House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Treasurer, the Hon J. B. Hockey MP)

Chapter 13 - Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015 and Foreign Acquisitions and Takeovers Fees Imposition Bill 2015

13.1 These Bills are compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

13.2 The Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015 (Bill) makes the most far-reaching changes to Australia's foreign investment framework since the Foreign Acquisitions and Takeovers Act 1975 (Act) was enacted. Australia welcomes foreign investment because of the important role it plays in the development of the economy. However, it is necessary to have a robust and flexible legal framework which permits the Treasurer to block or modify any proposed investment that is contrary to the national interest or to impose conditions on the way a proposal is, or an acquisition has been, implemented to ensure it is not contrary to the national interest. The framework provided by the Bill will increase the community's confidence in foreign investment in Australia while at the same time providing a predictable and welcoming environment for foreign investors.

Who is regulated by the Bills?

13.3 The main amendments to the Act, which are in Schedule 1 to the Bill, primarily apply to certain actions taken by a foreign person. 'Foreign person' is relevantly defined by new section 4 of the Act to include an individual who is 'not ordinarily resident in Australia' as well as a trustee (who may be an individual) of certain trusts.

13.4 An individual who is not an Australian citizen is considered to be 'ordinarily resident in Australia' at a particular point in time if:

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the individual has been in Australia during 200 or more days in the preceding 12 months; and

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at the particular point in time the individual is in Australia and the individual's continued presence is not subject to any limitation as to time imposed by law; or

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if the individual is not in Australia at the particular point in time but immediately before the individual's most recent departure from Australia the individual's continued presence in Australia was not subject to any limitation as to time imposed by law (see new section 5).

Regulated acquisitions

13.5 A foreign person must not take certain actions without first notifying the Treasurer (new section 81). These actions are called 'notifiable actions'. The acquisition of certain interests in an agribusiness, an Australian entity, or an interest in Australian land, are all notifiable interests. Generally, an action is only a notifiable action if the entity, business or land meets the applicable monetary threshold (new section 47).

13.6 The Bill also gives the Treasurer certain powers over actions that are referred to as 'significant actions'. Broadly, a significant action is an action to acquire interests in securities, assets or Australian land, or otherwise an action in relation to entities (that is, corporations and unit trusts) and businesses that have the requisite connection with Australia. An action in relation to an entity or business will only be a significant action if the action results in a change in control involving a foreign person or to be taken by a foreign person, unless an action related to an agribusiness or land (new section 40 to 43 and 51 to 54).

13.7 If the Treasurer is notified that a person is proposing to take a significant action, the Treasurer may:

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decide to not object to the action and give the person a no objection notification not imposing conditions;

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decide not to object to the action provided the person complies with one or more conditions and give the person a no objection notification imposing conditions; or

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decide that taking the action would be contrary to the national interest and make an order prohibiting the proposed significant action.

13.8 If a significant action has already been taken which the Treasurer is satisfied is contrary to the national interest, the Treasurer may make an order under new section 69, known as a disposal order, which is directed at undoing the action. For example, the Treasurer could order a person to dispose of their shares by a specified time. Alternatively, the Treasurer could impose conditions.

13.9 A foreign person is not obliged to inform the Treasurer that they are proposing to take a significant action unless the action is also a notifiable action. However, it is anticipated that some foreign persons will choose to notify the Treasurer because they will want the certainty offered by a no objection notification. Under new section 70, if a foreign person is given a no objection notification in relation to the significant action, provided the person does not take any action which is not specified by the notification, the Treasurer will generally not be able to make a disposal order.

13.10 The question of whether a particular investment is contrary to the national interest will be a matter for the Treasurer. While each proposal will be considered on a case-by-case basis, the factors that may be relevant to the Treasurer's decision will include the impact of the proposed investment on Australia's national security, the economy and the community, competition, other Government policies (including taxation), and the character of the investor. When considering an application to acquire an interest in residential land, generally consideration will also be given to whether the proposed investment would add to Australia's housing stock.

Fees

13.11 Fees will be payable in relation to applications made and orders made, and notices and notifications given. The amounts of the fees are specified in the Foreign Acquisitions and Takeovers Fees Imposition Bill 2015 (Imposition Bill). Fees are payable to ensure that foreign persons and others who take action regulated by the Act bear the costs relating to the administration of the Act.

Offences

13.12 A person may commit an offence or contravene a civil penalty provision if they fail to comply with certain obligations created by the new Act. An infringement notice may be given in relation to certain civil penalties. Most of the offences and all the civil penalty provisions created by the Bill are in new Part 5 of the Act.

