House of Representatives

Second Reading Speech

by the Minister representing the acting Treasurer the Hon. Wal Fife, M.P.

This Bill to amend the income tax law covers two important subjects.

It will give effect to the Government's decision, announced by the Treasurer on 14 April 1982, to amend the secrecy provisions of the income tax law.

The amendments will permit the Commissioner of Taxation - in very special and limited circumstances - to disclose to certain Royal Commissions information obtained from official income tax records.

The second main feature of the Bill is the legislation necessary to give effect to one of the housing assistance measures announced by the government, namely the scheme of home loan interest tax rebates that was foreshadowed by the Treasurer on 18 March 1982.

Associated with this group of measures is another amendment which will permit the Secretary of the Department of Housing and Construction to be given information from income tax records for the purposes of administration of the Government's new scheme of home deposit assistance to families on low incomes.

I turn now to the details of these measures.

Disclosure of taxation information to certain Royal Commissions

The secrecy provisions of the income tax law generally require that the Commissioner of Taxation and his officers maintain absolute confidentiality about information on taxpayers' affairs that comes into the possession of the Commissioner in the course of administration of the income tax law.

However, there is in the law authority for the Commissioner to supply taxation information to specified authorities, mainly those having responsibility for the administration of laws under which benefits of one kind or another are paid by the Commonwealth.

In this situation, Mr Speaker, the government recognises that the amendments now proposed do break new ground.

The measures are in response to recommendations contained in interim report No. 3 of the Royal Commission on the activities of the Federated Ship Painters and Dockers Union and follow a strong plea by the Royal Commission of inquiry into drug trafficking.

Provisions in the Bill will specifically permit the Commissioner of Taxation to make information from income tax records available to these two ongoing Royal Commissions.

It will also allow such information to be passed to other Royal Commissions that are given terms of reference that authorise such a course.

A Royal Commission that receives information obtained from taxation records will be able to disclose it in any report to the Governor-General, or in public proceedings, so long as this is done in a way that does not disclose the identity of the person or persons concerned.

Such a Royal Commission will however be permitted to divulge tax information, including identification of persons, to the attorney-General if it holds the view that the information indicates that there may have been a breach of a Commonwealth Act.

In turn the Attorney-General may, if he considers it appropriate to do so, pass on the information reported to him by a Royal Commission to the Australian Federal Police, which will be able to use it for internal purposes.

Mr Speaker, the government has not lightly taken the decision to permit these Royal Commissions to be provided with confidential tax information.

It is an old and well established principle in this country that taxation information should be kept confidential and the effectiveness of the taxation system owes a lot to that very important principle.

In coming to this decision, therefore, the government had to weigh very carefully two competing areas of public interest.

On the one hand there was the need to maintain taxation confidentiality and, on the other, there was the necessity for action to be taken to support enquiries in particular areas of special public interest.

In these circumstances, in reaching the decision we have come to, we have felt it appropriate to ensure that the highest possible level of confidentiality, compatible with the decision, should be maintained.

Accordingly, the proposed legislation will impose very strict secrecy restraints on persons to whom taxation information is conveyed under the new provisions.

These restraints will be of the same general kind as those that already apply to taxation officers and others who receive taxation information and will extend to the Royal Commissions, the Attorney-General and the Australian Federal Police, as well as to the respective staffs of those bodies or persons to whom tax information may necessarily be communicated.

Furthermore, the proposed amendments are so structured that persons to whom confidential tax information is conveyed under them will be precluded from using it in an action to prosecute any person.

Mr Speaker, it bears repeating that these amendments do not evidence any policy of generally easing the strict confidentiality applying to tax records.

As the Treasurer said when he was foreshadowing these amendments, their effect will be watched very closely and they are not to be taken as a precedent for any other relaxation of tax secrecy.

Home Loan Interest Rebate

Mr Speaker, Honourable Members will recall that, on 18 March 1982, the Treasurer made a Ministerial Statement in this House following a detailed review by the Government of Housing policy.

In his statement the Treasurer reinforced the Government's commitment to preserving the highest practicable level of private home ownership in Australia and identified four main problem areas in the field of housing finance.

This Bill will give effect to the Government's decision to alleviate one of those problems - the burden of mortgage payments.

These tend to be highest in real terms, of course, in the early years of a housing loan.

This Bill proposes the provision of a rebate of tax for home loan interest payments made on or after 1 July 1982.

The basic features of the rebate were referred to in the Treasurer's earlier statement in the House, and he also released a detailed supporting statement at that time.

In those circumstances, I trust that I can be brief in my references now to the rebate, particularly as it is explained fully in the explanatory memorandum that is being made available to Honourable Members.

The rebate of tax to be authorised by this Bill will be available to an individual taxpayer resident in Australia in respect of the first five years of occupancy of the person's sole or principal residence here.

Subject to certain upper limits, the basic rebate will be 32 cents for each dollar of interest paid on or after 1 July 1982 and during the relevant income year, provided the interest has accrued while the taxpayer occupied the dwelling.

A feature of the rebate is that existing home-owners may qualify.

It will be available to home-owners who first occupied a sole or principal residence on or after 1 July 1977, and will extend to those who first occupy a sole or principal residence no later than 30 June 1985.

For a married person - and this will apply also to a person in a de facto marriage relationship - the five year occupancy period will run from the date on which either of the partners first became an owner-occupier of such a residence.

As regards the limits on the rebate, the basic upper limit will be $500 per dwelling in the first year of owner-occupancy, to be reduced by $100 per year for each subsequent year.

Rules covering people who took up occupancy prior to 1 July 1982 will mean, for example, that if the occupancy occurred in 1981-82 the person will be eligible for the full first year limit of $500 in 1982-83.

The limit otherwise applicable in any year will, however, be increased by an additional amount of $200 where the dwelling is also home for a dependent child or dependent student.

Where a taxpayer changes his or her place of residence within the five year period, he or she will be entitled to the rebate in respect of interest attributable to the acquisition of the second dwelling, but the upper limit will be determined having regard to the date on which he or she occupied the original dwelling.

Special arrangements will apply where two or more persons have interests in a dwelling which is occupied by them as their sole or principal residence and where a dwelling is also used by a taxpayer for purposes other than as a sole or principal residence.

In the case of a matrimonial home the interest rebate will be transferable between spouses irrespective of which one incurred and paid the interest.

This will help to ameliorate the effect of another basic rule, which is that the rebate cannot exceed the tax otherwise payable by the taxpayer.

With those introductory remarks, I commend the Bill to the House.