House of Representatives

Supplementary Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon. John Howard, M.P.)

Introductory note

This supplementary memorandum, which is to be read in conjunction with the Explanatory Memorandum previously circulated, explains amendments that are proposed to be made to the Income Tax Assessment Amendment Bill (No. 2) 1982 as introduced in the House of Representatives. The amendments propose a number of changes to clarify certain aspects of the Bill and to indicate more particularly the circumstances in which confidential taxation information made available to a Royal Commission from official records may be made use of in relation to conduct of the inquiry for which the Royal Commission was appointed.

Amendment (1)

This amendment, which will amend proposed sub-section 16(4A) of the Principal Act, is a drafting measure made necessary by proposed amendment (3). Restrictions on the use of taxation information in relation to a Royal Commission inquiry as contained in proposed sub-section 16(4A), to be inserted by clause 3 of the Bill as introduced, is to be modified by two of the new sub-sections - sub-sections (4AA) and (4AB) that amendment (3) proposes. The effect of these sub-sections will be discussed later in these notes in connection with amendment (3). Amendment (1) merely makes clear that the provisions of sub-section (4A) are to be read as subject to additional sub-sections (4AA) and (4AB).

Amendment (2)

By this amendment, the word "public", in relation to proceedings of a Royal Commission, will be deleted from sub-paragraph (a)(ii) of proposed sub-section (4A). The purpose of sub-paragraph (a)(ii) is to permit a Royal Commission, to which taxation information has been disclosed, to reveal that information in the course of its public proceedings, but only in such manner as not to reveal the identity of a person or company to whom the information relates. The amendment is intended to overcome any unintended inference that sub-paragraph (a)(ii) qualifies the circumstances in which information that does not reveal identity may be communicated by a Royal Commission other than in its public proceedings.

Broadly put, the purpose of this amendment, in conjunction with amendment (3), is to make it clear that, in in camera proceedings, a Royal Commission is not to be precluded from divulging taxation information to the person or company (through its officers) to whom the information relates or to the person who furnished the taxation information to the Commissioner of Taxation. Legal representatives appearing before the Royal Commission on behalf of such a person or company will also be permitted to be given confidential information relating to the person (or company), e.g., where this is desirable for the proper conduct of an examination of the person concerned by the Royal Commission.

Amendment (3)

As mentioned, this amendment proposes that three further sub-sections - sub-sections (4AA), (4AB) and (4AC) be inserted in section 16 of the Principal Act. The purpose of these new sub-sections is to clearly set out the persons, in addition to those specified in sub-section (4A), to whom taxation information may be disclosed in the course of proceedings conducted by a Royal Commission and the secrecy constraints that are to apply to those persons. By sub-section (4A), a Royal Commission is to be prohibited from divulging taxation information received by it, except in the following circumstances:-

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to the Governor-General in a report by the Royal Commission or in proceedings conducted by the Royal Commission, provided that the information does not identify any person to whom it relates; and

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to staff and other persons employed by or under the control of the Royal Commission, for the purposes of the inquiry being conducted by the Royal Commission.

New sub-section (4AA) is mainly designed to facilitate the examination of certain witnesses before a Royal Commission by permitting the Royal Commission to disclose taxation information to the witness. This sub-section will in large measure preserve the confidentiality of the taxation information by limiting communication of the information to:-

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the person to whom the information relates and, in the case of a company, a person who, on behalf of the company, prepared or was responsible for preparing the information furnished to the Commissioner of Taxation; or

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the person who furnished the information to the Commissioner of Taxation (where that person is not the person to whom the information relates).

Such communication will necessarily be limited to in camera proceedings at which only persons authorised to be privy to the information may be present.

In relation to the circumstances in which information may be communicated under sub-section (4AA), new sub-section (4AB) means that where a person to whom taxation information is disclosed under sub-section (4AA) is represented at the Royal Commission by a barrister or solicitor, that information may also be disclosed by the Royal Commission to that legal representative. This is directed to permitting effective legal representation of the relevant person, e.g., during examination of that person by the Royal Commission.

New sub-section (4AC), consistent with the secrecy restraints applying to taxation officers and other persons, including Royal Commissioners and their staff, who are privy to confidential taxation information will prevent the further communication, in any circumstances, of confidential information that is supplied to a person in accordance with sub-sections (4AA) or (4AB).

Amendment (4)

This amendment will insert a further sub-section - sub-section (4CA) - in section 16 of the Principal Act, to make it clear that, for the purpose of conducting its inquiry, a Royal Commission will be permitted to disclose confidential taxation information to a barrister or solicitor appointed by the Attorney-General to assist the Royal Commission and to persons assisting that barrister or solicitor. Persons in the latter category might include, for example, an instructing solicitor or personnel of the Deputy Crown Solicitor's office called on to render assistance to or to advise such a barrister or solicitor. By this sub-section, the appointed barrister or solicitor, or other person assisting the barrister or solicitor, will be taken as being under the control of the Royal Commission for the purposes of sub-section (4A) and will, therefore, be subject to the same secrecy restraints as are to be applicable to the Royal Commission and its staff by virtue of sub-section (4A).