House of Representatives

Explanatory Memorandum

Circulated By the Authority of the Treasurer, the Hon Wayne Swan Mp

Chapter 2 - Secrecy and disclosure of information

Outline of chapter

2.1 This chapter outlines the provisions which deal with protected information and how it may be exchanged between Commonwealth agencies and between the Commonwealth and the States and Territories.

Context of amendments

2.2 The First Home Saver Accounts Act 2008 (FHSA Act) has a number of provisions which deal with protected information and how it can be disclosed.

2.3 The First Home Saver Accounts (Further Provisions) Amendment Bill 2008 makes a number of amendments to ensure the secrecy provisions enable agencies to share information they require to properly administer their statutory obligations, while also ensuring the privacy of account holders is protected.

Detailed explanation of new law

Protected information

2.4 The secrecy provisions in the FHSA Act are intended to apply only to the information that is obtained by the Commissioner of Taxation (Commissioner) under the FHSA Act. Notably, this is consistent with the approach taken in the Superannuation Industry (Supervision) Act 1993 (SIS Act), which is another Act in which administration is shared by the Commissioner, the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC).

2.5 As both APRA and ASIC have a role in administering the FHSA Act and will receive FHSA information in the course of performing their functions in relation to FHSAs, the definition of 'protected information' in the FHSA Act is being amended to ensure that information obtained directly by APRA and ASIC is excluded. Such information will instead be protected by ASIC and APRA's own secrecy provisions contained in section 56 of the Australian Prudential Regulation Authority Act 1998 (APRA Act) and section 127 of the Australian Securities and Investment Commission Act 2001 (ASIC Act). [Schedule 2, item 13, section 18 of the FHSA Act]

2.6 This exclusion, however, does not apply to information that APRA and ASIC receive from the Commissioner which will continue to be protected under the FHSA Act. This is consistent with other taxation secrecy and disclosure provisions which ensure that information obtained by the Commissioner continues to be protected under the same rules even where this information has been disclosed to other Commonwealth Government agencies. [Schedule 2, item 13, paragraph 18(b) of the FHSA Act]

2.7 To ensure that secrecy provisions in the ASIC Act and the FHSA Act do not both apply to information obtained by ASIC from the Commissioner, the secrecy provision in the ASIC Act is being amended to ensure it does not capture information disclosed to ASIC by the Commissioner under the FHSA Act. This amendment ensures that such information is not captured by section 127 of the ASIC Act. [Schedule 2, item 1, subsection 127(1AA) of the ASIC Act]

2.8 The same result in respect of information disclosed to APRA is achieved by amending the definition of 'prudential regulation law' in the Australian Prudential Regulation Authority Regulations 1998 .

Persons captured by the secrecy provision

2.9 Currently the secrecy provisions in the FHSA Act apply to, amongst others, a person who is or has been 'appointed or employed by, or a provider of services for, the Commonwealth'. To overcome some uncertainty as to whether this applies to employees of APRA and ASIC who may receive protected information, this definition is being amended to apply to persons who acquire protected information in the course of their employment, or because of their employment. However this does not include employees of entities to whom the information relates. [Schedule 2, item 28, paragraph 70(1)(c) of the FHSA Act]

Disclosing protected information

Disclosure to APRA and ASIC

2.10 As noted above, both APRA and ASIC perform functions in relation to FHSAs. APRA is responsible for the prudential regulation of FHSA providers and ASIC is responsible for the Australian Financial Services Licence regime under the Corporations Act 2001 (Corporations Act) as it applies to FHSA providers, as well as Product Disclosure Statements and other disclosure obligations which apply to FHSAs. In carrying out these responsibilities, APRA and ASIC may require information from the Commissioner.

2.11 While subsection 70(6) of the FHSA Act currently permits the Commissioner to disclose protected information to anyone for the purposes of carrying out functions in relation to the FHSA Act, the role for APRA and ASIC in relation to FHSAs are not confined to the FHSA Act. APRA and ASIC must also exercise functions under other Acts that they administer (for instance, the Banking Act 1959 and the Life Insurance Act 1995 for APRA and the Corporations Act for ASIC). Therefore, to ensure that APRA and ASIC can obtain the necessary information to carry out these functions, these amendments allow the Commissioner to disclose protected information (within the meaning of the FHSA Act) to APRA and ASIC:

•

in relation to APRA - for the purpose of APRA performing its functions in relation to FHSAs; and

•

in relation to ASIC - for the purpose of ASIC performing its functions in relation to FHSAs.

[Schedule 2, item 33, subsection 70(7A) of the FHSA Act]

2.12 The term 'in relation to FHSAs' is intended to be broad enough to cover a reference to 'FHSA providers' or any other aspect of the FHSA system.

