House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Josh Frydenberg MP)

Chapter 2 - Disclosure of tax information to Australian government agencies to facilitate COVID-19 business support programs

Outline of chapter

2.1 Schedule 2 to the Bill makes amendments to the tax secrecy provisions in the TAA 1953 to allow tax information to be disclosed to Australian government agencies for the purposes of administering COVID-19 business support programs.

Context of amendments

2.2 On 13 July 2021, the Prime Minster, the Hon Scott Morrison MP announced the expansion of the COVID-19 Disaster Payment and the establishment of the COVID-19 business support program. Following this on 15 July 2021, the Prime Minister announced that the Commonwealth would facilitate administering COVID-19 business support payments for States and Territories.

2.3 To assist Australian government agencies with administering programs declared by the Minister as COVID-19 business support programs, which may include compliance activities, Schedule 2 to the Bill amends the TAA 1953 to provide that it is not an offence for a taxation officer to disclose protected information to an Australian government agency where the information is disclosed for the purposes of administering a COVID-19 business support program.

Detailed explanation of new law

2.4 Section 355-25 in Schedule 1 to the TAA 1953 provides that it is an offence for a taxation officer to disclose or record information that is protected information acquired as a taxation officer.

2.5 Subsection 355-30(1) in Schedule 1 to the TAA 1953 provides that protected information is information that was disclosed or obtained under or for the purposes of a taxation law that both relates to the affairs of an entity and identifies, or is reasonably capable of being used to identify, the entity.

2.6 Schedule 2 to the Bill inserts new table item 12 into the table in subsection 355-65(8) in Schedule 1 to the TAA 1953 to provide an exception to the prohibition against disclosing or recording protected information. This exception applies in respect of disclosures or records made to an Australian government agency for the purpose of administering a program declared to be a relevant COVID-19 business support program. [Schedule 2, item 1, table item 12, subsection 355-65(8) in Schedule 1 to the TAA 1953]

2.7 The term 'Australian government agency' is defined in subsection 995-1(1) of the ITAA 1997 and applies to the Commonwealth, a State, a Territory, as well as one of their authorities.

2.8 The administration of such a program by an Australian government agency may include any compliance action undertaken by the agency in respect of the program.

2.9 The Minister can declare a program to be a COVID-19 business support program if they are satisfied that the program is in response to economic impacts of COVID-19 and directed at supporting businesses, the operation of which have been significantly disrupted as a result of a public health directive. [Schedule 2, item 2, subsection 355-65(8A) of TAA 1953]

2.10 Authorising the Minister to declare the programs that are eligible for information sharing is appropriate as it ensures the Government can respond quickly to changes in circumstances because of the unpredictable nature of COVID-19 outbreaks. It also ensures that information sharing is not automatically provided in respect of any new program that is developed by the Commonwealth or by a State or Territory. Rather, any new program must be actively considered and declared by the Minister as being eligible for information sharing.

2.11 The term 'business' is defined in subsection 995-1(1) of the ITAA 1997 as including any profession, trade, employment, vocation or calling, but does not include occupation as an employee. In working out whether a particular program is directed at supporting businesses, the Minister must have regard to the overall purpose and characteristics of the program.

2.12 A support program that is directed at supporting other entities or activities (such as individuals as employees or in a private capacity) would not be able to be the subject of a declaration. However, a program that applies to different types of entities could still be characterised as being directed at businesses if it substantially relates to supporting business entities. For example, a program that primarily relates to businesses but also applies to not-for-profits that are not also characterised as businesses could be a program that is directed at supporting businesses.

2.13 On-disclosures or records of the information covered by the exclusion are subject to a further prohibition in section 355-155 in Schedule 1 to the TAA 1953. The 'original purpose' exception to that prohibition in section 355-175 in Schedule 1 to the TAA 1953 will take into account any disclosures that are made for the same purposes as the new exception. This could include, for example, on-disclosures made by one agency to another where both agencies have a role in the administration of a COVID-19 business support program that has been declared by the Minister. This could arise if one Australian government agency is tasked with a co-ordination role for a business support program and another is empowered to undertake compliance action connected to a business support program.

2.14 The Privacy (Tax File Number) Rule 2015 continues to apply to information provided to Australian government agencies under this amendment. This regulates the collection, storage, use, disclosure, security and disposal of an individual's tax file number information, that may be provided as part of protected information to an Australian government agency administering a business support program.

2.15 A defendant bears the evidential burden in relation to the matters in this exception, as well as the existing exception for on-disclosures. The reversal of the burden of proof is consistent with the Attorney-General's Department's A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, September 2011 edition.

2.16 It is appropriate that the evidential burden be reversed in this situation. Matters relating to the disclosure of protected information and for which purposes (such as what information is being disclosed and for what purpose the disclosure is being made) are peculiarly within the knowledge of the person making the disclosure and can be raised in making their defence. It would be significantly more difficult and costly for the prosecution to disprove these facts.

Application and transitional provisions

2.17 The amendments made by Schedule 2 to the Bill apply to records or disclosures of information made on or after the day the Bill receives the Royal Assent, whether the information was obtained before, at or after that day.