Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Josh Frydenberg MP)Glossary
The following abbreviations and acronyms are used throughout this explanatory memorandum.
| Abbreviation | Definition |
| Bill | Treasury Laws Amendment (COVID-19 Economic Response) Bill 2021 |
General outline and financial impact
Schedule 1 - Tax-free treatment of certain small business grants relating to the coronavirus recovery
Schedule 1 to the Bill amends the income tax law to extend the concessional tax treatment of payments received by eligible businesses under eligible COVID-19 recovery grant programs administered by a State or Territory Government (or a State or Territory authority).
Date of effect: The amendments commence the day after Royal Assent.
Proposal announced: The amendments have not been previously announced.
Financial impact: The amendments are estimated to have no impact on receipts over the forward estimates period.
Human rights implications: This schedule does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 3.
Compliance cost impact: The amendments in this schedule are unlikely to have more than a minor impact on compliance costs.
Schedule 2 - COVID-19 Disaster Payment: disclosure of tax information to Services Australia
Schedule 2 to the Bill amends the tax secrecy provisions in the Taxation Administration Act 1953 to allow protected information to be disclosed to Services Australia for the purposes of administering the COVID-19 Disaster Payment.
Date of effect: The amendments commence the day after Royal Assent.
Proposal announced: The amendments have not been previously announced.
Financial impact: The amendments are estimated to have no financial impact over the forward estimates period.
Human rights implications: This schedule raises human rights issues. See Statement of Compatibility with Human Rights - Chapter 3.
Compliance cost impact: The amendments in this schedule are unlikely to have more than a minor impact on compliance costs.
Chapter 1 - Tax-free treatment of certain small business grants relating to the coronavirus recovery
Outline of chapter
1.1 Schedule 1 to the Bill amends the income tax law to extend the concessional tax treatment of payments received by eligible businesses under eligible COVID-19 recovery grant programs administered by a State or Territory Government (or a State or Territory authority).
Context of amendments
1.2 As part of the ongoing response to the COVID-19 pandemic, State and Territory governments continue to announce support packages and provide grants to businesses to help them manage the economic impacts of the pandemic on their business.
1.3 For example, the Victorian Government has recently announced further packages to support businesses during the recent lockdowns that were put in place in Victoria to help curb the spread of COVID-19.
1.4 To ensure that affected businesses continue to obtain an additional boost to their cash flow, the Commonwealth Government will extend the concessional tax treatment of eligible business support grants received by businesses to include grants received in the 2021-22 financial year.
Detailed explanation of new law
1.5 An amendment is made to section 59-97(1)(c) of the ITAA 1997 to include the 2021-22 financial year. [Schedule 1, item 1, section 59-97(1)(c) of the Income Tax Assessment Act 1997]
1.6 The amendment extends the application of the non-assessable non-exempt income status to payments an eligible entity receives under an eligible grant program to include payments received in the 2021-22 financial year. This will ensure that such payments will not be subject to income tax by the Commonwealth.
Application and transitional provisions
1.7 An application provision has been included to clarify that eligible grant payments an eligible entity receives in the 2020-21 or 2021-22 financial year has non-assessable non-exempt income status. The application provision ensures that entities with a substituted accounting period are also able to take advantage of the non-assessable non-exempt income status of grant payments. [Schedule 1, item 2]
Chapter 2 - COVID-19 Disaster Payment: disclosure of tax information to Services Australia
Outline of chapter
2.1 Schedule 2 to the Bill makes amendments to the tax secrecy provisions in the Taxation Administration Act 1953 to allow tax information to be disclosed to Services Australia for the purposes of administering the COVID-19 Disaster Payment.
Context of amendments
2.2 On 3 June 2021, the Prime Minister, the Hon Scott Morrison MP, the Treasurer, the Hon Josh Frydenberg MP, and the Minister for Agriculture, Drought and Emergency Management, the Hon David Littleproud MP, jointly announced the establishment of the COVID-19 Disaster Payment.
2.3 The COVID-19 Disaster Payment will provide financial assistance to eligible workers who are unable to earn their usual income as a result of health restrictions (public health order) imposed by State or Territory governments, where the Commonwealth Chief Medical Officer has determined the location to be a COVID-19 hotspot for the purposes of Commonwealth support.
2.4 The payment will be administered by Services Australia and those eligible for the payment can apply for the COVID-19 Disaster Payment by lodging an application to Services Australia.
2.5 To assist Services Australia with administering the payment, including undertaking compliance activities, Schedule 2 of the Bill amends the Taxation Administration Act 1953 to provide that it is not an offence for a Taxation Officer to disclose protected information to the Chief Executive Officer of Services Australia where the information is disclosed for the purposes of administering the COVID-19 Disaster Payment.
