Explanatory Memorandum
(Circulated by authority of the Minister for Revenue and Financial Services, Minister for Women and Minister Assisting the Prime Minister for the Public Service, the Hon Kelly O'Dwyer MP)Chapter 6 Amendments relating to employee commencement
Outline of chapter
6.1 Schedule 6 to the Bill contains amendments to allow the pre-filling of an individual's tax file number declaration and superannuation standard choice form by the Commissioner to the individual's employer.
6.2 All legislative references in this Chapter are to the TAA unless otherwise stated.
Context of amendments
6.3 Currently, individuals must provide a tax file number declaration and superannuation standard choice form to either the Commissioner or to the individual's employer (usually, via paper). The tax file number declaration allows an individual the option to disclose their tax file number to an employer or claim an exemption from quoting their tax file number, and provides information which can affect their withholding rates. These disclosure obligations for individuals are not mandatory under the tax law.
6.4 A taxation officer is permitted to disclose an individual's tax file number to an employer of the individual if the individual provided the number to the Commissioner in a tax file number declaration. However, there are situations where an employee may not know their tax file number or may be enquiring about their tax file number to the Commissioner which are not covered by this exception.
6.5 The current disclosure rules do not permit any pre-filling of information relating to the individual to their employer.
Summary of new law
6.6 Schedule 6 to the Bill contains amendments to allow the pre-filling of an individual's tax file number declaration and superannuation standard choice form by the Commissioner to the individual's employer to assist the individual to complete these forms using information held by the Commissioner.
6.7 The amendments achieve this by providing a range of new exceptions to the tax file number offence and the confidentiality of taxpayer information rules to enable the disclosure of tax file numbers, withholding information and the superannuation member accounts of individuals.
Comparison of key features of new law and current law
| New law | Current law |
| The Commissioner can disclose the tax file number of an individual if the employee has provided the tax file number to the Commissioner in a tax file number declaration, or made a tax file number declaration in particular circumstances. | The Commissioner can disclose the tax file number of an individual if the employee provided the number to the Commissioner in a tax file number declaration. |
| The Commissioner can disclose to an individuals' employer protected information on matters relating to the withholding rates of an individual. | No equivalent. |
| The Commissioner can disclose protected information to an individual's employer (including the individual's existing superannuation membership accounts) for the purpose of the individual making an informed superannuation choice. | No equivalent. |
Detailed explanation of new law
6.8 These amendments enable the Commissioner to disclose a tax file number to an individual's employer if the individual provided a tax file declaration to the Commissioner in relation to that employer. [Schedule 6, item 1, paragraph 202CG(a) of the ITAA 1936]
6.9 The Commissioner can also disclose a tax file number to an individual's employer if the employee made a tax file declaration to the Commissioner and the individual does not know their tax file number or is enquiring about the tax file number with the Commissioner. [Schedule 6, item 1, paragraph 202CG(b) of the ITAA 1936]
6.10 The amendments add two additional exceptions to the taxpayer confidentiality provisions in Division 355 in Schedule 1.
6.11 The Commissioner can disclose protected information to an employer (the payer) in relation to whom an individual has made a tax file number declaration that is in effect. The disclosure must be made for the purpose of the individual giving a declaration to the employer to determine withholding matters relating to the individual and is limited to information that relates to this purpose. The individual must request the Commissioner disclose the information in order for the disclosure to be made. [Schedule 6, item 3, item 11 to the table in subsection 355-50(2) in Schedule 1]
6.12 The Commissioner can disclose limited information to an employer (as defined in the SGAA) for the purpose of informing the individual of their existing superannuation interests, assist the individual to choose whether to maintain a current superannuation account or create a new one and to assist individuals to give effect to such a choice. [Schedule 6, item 4, item 11 to the table in subsection 355-65(3) in Schedule 1]
6.13 These changes enable the Commissioner to pre-fill information from an employee's tax file number declaration and superannuation standard choice forms on their business management software. To assist an individual to complete these forms with the benefit of information held by the Commissioner. Currently, individuals complete these forms without the benefit of information held by the Commissioner. Individuals that do not understand the questions can supply incorrect information leading to reverse workloads for their employers.
6.14 An individual, whose information will be disclosed by the Commissioner under these amendments, must first request the Commissioner disclose their information before the Commissioner discloses their protected information to their employer's business management software so that it can be presented as pre-filled information to assist the individual to make a withholding declaration. The individual must make this request each time they want the Commissioner to make the disclosure. For example, with each new employer or if the information held by the Commissioner changes and they want this new information to be disclosed to their employer's business management software so that it can be presented as pre-filled information.
6.15 The disclosures enable the individual to make a tax file declaration using up-to-date information about matters that may impact their withholding rate. Currently, individuals answer questions on a tax file number declaration, which determines how much their employer withholds from their pay, without the assistance of information held by the Commissioner. This can result in the individual receiving an unexpected tax debt because their employer withheld too little throughout a financial year to cover their tax obligations (for example, a compulsory loan repayment).
6.16 The disclosures can assist the individual to make an informed choice between their employer's default superannuation fund and their existing superannuation funds. Currently, individuals may not exercise their right to choose a fund for their employer superannuation contributions because they are unaware they have existing superannuation fund memberships or they do not know the appropriate information in order to nominate one of their existing superannuation funds in a standard choice form.
6.17 These changes ensure that an appropriate rate of withholding is applied by employers and reduce the proliferation of superannuation member accounts for individuals.
Application and transitional provisions
6.18 The amendments allowing the disclosure of a tax file number to an employer of an employee applies in relation to a tax file number declaration made on or after 1 July 2018. [Schedule 6, item 2]
6.19 The amendments in relation to the disclosure of protected information to an employee's payer of information relating to the withholding matters of the employee apply from commencement.
6.20 The amendments in relation to the disclosure of protected information to an employee's payer for the purpose of the employee making a superannuation fund choice apply from commencement.