Record keeping and confidentiality

13.13 New Part 7 of the Act seeks to ensure that information provided under this Act is not disclosed unnecessarily or put to unauthorised use. New Part 7 also requires certain records to be made and kept.

13.14 Information that is obtained for the purposes of this Act, which is called 'protected information', may be disclosed only for authorised purposes. New Division 3 of Part 7 of the Act sets out the circumstances in which information may be disclosed. A person who obtains, uses or discloses protected information other than as authorised by this Act may commit an offence.

Confidentiality requirements in other Acts

13.15 The Bill envisages that the Commissioner of Taxation (Commissioner) will exercise particular powers and functions under the Act. Schedule 4 to the Bill makes a number of consequential amendments to Schedule 1 to the Taxation Administration Act 1953 (TAA 1953). These amendments support the effective administration of the Bill and the Register of Foreign Ownership of Agricultural Land Bill 2015, which provides for the establishment of a Register of Foreign Ownership of Agricultural Land (Register) to be administered by the Commissioner.

13.16 Schedule 4 to the Bill also makes several other amendments that will assist the Australian Taxation Office (ATO) to perform its functions more effectively by allowing it to share information with the Australian Securities and Investments Commission (ASIC) and the Department of Immigration and Border Protection (DIBP) in a broader range of circumstances than is currently the case.

Human rights implications

13.17 This Bill engages the following human rights and freedoms:

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the right to be presumed innocent until proved guilty according to law;

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the right to a fair and public hearing;

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the right not to be compelled to testify against oneself or to confess guilt;

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the right to protection from unlawful or arbitrary interferences with an individual's privacy;

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the right to freedom of expression; and

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the right to freedom from discrimination on prohibited grounds.

Assessment of civil penalties

13.18 Practice Note 2: Offence provisions, civil penalties and human rights ^[12] observes that civil penalty provisions may engage criminal process rights under Articles 14 and 15 of the International Covenant on Civil and Political Rights (ICCPR), regardless of the distinction between criminal and civil penalties in domestic law. This is because the word 'criminal' has an autonomous meaning in international human rights law. When a provision imposes a civil penalty, an assessment is therefore required as to whether it amounts to a 'criminal' penalty for the purposes of the Articles 14 and 15 of the ICCPR.

13.19 The civil penalty provisions in the Bill (which are in new Division 3 of Part 5 of the Bill) should not be considered 'criminal' for the purposes of international human rights law. While the civil penalty provisions included in the Bill are intended to deter people from not complying with the obligations imposed by the Act, none of the civil penalty provisions carry a penalty of imprisonment and there is no sanction of imprisonment for non-payment of any penalty. In addition, the maximum pecuniary penalty that may be imposed on an individual for contravening a civil penalty provision is generally lower than maximum pecuniary penalty that may be imposed for the corresponding criminal offence. The statement of compatibility therefore proceeds on the basis that the civil penalty provisions in the Bill do not create criminal offences for the purposes of Articles 14 and 15 of the ICCPR.

Presumption of innocence

13.20 Paragraph 2 of Article 14 of the ICCPR protects the right of a person charged with a criminal offence to be presumed innocent until proven guilty according to law. The presumption of innocence is also a fundamental principle of the common law. As the Human Rights Committee has observed, the presumption of innocence 'imposes on the prosecution the burden of proving the charge, guarantees that no guilt can be presumed until the charge has been proved beyond reasonable doubt, ensures that the accused has the benefit of doubt, and requires that persons accused of a criminal act must be treated in accordance with this principle'. ^[13] The presumption of innocence generally requires the prosecution to prove each element of a criminal offence beyond reasonable doubt.

Offence provisions which carry an evidential burden

13.21 Any offence provision which requires a defendant to carry an evidential burden may be considered to engage the right to the presumption of innocence. New sections 129 and 133 of the Act engage the right to the presumption of innocence because a defendant bears an evidential burden in relation to matters in those provisions. In addition, Schedule 4 to the Bill relies on an absolute liability offence to enforce an obligation created by new section 354-1 of Schedule 1 to the TAA 1953. Each of these provisions is considered in turn.