Detailed explanation of new law
2.6 Section 355-25 in Schedule 1 to the Taxation Administration Act 1953 provides that it is an offence for a Taxation Officer to disclose or record information that is protected information acquired as a Taxation Officer.
2.7 Subsection 355-30(1) provides that protected information is information that was disclosed or obtained under or for the purposes of a taxation law that both relates to the affairs of an entity and identifies, or is reasonably capable of being used to identify, the entity.
2.8 Schedule 2 to the Bill inserts new table item 11 into the table in subsection 355-65(2) in Schedule 1 to the Taxation Administration Act 1953 to include an additional purpose for which protected information can be disclosed. [Schedule 2, item 1, table item 11, subsection 355-65(2) in Schedule 1 to the Taxation Administration Act 1953]
2.9 A defendant bears the evidential burden in relation to the matters in this exception. The reversal of the burden of proof is consistent with the Attorney-General's Department's A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, September 2011 edition.
2.10 It is appropriate that the evidential burden be reversed in this situation. Matters relating to the disclosure of protected information and for which purposes (such as what information is being disclosed and for what purpose the disclosure is being made) are peculiarly within the knowledge of the person making the disclosure and can be raised in making their defence. It would be significantly more difficult and costly for the prosecution to disprove these facts.
Application and transitional provisions
2.11 The amendments made by Schedule 2 to the Bill apply to records or disclosures of information made on or after the day the Act receives the Royal Assent, whether the information was obtained before, at or after that day.
Chapter 3 - Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Schedule 1 - Tax-free treatment of certain small business grants relating to the coronavirus recovery
3.1 Schedule 1 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
3.2 Schedule 1 to the Bill amends the income tax law to extend the concessional tax treatment of payments received by eligible businesses under eligible COVID-19 recovery grant programs administered by a State or Territory Government (or a State or Territory authority).
Human rights implications
3.3 Schedule 1 to the Bill does not engage any of the applicable rights or freedoms.
Conclusion
3.4 Schedule 1 to the Bill is compatible with human rights as it does not raise any human rights issues.
Schedule 2 - COVID-19 Disaster Payment: disclosure of tax information to Services Australia
3.5 Schedule 2 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
3.6 Schedule 2 to the Bill makes amendments to subsection 355-65(8) of Schedule 1 to the Taxation Administration Act 1953 to include an additional purpose for which protected information can be disclosed, and to whom.
3.7 A taxation officer will be permitted to disclose protected information to the Chief Executive Officer of Services Australia for the purposes of administering the COVID-19 Disaster Payment.
Human rights implications
3.8 The amendments made by Schedule 2 to the Bill engage:
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- the right to be presumed innocent until proven guilty according to the law in Article 14(2) of the International Covenant on Civil and Political Rights; and
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- the prohibition on arbitrary or unlawful interference with privacy contained in Article 17 of the International Covenant on Civil and Political Rights.
3.9 The amendments made by Schedule 2 to the Bill engage Article 14(2) of the International Covenant on Civil and Political Rights as the amendments provide for an exception to the prohibition of a taxation officer disclosing protected information. The prohibition is a criminal offence. A taxation officer wishing to rely on the exception bears the evidential burden in relation to the matters.
3.10 It is appropriate that the evidential burden be reversed in this situation as matters relating to the disclosure and for which purposes (such as what information is being disclosed and for what purpose the disclosure is being made) are peculiarly within the knowledge of the person making the disclosure and can be raised in making their defence. It would be significantly more difficult and costly for the prosecution to disprove these facts.
3.11 The amendments made by Schedule 2 to the Bill are compatible with Article 17 of the International Covenant on Civil and Political Rights as its engagement will neither be unlawful or arbitrary.
3.12 In order for an interference with the right to privacy to be permissible, the interference must:
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- be authorised by law;
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- be for a reason consistent with the International Covenant on Civil and Political Rights; and
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- be reasonable in the particular circumstances.
3.13 The United Nations Human Rights Committee has interpreted the requirement of 'reasonableness' to imply that any interference with privacy must be proportional to the end sought and be necessary in the circumstances of any given case.
3.14 The amendments are not arbitrary as they are aimed at a legitimate objective and are reasonable and proportionate in achieving that objective.
3.15 The COVID-19 pandemic has required quick, efficient and effective responses to deal with its economic impacts.
3.16 The amendments are reasonable and proportionate in achieving this objective as they only allow the disclosure information about the affairs of an entity held by the Commissioner of Taxation to the Chief Executive Officer of Services Australia for the purpose of administering the COVID-19 Disaster Payment and the information will be subject to strict privacy and confidentiality safeguards.
Conclusion
3.17 Schedule 2 to the Bill is compatible with human rights as it does not limit any applicable human rights or freedoms.