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Report Details


Committee Name:

Legislation Committee (2001 - 2005)

House:

Legislative Council
Report Type:Report

Title:

Taxation Administration Bill 2001, Taxation Administration (Consequential Provisions) (Taxing) Bill 2001 and Taxation Administration (Consequential Provisions) Bill 2001
Report No:16
No of Pages:127
Physical Location:Legislative Council Committee Office

Presentation Date:

10/16/2002
Inquiry Name(s):Taxation Administration Bill 2001, Taxation Administration (Consequential Provisions) (Taxing) Bill 2001 and Taxation Administration (Consequential Provisions) Bill 2001


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    Hide details for Executive Summary and RecommendationsExecutive Summary and Recommendations

    Executive Summary

    1 The Taxation Administration Bill 2001 (Main Bill), the Taxation Administration (Consequential Provisions) (Taxing) Bill 2001, and the Taxation Administration (Consequential Provisions) Bill 2001 (Consequential Bills) were initially referred to the Standing Committee on Legislation (Committee) on April 17 2002.

    2 The Main Bill amalgamates the administrative provisions of Western Australia’s four Major Taxing Acts – that is, the Pay-roll Tax Assessment Act 1971, the Stamp Act 1921, the Land Tax Assessment Act 1976 and the Debits Tax Assessment Act 1990. The purpose of the Main Bill is to provide for the administration and enforcement of State taxation legislation.

    3 The Consequential Bills complement the Main Bill by providing for amendments to legislation made necessary by the enactment of the Main Bill.

    4 The Committee focussed its inquiry on the areas of main concern raised by the submissions. These areas were:

            4.1 imposition of civil liability on directors of a body corporate

            4.2 imposition of criminal liability on directors of a body corporate

    4.3 legal professional privilege

    5 The Committee also addressed numerous other issues raised by the submissions and during the course of the Committee’s inquiry.

    6 The Committee has recommended a number of significant amendments to the Main Bill to address the areas of main concern. The Committee has also recommended numerous other amendments to address the other issues raised.

    7 The Committee considers that the recommended amendments ensure that the Main Bill achieves a fair balance between the interests of the Commissioner of State Revenue and the rights of the taxpayer.

    Recommendations

    8 Recommendations are grouped as they appear in the text at the page number indicated:

    Page 14

    Recommendation 1: The Committee recommends that clause 67 of the Taxation Administration Bill 2001 be amended in the following manner –

    Page 37, line 28 to page 38, line 4 – to delete subclause (1) and insert instead –

    “(1) This section applies where the Commissioner believes, on reasonable grounds, that:

    (a) a body corporate has been trading while insolvent to the knowledge of a director;

    (b) the Commissioner has issued an assessment notice, which assessment consists of, or includes an amount in relation to pay-roll tax, to the body corporate, and the amount assessed in relation to pay-roll tax has not been paid by the due date.

    (2) The Commissioner may serve notice on the director informing the director that the director, along with any other directors of the body corporate on whom the Commissioner serves notice in similar terms, will become jointly and severally liable with the body corporate for the payment of the pay-roll tax unless before the expiry of 28 days from the date of the notice the body corporate remedies its default.”

    Page 38, lines 10 – 12, after “director” – to delete the lines and insert instead –

    “, then the Commissioner may apply to the Supreme Court for an order substituted service in accordance with section 108(2).”

    Page 39, after line 10 – to insert the following new subclause –

    “(8) In proceedings for recovery of tax from a director under this section, the onus of establishing that the director did not have the knowledge required by section 67(1)(a) is on the director.”

    Page 39, lines 14 – 16 – to delete from “a director” to “applies” and insert instead –

    “(a) a director of a body corporate to which the Statutory (Liability of Directors) Act 1996 applies; or

    (b) a director of a body corporate that has been incorporated under the Associations Incorporation Act 1987.

    Page 39, after line 16 – to insert the following new clauses –

    “67A. Director of body corporate may apply

    (1) Any person served with a notice under section 67(2) may apply to the Supreme Court for an order setting aside that notice.

    (2) The body corporate, of which a person served with a notice under section 67(2) is a director, may also apply to the Court for an order setting aside any such notice.

