House of Representatives

Explanatory Memorandum

(Circulated by authority of the Assistant Treasurer, Minister for Housing and Minister for Homelessness, Social and Community Housing, the Hon Michael Sukkar MP)

Chapter 16: Minor and technical amendments Spring 2021

Outline of chapter

16.1 Schedule 8 to the Bill makes a number of miscellaneous and technical amendments to various laws in the Treasury portfolio.

16.2 The amendments make minor and technical changes to correct typographical and numbering errors, repeal inoperative provisions, remove administrative inefficiencies, address unintended outcomes, and ensure that the law gives effect to the original policy intent.

Context of amendments

16.3 Minor and technical amendments are periodically made to Treasury legislation to remove anomalies, correct unintended outcomes and generally improve the quality of laws. This is part of the Government's ongoing commitment to the care and maintenance of Treasury portfolio legislation.

16.4 The process was first supported by a recommendation of the 2008 Tax Design Review Panel, which was appointed to examine how to reduce delays in the enactment of tax legislation and improve the quality of tax law changes. It has since been expanded to all Treasury portfolio legislation.

Summary of new law

16.5 The minor and technical amendments address technical deficiencies and legislative uncertainties in various Treasury laws by:

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correcting spelling and typographical errors;

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fixing incorrect legislative references;

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reducing unnecessary red tape;

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addressing unintended outcomes;

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enhancing readability and administrative efficiency; and

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repealing redundant and inoperative provisions.

Detailed explanation of new law

Amendments commencing the day after Royal Assent

Australian Prudential Regulation Authority Supervisory Levies Determination 2021

16.6 Section 9-2 of the Australian Prudential Regulation Authority Supervisory Levies Determination 2021 contains a typographical error for the minimum restricted levy amount relating to superannuation entities that are not pooled superannuation trusts, small APRA funds or single member approved deposit funds. The minimum restricted levy amount included in the table was "$7,50", but the intended amount was "$7,500". The amendments update the minimum restricted levy to $7,500. [Schedule 8, item 1, section 9-2 of the Australian Prudential Regulation Authority Supervisory Levies Determination 2021]

16.7 The amendments apply retrospectively from 1 July 2021. It is not expected that the small number of superannuation entities affected by this typographical error would be adversely affected by the retrospective application of this amendment. This is because the correct amount of $7,500 was publicly consulted on and was the amount expected to be paid by the entities. Applying the amendment from the beginning of 2021 financial year ensures that levy obligations for affected entities are consistent with what was originally intended. The APRA has also contacted affected entities to advise them of the error and of this intended correction. [Schedule 8, item 2, section 10-1 of the Australian Prudential Regulation Authority Supervisory Levies Determination 2021]

Amendments to the breach reporting provisions in the Corporations Act 2001 and National Consumer Credit Protection Act 2009

16.8 Schedule 11 to the Financial Sector Reform (Hayne Royal Commission Response) Act 2020 introduced a strengthened breach reporting regime into the Corporations Act and a new regime into the National Consumer Credit Protection Act 2009. Under the regimes, licensees are obligated to report and investigate breaches of the financial services law and credit legislation.

16.9 Paragraph 50A(3)(c) of the National Consumer Credit Protection Act 2009 provides that breaches of other Commonwealth laws, to the extent that those laws cover conduct relating to credit activities, are reportable.

16.10 Under the equivalent provision in the Corporations Act, the breach reporting regime only covers breaches of other Commonwealth laws (to the extent they cover conduct relating to financial services) where those laws are prescribed by the regulations. The scope of the regime under the Corporations Act is therefore narrower and provides greater certainty to licensees about the scope of their breach reporting obligations.