13.22 The effect of new section 129 is that new section 128 of the Act (which makes it an offence for a person to record, use or disclose protected information for a purpose not authorised by new Part 7) does not apply if the person records, discloses or otherwise uses protected information in good faith in performing, or purportedly informing, his or her functions under this Act. An evidential burden applies to this defence. The imposition of an evidential burden is justified because the reason why a defendant used or disclosed protected information will generally be a matter that is peculiarly within the defendant's knowledge. Moreover, the effect of the limitation is that the defendant must merely adduce or point to evidence that suggests a reasonable possibility that he or she disclosed the information in good faith. Once this is done, the prosecution must refute this beyond reasonable doubt to obtain a conviction (see section 13.3 of the Criminal Code). As a result, the risk that a person may be found guilty of an offence against new section 128 of the Act despite there being reasonable doubt about the person's guilt is considered to be low. Accordingly, to the extent this provision might be considered to limit the presumption of innocence, the limitation is reasonable in all the circumstances.

13.23 New subsection 133(1) permits the Treasurer to issue a notice if the Treasurer has reason to believe that a person can give information or produce documents relating to matters that are relevant to the exercise by the Treasurer of his or her powers under this Act. A person who fails to comply with such a notice may be guilty of an offence which has a maximum penalty of imprisonment for six months, 30 units or both. However, this offence does not apply if the person complies with the notice to the extent to which the person is capable of complying with it. An evidential burden applies to this defence. This is appropriate because it is a matter that will be peculiarly within the defendant's knowledge and it would be significantly more difficult and costly for the prosecution to disprove than for the defendant to establish the matter. Once the person has adduced or pointed to evidence which suggests there is a reasonable possibility that the person has complied with the notice to the extent possible, the prosecution must refute this beyond reasonable doubt in order to obtain a conviction. For this reason it is again considered that the risk of a person being found guilty of an offence against subsection 133(5) of the Act is low, and to the extent this provision might be considered to limit the presumption of innocence the limitation is reasonable in all the circumstances.

13.24 New section 354(1) of Schedule 1 to the TAA 1953, which is inserted by item 3 of Schedule 4, is similar to new section 133 of the Act. A person who receives a notice under new section 354(1) of Schedule 1 to the TAA 1953 may be guilty of an offence against subsection 8C(1) of the TAA 1953. However, the effect of subsection 8C(1B) is that a person does not commit an offence to the extent to which the person is not capable of complying with the obligation. A defendant bears an evidential burden in relation to this matter. This is appropriate because generally only the defendant will know the reason why she or he will was unable to fully comply with the notice. For these reasons, to the extent this provision might be considered to limit the presumption of innocence the limitation is reasonable in all the circumstances.

Strict liability and absolute liability offences

13.25 Strict liability and absolute liability offences engage and limit the presumption of innocence because they allow for the imposition of criminal liability without the need to prove fault. The difference between strict and absolute liability is that strict liability allows a defence of honest and reasonable mistake to be raised, whereas an offence of absolute liability does not.

13.26 The Bill creates one strict liability offence and relies on an absolutely liability offence to enforce an obligation created by new section 354-1 of Schedule 1 to the TAA 1953.

13.27 New section 128 makes it an offence if a person fails to make and keep a record under Division 2 of Part 7 of the Act unless the Treasurer has notified the person that they do not need to make or keep the record. As the offence is one of strict liability it is only necessary for the prosecution to prove the person's alleged inaction - the person's intention is irrelevant. It is reasonable for this offence to be one of strict liability because the requirement is uncomplicated and easily satisfied, and the information is within the person's control. The compliance burden would otherwise be high where it cannot be known if records exist and against this the penalty is low. The maximum penalty is a fine not exceeding 30 penalty units rather than a fine and or a period of imprisonment.

13.28 A person who fails to comply with a notice given under new section 354(1) of Schedule 1 to the TAA 1953 may be guilty of an offence against section 8C of the TAA 1953 which is an offence of absolute liability. The maximum penalty is generally a fine of 20 penalty units. However, in the case of a person who has two or more relevant convictions, the maximum penalty is a fine of 50 penalty units or 12 months imprisonment or both. The notice requirement is uncomplicated, readily understood and limited to a narrow class of information which is readily available to the person. It is necessary because it may otherwise not be possible to obtain information about complex and opaque offshore corporate and business structures and ownership arrangements. These are matters purely within the knowledge of those involved and about which they can be expected to have knowledge. Noting that a person need only comply to the extent they are capable of doing so, it is appropriate to rely on an offence of absolute liability to enforce this obligation.

Right to a fair and public hearing

13.29 Article 14 of the ICCPR ensures that everyone shall be entitled to a fair and public hearing by a competent, independent and impartial tribunal established by law.

