Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)Chapter 3 - Consequential amendments
Outline of chapter
3.1 This chapter explains the consequential amendments to the Product Grants and Benefits Administration Act 2000, the Diesel and Alternative Fuels Grants Scheme Act 1999, the Customs Act 1901, the Excise Act 1901, the TAA 1953, the A New Tax System (Australian Business Number) Act 1999 and the ITAA 1936 made by Schedules 1 to 6 to the Energy Grants (Credits) Scheme (Consequential Amendments) Bill 2003.
3.2 This chapter also explains the transitional arrangements applying to the EG(C)S.
THE AMENDMENT OF THE PGBAA
Context of amendments
3.3 These amendments make changes to the PGBAA to accommodate the prospective nature of the EG(C)S and to incorporate some of the administrative and compliance features of the DFRS and DAFGS. The amendments also provide for the seamless transition of existing DFRS and DAFGS claimants to the new administrative framework.
3.4 The amendments also provide for the application of the public and private rulings provisions in the TAA 1953 to grants and benefits administered under the PGBAA.
Detailed explanation of new law
Registration for grants and benefits
3.5 Under the new arrangements an approved form of application for registration is application by telephone. A telephone signature within the meaning of subsection 388-75(4) of Schedule 1 to the TAA 1953 does not have to be provided when applying for registration for entitlement to a specific grant or benefit. [Schedule 1, items 4 and 5]
3.6 Registration is a prerequisite for the claiming of a grant or benefit but it is not a confirmation that a grant or benefit will be paid on presentation of a claim. The Commissioner will generally permit claimants to self-assess their eligibility for purposes of registration. If a claimant is uncertain as to whether they are entitled to an energy grant, they may apply for a private ruling.
3.7 Paragraphs 9(2)(a) to (c) amend the existing general requirements for registration to allow for registrations of persons who do not have an ABN. If a claimant does not have an ABN and is not entitled to have an ABN they may provide evidence of a kind determined by the Commissioner of their identity and address. [Schedule 1, item 6]
3.8 The specific requirement for registration for energy grants is that the Commissioner is satisfied that a potential claimant would be entitled to a fuel grant under the EG(C)S. [Schedule 1, item 7, subsection 9(4)]
3.9 The Commissioner may cancel a registration if the Commissioner is satisfied that the claimant at the time of registration did not satisfy the registration requirements contained in section 9, or subsequently ceased to satisfy those requirements. [Schedule 1, item 8, subsection 11(2)]
Payments of grants and benefits
3.10 A claimant may make a claim for purchases over any period the claimant chooses, subject to any determination by the Commissioner. [Schedule 1, item 9, section 12]
3.11 The Commissioner may issue guidelines providing that advances are not to be made in respect of a particular grant or benefit. [Schedule 1, item 10, subsection 14(1A)]
3.12 A claimant is not entitled to a grant or benefit unless they make a claim for payment of the grant or benefit in respect of a claim period during which the entitlement arose. [Schedule 1, item 11, subsection 15(1)]
3.13 The existing prohibition on submitting more than one claim for the same or overlapping periods has been removed. [Schedule 1, item 12, paragraph 15(2)(a)]
3.14 A claim for a grant or benefit must be given to the Commissioner within 3 years after the earliest purchase of the fuel during the claim period. [Schedule 1, item 13, paragraph 15(2)(e)]
3.15 Claimants may apply to the Commissioner for permission to authorise a third party to make claims on their behalf. [Schedule 1, item 15, section 15A]
Drawback, refund, rebate or remission
3.16 An applicant for an off-road credit is required to notify the Commissioner when making a claim for a grant of any drawback, refund, rebate, or remission that they have received in respect of the same fuel. The amount of off-road credit payable may be reduced by the amount of drawback, refund, rebate remission received by the applicant. [Schedule 1, item 16, section 16A]
3.17 The existing arrangements are amended to provide that a notice of assessment need not issue unless the assessment of entitlements is different to the amount of the grant or benefit claimed. [Schedule 1, item 17, subsection 19(1)]
3.18 Under section 19 the Commissioner may give a notice of assessment in any manner or form. [Schedule 1, item 18]
3.19 Where the Commissioner gives a notice of assessment under Part 4, the production of that notice is conclusive evidence that the assessment was properly made, and except when the assessment itself is the subject of review proceedings, that the amounts and particulars in the assessment are correct. [Schedule 1, item 19, section 22]
3.20 A system of binding rulings has applied to income tax (and fringe benefits tax) matters for some years. The new provisions in the PGBAA will largely mirror existing provisions in the ITAA 1997 in relation to public and private rulings, and will be legally binding on the Commissioner where they are favourable to a claimant. This will provide claimants with the ability to determine with certainty the grants and benefits they are entitled to receive.
