Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)Chapter 4 - Recovery of scheme debts
Overview
4.1 This Chapter explains new Part 8 of the Diesel and Alternative Fuels Grants Scheme Act 1999. This Part deals with situations where an amount has been incorrectly paid under the Diesel and Alternative Fuels Grants Scheme (the Scheme) and enables the Commonwealth to recover those amounts.
4.2 Some of the provisions in new Part 8 are similar to those in other Acts administered by the Commissioner of Taxation (the Commissioner).
Summary of the legislation
4.3 New Part 8 contains rules to support the recovery of payments made under the Scheme and makes provision for the following:
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- a notice of assessment evidences that the assessment was correctly made;
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- the Commissioner may sue for the debt;
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- the debt may be set off against other grants made under the Scheme;
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- recovery of a scheme debt from another entity; and
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- recovery of a scheme debt which has not been paid at the time of the persons death.
Purpose of the amendments
4.4 The overall purpose of the amendments is to enable the Commissioner to recover amounts incorrectly paid under the Scheme.
Explanation of the amendments
Recovery of scheme debts
4.5 A scheme debt includes an amount of penalty under new Part 7 and is a debt due to the Commonwealth. A scheme debt is a debt that the Commissioner can sue for in the appropriate court. [New sections 34 and 35, item 40 of Schedule 1]
4.6 Where an entity has a scheme debt and is entitled to other fuel grants under the Scheme the amount of the outstanding scheme debt may be deducted from the entitys entitlement to those other grants.
4.7 If the Commissioner applies an amount of grant in satisfaction of a scheme debt the fuel grant so applied is taken to have been paid to the entity. [New section 36, item 40 of Schedule 1]
Example 4.1
Longhaul Trucking Co. has a scheme debt for period X of $5,600 and a penalty of $896. In period X the company is entitled to a grant under the Scheme of $10,000. The Commissioner is able to offset the scheme debt and penalty ($6,496) against the companys entitlement to the grant. In this case the company would receive the balance of $3,504 and the fuel grant for period X is taken to have been paid in full to Longhaul Trucking Co.
4.8 If an entity has a scheme debt the Commissioner will be able to collect that debt from a third party that owes money to the entity. [New subsection 37(1), item 40 of Schedule 1]
4.9 The Commissioner may direct a person, who owes money to an entity with a scheme debt, to pay some or all of that persons debt to the entity to the Commissioner instead. However, the Commissioner cannot require a third party to pay an amount prior to them owing the amount to the entity. [New subsections 37(2), (3), and (9), item 40 of Schedule 1]
4.10 Where a person receives such a direction from the Commissioner they must comply with that direction. Failure to comply with a direction from the Commissioner gives rise to a penalty of 20 penalty units. If a person is convicted of failing, or refusing, to comply with a determination from the Commissioner a court may order the person to pay the amount to the Commissioner. [New subsections 37(4) and (5), item 40 of Schedule 1]
4.11 Where a person complies with a direction from the Commissioner and pays that amount to the Commissioner the person is taken to have made that payment with the authority of the entity. This ensures that the entity cannot take action against the person for failure of the person to pay their debt to the entity. [New subsection 37(6), item 40 of Schedule 1]
Example 4.2
Rural Transport Co. has a scheme debt of $1,500. Brian owes Rural Transport Co. $1,500 for some stock that they transported for Brian. The Commissioner directs Brian to pay $1,500 to the Commissioner in satisfaction of Rural Transport Co.s scheme debt. Brian complies with this request. The indemnity in new subsection 37(6) provides that Brian actually paid the amount to the Commissioner with the authority of Rural Transport Co. and as such has satisfied his debt to Rural Transport Co.
4.12 The Commissioner must notify a third party that has received a direction if an amount of an entitys scheme debt has been paid before the third party is required to make a payment to the Commissioner. This has the effect of varying the direction from the Commissioner to the correct amount outstanding. [New subsections 37(7) and (8), item 40 of Schedule1]
Recovery of scheme debt from the trustee of a deceased estate
4.13 If at the time of your death, you had an unpaid scheme debt, the Commissioner will have the same powers and remedies for assessment and recovery from the trustee of your estate as he or she would have had against you before your death. A trustee includes an executor or administrator. [New subsections 38(1) and (2), item 40 of Schedule 1]
4.14 The trustee will be required to give any information to the Commissioner that you would have been liable to provide. The trustee will also be required to provide any other information that the Commissioner may require. [New subsection 38(3), item 40 of Schedule 1]
4.15 If the trustee does not provide the requested information the Commissioner will able to make an assessment of a scheme debt. [New subsection 38(4), item 40 of Schedule 1]
4.16 The trustee will be liable for the same penalty for any unpaid scheme debt for which you would have been liable if you had still been alive. [New subsection 38(5), item 40 of Schedule 1]
4.17 Any amount of scheme debt payable by the trustee will be a charge on all the assets of your estate in the hands of the trustee. [New subsection 38(6), item 40 of Schedule 1]
4.18 The Commissioner may at any time amend an assessment of a scheme debt. An amended assessment is treated as an assessment. [New subsections 38(7) and (8), item 40 of Schedule 1]
4.19 A trustee who is dissatisfied with an assessment made under this section may seek review of that assessment by lodging an objection under Part IVC of the Taxation Administration Act 1953. [Items 8 and 9 of the table in new subsection 55(2), item 42 of Schedule 1]
Recovery of scheme debt from an unadministered deceased estate
4.20 If probate has not been granted or letters of administration have not been granted within 6 months after your death, the Commissioner will be able to make an assessment or amended assessment of your liability to a scheme debt. The Commissioner will be required to publish notice of the assessment twice in a daily newspaper in the State or Territory where you resided at the time of death. [New subsections 39(1) and (2), item 40 of Schedule 1]
4.21 A person who claims an interest in the deceased persons estate, or has been granted probate of the persons will, or letters of administration of the persons estate, and who is dissatisfied with the assessment will be able to seek review of the assessment by lodging an objection in the way prescribed in Part IVC of the Taxation Administration Act 1953. [New subsections 39(3) and (6), item 40 of Schedule 1]
4.22 The Commissioner may at any time amend an assessment of a scheme debt [new subsection 39(4), item 40 of Schedule 1] . An amended assessment is treated as an assessment. The production of a notice of assessment is conclusive evidence that the assessment was properly made. [New subsection 39(5) and section 40, item 40 of Schedule 1]