13.30 New section 100 of the Act might be considered to engage the right to a fair and public hearing because it permits an infringement notice to be given by an infringement officer if the officer believes on reasonable grounds that the person contravened a civil penalty provision relating to residential land. However, the right of a person to fair and public hearing by a competent, independent and impartial hearing is not limited by the Bill because the provisions in Part 5 of the Regulatory Powers (Standard Powers) Act 2014 (Regulatory Powers Act) allow a person to elect to have the matter heard by a court rather than pay the amount specified in the infringement notice. Moreover, the Regulatory Powers Act requires that this right must be stated in any infringement notice given to the person. For these reasons the Bill is not considered to limit the right to a fair and public hearing.

Right not to be compelled to testify against oneself or to confess guilt

13.31 Paragraph 3(g) of Article 14 of the ICCPR guarantees the right of an individual not to be compelled to testify against oneself or to confess guilt. The privilege against self-incrimination is recognised by the common law and applies unless it is expressly abrogated.

13.32 This right is engaged by new section 133 of the Act because it permits the Treasurer to give a person a written notice that requires the person to give information or documents to the Treasurer or a specified person acting on the Treasurer's behalf. An individual is not excused from giving information or producing a document on the ground that to do so might tend to incriminate him or her. A person who fails to comply with a notice given under new section 133 may be guilty of an offence and liable to a maximum penalty of imprisonment for six months, or 30 penalty units, or both.

13.33 These limitations on the right to freedom from self-incrimination are reasonable because of the safeguards that have been included. Specifically, new section 133 provides that, in the case of an individual, the information given or documents produced is not admissible against the individual in any criminal proceedings or in proceedings for the recovery of a civil penalty, other than proceedings under this Act or section 137.1 or 137.2 of the Criminal Code (use immunity). In addition, any information, document or thing obtained as a direct or indirect consequence of the individual giving the information, answer, document or thing is not admissible against the individual in any criminal proceedings or in proceedings under or in proceedings for the recovery of a civil penalty, other than proceedings under this Act or section 137.1 or 137.2 of the Criminal Code (derivative use immunity). The provision therefore strikes a reasonable balance between the competing interest of obtaining information relevant to the administration of this Act and protecting an individual's rights and is considered to be reasonable in all the circumstances.

Right to protection from unlawful or arbitrary interference with an individual's privacy, family, home or correspondence

13.34 Article 17 of the ICCPR prohibits unlawful or arbitrary interferences with an individual's privacy, family, home or correspondence. It also provides that everyone has the right to the protection of the law against such interference or attacks.

13.35 The Human Rights Committee has interpreted the term 'unlawful' to mean that no interference can take place except in cases envisaged by a law which comply with the provisions, aims and objectives of the ICCPR. The Human Rights Committee has also indicated that an interference will not be considered to be 'arbitrary' if it is provided for by law and is in accordance with the provisions, aims and objectives of the ICCPR and is reasonable in the particular circumstances. ^[14]

13.36 The following provisions in Schedule 1 to the Bill engage the rights protected by Article 17 of the ICCPR:

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new Division 3 of Part 7 of the Act permits information to be recorded, used or disclosed in specified circumstances; and

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new section 133 allows the Treasurer to require any individual to give information or documents (including information about a member of an individual's family) relating to matters that are relevant to the exercise of the Treasurer's powers under the Act.

13.37 Schedule 4 also engages the rights protected by Article 17 of the ICCPR because it allows the ATO to disclose information about individuals in a broader range of circumstances than is currently the case.

Protected information that may be collected, used or disclosed under new Division 3 of Part 7 of the Act

13.38 New Division 3 of Part 7 of the Act authorises the disclosure of protected information in a range of specified circumstances. However, to the extent these provisions authorise the disclosure of protected information about individuals or identifiable individuals, any interference with an individual's privacy is not arbitrary because the interference is necessary to achieve a legitimate public purpose. The purpose of each of these provisions is briefly considered.

Disclosure for the purposes of this Act

13.39 New section 121 of the Act permits a person to record, disclose or otherwise use protected information for the purposes of this Act. In order to properly advise the Treasurer or his or her delegate about whether one of the actions regulated by this Act may be contrary to the national interest, it will generally be necessary for department officers to disclose protected information in order to consult with officers in other Commonwealth departments and agencies. Protected information about particular applications is also given to the States and Territories to enable them to provide comments about an application. The advice and comments provided by other agencies and departments directly informs the decision about whether a particular action is contrary to the national interest.