16.11 The amendment adds to paragraph 50A(3)(c) of the National Consumer Credit Protection Act 2009 the requirement that Commonwealth laws be prescribed by the regulations for their breach to be reportable. This aligns the with the approach taken in the Corporations Act where regulations prescribe which Commonwealth laws are caught within the breach reporting regime. This will provide clarity to licensees of their breach reporting obligations. [Schedule 8, items 19 and 22, section 50A(3)(c) of the National Consumer Credit Protection Act 2009]

16.12 The breach reporting regimes under the Corporations Act and the National Consumer Credit Protection Act 2009 provide that significant breaches of core obligations by representatives of licensees are reportable. However, the provisions comprising the core obligations pertain to obligations on licensees only. This means that breaches by representatives of the financial services law or credit legislation do not attract a reporting obligation, even if such breaches are significant.

16.13 The amendments add core obligations on representatives of licensees into the breach reporting regime. This will ensure that breaches of these obligations by representatives of licensees are reportable. [Schedule 8, items 4 and 20, section 50A(3) of the National Consumer Credit Protection Act 2009; section 912D(3)(e) of the Corporations Act]

16.14 The core obligations on representatives of licensees are the same core as the obligations on licensees, except that licensees' core obligations also include those found in other Commonwealth laws (that fall within the scope defined in each of the Corporations Act and National Consumer Credit Protection Act 2009).

16.15 The amendments apply in relation to a reportable situation that arises on or after 1 October 2021. Licensees are not disadvantaged by retrospective application of the amendments because the amendments operate to ensure that, for a reportable situation that arises in the period between 1 October 2021 and the commencement of the amendments, the relevant reporting time period begins on the day the amendments commence. [Schedule 8, item 14, sections 1689 and 1690 of the Corporations Act; Schedule 8, item 22, items 1 and 2 of Schedule 20 to the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009]

16.16 For example, if a licensee is required to do something within 30 days of becoming aware of a reportable situation, and the time to do that thing was before the commencement of the amendment, the effect of the application provision is that the licensee would be required to do the thing within 30 days after the commencement of the amendments.

16.17 Paragraph 912D(4)(b) of the Corporations Act and paragraph 50A(4)(b) of the National Consumer Credit Protection Act 2009 provide that a breach of a civil penalty provision is significant and reportable to ASIC unless the civil penalty provision is prescribed in the regulations.

16.18 Under both Acts, a breach of a civil penalty provision may be triggered by the breach of one of a number of different provisions, or in relation to one of a number of different matters. Prescribing a civil penalty provision in the Regulations would therefore have the effect of making a breach in relation to multiple provisions or matters exempt from reporting. This limits the ability to make breaches in relation to some matters reportable while exempting others.

16.19 The amendments address this situation by providing that a civil penalty provision may be prescribed to the extent that it relates to the contravention of a specific provision or class of provisions, or a matter or class of matters. This allows particular matters or contraventions of provisions (or classes of the same) to be specified for exemption from reporting, without exempting the whole civil penalty provision and each provision or matter to which the penalty provision relates. [Schedule 8, items 5 and 21, section 912D(6) of the Corporations Act and section 50A(5A) of the National Consumer Credit Protection Act 2009]

16.20 The amendment applies to reportable situations that arise on or after the commencement of the amendment. [Schedule 8, item 14, sections 1689 and 1691 of the Corporations Act; Schedule 8, item 22, items 1 and 3 of Schedule 20 to the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009]

Other amendments to the Corporations Act 2001

16.21 Section 323DB of the Corporations Act requires listed entities to give each relevant market operator a notice if it or its subsidiary received a JobKeeper payment in a financial year. Section 323DC requires ASIC to publish a report of all notices that were given and released to the market. Item 3 amends a typographical error in subsection 323DC(1), replacing "relevant market regulators" with "relevant market operators" (italic emphasis added). This reflects the intended operation of the subsection, that the requirement on ASIC to report is in relation to notices given to relevant market operators. [Schedule 8, item 3, section 323DC(1) of the Corporations Act]

16.22 A number of amendments are also made to incorporate various modifications of the Corporations Act that are located in the Corporations Regulations 2001 directly into the Act. These amendments improve the readability of the law and reduce the number of instruments that modify the primary law.

