House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)

Chapter 7 Other matters

Outline of chapter

7.1 This chapter outlines the provisions in the new framework that relate to:

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oaths and affirmations to be taken by taxation officers; and

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injunctions that can be sought to prevent the disclosure of taxpayer information.

7.2 This chapter also provides information on the application and transitional provisions.

Context of amendments

Operation of current provisions

7.3 Under the current law, taxation officers can be required to take oaths or make affirmations relating to the protection of taxpayer information.

7.4 There are also provisions in the current law that permit the Commissioner of Taxation (Commissioner) to seek an injunction in the Federal Court of Australia to prevent an unauthorised disclosure of taxpayer information.

Summary of new law

7.5 The new framework adopts the existing provisions relating to oaths, affirmations and injunctions.

Detailed explanation of new law

Oaths and affirmations

7.6 The Commissioner has the power to require a taxation officer to make an oath or affirmation to protect information in accordance with the secrecy and disclosure rules. The form of this oath or affirmation is determined by the Commissioner in writing. [Schedule 1, item 1, section 355-325]

7.7 The oath or affirmation plays an important role in reminding taxation officers of the importance of maintaining the appropriate confidentiality of an entity's information. As it can be required by the Commissioner as a condition of employment, it ensures that all taxation officers are given the opportunity to understand the serious consequences of any breach of a taxation secrecy provision.

Injunctions

7.8 If an entity has engaged, is engaging, or is proposing to engage, in a breach of the new framework, the Commissioner can apply to the Federal Court for an injunction. The Federal Court may grant an injunction restraining the entity from engaging in a breach or compelling the entity to do a particular thing. [Schedule 1, item 1, subsection 355-330(1)]

Example 7.1

Jerome, a journalist, unlawfully obtains information regarding the financial affairs of a prominent business person and decides to include that information in his newspaper article the following day. The Commissioner, who has become aware of this impending unlawful disclosure of taxpayer information, applies to the Federal Court for an injunction. The Federal Court issues an injunction against Jerome and the newspaper preventing them from publishing that information and compelling Jerome to return the information to the ATO.

7.9 The circumstances in which an injunction can be sought replicate the injunction provisions in section 98 of the Privacy Act 1988 (Privacy Act). The tests for the award of an injunction in both the new framework and in the Privacy Act are materially identical and ensure a consistent approach to the manner in which taxpayer information under the new framework and personal information under the Privacy Act are protected through application of an injunction.

7.10 The Federal Court can issue an interim injunction pending the determination of the Commissioner's application for an injunction. [Schedule 1, item 1, subsections 355-330(2) and (3)]

7.11 The Federal Court also has the power to discharge or vary an injunction previously awarded. [Schedule 1, item 1, subsections 355-330(2) and (3)]

7.12 The Federal Court must not require the Commissioner (or any other entity) to give any undertakings as to damages as a condition of the granting of an interim injunction. [Schedule 1, item 1, subsection 355-330(6)]

Application and transitional provisions

7.13 The secrecy and disclosure provisions contained in this Bill apply to records and disclosures of taxpayer information after the commencement of this Bill, irrespective of when that information was obtained. [Schedule 2, item 123]

7.14 To ensure that all on-disclosures of taxpayer information by non-taxation officers are governed by the on-disclosure provisions (irrespective of when the information was obtained) information obtained before the commencement of the new framework is taken to be information obtained in accordance with the disclosure provisions. [Schedule 2, item 124]

7.15 To ensure that there is as little disruption as possible caused by the introduction of the new framework, ASIO officers and law enforcement officers currently authorised to receive information under the existing law, will continue to be able to receive information under the new law. [Schedule 2, item 125]

7.16 Until 2001, the Excise Act 1901 was administered by the Chief Executive Officer of Customs. It was therefore not administered by the Commissioner and was, consequently, not a taxation law. If not for a transitional provision, information obtained under that Act before the administrative responsibility for the Excise Act 1901 changed would not be subject to any secrecy and disclosure provisions. It is therefore necessary for the secrecy provisions in the Excise Act 1901 (section 159) to continue to operate with respect to such information. [Schedule 2, item 126]

7.17 A similar result is achieved with respect to the Superannuation Industry (Supervision) Act 1993 (SIS Act). When the Commissioner took over responsibility for the regulation of self-managed superannuation funds, section 252C of the SIS Act was introduced to protect information provided to the Commissioner in the course of performing this function and to other officers who received this information from the Commissioner.

7.18 Information disclosed after the enactment of section 252C is taxpayer information within the new law and is therefore be covered by item 124. However, section 252C also included within its own definition of 'taxpayer information', information that was obtained or disclosed prior to the commencement of section 252C. Such information would not have been obtained or disclosed under a taxation law (as the Commissioner did not have administration of SIS Act provisions at that time) and it is therefore necessary for section 252C to continue to operate with respect to such information. [Schedule 2, item 127]

Regulations

7.19 In making the numerous amendments required under the new framework, any additional transitional provisions that become necessary to ensure a smooth transition can be made by way of regulations. This approach will ensure that there is as little disruption as possible in the transition to the new regime. [Schedule 5, item 1] .

Repeal of Acts

7.20 The A New Tax System (Bonuses for Older Australians) Act 1999 was introduced to provide for a one-off bonus for certain taxpayers. It has no ongoing impact. Rather than merely repealing the taxation secrecy provisions contained in that Act, the creation of the new framework provided an opportunity to repeal it in its entirety. [Schedule 4, item 1]

Key consequential amendments

7.21 Most of the consequential amendments in the Bill simply update existing references to taxation secrecy and disclosure provisions (either in the taxation law or in other Commonwealth laws) with references to the appropriate provisions in the new framework or repeal existing taxation secrecy and disclosure provisions that are being replaced by the new framework.

7.22 One exception is that the introduction of this framework provides an opportunity to remove certain redundant provisions in the Privacy Act. Section 17 of that Act provides that the Privacy Commissioner is to publish guidelines on the collection, storage, use and security of tax file numbers (TFN). Subsection 17(4) provides that the interim guidelines in Schedule 2 to the Act would be in effect until such time as the Commissioner has issued new guidelines.

7.23 As new TFN guidelines have, since the enactment of this provision, been published by the Privacy Commissioner, both subsection 17(4) and Schedule 2 to the Privacy Act have no ongoing effect. This Bill repeals those provisions. [Schedule 2, items 62 and 63]