13.40 Under new subsection 121(2) of the Act a person who receives protected information under the Bill because they are consulted about a particular application under the Act is also permitted to record, disclose or otherwise use the information for the purposes for which the information was disclosed to the person. The person may also disclose the protected information for the purposes for which it was disclosed, but only to:

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a Minister, an officer or an employee of the Commonwealth, a State, the Australian Capital Territory or the Northern Territory;

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an officer or employee of a Commonwealth, State or Territory body; or

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a person appointed by the Commonwealth for purposes of this Act.

13.41 This provision permits a person who obtains protected information for the purposes of this Act to consult with a colleague if it is necessary to do so in order to provide advice or comments about a particular application.

Other circumstances in which protected information may be recorded, used or disclosed

13.42 New subsection 122(1) of the Act permits a person to disclose protected information to the Minister responsible for administering specified Commonwealth statutes as well as the accountable authority of a Commonwealth entity that deals with the administration of any of those Acts.

Disclosures for the purposes of administering statutes that also impose restrictions on foreign ownership

13.43 Several statutes include provisions which impose supplementary or alternative requirements relating to foreign investment. Specifically,

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foreign ownership of some airports is limited by the Airports Act 1996;

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foreign investment in the banking sector must be consistent with requirements in the Banking Act 1959 and the Financial Sector (Shareholdings) Act 1998;

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aggregate foreign ownership in Qantas Airways Limited is limited by the Qantas Sale Act 1992; and

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aggregate foreign ownership of Telstra Corporation Limited is limited by the Telstra Corporation Act 1991.

13.44 There are occasions when the disclosure of protected information to the Minister administering the above Acts or the accountable authority of a Commonwealth entity that deals with the administration of those Acts would assist those persons to perform their functions efficiently and effectively.

Disclosures to security agencies

13.45 An officer who is performing functions or exercising powers under this Act may occasionally collect information for the purposes of performing powers and functions under this Act that should be disclosed to intelligence agencies, or law enforcement agencies, relating to Australia's national security and criminal activities such as organised crime. The Bill therefore enables protected information to be disclosed to the relevant Commonwealth Minister or the accountable authority that deals with the administration of the Australian Crimes Commission Act 2002, Australian Security Intelligence Organisation 1979, the Inspector-General of Intelligence and Security Act 1986, the Intelligence Services Act 2001, and the Proceeds of Crimes Act 2002.

Disclosures for the purposes of the administration of the Migration Act 1958

13.46 From time to time it may appear to a person who is performing functions or exercising powers under this Act that an individual has not complied with the conditions imposed on their visa. The Bill permits such information to be disclosed to the Commonwealth department responsible for the administration of the Migration Act (currently DIBP).

Disclosures for the purposes of the administration of a taxation law

13.47 The Bill allows protected information to be disclosed for the purposes of a taxation law within the meaning of section 995-1 of the Income Tax Assessment Act 1997. This will allow information to be disclosed for the purpose of protecting public revenue, as well as for the purposes of administering the Register of Foreign Ownership of Agricultural Land Act 2015.

Disclosures to corporate regulators

13.48 The Bill allows protected information to be disclosed for the purposes of administering the Australian Prudential Regulation Authority Act 1998, the Australian Securities and Investment Commission Act 2001, and the Corporations Act 2001. Such information will usually relate to bodies corporate rather than individuals. However, the ability to disclose information about individuals, such as directors and security holders, can assist the relevant regulator to efficiently and effectively administer particular provisions in these Acts (for example, the takeover provisions in Chapter 6 of the Corporations Act).

Disclosures for the purposes of assisting certain Ministers to perform their responsibilities

13.49 Subsections 122(2) and (3) permit a person to disclose protected information to a Commonwealth Minister responsible for agriculture; industry policy; investment promotion; taxation policy; and foreign investment in Australia. A person may also disclose protected information to the Secretary of a department administered by a Minister responsible for one of these areas for the purposes of assisting the Minister to discharge his or her responsibilities.

13.50 Ministers responsible for these areas sometimes receive representations from persons who are proposing to invest in Australia or who have invested in Australia and want to discuss their investment. The Bill therefore allows information to be disclosed for the purposes of briefing the relevant Minister. The disclosure of protected information will also contribute to the development of well-informed policy proposals.

Authorisation of disclosures for the purposes of law enforcement

13.51 New section 123 of the Act permits a person to disclose protected information to an enforcement body (within the meaning of the Privacy Act 1988) if the person reasonably believes that the disclosure is reasonably necessary for one of more enforcement related activities conducted by or on behalf of that body.