16.23 Since 2005, regulation 7.6.08 of the Corporations Regulations 2001 have modified the operation of section 916B of the Corporations Act. These modifications ensure any authorised representative can appoint an individual person to act on behalf of the licensee, so long as:

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the licensee consents in writing to this occurring; and

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the representative making the appointments was not themselves appointed in this manner.

16.24 Items 6 and 7 incorporate these modifications into section 916B of the Corporations Act by expanding the group of authorised representatives who can appoint individual persons to act on a licensee's behalf. Currently under that provision, only body corporate authorised representatives can appoint individual persons to act on a licensee's behalf. [Schedule 8, items 6 and 7 section 916B of the Corporations Act]

16.25 For consistency throughout the provision, items 8, 9 and 10 make consequential amendments to the remainder of section 916B to update the terminology to 'authoriser'. [Schedule 8, items 8, 9 and 10, section 916B of Corporations Act]

16.26 Item 11 amends subsection 916F(1AA) to insert two additional exemptions where the person who authorises a representative to provide financial services is not required to notify ASIC of the authorisation. These two exemptions were included as modifications by subregulation 7.6.08(3) of the Corporations Regulations 2001 and include instances where:

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a representative provides personal advice about a basic deposit product or a facility for making non-cash payments that relates to a basic deposit product; or

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the authoriser provides information about the representative and the representative's authorisation when requested.

[Schedule 8, item 11, section 916F(1AA) of the Corporations Act]

16.27 Item 14 preserves the operation of existing regulations made under the previous section 916F(1AA) of the Corporations Ac t, which is repealed and replaced by item 11. [Schedule 8, item 14, section 1692 of the Corporations Act]

16.28 Section 946C of the Corporations Act was modified by regulation 7.7.10AH of the Corporations Regulations 2001 so that in a time critical case, a provider can issue a Statement of Advice to a client within five business days (rather than five calendar days). Item 12 amends paragraph 946C(3)(c) to incorporate this modification in the primary law. [Schedule 8, item 12, section 946C(3)(c) of the Corporations Act]

16.29 Section 1019B of the Corporations Act was modified by regulation 7.9.15G of the Corporations Regulations 2001 so that the client's right to return a financial product in certain circumstances commences no later than the end of five business days (rather than five calendar days) after the product was issued or sold to the client. Item 13 amends paragraph 1019B(3)(b) to incorporate this modification in the primary law. [Schedule 8, item 13, section 1019B(3)(b) of the Corporations Act] Foreign Acquisitions and Takeovers Act 1975

16.30 Section 62A of the Foreign Acquisitions and Takeovers Act 1975 allows the Treasurer to provide a notice which contemplates the variation or revocation of an exemption certificate if the holder of that certificate provides false or misleading information prior to seeking the exemption. The power to give this notice is in subsection 62A(2). However, paragraph 62A(3)(b) incorrectly references the power as being in subsection 62A(1). The amendment fixes this error and ensures the reference is correct. [Schedule 8, item 15, section 62A of Foreign Acquisitions and Takeovers Act 1975]

16.31 Section 76 of the Foreign Acquisitions and Takeovers Act 1975 sets out the content requirements in relation to a no objection certificate that is issued under sections 74 or 75 of that Act. Section 76(4) incorrectly references paragraph 76(1)(c) when referring to the time period requirement which is in subparagraph 76(1)(b)(i). The amendment corrects this error and ensure the reference is correct. [Schedule 8, item 16, section 76 Foreign Acquisitions and Takeovers Act 1975] Income Tax Rates Act 1986

16.32 Amendments are made to ensure the Working Holiday Maker tax regime functions properly despite disruptions caused by COVID-19.

16.33 Under section 3A of the Income Tax Rates Act 1986, an individual who holds a subclass 417 (Working Holiday) visa, subclass 462 (Work and Holiday) visa or certain bridging visas is considered a working holiday maker. Relative to non-resident taxpayers, working holiday makers are effectively subject to concessional tax rates under Part III of Schedule 7 to the Income Tax Rates Act 1986.

