HOUSE OF REPRESENTATIVES

Explanatory Memorandum

(Circulated by the authority of the Treasurer, the Hon. P.J. Keating, M.P.)

GENERAL OUTLINE

This Bill provides for a system of information reporting based on the use of tax file numbers (TFN's) and specifies the circumstances in which TFN's are to be quoted.

The Bill will amend:

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the Income Tax Assessment Act 1936 -

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to enable a person to apply for, and be issued with, a TFN;

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to require persons who take up employment with an employer on or after 1 November 1988 to quote their TFN on an employment declaration to be given to their employer;

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to require persons who are in employment on or after 1 April 1989 (or such later date as declared by the Minister in the Gazette) to complete a new instalment declaration and to quote their TFN on an employment declaration to be given to their employer;

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to ensure employers include their employees' TFN's on group certificates and tax stamp sheets sent to the Tax Office;

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to ensure that group certificates in respect of salary and wages will be issued to employees irrespective of whether or not tax instalment deductions have been made from the payments;

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to require persons who enter into certain investments on or after 1 July 1991 to quote their TFN to the person with whom they are making the investment (the investment body);

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to require persons who hold certain investments from 1 July 1991 to quote their TFN to the investment body;

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to facilitate the use of a person's TFN in respect of any legislation enacted by the Parliament concerning the funding of higher education;

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to exclude from the TFN quotation requirements, certain categories of persons (e.g., certain children and pensioners);

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to require organisations to provide information reports to the Australian Taxation Office by magnetic or electronic media where that information is stored on a data processing device; and

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to increase the penalties for a breach of the secrecy provisions of the law from $5,000 or imprisonment for 12 months to $10,000 or imprisonment for 2 years.

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the Taxation Administration Act 1953 -

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to create a range of offences relating to the unauthorised use of a TFN, primarily to safeguard taxpayer confidentiality;

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to create an offence for conducting a person's affairs so as to avoid the TFN requirements;

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to increase the existing penalties for a breach by a Tax Office employee of the secrecy provisions of the law consistent with those proposed for the Income Tax Assessment Act;

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to introduce an equivalent offence to that which will apply to the disclosure of tax information by Tax Office employees to the disclosure of information obtained in unauthorised circumstances by non-employees; and

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to enable the Commissioner to be granted a Federal Court injunction against a person disclosing taxation information obtained in unauthorised circumstances.

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the Crimes (Taxation Offences) Act 1980 -

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as a consequence of amendments being made to provisions of the Income Tax Assessment Act 1936 dealing with the collection of tax in respect of certain payments.

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the Income Tax Regulations -

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to prescribe a tax deduction rate equal to the maximum marginal rate plus Medicare levy (50.25%) on employees who are taken not to have quoted their TFN to their employer;

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to increase, from 30 per cent to the maximum marginal rate plus Medicare levy (currently 50.25 per cent), the rate of deduction from payments under the Prescribed Payments System (PPS) where a TFN has not been quoted on a PPS deduction form;

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to prescribe the rate of deduction (50.25%) to be deducted from certain investment income in respect of which a TFN has not been quoted as required;

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to require all investment bodies to prepare and give to the Commissioner quarterly reports of TFN quotations;

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to require investment bodies to include TFN's in annual reports of investment income paid to investors during any financial year; and

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to make a number of amendments in consequence of the amendments to be made of the Income Tax Assessment Act 1936.

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also amend the following laws to increase the existing penalties for unauthorised release of taxpayer information by employees of the Tax Office from $5,000 and/or one year's imprisonment to $10,000 and/or 2 years imprisonment -

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Fringe Benefits Tax Assessment Act 1986;

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Gift Duty Assessment Act 1941;

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Petroleum Resource Rent Tax Assessment Act 1987;

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Sales Tax Assessment Act (No. 1) 1930;

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Sales Tax Procedure Act 1934;

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Tobacco Charges Assessment Act 1955;

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Wool Tax (Administration) Act 1964;

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Debits Tax Administration Act 1982;

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Taxation (Interest on Overpayments) Act 1983.