2.13 As the Commissioner will also collect information relating to FHSAs under the Income Tax Assessment Act 1936 (ITAA 1936), the Income Tax Assessment Act 1997 and Schedule 1 to the Taxation Administration Act 1953 (TAA 1953), the relevant secrecy provision relating to these Acts (section 16 of the ITAA 1936) is being amended to permit the disclosure of information to ASIC and APRA for the purpose of performing their functions in relation to FHSAs. [Schedule 2, item 38, paragraph 16(4)(hca) of the ITAA 1936]

2.14 This is consistent with the approach taken in relation to the SIS Act which is another Act in which all three agencies share administration. Paragraph 16(4)(hca) of the ITAA 1936 currently allows the Commissioner to disclose income tax information to 'the Australian Prudential Regulation Authority or the Australian Securities and Investments Commission, for the purpose of [their] administration of the [SIS Act]'.

2.15 The reference to protected document is removed from the provision relating to disclosure to a court as it is superfluous. [Schedule 2, item 32, subsection 70(5) of the FHSA Act]

2.16 To ensure consistency, a definition of FHSA is included in the ITAA 1936 which gives FHSA the same meaning as in the FHSA Act. [Schedule 1, item 5, subsection 6(1) of the ITAA 1936]

'On-disclosure' of information by APRA and ASIC

2.17 As described in paragraph 2.9, the secrecy provisions in section 70 of the FHSA Act apply to employees of APRA and ASIC.

2.18 As a result of other amendments in the FHSA (Further Provisions) Bill, once ASIC and APRA receive information from the Commissioner under section 70 they will continue to be bound by section 70 of the FHSA Act.

2.19 In addition, other amendments in the FHSA (Further Provisions) Bill allow the Commissioner to disclose information to APRA and ASIC for purposes of their administration of FHSAs.

2.20 However, under the current law, irrespective of the reason for which APRA and ASIC receive the information, they can only then 'on-disclose' the information (even internally) in accordance with subparagraphs 70(2)(b)(i) and (ii) - that is, under or in relation to the FHSA Act or in the performance of their duties under the FHSA Act.

2.21 To ensure that APRA and ASIC can use protected information for the purpose for which they received the information from the Commissioner under section 70, an amendment is being made so that once APRA or ASIC receive information from the Commissioner they can use that information for the purposes of performing their respective duties. [Schedule 2, item 31, subparagraph 70(2)(b)(ii) of the FHSA Act]

Example 3.1

Michael, an authorised ATO officer involved in administering the FHSA Act, discloses protected information obtained under the FHSA Act to Sam, an employee of APRA for the purposes of enabling Sam to administer provisions in the Banking Act 1959 incidental to the prudential regulation of a particular FHSA provider. It is not an offence for Michael to disclose that information, nor for Sam to on-disclose the information in the performance of his duties as an APRA employee.

2.22 Amendments are also being made to make the prohibition on the use of protected information clearer. These amendments ensure that information can be disclosed in either of the situations mentioned in paragraph 70(2)(b). [Schedule 2, items 29 and 30, subparagraphs 70(2)(b)(i) and (ii) of the FHSA Act]

Disclosure to the States and Territories

2.23 In each State and Territory, the Commissioner of State or Territory Taxation administers the State or Territory's First Home Owner Grant Acts. State or Territory Commissioners do extensive compliance work in relation to the grants, including whether home buyers do actually live in the homes that they buy.

2.24 Access to this information by the Commissioner would greatly assist in the administration of FHSAs and, in particular, in conducting effective compliance work. In order to facilitate information sharing, these amendments put in place provisions that will enable the Commissioner to provide FHSA information to State and Territory taxation officers in instances where First Home Owner Grant information can be provided in return.

2.25 To achieve this, the TAA 1953 is being amended to allow the Commissioner to disclose FHSA information to a State taxation officer for the purposes of the administration of a First Home Owner Grant Act if the officer is authorised by law to communicate information to the Commissioner. A State taxation officer, for the purposes of these provisions, includes a Territory taxation officer. [Schedule 2, item 42, subsection 13J(9) of the TAA 1953]

2.26 The current law provides that information can only be provided to State and Territory taxation officers where 'similar information' can be provided in return. While this was intended to ensure that any exchange of information was on a reciprocal basis, the ambiguity of what constitutes 'similar' information created significant uncertainty and problems in administering this provision. Therefore, to overcome this ambiguity and maintain some requirement for reciprocity, these amendments will remove the requirement that the information be 'similar' but will require that information can be disclosed to the Commonwealth under the State tax law. [Schedule 2, item 41, subsection 13J(1) of the TAA 1953]

2.27 The States and Territories have agreed to put in place arrangements by which they can share their First Home Owners Scheme information with the Commonwealth and vice versa.