16.34 Eligible working holiday makers may apply to the Department of Home Affairs to extend their stay in Australia under a COVID-19 Pandemic Event 408 visa, which is defined in regulation 9204 of Schedule 13 to the Migration Regulations) 1994.

16.35 Section 3A of the Income Tax Rates Act 1986 is amended so that the definition of a working holiday maker includes holders of a Pandemic Event 408 visa if that visa was granted to allow holder to remain in Australia following the expiry of a subclass 417 visa, subclass 462 visa, or certain bridging visas. [Schedule 8, item 17, section 3A of the Income Tax Rates Act 1986]

16.36 The amendments apply retrospectively from 1 July 2019 to taxpayers who are non-residents, whether they were non-residents for the entirety or part of an income year, and prospectively from the first 1 July to occur after the Part commences to all taxpayers. It is not expected that the retrospective application will adversely impact any individuals and ensures non-resident taxpayers are subject to the concessional rates. [Schedule 8, item 18] Payment Times Reporting Act 2020

16.37 Subsection 14(1) of the Payment Times Reporting Act 2020 sets out the content that must be included in payment times reports. Paragraph 14(1)(h) requires reporting on the proportion of all procurement during the reporting period, determined by total value, that was procurement from small business suppliers.

16.38 The amendments repeal paragraph 14(1)(h) of the Payment Times Reporting Act 2020 and substitute a new paragraph. The new paragraph refers to the proportion, by total value, of "all invoices paid" rather than the proportion, determined by total value, of "procurement". [Schedule 8, item 28, section 14 of the Payment Times Reporting Act 2020]

16.39 The amendments are intended to ensure that the reporting content requirement captures the proportion, by total value, of all invoices paid by the entity during the reporting period that were small business invoices rather than the total value of procurement which may differ from invoices paid.

16.40 Subsection 14(2) of the Payment Times Reporting Act 2020 provides that the rules may prescribe the method for working out any of the matters mentioned in subsection 14(1)(g) of that Act, including in relation to the issue or payment of small business invoices for the purposes of paragraph 14(1)(g).

16.41 Subsection 14(2) of the Payment Times Reporting Act 2020 is amended to provide that the rules may prescribe a method for working out any of the matters mentioned in paragraphs 14(1)(e), 14(1)(f), 14(1)(g) and 14(1)(h) of that Act. [Schedule 8, item 29, section 14 of the Payment Times Reporting Act 2020]

16.42 The amendment allows additional rules to be prescribed about the method of working out for those sections. Paragraph 14(1)(e) of the Payment Times Reporting Act 2020 requires the inclusion of a statement on the entity's shortest and longest standard payment periods. Paragraph 14(1)(f) of that Act requires details and an explanation of changes to standard payment periods, if any, during the reporting period. Paragraph 14(1)(h) of that Act as amended relates to the proportion of all invoices paid in a reporting period that were paid to a small business supplier.

16.43 The amendments to subsection 14(1) of the Payment Times Reporting Act 2020 made by this Part apply in relation to a payment times report given on or after the commencement of this Part (including a payment times report for a reporting period that began before the commencement time). [Schedule 8, item 30]

16.44 Rules made under subsection 14(2) of the Payment Times Reporting Act 2020, in force immediately before the commencement time, have effect, at and after the commencement time, as if the rules had been made for the purposes of subsection 14(2) of that Act as inserted by this Part. [Schedule 8, item 30]

16.45 Section 27 of the Payment Times Reporting Act 2020 allows for the delegation of any or all of the Regulators' powers and functions under that Act (except for those specified in subsection 27(2) of that Act).

16.46 Subsection 27(3) of the Payment Times Reporting Act 2020 limits the delegation of certain functions or powers to the level of Senior Executive Service (SES) employee, or acting SES employee in the department.

