Explanatory Memorandum
(Circulated by authority of the Minister for Revenue and Financial Services, the Hon Kelly O'Dwyer MP)Chapter 2 Amendment of the Australian Securities and Investments Commission Act 2001
Outline of chapter
2.1 Schedule 2 to the Bill will amend the Australian Securities and Investments Commission Act 2001 (the ASIC Act) to allow the Australian Securities and Investments Commission (ASIC) to more readily share confidential information with the Commissioner of Taxation. The amendment will assist both ASIC and the Commissioner of Taxation to perform their functions in a more timely and effective manner.
Context of amendments
2.2 ASIC has a range of powers to gather information and documents as part of its role in regulating Australian companies, financial markets and financial services organisations and professionals who deal and advise in investments, superannuation, insurance, deposit taking and credit.
2.3 ASIC uses the information and documents gathered to ensure compliance with the law and to take enforcement action where necessary.
2.4 There are strict confidentiality rules around the use and disclosure of the information ASIC obtains. Under section 127 of the ASIC Act, ASIC must take all reasonable measures to protect confidential information it receives as part of its statutory functions from unauthorised use or disclosure.
2.5 ASIC is, however, authorised to share the confidential information it obtains with certain prescribed individuals and entities, including the relevant Minister, the Reserve Bank of Australia and the Australian Prudential Regulation Authority (section 127(2A) of the ASIC Act).
2.6 The ASIC Act also permits ASIC to share the information with other agencies and regulatory bodies where the ASIC Chairperson is satisfied that it will enable or assist them to perform their functions or exercise their powers.
2.7 At present, in order for ASIC to be able to share information with the Commissioner of Taxation, the ASIC Chairperson, or their delegate, must be satisfied that doing so would enable or assist the Commissioner of Taxation to perform or exercise their functions or powers. This is in addition to the Commissioner of Taxation being satisfied that they have authority to receive and utilise the information.
2.8 This process causes inefficiencies and hinders effective collaboration between the agencies in ensuring compliance and investigating potential illegal activity.
2.9 Where ASIC has shared information with the Commissioner of Taxation, the information remains protected from unauthorised disclosure as Division 355 of Schedule 1 to the Taxation Administration Act 1953 makes the unauthorised disclosure of confidential information an offence.
Summary of new law
2.10 The new law amends the ASIC Act to specify that the sharing of confidential ASIC information with the Commissioner of Taxation is authorised use and disclosure of that information.
Comparison of key features of new law and current law
| New law | Current law |
| ASIC is authorised to share confidential information with the Commissioner of Taxation. Confidential information shared with the Commissioner of Taxation remains protected from unauthorized disclosure. | A confidentiality provision prohibits ASIC from sharing confidential information with the Commissioner of Taxation, unless the Chairperson, or their delegate, is satisfied that the information will enable or assist the Commissioner of Taxation to perform or exercise their functions or powers. |
Detailed explanation of new law
2.11 The new law adds the Commissioner of Taxation to the entities listed in subsection 127(2A) of the ASIC Act to which disclosure of confidential information is authorised. [Schedule 2, item 1, subsection 127(2A)]
2.12 The reference to the Commissioner of Taxation includes the Commissioner in all their capacities as the Commissioner of Taxation.
2.13 As a result of this amendment, ASIC will be authorised to provide the Commissioner of Taxation with information it holds that is protected or that is given to it in confidence in connection with the performance of its functions or exercise of its powers. The amendment simplifies the process and creates efficiencies by allowing information to be shared without the Chairperson's, or their delegate's, involvement.
2.14 The new law enables ASIC to more effectively share information with the Commissioner of Taxation, enabling more timely collaboration during investigations into illegal or high risk activities. Simplifying the process for information sharing will also enable both agencies to ensure compliance with laws and identify patterns of non-compliance.
2.15 The amendment enables a simpler process for ASIC to share information with the Commissioner of Taxation, which mirrors the existing arrangement for sharing information between ASIC and the Reserve Bank of Australia, the Australian Prudential Regulation Authority and the relevant Minister.
Application and transitional provisions
2.16 ASIC will be authorised to disclose information to the Commissioner of Taxation following the commencement of the Schedule. This applies in relation to disclosure of any information held by ASIC at that time regardless of whether it was obtained before or after this amendment commences. [Schedule 2, item 2, section 302]
2.17 The amendment is prospective because it only authorises the disclosure of information after commencement.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Treasury Laws Amendment (2017 Measures No.1) Bill 2017
2.18 This Schedule is 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
2.19 Schedule 2 to the Bill amends the Australian Securities and Investments Commission Act 2001 (the ASIC Act) to allow the Australian Securities and Investments Commission (ASIC) to more readily share confidential information with the Commissioner of Taxation.
Human rights implications
2.20 Schedule 2 engages the right to protection from unlawful or arbitrary interference with privacy under Article 17 of the International Covenant on Civil and Political Rights (ICCPR) because it provides a more streamlined process for ASIC to share confidential information with the Commissioner of Taxation.
2.21 Under the existing law, ASIC can disclose confidential information to other Australian government agencies, including the Commissioner of Taxation, where the ASIC Chairperson (or delegate) is satisfied that it will enable or assist them to perform their functions and exercise their powers.
2.22 The amendment streamlines the process by providing a more efficient mechanism for ASIC to share confidential information with the Commissioner of Taxation. It will improve the Commissioner of Taxation's ability to conduct timely compliance activity and better protect the integrity of Australia's tax system.
2.23 The amendment to the process for ASIC to share information with the Commissioner of Taxation mirrors the existing power for the Commissioner of Taxation to share confidential information with ASIC under Division 355 of Schedule 1 to the Taxation Administration Act 1953. Mirroring the information sharing process between ASIC and the Commissioner of Taxation will enable effective and timely collaboration during investigations into illegal and high risk activities. The amendment is a reasonable change as it will allow ASIC and the Commissioner of Taxation to more effectively work together to ensure compliance with corporate and taxation laws.
2.24 Furthermore, the amendment is appropriate as it will ensure that the process for ASIC to share confidential information with the Commissioner of Taxation is consistent with the process for ASIC to share confidential information with the Reserve Bank of Australia, the Australian Prudential Regulation Authority and the relevant Minister.
2.25 Although ASIC will not need to determine that particular information would enable or assist the Commissioner of Taxation to perform or exercise their functions or powers, the Commissioner of Taxation will remain restricted in the information they can seek by the scope of their authority to receive and utilise information in carrying out their role.
2.26 Any information that is shared between ASIC and the Commissioner of Taxation will remain subject to strict confidential protections. ASIC will remain subject to the requirement to take all reasonable measures to protect confidential information from any unauthorised disclosure. Where ASIC has shared information with the Commissioner of Taxation, the information will remain protected from unauthorised disclosure as Division 355 of Schedule 1 to the Taxation Administration Act 1953 makes the unauthorised disclosure of confidential information an offence.
Conclusion
2.27 The amendment to simplify the process to share information in Schedule 2 is consistent with Article 17 of the ICCPR because, to the extent the amendment authorises the disclosure of confidential information by ASIC to the Commissioner of Taxation, this is already permitted. The amendment replicates existing information sharing arrangements ASIC has with other agencies to ensure consistency and streamlines administrative processes.
2.28 A simpler and more efficient information sharing arrangement between ASIC and the Commissioner of Taxation is justified as it will benefit the community by enabling better monitoring of illegal and other high-risk activities by the Commissioner of Taxation and strengthen corporate compliance with taxation law.