House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

General outline and financial impact

Administrative penalties

Schedules 1 and 2 to this Bill amend the TAA 1953, the ITAA 1936 and other Acts to introduce a uniform administrative penalty regime that will impose:

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penalties relating to statements and schemes;

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penalties for the late lodgment of returns and other documents; and

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penalties for failing to meet other taxation obligations.

Date of effect : For income tax, the new administrative penalty regime will generally apply to matters relating to the 2000-2001 income year and later years. Amendments relating to FBT matters will apply from 1 April 2001.

Proposal announced : The new administrative penalty regime is part of the Government's commitment, announced in ANTS, to look at ways of streamlining administrative processes.

Financial impact : It is not possible to quantify the financial impact. Some penalties increase and some decrease. Overall, the measure is expected to be revenue neutral.

Compliance cost impact : The compliance cost impact is outlined in the regulation impact statement.

Provision of BAS services by people other than registered tax agents

Schedule 2 to this Bill amends the ITAA 1936 and the FBTAA 1986 by allowing the following people to prepare and lodge a BAS, and provide advice about BAS matters, on behalf of taxpayers:

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members of recognised professional associations that represent accountants and tax practitioners;

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bookkeepers working under the direction of registered tax agents; and

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persons that provide payroll bureau services to employers.

Date of effect : The amendments will apply from 1 July 2000.

Proposal announced : Not previously announced.

Financial impact : It is expected that there will be a small, positive gain in revenue through BAS service providers being able to assist more businesses to comply with their obligations under the new tax system.

Compliance cost impact : The compliance cost impact is outlined in the regulation impact statement.

Miscellaneous - technical amendments

Schedules 2 to 5 to this Billamend various tax laws to:

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round down to the nearest dollar all tax debts and credits notified to the Commissioner in returns and a BAS and, where the Commissioner determines the tax debt, round down the amount to the nearest multiple of 5 cents;

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give the Commissioner the discretion to defer the due date for notification of BAS liabilities;

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give the Commissioner a broader discretion to remit the GIC; and

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make a number of technical and miscellaneous amendments to the legislation supporting the new tax system including the PAYG withholding system.

Date of effect : The amendments will apply from 1 July 2000.

Proposal announced : Not previously announced.

Financial impact : The impact from the rounding and crediting measures is unquantifiable.

Compliance cost impact : None.

Summary of regulation impact statement

Regulation impact on business

Impact : Moderate

Main Points :

The proposed change to the law is part of a broad move to streamline administrative processes in line with the Government's key reform objectives of certainty, robustness, fairness and simplicity.

The measure to increase the number of people who can provide BAS services will provide a wider choice to businesses in deciding who to engage to assist them in meeting their obligations under the new tax system.

Policy Objective :

The purpose of the proposed change is to introduce a new penalty regime to the laws administered by the Commissioner that is uniform, simple and equitable. The new penalty regime is necessary to support the 'New Tax System' that commences on 1 July 2000. The new regime will also remove weaknesses that are evident in the current penalty rules such as the poor structure of penalties for late lodgement of returns by individuals and difficulties in the administration of GIC penalties which don't relate to late payment.

The purpose of the other proposed change is to allow people other than registered tax agents to prepare and lodge the BAS on behalf of taxpayers. These people will also be able to provide advice on BAS matters.