16.47 The amendments repeal paragraphs 27(3)(a) and (b) of the Payment Times Reporting Act 2020 so that functions or powers under subsections 7(3) (ceasing to be a reporting entity) and 13(4) (further time to give a payment times report) may also be exercised by Executive Level 2 (EL2) officers or acting EL2 officers. [Schedule 1, item 31, section 27 of the Payment Times Reporting Act 2020]

16.48 During the implementation of the Scheme, it has become apparent that decisions about ceasing to be a reporting entity and to allow further time to give a payment times report are generally high volume and routine. The legislation also clearly prescribes the circumstances in which an entity can be considered to cease to be a reporting entity and the circumstances where an extension of time may be allowed.

16.49 For these reasons, the amendments provide greater flexibility by extending the delegation to cover EL2 officers, in addition to SES officers.

16.50 The decision to cease to be a reporting entity, under subsection 7(3) of the Payment Times Reporting Act 2020, and extension of time for submission of a Payment Times Report, under subsection 13(4) of that Act, are reviewable decisions under section 51 of that Act. Subsection 53(1) of that Act requires that reviewable decisions are either considered by the Regulator personally or considered by another individual who was not involved in the original decision and is at the same level as the original decision maker.

16.51 Under paragraph 7(1)(b) of the Payment Times Reporting Act 2020 a constitutionally covered entity which does not meet the criteria for a reporting entity in subsection 7(2) of that Act may volunteer to provide Payment Times Reports by writing to the Regulator prior to the beginning of an income year. A reporting entity which elects under paragraph 7(1)(b) of that Act to report is referred to as a "volunteering entity".

16.52 The amendments clarify that a volunteering entity becomes a reporting entity at the time at which they give notice of their election to become a reporting entity. Reporting entities, who are not volunteering entities, do not commence reporting until the start of an income year in the first reporting period for that income year. This has also been the case for volunteering entities, however, these amendments will mean that volunteering entities will report in the next reporting period regardless of whether it is the first or the second reporting period of an income year. [Schedule 8, items 23 and 24, sections 5 and 7 of the Payment Times Reporting Act 2020]

16.53 The amendment to section 8 of the Payment Times Reporting Act 2020 clarifies the meaning of reporting period for new volunteering entities. It provides that if a volunteering entity becomes a reporting entity within the first 6 months of an income year, the first 6 months of that income year is not a reporting period for the entity. In addition, if a volunteering entity becomes a reporting entity within the last 6 months of an income year for the entity, no period in that income year is a reporting period for the entity. [Schedule 8, items 25 and 26, section 8 of the Payment Times Reporting Act 2020]

16.54 The application provision provides that the amendments apply to those volunteering entities giving notice on or after the commencement date of the amendments. Volunteering entities that have already given notice will need to continue to wait to the start of the relevant income year to commence reporting. [Schedule 8, item 27] Taxation Administration Act 1953

16.55 Under subsection 350-10(4) in Schedule 1 to the TAA 1953, copies or extracts of certain tax documents may be used in substitute of the original document by the ATO for the purposes of court proceedings. Such documents may be used as evidence of the matters set out in the document to the same extent the original document would have been.

16.56 This provision replaced the now repealed subsection 177(1) of the ITAA 1936 and was intended to have the same substantive effect as the rewritten provision even though the new provision expressed the same idea in a different form of words in order to use a clearer or simpler style. [Schedule 8, item 32, section 350-10 in Schedule 1 to the TAA 1953]

16.57 The amendments clarify that a copy of a document to which subsection 350-10(4) applies may be used as conclusive evidence of the same matters that the original document would have been proof of, consistent with the policy intent and the ATO's current administration of the provision.

Amendments commencing first day of next quarter

Income Tax Assessment Act 1997 and Taxation Administration Act 1953

16.58 The amendments ensure the Seasonal Labour Mobility Program tax regime functions properly despite disruptions caused by COVID-19.

16.59 Under Subdivision 840-S of the ITAA 1997, foreign residents who are employed under the Seasonal Labour Mobility Program may be liable to pay income tax on the salary, wages and other types of payments paid to them under that program.