3.21 In some instance, provisions in the income tax legislation would serve no purpose in the PGBAA and have not been replicated. In addition, various terms appearing in the income tax legislation have been replaced with other terms to suit the requirements of the PGBAA. For example, the term 'claim period' is used in the PGBAA instead of the term 'income year'.
3.22 The new binding rulings provisions will apply to all grants and benefits payable under the PGBAA.
3.23 Public and private rulings will affect product grant or benefit assessments where:
- •
- a ruling states that the law applies to a claimant in a particular way; and
- •
- the ruling would result in the claimant being entitled to a higher energy grant in respect of an assessment for a particular claim period than it would if the law were applied in the absence of the ruling.
In these cases, the assessment and the amount of the grant or benefit must be calculated in accordance with the ruling. [Schedule 1, item 20, subsections 24B(2), 24C(2) and 24D(3)]
3.24 Under the provisions of the Energy Grants (Credits) Scheme Bill 2003 an entity will not be able to use the new rulings provisions to obtain a double grant or benefit.
Arrangements that are covered by a binding ruling
3.25 A public ruling applies to an entity to the extent to which it relates to an arrangement entered into by that entity. Private rulings are more specific than public rulings in that they specify the entity, claim period and arrangement covered by the ruling. A private ruling will apply to an entity in relation to an arrangement, provided the arrangement is materially the same as the arrangement described in the ruling. There may be some minor differences between an arrangement dealt with in a ruling and the arrangement actually carried out, but provided the differences are not so material that the Commissioner might have given a different ruling, the ruling will still apply to the actual arrangement.
Example 3.1
A claimant obtains a private ruling confirming their entitlement to an on-road credit in respect of a particular type of fuel they propose to purchase from a particular fuel supplier and use in a particular manner. If the claimant obtains fuel of the same type but from another supplier, the ruling will still be effective.
Assessments affected by ruling
3.26 The binding rulings provisions [Schedule 1, item 20, sections 24B, 24C and 24D] will only apply in relation to an assessment for a claim period if there is a binding ruling that deals with an arrangement wholly or partly carried out in the same claim period. For instance, a claimant may have obtained a private ruling to the effect that certain fuel purchased in December 2003 in relation to an arrangement being carried out in that period gives rise to an on-road credit. The claimant's energy grant entitlement will be calculated in accordance with the ruling if this would give rise to a higher grant entitlement than would be allowable if the law were to be applied in the absence of the ruling. The binding rulings provisions will effectively ensure that a grant is allowed for the expenditure that would otherwise not be claimable.
Example 3.2
The Commissioner gives a claimant a private ruling that an amount of $5,000 spent on fuel in December gives the claimant an entitlement to an on-road credit, despite the fact the claimant stated in their ruling request that the fuel was to be used in a truck weighing only 3 tonnes.
As the truck weighs less than 4.5 tonnes, no credit is properly allowable under the law.
However, if the assessment was made in accordance with the private ruling, a credit would be available in respect of the $5,000 fuel purchase.
In this case, the amount of the grant under an assessment made in accordance with the law would be less than the grant if an assessment was made in accordance with the ruling. The binding rulings provisions would apply so that a grant would be payable in respect of the $5,000 fuel purchase.
