Explanatory Memorandum
(Circulated by the authority of the Treasurer, the Hon. J.S. Dawkins, M.P.)Collection and Recovery
A. Introduction
12.1 This chapter describes the obligations of people who engage in taxable dealings, in relation to the lodgment of returns and payment of tax . It also deals with the Commissioner's right to recover unpaid tax and the penalties that apply to non-payment. The new law will be changed very little in this area, but the relevant provisions will be expressed in a simpler form. These matters are dealt with in Part 5 of the Sales Tax Assessment Bill 1992.
B. Explanation and Commentary
12.2 Taxpayers who engage in taxable dealings will be required to calculate the tax payable on those dealings and send a return, in the approved form, to the Commissioner. The return will be required to be received by the Commissioner within 21 days after the end of the month or quarter in which the dealing took place, depending upon whether the person is a monthly remitter or a quarterly remitter. The relevant quarters for a quarterly remitter will be the three months ending on 31 July, 31 October, 31 January and 30 April. [clause 5, definition of 'sales tax quarter', 'taxpayer' and clause 61 ]
12.3 Quarterly remitters: A quarterly remitter will be a person whose annual sales tax liability for the previous financial year did not exceed the quarterly remitter threshold, and who has no sales tax payments outstanding. The threshold for 1991-92 is $50,000. The threshold for 1992-93 will be $51,200. [clause 5, definition of 'quarterly remitter' and clause 62 ]
12.4 Monthly remitter: A person who is not a quarterly remitter is a monthly remitter. [clause 5, definition of 'monthly remitter' and clause 62]
12.5 In some very limited circumstances, certain people such as airport shop proprietors and auctioneers are, under existing law, required to lodge returns at the time of the taxable dealing or within 7 days of that dealing. Under the new law, these people will become either monthly or quarterly remitters, depending on their liability.
12.6 Monthly remitters: Tax will be required to be paid by the 21st day after the end of the month in which the taxable dealing occurred. [subclause 63(1)]
12.7 Quarterly remitters: Tax will be required to be paid by the 21st day after the end of the quarter in which the taxable dealing took place. For example, for the quarter ending 31 July the date for payment is 21 August. [subclause 63(2)]
12.8 If tax is payable on a local entry of goods, or a removal of goods from a customs clearance area, then the tax will be payable at the time of the customs dealing. This means that the taxpayer will not have the option of paying that tax at a later time. [clause 64]
12.9 If the Commissioner believes that a person is about to leave Australia before an amount of tax becomes due and payable, the Commissioner will be able to bring forward the due date for the payment of the tax. [clause 65]
12.10 The Commissioner will be able, in a particular case, to extend the time for payment of tax, or allow tax to be paid by instalments. This provision will be of the same effect as the existing provision that allows the Commissioner to extend the time for payment. [clause 66]
Way in which tax will be required to be paid
12.11 Tax payable on goods removed from a customs clearance area or on a local entry of goods will be required to be paid at the same place and in the same way as Customs duties are payable. [subclause 67(1)]
12.12 Any other tax will be required to be paid at the place, and in the way determined by the Commissioner. [subclause 67(2)]
12.13 If tax payable by a person has not been paid by the due date for payment, the person will be liable to pay a penalty. The penalty will be 20% per year, calculated on the unpaid amount from the due date for payment, or from a later date determined by the Commissioner if the Commissioner has granted an extension of time to pay or has allowed payments by instalments. [clause 5, definition of 'late payment penalty' and subclause 68(1)]
12.14 Where a judgement has been entered or given in a court for the payment of tax, this will not alter the fact that the tax has remained unpaid from the original due date. [subclause 68(2)]
12.15 If the judgement debt includes interest, the penalty (discussed in 12.16 above) will be reduced by a proportion of the interest as follows:
(Tax component of judgement debt / judgement debt) * Interest on Judgement debt
[subclause 68(3)]
12.16 The Commissioner will be able to remit some, or all, of the penalty for unpaid tax if he is satisfied that the circumstances warrant it. Some of those circumstances will be described in the law. In other situations the Commissioner will be able to remit some or all of the tax if the Commissioner is satisfied that there are special circumstances that justify a remission. [subclause 68(4)]
12.17 These provisions have been simplified but the effect of the law remains unchanged.
12.18 Unpaid tax (including penalty) will be a debt which can be sued for by the Commissioner or a Deputy Commissioner in the appropriate court. [clause 69]
Recovery of tax paid on another person's behalf
12.19 A person who pays tax for, or on behalf of, another person will be able to recover the amount from the other person (including the cost of recovery) as a debt through court action. Alternatively, the amount will be able to be deducted from moneys held by the person that belong to the other person. For this purpose, tax will include any penalties payable on the unpaid tax. [clause 70]
Recovery of tax from joint taxpayers
12.20 When 2 or more people become jointly liable to pay tax, each one will be liable for the whole of the tax. If any of them pays the whole tax, that person will be able to recover tax from the others in the same proportion as their interest in the goods.
Example:
If 4 people are jointly liable to pay tax and they each have an equal interest in the goods, the person who has paid the tax will be able to recover 25% of the tax from the other 3 people.
12.21 The person who has paid the tax will be able to either recover it as a debt through court action or deduct it from any money held by the person which belongs to the other people. For this purpose, tax will include any penalties payable on the unpaid tax. [clause 71]
Recovery of tax from trustee of deceased taxpayer
12.22 If at the time of a taxpayer's death, tax that is due has not been assessed or paid, the Commissioner will have the same powers and remedies for assessment and recovery from the trustee of the estate as he would have had against the taxpayer.
12.23 The trustee will be required to lodge any returns and provide any information that the taxpayer would have been liable to provide. The trustee will also be required to lodge any further returns or provide any further information required by the Commissioner.