13.52 An officer who is performing functions or exercising powers under this Act may occasionally obtain information which suggests that an individual may have committed a criminal offence and it is in the public interest that officers can disclose this information to the appropriate law enforcement body.

Authorisation to use information for purposes of proceedings

13.53 A person who obtains protected information may disclose that information to a court or tribunal, or in accordance with an order made by a court or tribunal (for example, a subpoena) if the Commonwealth is a party to the proceeding and the Treasurer is satisfied that it is not contrary to the national interest. A person who receives protected information in these circumstances (for example, staff in the relevant court or tribunal) is permitted by new section 127 of the Act to make a record of, or disclose or otherwise use, the information for the purposes for which the information was disclosed.

13.54 This provision will ensure that where the Commonwealth is involved in proceedings of any kind relevant information and documents may be provided to a court or tribunal. This includes where a person applies for judicial review or where it would assist a tribunal to have evidence about the administration of the Act.

Safeguards

13.55 The Bill includes two safeguards that will minimise the risk of information about individuals being misused. First, a person who records, discloses or uses protected information for a purpose that is not authorised by new Part 7 of the Act may be guilty of an offence against new section 128 of the Act and liable to imprisonment for two years, 120 penalty units, or both. Secondly, new section 130 of the Act provides that a person must not, except for the purposes of this Act, be required to produce any document or give any information to a court, tribunal, authority or person having the power to require the production of documents or the answering of questions.

Conclusion

13.56 These provisions do not limit Article 17 because they do not permit an unlawful or arbitrary interference with an individual's privacy. The Division ensures that that there is an appropriate balance between an individual's right to information privacy whilst at the same time ensuring that information can be shared with other government departments and agencies for the legitimate purposes outlined above. The restrictions are also 'lawful' in the sense that the Bill adequately specifies the circumstances in which interferes with a person's right to privacy will be permissible. Accordingly these provisions are compatible with Article 17 of the ICCPR.

Requirement to provide information or documents

13.57 New section 133 of the Act confers on the Treasurer the power to require a person to provide documents or give information, and this power could be exercised to incidentally require the provision of information about identified or identifiable individuals. A person who fails to comply with such a notice may be liable to a criminal offence that carries a penalty of imprisonment for six months, 30 penalty units, or both. Such a provision is needed to enable information to be gathered for the purpose of monitoring and enforcing compliance with the obligations imposed by the Act. However, the provision does not authorise an arbitrary interference with an individual's privacy because the power can only be exercised by the Treasurer or the Treasurer's delegate if they have reason to believe that the person can give information or produce documents relevant to the exercise of the Treasurer's powers under the Act. The circumstances in which information may be collected and are clearly defined by the Bill and consequently any interference with an individual's right to privacy is lawful.

13.58 The power conferred by this provision could also be exercised for the purpose of requiring a person to provide specified information or documents that might incriminate a close family member, including a person's spouse, parent or child. A person is not able to object to the notice on the basis that they are being asked to provide information about a member of their family. In contrast, the Evidence Act 1995 provides that a person who is the spouse, de facto partner, parent or child of a defendant in a criminal proceeding may object to being required to give evidence, or to give evidence of a communication between the person and the defendant, as a witness for the prosecution. ^[15] However, in circumstances where arrangements about actions may be informal and impossible to otherwise discover, being able to obtain accurate information about the extent to which this Act is being complied with is considered to be of paramount importance. Moreover, the circumstances in which the discretion could be lawfully exercised is sufficiently clear from the provision. Accordingly this provision does not arbitrarily interfere with an individual right to privacy or family life.

Information that may be collected, used or disclosed under Schedule 4 to the Bill

Disclosure of information contained in the Register to certain Ministers

13.59 Section 355-25 in Schedule 1 to the TAA 1953 makes it an offence for a taxation officer to disclose tax information that identifies an entity, or is reasonably capable of being used to identify an entity, except in certain specified circumstances (the offence provision).

13.60 Subsection 355-55(1) of Schedule 1 to the TAA 1953 provides that the offence provision does not apply if a taxation officer discloses certain classes of information to a Minister for various specified purposes. This provision will be amended by item 4 of Schedule 4 so that the offence provision does not apply if a taxation officer discloses information contained in the Register to a Minister responsible for agriculture, industry policy, investment promotion, taxation policy or foreign investment in Australia for the purpose of enabling that Minister to discharge that responsibility. It is anticipated that this provision will enable officers at the ATO to disclose information about identified or identifiable individuals for the purposes of briefing these Ministers about issues raised by investors and potential investors. It will also enable officers to disclose information that is needed to develop well-informed public policy.