    (3) An application under subsections (1) or (2) may only be made within 21 days after the notice is so served.

    (4) An application is made in accordance with this section only if, within the time period specified in subsection (3) –

    (a) an affidavit supporting the application is filed with the Court; and

    (b) a copy of the application, and a copy of the supporting affidavit, are served on the Commissioner.

    67B. Determination of application where there is a dispute

    (1) This section applies where, on an application under section 67A, the Court is satisfied that there is a genuine dispute between the body corporate and the Commissioner about –

    (a) the validity;

    (b) the merits; or

    (c) the amount of the assessment to which the notice relates, so far as that assessment concerns pay-roll tax.

    (2) Where subsection (1) applies, the Court must, by order –

    (a) set aside the notice or notices referred to in the application;

    (b) order the Commissioner to withdraw any other notice served on any director of the body corporate under section 67 which relates to the assessment.

    67C. Setting aside demand on other grounds

    (1) On application under section 67A, the Court may by order set aside the notice and order the Commissioner to withdraw any other notice if it is satisfied that –

    (a) because of a defect in the notice, substantial injustice will be caused unless the notice is set aside; or

    (b) there is some other reason why the notice should be set aside.

    (2) Except as provided in subsection (1), the Court must not set aside a notice merely because of a defect.

    67D. Effect of order setting aside notice

    A notice served on a director of a body corporate under section 67(2) has no effect while there is in force under section 67B or 67C an order setting aside any notice served on any director of that body corporate.

    67E. Dismissal of application

    Unless the Court makes, on an application under section 67A, an order under section 67B or 67C, the Court is to dismiss the application.

    67F. Order subject to conditions

    An order under section 67B or 67C may be made subject to conditions.

    67G. Costs where applicant successful

    Where, on an application under section 67A, the Court sets aside the notice, it may order the Commissioner to pay the applicant’s costs in relation to the application.

    67H. Period of remedying default

    Notwithstanding anything contained in section 67, if an application is made in accordance with section 67A for an order setting aside a notice, the period for compliance with that notice and any other notice which has been served on any director of the body corporate to which the notice relates, shall be the period beginning on the day when the demand is served and ending 7 days after the application under section 67A is finally determined or otherwise disposed of.”

    Page 16

    Recommendation 2: The Committee recommends that clause 108 of the Taxation Administration Bill 2001 be amended in the following manner –

    Page 67, after line 7, to insert the following new subclause –

    “(2) Where any of the methods of service in section 108(1) are impracticable, or have failed, the Commissioner can apply to the Supreme Court for substituted service.”

    Page 19

    Recommendation 3: The Committee recommends that clause 100 of the Taxation Administration Bill 2001 be amended in the following manner –

    Page 61, lines 21 to 24 – to delete the lines and insert instead –

    “(2) It is a defence to a charge of an offence by a director under this section to prove that the defendant –

    (a) did not aid, abet, counsel or procure the act or omission of the body corporate concerned; and

    (b) was not in any way, by act or omission, directly or indirectly, knowingly concerned in, or party to, the act or omission of the body corporate.”

    Page 23

    Recommendation 4: The Committee recommends that clause 117 of the Taxation Administration Bill 2001 be amended in the following manner –

    Page 70, after line 27, to insert the following new subclause –

    “(3) A regulation made under section 95(f) may not be contained in regulations dealing with any other matter and is to disclose in its title that it is a regulation which removes the protection given by a law from the disclosure of information.”

    Page 26

    Recommendation 5: The Committee recommends that clause 94 of the Taxation Administration Bill 2001 be amended in the following manner –

    Page 58, lines 20 – 31 – to delete subclauses (3) and (4) and insert instead –

    “94A Legal Professional Privilege

    (1) A person must provide an official document when so required by the Commissioner or an investigator whether or not that official document would otherwise be protected by legal professional privilege.