12.24 If the trustee does not lodge any return or further information, the Commissioner will be able to make an assessment of tax in relation to the deceased taxpayer.
12.25 The trustee will be liable to the same penalty under Part 9 and the same late payment penalty for which the taxpayer would have been liable had the taxpayer still been alive.
12.26 Any tax due by the trustee will be a first charge on all of the taxpayer's estate in the hands of the trustee.
12.27 A trustee who is dissatisfied with an assessment made under this section will be able to object as set out in Part IVC of the Taxation Administration Act 1953.
12.28 In this part trustee will include an executor, administrator or other personal representative of a deceased person. [clause 5, definition of 'trustee' and clause 72 ]
Recovery of tax from unadministered deceased estate
12.29 If probate has not been granted or letters of administration taken out within 6 months of a taxpayer's death, the Commissioner will be able to make an assessment of tax. Notice of the assessment will be required to be published twice in a daily newspaper in the State or Territory where the taxpayer resided at the time of death.
12.30 Subject to any amendment, the assessment will be conclusive evidence of the liability of the deceased taxpayer.
12.31 A person who claims an interest in the deceased taxpayer's estate, or has been granted probate of the taxpayer's will, or letters of administration of the taxpayer's estate, and who is dissatisfied with the assessment, will be able to object in the same way as that set out in Part IVC of the Taxation Administration Act 1953 if the person were the deceased taxpayer. [clause 73]
Collection from a person who owes money to a taxpayer
12.32 The Commissioner will be able to collect money from a person who owes money to a taxpayer who has a sales tax debt. This power will extend to the following situations:
- •
- a person who owes, or may owe money to a taxpayer;
- •
- a person who holds, or may hold money for a taxpayer;
- •
- a person who holds, or may hold money for a person who will pay it to the taxpayer; or
- •
- a person who has authority from someone else to pay money to a taxpayer.
The Commissioner will be able, by written direction, to require people in the situations outlined above to pay the money (or an amount equal to the tax due) to the Commissioner, in accordance with the direction. If several payments are to be made to the taxpayer, the Commissioner will be able to require a specified amount out of each payment. The Commissioner will not be able to require money to be paid to the Commissioner before it is due to the taxpayer. Money will be taken to be due to the taxpayer regardless of whether there is a condition to be fulfilled before the taxpayer is entitled to the money.
12.33 Any person who refuses to comply or does not comply will be guilty of an offence carrying a penalty of $2,000. Where such a person is convicted of not complying by a court, the court will be able to order the convicted person to pay the amount refused in addition to any penalty determined by the court.
12.34 Any person making payments to the Commissioner under these provisions will be deemed to be acting on the authority of the taxpayer and will be indemnified against any action that may be taken by the taxpayer in relation to the payments.
12.35 If the whole debt has been paid before the Commissioner has received payments of the debt from a third party, the Commissioner will be required to inform the third person that the debt has been paid.
12.36 Where a person owns withdrawable shares in the capital of a building society which have not been repaid, the money represented by the shares and held by the building society will be taken to be due to the person if it is repayable on demand, or if it is not repayable on demand, it will be taken to be money which may become due by the building society to the person. [clause 74]
12.37 If, in any proceedings for recovery of sales tax against a taxpayer, the taxpayer is absent from Australia and after reasonable enquiries the Commissioner is satisfied that:
- (a)
- the taxpayer does not have any attorney or agent on whom documents can be served in Australia, and
- (b)
- the taxpayer cannot be found,
the Commissioner will be required to post the documents (or a sealed copy) in a letter addressed to the taxpayer at the last known place of business or residence in Australia. [clause 75]
12.38 The Commissioner will be required to remit any tax not paid 3 years after it became due, unless the Commissioner has, during that 3 year period, required payment of the tax in writing or is satisfied that payment of the tax has been avoided by fraud or evasion.
12.39 Where a taxpayer makes a part payment towards several due amounts, the due amounts will be cleared by the payment in the order in which they became due. The Commissioner will be able, however, to determine a different order. [clause 76]
12.40 Clause 77 will apply to a taxpayer who has been given a ruling by the Commissioner which has subsequently been changed and, relying on the first ruling, has either paid no tax or underpaid the tax that has become due under the new ruling.
12.41 The Commissioner will be required to remit the underpaid tax unless he is satisfied that the taxpayer had made a mis-statement of fact or suppressed an important fact causing the first ruling to be given or continued.
12.42 If a ruling is given to a particular person, it will apply only to that person and when a subsequent public ruling is issued which conflicts with a ruling previously given to a particular person, the public ruling will prevail. Similarly, if a private ruling is issued which conflicts with an earlier public ruling, the private ruling will be the correct ruling.
12.43 The general position with private and public rulings will be that the later issued ruling will prevail. With public rulings, it will be the responsibility of the taxpayer to ensure that any public ruling does not conflict with an earlier ruling the taxpayer has received.
12.44 If the Commissioner issues a ruling subsequent to an amendment to the law, that ruling will not alter a previous ruling which was issued prior to the commencement of the amendment, except to the extent that it deals with issues other than the amendment.
Example:
Ruling issued 1 June 1992 Law amended 1 July 1992. Ruling issued giving advice of the amendment and altering the June ruling 1 August 1992
Because the law had been amended, the ruling issued on 1 June 1992 applies only until 1 July 1992 and cannot be relied on the after that date. The ruling issued on 1 August 1992 will not act to remit tax underpaid from 1 July 1992 to 1 August 1992 if the taxpayer had continued to rely on the 1 June 1992 ruling and had ignored the amendment made to the law on 1 July 1992. [clause 77]