House of Representatives

Explanatory Memorandum

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

Chapter 8 - Other administrative provisions

Overview

8.1 This Chapter explains the various administrative provisions in Division 8 of new Part VI .

Summary of the legislation

8.2 Division 8 provides for:

•

general administration of the GST law by the Commissioner of Taxation;

•

reporting to Parliament on the working of the GST law;

•

information gathering powers to be conferred on the Commissioner;

•

rules relating to notices and the service of documents by the Commissioner;

•

the confidentiality of information to be protected; and

•

record-keeping requirements.

Explanation of the legislation

8.3 Although most of the administrative provisions for GST will be located in Part VI of the Taxation Administration Act 1953 , existing provisions of that Act will apply where appropriate to the GST context. They will do so because they apply to a taxation law which is defined in section 2 of the Taxation Administration Act 1953 to include Acts of which the Commissioner has the general administration.

Commissioner has general administration of the GST law

8.4 The Commissioner will be responsible for the general administration of the GST law. These responsibilities include the collection of GST and ensuring compliance with the provisions of the GST law. [New section 63]

8.5 Section 8 of the Taxation Administration Act 1953 allows the Commissioner to delegate any of the powers or functions (other than the delegation power) the Commissioner has under a taxation law. Certain powers and functions will be delegated to the Chief Executive Officer of Customs, for example, in relation to payments and refunds of GST on importations.

Commissioner must prepare annual report

8.6 Each year the Commissioner will have to prepare an annual report on the working of the GST law, including a report about any breaches or evasions of the GST law that the Commissioner knows about. The report will be presented to Parliament by the Minister. [New section 64]

Information gathering and verification

8.7 Provisions dealing with access to premises and information gathering powers will be necessary for the Commissioner to ensure compliance with the GST law. Similar provisions are found in other Acts administered by the Commissioner.

8.8 The access and information gathering powers may be used, for example, to ensure that an entity has returned the full amount of GST payable on taxable supplies it has made in the relevant tax period. In such a case, it may be necessary for authorised officers to inspect documents which may not otherwise be available for inspection if access and information gathering powers were not included in this Bill.

Commissioner may direct a person to provide information

8.9 The Commissioner will have powers to compel a person to provide information and to obtain access to premises and documents. The confidentiality of the information obtained by the Commissioner or his officers will be protected (see paragraph 8.21).

8.10 The Commissioner will have the power to require a person:

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to provide such information as the Commissioner requires;

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to attend and give evidence; and

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to produce documents in the custody or control of the person.

The Commissioner will be able to use these powers for the purpose of applying the GST law in relation to that person or another person. [New subsection 65(1)]

8.11 The Commissioner will be able to require information or answers to questions to be given orally or in writing. The Commissioner will also be able to insist that information or answers to questions be verified or be given under oath or affirmation. [New subsection 65(2)]

Either the Commissioner or an authorised officer will be able to administer the oath or affirmation. [New subsection 65(3)]

The law will allow for regulations to set out scales of reimbursement of expenses for persons required to attend before the Commissioner.

8.12 Failure to comply with any of these requirements will be an offence under existing section 8C of the Taxation Administration Act 1953 .

Access to premises etc.

8.13 There will be an obligation to provide authorised officers, at all reasonable times, with access to premises, goods, documents and property for the purposes of the GST law. Officers exercising powers under this section will need an authority in writing signed by the Commissioner.

8.14 An authorised officer must be given entry at any reasonable time, to land or premises. Authorised officers must also be given full access to documents, goods or other property at all reasonable times. They must be allowed to inspect, examine, copy or take extracts from any documents and inspect, examine, count, measure, weigh, gauge, test or analyse any goods or other property and take samples from them. [New subsection 66(1)]

8.15 The occupier of the land or premises will be obliged to provide the officer seeking access with reasonable facilities and assistance. [New subsection 66(3)]

8.16 For example, an authorised officer will be entitled to reasonable use of photocopying, telephone, fax and light and power facilities and of work space and facilities to extract relevant information stored on computer. In addition, the officer will be entitled to reasonable assistance, for example, in the form of advice as to where relevant documents are located and access to areas where such documents are located.

