Explanatory Memorandum
(Circulated by authority of the Assistant Treasurer, the Hon. Stuart Robert MP)General outline and financial impact
Non-compliant payments
Schedule 1 to the Bill denies an income tax deduction for certain payments if the associated withholding obligations have not been complied with. This will provide a greater incentive for employers and entities engaging contractors to comply with their withholding obligations.
Date of effect: 1 July 2019
Proposal announced: This measure was announced in 2018-19 Budget Paper No. 2 as 'Black Economy Package - removing tax deductibility of non-compliant payments'.
Financial impact: The measure is estimated to have a small unquantifiable gain to revenue over the forward estimates period.
| 2018-19 | 2019-20 | 2020-21 | 2021-22 |
| - | - | * | * |
- Nil
* Unquantifiable
Human rights implications: This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 4, paragraphs 4.1 to 4.4.
Compliance cost impact: Minimal. For further information, please refer to the Black Economy Taskforce Final Report.
Third party reporting
Schedule 2 to this Bill requires entities providing road freight, IT or security, investigation or surveillance services that have an ABN to report to the ATO information about transactions that involve engaging other entities to undertake those services for them.
Date of effect: The amendments contained in Schedule 2 apply from 1 July 2019.
Proposal announced: This measure was announced in 2018-19 Budget Paper No. 2 as 'Black Economy Package - further expansion of taxable payments reporting'.
Financial impact: As at the 2018-19 Budget, the measure is estimated to have a net gain to the budget of $605.8 million in fiscal balance terms over the forward estimates period comprising:
| 2018-19 | 2019-20 | 2020-21 | 2021-22 |
| -$3.8m | $47.4m | $263.6m | $298.6m |
In underlying cash balance terms, this measure is estimated to have a net gain to the budget of $545.8 million over the forward estimates period.
Human rights implications: Schedule 2 is compatible with human rights. See Statement of Compatibility with Human Rights - Chapter 4, paragraphs 4.5 to 4.13.
Compliance cost impact: low.
Taxing tobacco at the time of manufacture
The Bills amend the Excise Acts to establish a framework to make excise duty on tobacco due and payable at the time of manufacture.
Date of effect: The amendments apply to tobacco manufactured on or after 1 July 2019.
Proposal announced: This measure was announced by the Government on 6 May and included in 2018-19 Budget Paper No. 2 as 'Black Economy Package - combatting illicit tobacco'.
Financial impact: As in 2018-19 Budget Paper No. 2, the whole package of combatting illicit tobacco reforms is estimated to result in a net gain to the budget of $3.6 billion over the forward estimates period, comprising:
| 2018-19 | 2019-20 | 2020-21 | 2021-22 |
| -$14.9m | $3,250.8m | $148.0m | $193.4m |
Human rights implications: This Schedule is compatible with Human Rights. See Statement of Compatibility with Human Rights - Chapter 4, paragraphs 4.14 to 4.26.
Compliance cost impact: Nil.