    (2) A document, information or relevant material that, at the time it is provided to, or acquired by the Commissioner or an investigator, is claimed to be protected by legal professional privilege –

    (a) is to be separated from any document, information or relevant material for which no claim is made, retained under secure conditions in a sealed container to which must be affixed the name, address and contact details of the person making the claim and of the person on whose behalf the claim is made, and a statement that the contents are, or may be, subject to legal professional privilege;

    (b) is not to be viewed, accessed, or otherwise dealt with by the Commissioner or an investigator for any purpose.

    (3) Where no claim is made under subsection (2), but it is apparent on examination by the Commissioner or an investigator that a document, information or relevant material that has been provided or acquired is, or is likely to be, protected by legal professional privilege, it becomes the duty of the Commissioner or an investigator to comply with subsection (2) in relation to that document, information or relevant material.

    (4) If a claim of legal professional privilege is made for a document, information or relevant material already in the possession of the Commissioner or an investigator, and at the time that the claim is made the document, information or relevant material –

    (a) has not been examined, accessed, or dealt with for a purpose under a taxation Act, subsection (2) applies as if the claim had been made at the time when it was provided or acquired;

    (b) is being, or is intended or likely to be, used for a purpose under a taxation Act, its further use is terminated or not to commence, as the case requires, and subsection (2)(a) applies.

    (5) The Commissioner may apply to the Supreme Court or a Judge –

    (a) for a declaration that legal professional privilege does, or does not apply, to a document, information or relevant material provided or acquired under this Part;

    (b) for an order to extinguish legal professional privilege where it applies to a document, information or relevant material; and the Commissioner is to give effect to, and act in accordance with, any declaration or order, or other direction made by the Court or the Judge.

    (6) A person who claims the benefit of legal professional privilege in relation to a document, information or relevant material may apply for an order under subsection (5)(a).

    (7) A document, information or relevant material –

    (a) that is declared to be subject to legal professional privilege under subsection (5)(a); or

    (b) for which an order under subsection (5)(b) is refused;must be returned to the person named under subsection (2)(a) from whom the document, information or relevant material was obtained without delay and remains subject to subsection (2)(b) in the period between publication of the decision of the Court or Judge and the return.

    (8) Nothing in this section prevents a person entitled to claim legal professional privilege from waiving its application to a document, information or relevant material and a waiver once made cannot later be revoked.

    (9) A person, either personally or on another’s behalf, who claims that legal professional privilege applies to a document, information or relevant material and who knows, or ought to know at the time that claim is made that it is false, misleading, or without substance, commits an offence.

    Penalty: $20 000”

    Page 30

    Recommendation 6: The Committee recommends that clause 41 of the Taxation Administration Bill 2001 be amended in the following manner – Page 23, after line 11 – to insert the following new subclause – “(2) Where the amount of tax in issue is the limit amount or less, an appeal under section 40(1) may be made to the Small Claims Tribunal constituted by a Magistrate and the Tribunal has jurisdiction to hear and determine the appeal.”

    Page 23, after line 13 – to insert the following new subclause –

    “(4) The limit amount from time to time for the purpose of section 41(2) is:

    (a) $10 000;

    (b) the maximum amount with respect to which the Small Claims Tribunal has jurisdiction in its ordinary jurisdiction; or

    (c) an amount prescribed;

    whichever is the greatest.”

    Page 31

    Recommendation 7: The Committee recommends that clause 34 of the Taxation Administration Bill 2001 be amended in the following manner –

    Page 19, after line 15 – to insert the following new subclauses –

    “(4) Where a decision of the Commissioner is by any of the taxation Acts declared to be non-reviewable a taxpayer may, within 60 days of being notified in writing of the decision, apply to a Small Claims Tribunal constituted by a Magistrate for the decision to be reconsidered.

    (5) A Small Claims Tribunal to which an application is made pursuant to subsection (4) shall have power to hear and redetermine a matter which had been decided by the Commissioner and any determination of the Small Claims Tribunal when made shall stand as if made by and substituted for that of the Commissioner.”

    Page 32

    Recommendation 8: The Committee recommends that a system of private rulings be introduced, modelled on the system of private rulings which operates at the Federal level in relation to Federal taxation laws.