Dealing with conflicting rulings
3.27 There will be occasions where two or more rulings may apply to the same claimant in respect of the same claim period. For example, a public ruling may be withdrawn and replaced with another public ruling. The old ruling will continue to apply to arrangements that a claimant had commenced prior to the withdrawal of the ruling (existing section 14ZAAL of the TAA 1953). The new ruling will have a past, present and future effect (existing subsection 14ZAAH(1) of the TAA 1953). Therefore if the former and current rulings would result in an entity enjoying a different grant entitlement, but both rulings would result in a higher entitlement than would be the case if the law were applied in the absence of the rulings, section 24B would apply in respect of both rulings.
3.28 There could be a similar conflict between public and private rulings. For example, a public ruling may be issued that conflicts with an existing private ruling. If the claimant has already commenced the arrangement to which the private ruling relates, the private ruling cannot be withdrawn (except in limited circumstances) and both rulings could potentially apply. The same potential for conflict should not arise with private rulings, because they are required to be specific to a claim period, and where a private ruling is withdrawn, it is taken to have never been of effect.
3.29 The law will deal with cases involving conflicting rulings by ensuring there is only one application of the binding rulings provisions and that it is the one which provides the entity with the greatest benefit. [Schedule 1, item 20, subsection 24D(3)]
Tribunal Decision about private ruling
3.30 Where the AAT reviews an objection decision about a private ruling and determines the way the product grant or benefit law applies to a claimant in respect of a claim period in relation to an arrangement, the AAT's decision will override any decision of the Commissioner as to the application of the law and will also overrule the private ruling. The law will apply to the claimant, in respect of that period, in respect of that arrangement in the manner decided by the AAT. [Schedule 1, item 20, section 24E]
3.31 The AAT's decision has effect when the decision is final, that is, when the period for lodging an appeal against the decision has expired and an appeal has not been lodged, and the arrangement covered by the ruling has commenced.
3.32 The AAT's decision about how the law applies will be effective regardless of any conflicting decision by the AAT or court about the application of that particular law to someone else [Schedule 1, item 20, subsection 24E(3)]. This means that claimants affected by an AAT decision are not entitled to self amend to give effect to a subsequent AAT or court decision in respect of someone else that would be more favourable to them.
Court order about private ruling
3.33 Where a court makes an order that a product grant or benefit law applies in a particular way to a claimant in respect of a claim period in relation to an arrangement, the law will apply in that way [Schedule 1, item 20, section 24F]. Nothing can change that, not even a conflicting decision by a higher court about the application of that law to another claimant [Schedule 1, item 20, subsection 24F(3)].
3.34 As with decisions of the AAT, a court's order becomes effective in deciding the law when the order is final and the particular arrangement has commenced to be carried out. [Schedule 1, item 20, subsection 24F(4)]
3.35 There will be cases where a court order about a private ruling does not decide the law that is to apply. This will happen where a court is asked to decide whether the Commissioner can lawfully exercise a discretion in the way specified in a private ruling (a court cannot exercise the Commissioner's discretions but the AAT can). If the court orders that the Commissioner can lawfully exercise the discretion in that way, and the Commissioner does so, the Commissioner will have acted lawfully [Schedule 1, item 20, subsection 24G(3)]. There could not be any further review of the matter.
3.36 An order of the court to the effect that, if the Commissioner exercised a discretion in a particular way, the Commissioner will have acted lawfully, does not prevent the Commissioner from exercising the discretion in a different way. If the Commissioner does exercise the discretion in a different way and in a way that would cause the grant or benefit under an assessment to be less than if the ruling applied, the binding rulings provision [Schedule 1, item 20, section 24C] ensures that any assessment that would be affected by the Commissioner's contrary decision is made on the basis of the private ruling [Schedule 1, item 20].
