Senate

Revised 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 RPAs 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 Bill amend 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: Nil.

Amendments to support the new tax system

The amendments will also modify previously enacted areas of the law to support the new tax system from 1 July 2000. These amendments include:

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an extension to the provisions in the ITAA 1997 which provide an immediate write-off of GST related expenditure;

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an exclusion for wholly input taxed supplies from the no ABN withholding event in the PAYG withholding provisions in Schedule 1 to the TAA 1953; and

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a modification to the application provisions of the standardised collection and recovery rules in Schedule 1 to the TAA 1953.

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

Proposal announced: The modifications to the GST related expenditure were announced in Treasurer's Press Release No. 40 of 23 May 2000. The other amendments have not been previously announced.

Financial impact: The amendments are not expected to have a financial impact.

Compliance cost impact: The amendments are not expected to have an impact on compliance costs.

Amendments to Customs Act 1901 and Excise Act 1901 for the Diesel and Like Fuels Rebate Scheme

The amendments will enable a rebate of duty to be paid for the off-road business use of 'like fuels' for eligible purposes, by amending the provisions of the Customs Act and the Excise Act relating to the DFRS.

Date of effect: The amendments will commence from 1 July 2000 so that the extended rebate will be available for fuel purchased for use on or after 1 July 2000. The rebate will not be available for fuel purchased for use after 30 June 2002, when it is intended that it will be replaced by a new Energy Grants (Credits) Scheme. The amendments are technical amendments enabling rebate rates to be declared. As such, the amendments have no financial impact or compliance cost in themselves. The financial impact and compliance cost information below relate to the expansion of the DFRS as a whole.

Proposal announced: The significant reduction in the cost of fuel to business, particularly in the categories of heavy transport, marine transport and rail was announced by the Government on 28 May 1999 as part of the agreement between the Government and the Australian Democrats.

Financial impact: The expansion of the DFRS will cost an additional $420 million in the 2000-2001 financial year and $480 million in the 2001-2002 financial year.

Compliance cost impact: Medium. The amendments to the DFRS will have little effect on those currently entitled to a rebate under the scheme. Those categories of users presently entitled to claim a rebate are already required to keep records to substantiate their claim. The substantiation requirements for those entitled to claim the rebate as a consequence of these amendments will be the same as for those previously entitled.

Application: The rebate for like fuels will be available for fuel purchased for use between 1 July 2000 and 30 June 2002. It is intended that from 1 July 2002 the DFRS will be replaced by an Energy Grants (Credits) Scheme.

Access to ABN information

The amendments limit public access to details contained in the Australian Business Register.

Under existing law, State, Territory and local government bodies are able to obtain, through public access to the ABR, sufficient ABN information to carry out their functions. However, the amendments to limit public access would severely restrict the information that State, Territory and local government bodies could obtain. Therefore, the amendments also enable State, Territory and local government bodies to access ABN information in the same way as the Commonwealth accesses ABN information.

Date of effect: From 1 July 2000.

Proposal announced: Not previously announced.

Financial impact: The amendments will not alter the financial impact of the ABN Act.

Compliance cost impact: The amendments will not alter the compliance cost impact of the ABN Act.

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.