8.17 If reasonable facilities and assistance are not provided, the occupier will be guilty of an offence with a maximum penalty of 10 penalty units. [New subsection 66(4)]

On the other hand, an officer will not be entitled to remain on land or premises if they fail to produce their written authorisation when requested to do so. [New subsection 66(2)]

Address for service

8.18 For GST purposes the address to which the Commissioner will deliver or send notices or other documents is:

(a)

the address shown on the Australian Business Register (if the entity is registered there);

(b)

the address last notified to the Commissioner by the entity (if it is not registered on the Australian Business Register);

(c)

if no address has been notified, the entitys place of business or residence in Australia last known to the Commissioner; or

(d)

any other address the Commissioner reasonably believes to be the entitys address for service.

[New subsection 67(1)]

8.19 If you are liable to pay GST you will be required to notify the Commissioner of any change of address within 28 days of the change. [New subsection 67(2)]

8.20 Notices or other documents may be served by posting them to your address. [New subsection 67(3)]

However, the Commissioner may serve them by electronic transmission if you give your GST returns to the Commissioner in electronic form and you have notified an address for receipt by electronic transmission. [New subsection 67(4)]

Protecting the confidentiality of information

8.21 The dissemination of information obtained under the GST laws will be restricted. [New subsection 68(1)]

An obligation of secrecy will be imposed on persons who, in the course of their duties relating to the administration of the GST law, acquire information about the affairs of another person. A person who holds protected information or documents obtained in the course of official employment will be prohibited from making a record of the information or disclosing it to anyone else, except in specified circumstances. The penalty for a breach of this prohibition is imprisonment for two years. [New subsection 68(2)]

8.22 Protected information will be defined as information obtained under the GST laws by a person acting in the course of official employment and relating to the affairs of another person. Protected documents will be documents made or given under, or for the purposes of, the GST laws. Official employment will mean, as well as appointment or employment by the Commonwealth, performance of services for the Commonwealth or the exercise of powers or functions under a delegation by the Commissioner. [New subsection 68(6)]

8.23 A person will be able to record or disclose protected information or documents if:

(a)

the recording or disclosure is for the purposes of the GST law;

(b)

it happens in the course of official employment;

(c)

the person is the Commissioner or Deputy Commissioner and the disclosure is to the Chief Executive Officer of Customs, to the Australian Statistician for census or statistics purposes, to another person carrying out functions under a taxation law or to the Administrative Appeals Tribunal in proceedings under a taxation law; or

(d)

the person making the disclosure has been authorised by the Commissioner or Deputy Commissioner to disclose the information and the disclosure is to the Chief Executive Officer of Customs, to another person carrying out functions under a taxation law administered by the Commissioner or to the Australian Statistician for census or statistics purposes.

[New subsection 68(3)]

8.24 Disclosure of information or production of a document can be made to a court if it is necessary to give effect to the GST law. A person acting in the course of official employment will not otherwise be required to produce protected information or documents to a court. [New subsection 68(5)]

8.25 There will be no circumstances in which a disclosure of protected information or documents can be made to a Minister. [New subsection 68(4)]

8.26 These provisions are consistent with secrecy provisions in other Acts administered by the Commissioner.

Notices etc. by Commissioner must be in writing

8.27 Any notice, approval, direction or authority which the Commissioner will be required to give to a person under the GST law will have to be in writing. [New subsection 69(1)]

8.28 However, it will be permissible for certain notices to be sent by electronic transmission if so provided for in the GST law. [New subsection 69(2)]

8.29 New subsection 25(2) expressly provides for assessment notices to be served by electronic transmission to entities that are required to lodge returns electronically by section 31-25 of the GST Act.

Keeping records of GST transactions

8.30 The law will impose record keeping requirements on an entity that:

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makes a taxable supply, taxable importation, creditable acquisition or creditable importation; or

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acquires or imports diesel or like fuel for creditable diesel fuel consumption.

The entity will be required to keep sufficient records to explain all relevant transactions and other relevant acts for the purposes of the GST law.

8.31 The records must be in the English language, or be accessible and easily converted into writing in the English language so that, where necessary, a entitys GST liability can readily be determined. Records will be required to be kept for 5 years after the relevant transactions are completed unless the entity is notified by the Commissioner that it need not retain them or is a company that has been dissolved. A failure to keep records will be an offence under Part III. [New section 70]