3.37 In relation to a claim for an energy grant claimants must keep records after they have made a claim to enable them to substantiate that they have not lost their entitlement to a grant because of any disqualifying use set out in sections 225 and 255 of the Energy Grants (Credits) Scheme Bill 2003. [Schedule 1, item 22, subsections 27(1A) to (1D)]
3.38 A claimant must notify the Commissioner within 90 days or such longer period as the Commissioner allows, of fuel for which a grant has been paid that has subsequently been used in an ineligible activity, or an activity that does not qualify for the same amount of grant, is lost, stolen or otherwise disposed of. [Schedule 1, item 23, section 27A]
Disqualification for aiding or abetting fraud
3.39 A claimant will be disqualified from receiving a grant or benefit for aiding or abetting a fraud. The period of disqualification is 2 years or such shorter period as the Commissioner determines. [Schedule 1, item 24]
3.40 Under section 42(2) of the PGBAA, if the Commissioner has reason to believe that a person has information and is capable of giving evidence to the Commissioner that is relevant to the operation of a grants or benefits scheme, the Commissioner has the power to compel the person to provide information.
3.41 After giving written notice to the person the Commissioner may require the person to provide information, attend and give evidence and produce documents.
3.42 The amendment to insert subsection 42(2A) provides that if a claimant fails to comply with a written notice by the Commissioner under subsection 42(2), the Commissioner must not make an assessment in relation to an existing or new claim to entitlement to a grant or benefit until the claimant complies with the requirement. [Schedule 1, item 26]
3.43 Under subsection 45A(2) if a claim is made for entitlement to a grant or benefit the Commissioner may, in writing require the claimant to demonstrate the method, or the operation of any record keeping or accounting system used in arriving at particulars or estimates included in the claim.
3.44 The Commissioner may conduct testing of such record keeping or accounting system as is reasonably necessary to determine the accuracy or the system in arriving at particulars or estimates.
3.45 If a claimant fails to comply with a written notice by the Commissioner under subsection 45A(2), the Commissioner must not make an assessment in relation to an existing or new claim for entitlement to a grant or benefit until the claimant complies with the requirement. [Schedule 1, item 27, section 45A]
Application and transitional provisions
3.46 The amendments made by Schedule 1 to sections 9 and 15 of the PGBAA apply to applications or claims after commencement of that Schedule.
3.47 The amendments made to subsection 11(2) apply to registrations taking place before or after the commencement of item 8. [Schedule 1, item 28]
3.48 If a claimant was registered at the end of 30 June 2003 for entitlement to fuel grants under section 7 of the Diesel and Alternative Fuels Grants Scheme Act 1999, or a claimant was recorded as at the end of 30 June 2003 in the generic payments system administered by the ATO as a participant in the DFRS, a claimant will be taken as registered at the start of 1 July 2003 under the PGBAA for entitlement to an energy grant. [Schedule 1, item 29]
3.49 If at the end of 30 June 2003 a claimant had given authorisation for a third party to make claims under the Diesel and Alternative Fuels Grants Scheme Act 1999 or on their behalf applications for the DFRS under the Customs Act 1901 or the Excise Act 1901, that authorisation will continue to have effect under the PGBAA from 1 July 2003 and will be subject to any terms and conditions the authorisation was subject to. [Schedule 1, item 30]
REPEAL OF THE DIESEL AND ALTERNATIVE FUELS GRANTS SCHEME ACT 1999
Context of amendments
3.50 The Diesel and Alternative Fuels Grants Scheme Act 1999 is to be replaced by the EG(C)S. The EG(C)S will maintain entitlements equivalent to those currently available in respect of the DAFGS administered under the Diesel and Alternative Fuels Grants Scheme Act 1999. The Diesel and Alternative Fuels Grants Scheme Act 1999 is therefore to be repealed. [Schedule 2, item 1]
Application and transitional provisions
3.51 Under the transitional provision DAFGS claims made under section 15 of the Diesel and Alternative Fuels Grants Scheme Act 1999 before 1 July 2003 in respect of diesel fuel or alternative fuel used during a grant period ending before 1 July 2003 will continue to be subject to the Diesel and Alternative Fuels Grants Scheme Act 1999 as if it had not been amended by this bill. [Schedule 2, item 2]
3.52 In addition, claims under section 15 of the Diesel and Alternative Fuels Grants Scheme Act 1999 can be made in relation to fuel used before 1 July 2003 at any time from 1 July 2003 until the end of 30 November 2003 provided no claim for an energy grant has been made in respect of the same fuel under the PGBAA. Such applications will continue to be subject to the Diesel and Alternative Fuels Grants Scheme Act 1999 as if it had not been amended by this bill. [Schedule 2, item 2]
3.53 A determination in force under section 10A of the Diesel and Alternative Fuels Grants Scheme Act 1999 at the end of 30 June 2003 will continue to have application at the start of July 2003 as if it had been made under section 30 of the Energy Grants (Credits) Scheme Act 2003.