16.60 Individuals who are employed under the Seasonal Labour Mobility Program typically hold a subclass 403 visa. Holders of a subclass 403 visa may apply to the Department of Home Affairs to extend their stay in Australia under a COVID-19 Pandemic Event visa (subclass 408 visa). However, under the subclass 408 visa they will not be subject to the concessional Seasonal Labour Mobility Program tax regime. Currently, this issue is addressed by the Taxation Administration (Remedial Power - Seasonal Labour Mobility Program) Determination 2020, a legislative instrument, made by the Commissioner under section 370-5 of Schedule 1 to the TAA 1953.

16.61 Subparagraph 840-905(b)(ii) of the ITAA 1997 and section 12-319A of Schedule 1 to the TAA 1953 are amended to expand the scope of both provisions to holders of a subclass 408 visa who were previously holders of a subclass 403 visa. [Schedule 8, items 33 and 35, section 840-905 of the ITAA 1997 and section 12-319A in Schedule 1 to the TAA 1953]

16.62 The amendments apply retrospectively from the 1 July 2019. The retrospective application does not adversely impact individuals. [Schedule 8, items 34 and 36]

16.63 The amendments also repeal the Taxation Administration (Remedial Power - Seasonal Labour Mobility Program) Determination 2020. [Schedule 8, item 37]

Amendments with other commencements

National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009

16.64 Amendments made by the National Consumer Credit Protection Amendment (Mandatory Credit Reporting and Other Measures) Act 2021 (the Amending Act) that insert transitional provisions into the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 will commence on 1 July 2022. The Amending Act contains a numbering error where item 23 of Schedule 2 to the Amending Act was meant to be a continuation of item 22. Item 23 should have been numbered as item 1 of Schedule 9 under amending item 22. The amendment corrects this error by renumbering the provision to the correct item number. [Schedule 8, item 38, item 23 of Schedule 9 to the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009. Income Tax Assessment Act 1936

16.65 Section 204 of the ITAA 1936 permits the disclosure of TFN to certain registrars for certain purposes. The Modernising Business Registers Program will consolidate multiple registers maintained by ASIC and the ATO. The registrars will share computer systems with the ATO to efficiently deliver the Australian Business Registry Services.

16.66 The amendments allow the Commissioner to disclose TFNs to the extent reasonably necessary to enable the registrars to share the ATO's computer systems in the performing of their functions or carrying out their powers. [Schedule 8, items 39 and 40, sections 204(2A) and 204(3) of ITAA 1936]

16.67 The amendments to section 204 of the ITAA 1936 have retrospective effect to ensure that any disclosures during computer system development and testing carried out for the Modernising Business Registers Program do not constitute offences due to the inadvertent omission of the provisions inserted by these amendments from the Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2020.

16.68 This retrospectivity is achieved by linking the commencement time of these amendments to the commencement time of amendments to the TAA 1953 being made by the Treasury Laws Amendment (2020 Measures No. 6) Act 2020 (which specify which registrars the Commissioner may disclose TFNs to). The Treasury Laws Amendment (2021 Measures No. 5) Bill 2021 includes provisions to make the commencement of those amendments retrospective. [Schedule 8, item 43]

16.69 Retrospective application will not adversely affect any persons or entities because its effect is to ensure that appropriate disclosure of TFNs in circumstances that should have been specified at the commencement of the Modernising Business Registers Program does not constitute an offence. Taxation Administration Act 1953

16.70 Section 8WB of the TAA 1953 prohibits the recording or use of TFNs in particular ways, but disapplies the prohibition in some circumstances. The amendments to this section add circumstances connected to the activities of the registrar to the circumstances in which the prohibition is disapplied. [Schedule 8, items 41 and 42, sections 8WB(1A)(b) and 8WB(2) of the TAA 1953]

16.71 These amendments have retrospective application in the same manner and for the same reasons as the amendments to section 204 of the ITAA 1936 described above.