Disclosure of taxpayer information to ASIC

13.61 Subsection 355-65(4) of Schedule 1 to the TAA 1953 provides that the offence provision does not apply if a taxation officer discloses certain classes of information to certain entities (including ASIC) for purposes relating to corporate regulation, business research, or policy. Specifically, the ATO can give information to ASIC for the purpose of investigation or enforcement activities relating to a provision that is administered by ASIC and imposes a pecuniary penalty or creates an offence. A taxation officer can also disclose information to ASIC about information that was obtained under or in relation to the Superannuation (Unclaimed Money and Lost Members) Act 1999 for the purpose of ASIC performing any of its functions or exercising any of its power.

13.62 However, the ATO is not permitted to disclose information to ASIC for the purpose of enabling ASIC to undertake general data-matching. This is because ASIC needs to suspect a breach before it can receive information from the ATO, rather than using the relevant ATO information for data-matching to proactively assess and manage compliance risks.

13.63 The limited information sharing provision has also prevented the ATO and ASIC from co-operating in other areas where they co-regulate. For example, the ATO holds information that may better inform ASIC in its consideration of class order relief and other exemptions from filing statutory accounts in Australia, but the ATO cannot share this information unless there is evidence that an offence may have been committed or ASIC has commenced an investigation. To overcome these limitations the item 5 of Schedule 4 to the Bill enables a taxation officer to disclose information to ASIC for the purpose of performing any functions or exercising any powers under any Act or instrument (or part of any Act or instrument) of which ASIC has general administration.

Disclosure of taxpayer information to DIPB

13.64 The effect of subsection 355-65(8) in Schedule 1 to the TAA 1953 is that the offence provision does not apply to a taxation officer who discloses particular classes of information to specified individuals for a range of purposes. Relevantly, the offence provision does not apply to a taxation officer who discloses information to the 'Immigration Secretary' for the purposes of assisting in locating persons who are unlawfully in Australia and information relating to a holder (or former holder) of a visa or an approved sponsor (or former approved sponsor) for certain narrowly defined purposes.

13.65 Schedule 4 to item 7 of the Bill will allow taxpayer information to be disclosed to the 'Immigration Secretary' or the Australian Border Force Commissioner for the purpose of administering any functions or exercising any of the powers administered by the Minister administering the Immigration Department. This will improve the effectiveness of the ATO's data-matching.

Limits on disclosure to courts and tribunals

13.66 The effect of existing section 355-75 in Schedule 1 to the TAA 1953 is that a taxation officer cannot be required to disclose to a court or tribunal protected information that was acquired by the person as a taxation officer except where it is necessary to do so for the purpose of carrying into effect the provisions of a taxation law.

13.67 Because taxation officers have duties, functions and powers under the Bill, the effect of the amendment to this provision made by item 9 of Schedule 4 is to make the TAA 1953 provision consistent with the Bill. Where a taxation officer has acquired protected information because of the exercise of duties and functions under the Bill, the taxation officer can be required to disclose that information to a court or a tribunal where it is necessary to do so for the purpose of carrying into effect the provisions under a taxation law or the Act.

Limits on on-disclosure to courts and tribunals

13.68 Item 11 of Schedule 4 to the Bill repeals section 355-205 in Schedule 1 to the TAA 1953 and substitutes a new provision. Broadly, section 355-205 currently provides that an entity cannot be required to 'on disclose' protected information to a court or tribunal except where it is necessary to do so for the purposes of carrying into effect the provisions of a taxation law. The new section 355-205 in Schedule 1 to the TAA 1953 is identical to the current provision except that because information is disclosed for the administration of the Act, the limit on on-disclosure to courts or tribunals would not apply for the purposes of carrying into effect the provisions of a taxation law or if the entity has or had duties, functions or powers under the Act.

Conclusion

13.69 None of the provisions in Schedule 4 limit Art 17 because they do not permit an unlawful or arbitrary interference with an individual's privacy. The Schedule ensures that information can be shared with other government departments and agencies for the legitimate purposes outlined above. The restrictions are also 'lawful' in the sense that the Bill adequately specifies the circumstances in which interferes with a person's right to privacy will be permissible. Accordingly these provisions are compatible with Art 17 of the ICCPR.

Right to freedom of expression

13.70 Paragraph 2 of Art 19 of the ICCPR requires States parties to guarantee the right of everyone to freedom of expression, including the 'freedom to seek, receive and impart information and ideas of all kinds'. The right to freedom of expression includes the right not to impart information. New section 133 of the Act and item 3 in Schedule 4 to the Bill engage this right.