AMENDMENT OF THE CUSTOMS ACT 1901 AND THE EXCISE ACT 1901
Context of amendments
3.54 The DFRS is to be replaced by the EG(C)S . The EG(C)S will maintain entitlements equivalent to those currently available in respect of the DFRS administered under the Customs Act 1901 and Excise Act 1901. These amendments will repeal the DFRS provisions in the Customs Act 1901 and the Excise Act 1901 and amend associated provisions accordingly.
Application and transitional provisions
3.55 Under the transitional provisions diesel fuel rebate applications made under section 164 of the Customs Act 1901 (section 78A of the Excise Act 1901 ) before 1 July 2003 in respect of fuel purchased before 1 July 2003 will continue to be subject to the Customs Act 1901 (or Excise Act 1901 ) as if it (they) had not been amended by this bill.
3.56 In addition, an application under section 164 of the Customs Act 1901(section 78A of the Excise Act 1901 ) can be made in relation to fuel purchased before 1 July 2003 at any time from 1 July 2003 until the end of 30 November 2003 provided no claim for an energy grant has been made in respect of the same fuel under the PGBAA. Such applications will continue to be subject to the Customs Act 1901 (or Excise Act 1901 ) as if it (they) had not been amended by this bill. [Schedule 3, item 25; Schedule 4, item 18]
AMENDMENT OF THE TAXATION ADMINISTRATION ACT 1953
Context of amendments
3.57 The amendments to Schedule 5 make changes to the TAA 1953 to accommodate the new arrangements under the PGBAA for the administration of the EG(C)S.
Detailed explanation of the new law
3.58 The amendments to the TAA 1953 repeal references to the DFRS and the Diesel and Alternative Fuels Grants Scheme Act 1999, exclude the PGBAA from the application of the running balance account provisions in Part IIB, and include the PGBAA in the application of sections 8AAZMA (electronic payment of tax debts) and 8AAZM (when payments are treated as received). [Schedule 5, items 9 to 12]
3.59 Amendments are also made to the TAA 1953 to bring the PGBAA within the scope of the public and private rulings regime in parts IVAAA and IVAA of the TAA 1953. [Schedule 5, items 15 to 26]
Application and transitional provisions
3.60 The transitional provisions ensure the continued application of the TAA 1953 provisions for claims lodged before 1 July 2003 under the Diesel and Alternative Fuels Grants Scheme Act 1999. [Schedule 5, item 29]
Transitional extension of Energy Grants (Credits) Scheme
3.61 The DFRS and DAFGS will end on 30 June 2003.
3.62 These transitional arrangements provide for entitlements that would otherwise expire because of the sunset provisions of the DFRS and DAFGS to be preserved for 3 years under the EG(C)S. A person will be able to claim an energy grant for fuel purchased within 3 years of a claim being made, provided that a claim has not already been made for the fuel under the DFRS provisions or the Diesel and Alternative Fuels Grants Scheme Act 1999. [Schedule 7, item 1]