioner to reduce
the amount of penalty tax by 20% where a taxpayer makes a
voluntary disclosure to the Commissioner after an investigation
commences.
Clause 34 Subclause (1) amends section 32(1) of the Taxation
Administration Act 1997 to ensure that it applies to both tax
defaults and notification defaults. Section 32(1) of the Taxation
Administration Act 1997 allows the Commissioner to increase
the amount of penalty tax by 20% if, after an investigation
commences, the taxpayer takes steps to hinder the Commissioner
from becoming aware of the nature and extent of the default.
Clause 35 amends Schedule 1 of the Taxation Administration Act 1997
to insert item 17, which provides transitional rules for the
application of penalty tax to notification defaults under
Division 2 of Part 5 of the Taxation Administration Act 1997.
19
Subclause (1) provides the transitional rule for a trust notification
default under section 46K of the Land Tax Act 2005. Under that
rule, penalty tax cannot be applied for a trust notification default
if the event that triggers the notification requirement in
section 46K occurs before 1 January 2010. For example, a
taxpayer acquires land as trustee on 1 July 2008, but fails to
notify the Commissioner of the acquisition in accordance with
section 46K of the Land Tax Act 2005. The Commissioner
becomes aware of the trust notification default on 1 January 2010
and assesses the trustee for land tax as a trustee for the 2009 and
2010 tax years. The Commissioner cannot apply penalty tax
because the trust notification default occurred before 1 January
2010.
Subclause (2) provides the transitional rule for an error
notification default under section 104A of the Land Tax Act
2005. Under that rule, penalty tax cannot be applied for an error
notification requirement that relates to an assessment issued
before 1 January 2010. For example, a taxpayer is issued with a
land tax assessment on the 1 December 2009. The assessment
incorrectly specifies that a parcel of land held by the taxpayer is
exempt from land tax. The taxpayer fails to inform the
Commissioner of the error in the assessment within 60 days
resulting in a notification default under section 104A.
Even though the "notification default" occurs after 1 January
2010, the Commissioner cannot impose penalty tax because the
assessment was issued before 1 January 2010.
Subclause (3) inserts a definition for the terms error notification
default and trust notification default which are used in this
clause.
Error notification default is defined to mean a failure to notify
the Commissioner of an error or omission in accordance with
section 104A of the Land Tax Act 2005.
Trust notification default is defined to mean a failure to lodge a
notice under section 46K of the Land Tax Act 2005.
Clause 36 amends section 92(1)(b) of the Taxation Administration Act
1997. Subsection 92(1)(b) now permits the disclosure of
information not only where it is connected with the
administration of a taxation law, but also for the purposes of
administering the Unclaimed Money Act 2008 and the First
Home Owner Grant Act 2000. Information disclosed under this
provision may also be used for the purposes of any legal
proceedings arising out of any of these laws. This clarifies the
relationship between the taxation laws and these Acts which are
also administered by the Commissioner of State Revenue.
20
This clause also amends section 92(1)(e)(iii) and clarifies that the
Victorian Archives Authority is the Public Records Authority
Victoria.
Clause 37 inserts a new section 125(1A) into Part 11 of the Taxation
Administration Act 1997. The new section provides that the
Commissioner may serve court processes in tax recovery matters
by post. The effect of the amendment is to remove any doubt
that section 125 of the Taxation Administration Act 1997
preserves the ability to serve court process by post that existed
under the Stamps Act 1958, Payroll Tax Act 1971, and the
Land Tax Act 1958.
PART 6--REPEAL AND CONSEQUENTIAL AMENDMENTS
Part 6 provides for the repeal of the Taxation (Reciprocal Powers) Act 1987
and the consequential amendments arising from the repeal of that Act.
These amendments repeal redundant references to the Taxation (Reciprocal
Powers) Act 1987 and corresponding law as defined by the Taxation
(Reciprocal Powers) Act 1987, and replace the reference to reciprocal
taxation law with the new terms being introduced by this Bill.
Clause 38 repeals the Taxation (Reciprocal Powers) Act 1987.
Clause 39 repeals section 244 of the Accident Compensation Act 1985.
Rather than amending section 244 to remove a reference to the
Taxation Reciprocal Powers Act 1987, the section is repealed
because section 244 applies in relation to Part 7 of the Accident
Compensation Act 1995 which was repealed by the Accident
Compensation (Amendment) Act 1994.
Clause 40 repeals section 2 of the Business Franchise (Tobacco) Act
1974.
Clause 41 replaces section 77(1)(c) and 77(2) of the Unclaimed Money Act
2008, in light of the amendment to section 92(1)(c) of the
Taxation Administration Act 1997, and the introduction of the
terms recognised jurisdiction and recognised law by this Bill.
PART 7--REPEAL OF AMENDING ACT
Clause 42 provides for the automatic repeal of this Act on 1 October 2011.
The repeal of this Act does not affect in any way the operation of
the amendments and repeal made by the Act (see section 15(1) of
the Interpretation of Legislation Act 1984).
21