13.71 New section 133 engages the right to freedom of expression because it allows the Treasurer to require a person to provide information or produce documents. This restriction is necessary for the legitimate purpose of ensuring that the Treasurer can obtain the information and documents needed relating to his or her functions under the Act. There is a rational and proportionate connection between the purpose of the provision and the limitation of the right.

13.72 New section 354-5 in Schedule 1 to the TAA 1953 engages the right to freedom of expression in a very similar fashion because it enables the Commissioner to give a person a notice which requires the recipient of the notice to provide information the person has about any legal or equitable interest in the property or a right, power or privilege in connection with the property. The information a person may be required to give includes details about each other person who has a property right or interest in the property and information about the right or interest in the property.

13.73 The information available to the ATO suggests that obscure ownership arrangements are sometimes used to purchase property. The purpose of giving the Commissioner the power to issue such a tracing notice is to give the Commissioner another tool to find out who may have a beneficial interest in property. In addition to assisting the ATO to monitor compliance with this Act, the power would also be used in circumstances where the ATO believes that property has been purchased as a means of laundering money. The only other way the Commissioner could discover each person who has a beneficial interest in a property would be to undertake an intensive information gathering and audit process. Such a process is time-consuming and there is a risk that the process may not be completed before the person transfers their beneficial interest. Accordingly, while the provision limits the right to freedom of information, the limitation is reasonable because it will help ensure that the ATO has the legal powers it needs to investigate persons who may not be complying with their obligations under Australia's taxation laws.

Right to be free from discrimination on prohibited grounds

13.74 Article 26 of the ICCPR recognises that all persons are equal before the law and are entitled without discrimination to the equal protection of the law. Article 26 further provides that 'the law shall prohibit any discrimination and guarantee to all persons equal and effective protection against discrimination on any ground such as national origin. However, the Human Rights Committee has recognised that 'not every differentiation of treatment will constitute discrimination, if the criteria for such differentiation are reasonable and objective and if the aim is to achieve a purpose which is legitimate under the Covenant'. ^[16]

13.75 The Bill also generally engages the rights protected by the International Convention on the Elimination of All Forms of Racial Discrimination. Paragraph 1 of Article 1 of International Convention on the Elimination of All Forms of Racial Discrimination defines the term 'racial discrimination' to mean 'any distinction, exclusion, restriction or preference based on race, colour descent, or national or ethnic origin which has the purpose or effect of nullifying or impairing the recognition, enjoyment or exercise, on an equal footing, of human rights and fundamental freedoms in the political, economic, social, cultural, or any other field of public life'. Under Article 2(a)(a) of the International Convention on the Elimination of All Forms of Racial Discrimination, [E]ach State Party undertakes to engage in no act or practice of racial discrimination against persons, groups of persons or institutions and to ensure that all public authorities and public institutions, national and local shall act in conformity with this obligation'. Under Article 5 of International Convention on the Elimination of All Forms of Racial Discrimination States Parties 'undertake to prohibit and eliminate racial discrimination in all its forms and to guarantee the right of everyone, without distinction as to ...national ...origin, to equality before the law' in the enjoyment of civil, political, economic, social and cultural rights, including the 'right to own property alone as well as in association with others'.

13.76 The Bill limits Article 26 of the ICCPR and Articles 2 and 5 of International Convention on the Elimination of All Forms of Racial Discrimination because the core obligations imposed by the Bill only apply to a 'foreign person'. While an Australian citizen who is not ordinarily resident in Australia may be a 'foreign person' for the purposes of this Act, it is anticipated that the majority of individuals who are directly affected by this Bill will not be Australian citizens.

13.77 Perhaps the most significant impact of the framework on foreign persons who are individuals is that they are generally not permitted to purchase existing residential real estate, although they may purchase real estate off-the-plan or a newly constructed residential dwelling. This reflects the Government's policy that any foreign investment in residential real estate should be directed to increasing Australia's housing stock. However, it is anticipated that the effect of this restriction will be ameliorated by the practice that permits temporary residents to buy one established dwelling for use as their residence in Australia.

13.78 While the Bill, if enacted, will primarily affect individuals who are citizens of countries other than Australia, there is no less restrictive way of achieving the objectives of the Bill. Accordingly those limitations are reasonable, necessary and proportionate.

Conclusion

13.79 The Bills are compatible with human rights because to the extent that they may limit human rights, those limitations are reasonable, necessary and proportionate.