Explanatory Memorandum
(Circulated by authority of the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP)General outline and financial impact
Schedule 1 - PwC response - Promoter penalty law reform
Outline
Schedule 1 to the Bill amends the TAA 1953 with respect to the promoter penalty provisions to increase the time the ATO has to bring an application for civil penalty proceedings to the Federal Court of Australia, increase the maximum penalty applicable, and expand the application of the promoter penalty laws.
This will improve the ability of the ATO to target promoters of tax exploitation schemes and seek the application of civil penalties.
Date of effect
Schedule 1 to the Bill commences on the later of the first 1 January, 1 April, 1 July or 1 October to occur after the day the Bill receives Royal Assent, and 1 July 2024.
Amendments to section 290-55 of Schedule 1 to the TAA 1953 to extend the timeframe in which the ATO can apply to the Federal Court for the imposition of a civil penalty apply in relation to conduct occurring before, on or after commencement of Schedule 1 to the Bill.
Proposal announced
Schedule 1 to the Bill was announced on 6 August 2023 as part of the Government's response to the PwC tax leaks scandal.
Financial impact
Schedule 1 to the Bill is expected to have an unquantifiable but positive impact on receipts. Financial impacts are expected to first occur in 2024-25.
Human rights implications
Schedule 1 to the Bill raises human rights issues. See Statement of Compatibility with Human Rights - Chapter 6.
Compliance cost impact
This measure is not anticipated to impact compliance costs.
Schedule 2 - PwC response - Extending tax whistleblower protections
Outline
Schedule 2 to the Bill amends the TAA 1953 to extend whistleblower protections to eligible whistleblowers who make disclosures to the TPB, as well as disclosures to certain other entities who may support or assist the whistleblower. It also reverses the burden of proof for certain claims of protection under Part IVD of the TAA 1953.
Date of effect
Schedule 2 to the Bill commences on the later of the first 1 January, 1 April, 1 July or 1 October to occur after the day the Bill receives Royal Assent, and 1 July 2024.
Proposal announced
Schedule 2 to the Bill was announced on 6 August 2023 as part of the Government's response to the PwC tax leaks scandal.
Financial impact
Nil.
Human rights implications
Schedule 2 to the Bill raises human rights issues. See Statement of Compatibility with Human Rights - Chapter 6.
Compliance cost impact
This measure is not anticipated to impact compliance costs.
Schedule 3 - PwC response - Tax Practitioners Board reform
Outline
Schedule 3 to the Bill aims to enhance public confidence in the regulation of the tax profession by implementing the second tranche of amendments arising from the TPB Review to improve the Register and boost the TPB's investigation powers. The amendments increase the information published on the Register, remove the 12-month time limit for certain information to remain on the register, extend the timeframe that the TPB has to conduct an investigation, and better target the TPB's delegation powers.
Date of effect
Schedule 3 to the Bill to the Bill commences on the later of the first 1 January, 1 April, 1 July or 1 October to occur after the day the Bill receives Royal Assent, and 1 July 2024.
The expanded timeframe for TPB investigations applies to investigations that are in progress at commencement where a decision has not yet been made or taken to have been made. In circumstances where the TPB has investigated conduct, found it breached the TAS Act, and made a decision on or after 1 July 2022 to take no further action because the entity was no longer registered, the TPB has 6 months from commencement in which it is permitted to decide to publish information on the Register.
Proposal announced
Schedule 3 to the Bill partially implements the Government's Response to the TPB Review, the report for which was released on 27 November 2020.
Financial impact
Nil.
Human rights implications
Schedule 3 to the Bill raises human rights issues. See Statement of Compatibility with Human Rights - Chapter 6.
Compliance cost impact
This measure is not anticipated to impact compliance costs.
Schedule 4 - PwC response - Information sharing
Outline
Schedule 4 to the Bill amends the TAA 1953 and the TAS Act to allow taxation officers and TPB officials to share protected information with Treasury about misconduct arising out of breaches or suspected breaches of confidence by intermediaries engaging with the Commonwealth. The amendments also allow taxation officers and TPB officials to share protected information with prescribed professional disciplinary bodies to enable them to perform their disciplinary functions.
Date of effect
Schedule 4 to the Bill commences on the day after Royal Assent.
The amendments apply in relation to records and disclosures of information made on or after commencement of Schedule 4 to the Bill, whether the information was obtained before, on or after that commencement.
Proposal announced
Schedule 4 to the Bill was announced on 6 August 2023 as part of the Government's response to the PwC tax leaks scandal.
Financial impact
Nil.
Human rights implications
Schedule 4 to the Bill raises human rights issues. See Statement of Compatibility with Human Rights - Chapter 6.
Compliance cost impact
This measure is not anticipated to impact compliance costs.
Schedule 5 - Petroleum resource rent tax deductions cap
Outline
Schedule 5 to the Bill amends the PRRTA Act to effectively cap the availability of deductible expenditure incurred by a person in relation to a petroleum project for a year of tax. The changes will mean the offshore LNG industry pays more tax sooner.
Date of effect
Schedule 5 to the Bill commences on the first 1 January, 1 April, 1 July or 1 October to occur after the day the Bill receives Royal Assent.
The amendments to the PRRTA Act made by Schedule 5, other than the amendments to the instalment provisions made by items 5 to 7, apply in relation to assessable receipts derived by a person in relation to a project, or a Greater Sunrise project, and in relation to a year of tax beginning on or after 1 July 2023. Instalment provisions, as they relate to the deductions cap, apply in relation to a petroleum project and in relation to a year of tax beginning on or after 1 July 2024.
Proposal announced
Schedule 5 to the Bill partially implements the Petroleum Resource Rent Tax – Government Response to the Review of the PRRT Gas Transfer Pricing arrangements measure announced in the 2023-24 Budget.
Financial impact
Schedule 5 to the Bill and other elements of the 2023-24 Budget measure Petroleum Resource Rent Tax – Government Response to the Review of the PRRT Gas Transfer Pricing arrangements are estimated to increase receipts by $2.4 billion over the 4 years from 2023-24.
All figures in this table represent amounts in $m.
| 2023-24 | 2024-25 | 2025-26 | 2026-27 |
| 500.0 | 600.0 | 800.0 | 500.0 |
Impact Analysis
Details relating to the impacts of the amendments in Schedule 5 are referenced in the Petroleum Resource Rent Tax: Review of Gas Transfer Pricing Arrangements - Final report to the Treasurer - May 2023 at Attachment 1.
Human rights implications
Schedule 5 to the Bill does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 6.
Compliance cost impact
The compliance cost for this measure has been measured as minimal.