Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)Chapter 6 - Compliance enforcement measures
Outline of Chapter
6.1 This Chapter explains the provisions dealing with disqualification for fraud (Part 6) , contrived schemes (Part 7) and civil penalties (Part 8) . These provisions form part of the compliance assurance framework that focuses on countering or deterring non-compliant behaviour.
Detailed explanation of Parts 6, 7 and 8
6.2 Part 6 contains rules disqualifying claimants because of fraudulent acts of the claimant or an individual or entity closely associated with the claimant. They ensure that claimants cannot benefit from a grant or benefit scheme if they, or a person closely associated with their management have knowingly or recklessly made false statements to a person who is exercising powers, or performing functions under the Act or entitlement Act, and that statement results in a greater grant or benefit than they were otherwise entitled to.
Disqualification of claimant for fraud
6.3 A claimant will be disqualified, and taken to have been disqualified from receiving a grant or benefit if the claimant knowingly or recklessly makes a false statement (including omissions) in a material particular that would have resulted in an increased grant or benefit. The disqualification shall be taken as commencing at the start of the payment period in which the disqualification occurred, and ending at the end of 2 years or such shorter period as the Commissioner determines. [Clause 29]
Disqualification for aiding and abetting etc. fraud
6.4 If a claimant knowingly or recklessly makes a false statement (including omissions) that would have resulted in an increased grant or benefit, anyone that aided, abetted, counselled or procured the making of a false statement by an entity, or were in any way, by act or omission, directly or indirectly, knowingly concerned in, or party to, the making of that false statement will also be disqualified. [Clause 30]
Disqualification of body corporate - executive disqualified
6.5 A body corporate will be disqualified from receiving a grant or benefit at a particular time if it has a director, secretary or person who is concerned in, or takes part in, the management of the body corporate that is disqualified under clauses 29 or 30 . [Clause 31]
Disqualification of partnership - partner disqualified
6.6 A partnership will be disqualified from receiving a grant or benefit at a particular time if it has:
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- a partner that is disqualified (including a partner that is a body corporate because a director, secretary or person involved in the body corporate's management is disqualified); or
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- an individual employee that is disqualified and is concerned in, or takes part in, the management of the partnership.
Disqualification of trust trustee disqualified
6.7 A trust will be disqualified from receiving a grant or benefit at a particular time if it has:
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- a trustee that is disqualified (including a trustee that is a body corporate because a director, secretary or person involved in the body corporate's management is disqualified); or
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- an individual employee that is disqualified and is concerned in, or takes part in, the management of the trust.
6.8 Part 7 contains a provision which enables the Commissioner to disregard schemes entered into for the sole or dominant purpose of creating an entitlement to a grant or benefit.
6.9 A scheme is defined to be any agreement, arrangement, understanding, promise or undertaking, whether express or implied and whether or not enforceable, or intended to be enforceable by legal proceedings. A plan, proposal, action, course of action or course of conduct will constitute a scheme if its conduct is unilateral or otherwise. [Subclause 34(3)]
6.10 In the context of the fuel sales grants scheme, the provision is directed against arrangements designed for the sole or dominant purpose of enabling acts or transactions that otherwise would not give rise to a fuel sales grant to be taken into account for the purposes of calculating an entitlement to the grant. The provisions enable the Commissioner to treat those acts or transactions as if they had never happened. [Subclause 34(1)]
6.11 In deciding to treat an act or transaction as never having happened the Commissioner will make a determination to that effect. [Subclause 34(2)]
6.12 The GIC will apply to scheme debts that remain unpaid after the day by which they should have been paid [subclause 35(1)] . This liability represents compensation to the Commonwealth for the time value of the money that you had access to when that money was correctly payable to the Commonwealth.
6.13 A designated scheme debt is a debt resulting from an overpayment or an amount payable by way of penalty for a false statement. The GIC is calculated from the day on which the amount becomes due to be paid. [Subclauses 35(1), (2) and (3)]
6.14 The GIC does not apply to an overpayment debt that arose because of an error made by the Commissioner (provided the product stewardship benefit was received in good faith) or was due to a change in regulations for the purpose of calculating the amount of the product stewardship benefit. [Subclauses 35(4) and (5)]
Penalty for making false statements
6.15 A penalty applies if you make a false statement that results in the amount of a grant or benefit payable exceeding that which would have been payable if you had not made the false statement. The statement may be considered false irrespective of whether or not you knew it was false. The penalty for such a false statement is double the amount of the excess grant or benefit. [Clause 36]
6.16 The Commissioner must make an assessment of a penalty for a false statement and give you notice of the assessment as soon as practicable after the assessment is made. However, failure to notify you of the assessment does not affect the validity of the assessment. The Commissioner may notify you electronically or the notification may be included in another type of notice the Commissioner gives you. The penalty becomes due and payable on the day specified in the notice but must be at least 14 days after the notice is given to you. [Clause 37]
6.17 The Commissioner may amend an assessment of penalty at any time [clause 39] . The Commissioner is also able to remit some or all of the penalty if the Commissioner is satisfied that it is fair and reasonable to do so [clause 38] .
6.18 The production of a notice of assessment of penalty is conclusive evidence that the assessment was properly made, except in proceedings for the review of the penalty assessment. [Clause 40]
Relationship with offence provisions
6.19 None of the conduct covered by this Part can be considered to be an offence, however, some conduct could constitute an offence under other Parts. [Clause 41]