Explanatory Memorandum
Circulated By the Authority of the Treasurer, the Hon Wayne Swan MpChapter 4
Use of tax file numbers
Outline of chapter
4.1 Part 4 of Schedule 1 to this Bill amends the taxation law to provide for the usage of tax file numbers (TFNs) to facilitate the administration of the Financial Claims Scheme (FCS).
Context of amendments
4.2 The Australian Prudential Regulation Authority (APRA) as administrator of the FCS needs to identify depositors in a failed authorised deposit-taking institution (ADI) to ensure that early access payments to depositors do not exceed the maximum amount per depositor. The TFN is a unique identifier that has been used by various government agencies to facilitate the administration of legislation.
Summary of new law
4.3 The Bill amends the Banking Act 1959 to provide for the use of TFNs under the FCS to assist in identifying depositors in a failed ADI. The Bill also amends section 202 of the Income Tax Assessment Act 1936 (ITAA 1936) to expand the objects of the TFN system to include the recording, use and disclosure of TFNs to facilitate the FCS. In addition, the Bill amends subsection 8WB(1A) of the Taxation Administration Act 1953 (TAA 1953) to provide that an offence is not committed where a person records, uses or discloses TFNs for the purposes of the FCS.
Detailed explanation of new law
4.4 APRA is the administrator of the FCS and arranges for depositors in a failed ADI to have early access to their funds subject to a prescribed limit. In order for APRA to ensure that early access payments to depositors do not exceed the maximum prescribed limit per depositor under the FCS, TFNs and other personal information provided by depositors to the failed ADI will be used to assist in identifying depositors.
4.5 Where depositors have quoted their TFN to an ADI that has become subject to the FCS, the Bill amends the Banking Act 1959 to permit the TFN to be used for the purposes of administering the FCS. The TFN would be used in conjunction with other information, including personal information held by the ADI in order to identify total deposits held by depositors with that ADI. [Schedule 1, item 15, subsection 16AK(3) of the Banking Act 1959]
4.6 The ADI would be able to disclose this information to APRA for the purposes of the administration of the FCS. It could also disclose it to any other recipients authorised by APRA to perform duties as part of the FCS.
4.7 In order to facilitate those purposes, the Bill amends the ITAA 1936 to permit the use of the TFN for the purposes of the FCS. [Schedule 1, item 58, paragraph 202(q) of the Income Tax Assessment Act 1936]
Consequential amendments
4.8 A number of consequential amendments are required to prevent the recording, usage and disclosure of TFNs pursuant to paragraph 202(q) of the ITAA 1936 being treated as an offence against the secrecy provision in subsection 8WB(1) of the TAA 1953. The Bill contains amendments to subsection 8WB(1A) of the TAA 1953 to exclude from the offence provision, usage of the TFN in relation to the FCS. [Schedule 1, item 60,paragraphs 8WB(1A)(a) and (b)]