    Page 33

    Recommendation 9: The Committee recommends that a system of binding public rulings be introduced that includes the following features:

    – an objective to provide a current and wide range of information that is publicly available; and

    – an ongoing invitation to taxpayers and professional bodies to suggest topical matters.

    Page 34

    Recommendation 10: The Committee recommends that clause 13 of the Taxation Administration Bill 2001 be amended in the following manner –

    Page 7, line 5 – to delete “a” and insert instead –

    “that”

    Page 34

    Recommendation 11: The Committee recommends that the Taxation Administration Bill 2001 be amended in the following manner:

    Page 70, after line 27 – to insert the following new clause –

    “118 Practices

    (1) The Commissioner is to publish all existing practices relating to the assessment of tax. (2) The Commissioner cannot establish or direct a practice to beobserved unless the Commissioner first publishes that practice.”

    Page 35

    Recommendation 12: The Committee recommends that the Taxation Administration Bill 2001 be amended in the following manner –

    Page 73, to insert after “primary liability” –

    “ “publish” means publish in the Government Gazette; ”

    Page 35

    Recommendation 13: The Committee recommends that clause 19 of the Taxation Administration Bill 2001 be amended in the following manner –

    Page 10, line 21 – to insert after “suspects” –

    “on reasonable grounds”

    Page 36

    Recommendation 14: The Committee recommends that clause 20 of the Taxation Administration Bill 2001 be amended in the following manner –

    Page 11, line 6 – to insert before “create” –

    “Subject to subsection (4)”

    Page 11, line 14 – to insert before “if” –

    “Subject to subsection (4)”

    Page 11, line 21 – to insert after “may” – “, subject to subsection (4),”

    Page 11, after line 24 – to insert the following new subclause –

    “(4) The Commissioner can only create a memorandum of an instrument under subsection (1)(a), (2)(b) or (3) if the Commissioner has, so far as is practicable, made reasonable efforts to obtain sufficient information to make an accurate assessment.”

    Page 37

    Recommendation 15: The Committee recommends that clause 23 of the Taxation Administration Bill 2001 be amended in the following manner –

    Page 13, line 7 – to insert before “makes” –

    “under a taxation Act referred to in section 3 (1) (d) – (g)”

    Page 40

    Recommendation 16: The Committee recommends that clause 30 of the Taxation Administration Bill 2001 be amended in the following manner –

    Page 17, lines 2 – 4 – to delete the lines and substitute –

    “(1) The Commissioner is, from time to time, to publish guidelines setting out the policy to be followed when deciding whether or not to –

    (a) impose penalty tax under section 26;

    (b) remit penalty tax under section 29”

    Page 40

    Recommendation 17: The Committee recommends that clause 31 of the Taxation Administration Bill 2001 be amended in the following manner –

    Page 18, lines 11 – 13 – to delete the lines.

    Page 42

    Recommendation 18: The Committee recommends that clause 34 of the Taxation Administration Bill 2001 be amended in the following manner –

    Page 19, lines 3 – 4 – to delete the lines.

    Page 42

    Recommendation 19: The Committee recommends that clause 36 of the Taxation Administration Bill 2001 be amended in the following manner –

    Page 19, after line 28 – to insert the following new subclause –

    “(c) if a taxpayer has requested a statement of grounds in accordance with section 25(2)(a) within thirty days of the issue of the assessment – the date on which the Commissioner serves a statement of the grounds.”

    Page 43

    Recommendation 20: The Committee recommends that clause 38 of the Taxation Administration Bill 2001 be amended in the following manner –

    Page 22, lines 4 – 5 – to delete “the decision period” and replace with –

    “120 days of the day that the objection was lodged with the Commissioner.”

    Page 22, lines 6 – 7 – delete from “refer” to “Court” and replace with –

    “apply to the appeal body for directions as to any or all of the matters referred to in this section, including but not limited to –

    (a) the length of the decision period;

    (b) the time for a taxpayer to comply with a request for information;

    (c) the information to be provided by the taxpayer;

    (d) the time for the Commissioner to seek advice and assistance from an external agency.”

    Page 22, lines 9 – 10 – delete from “refer” to “practicable” and replace with

    “apply to the appeal body within fourteen days of the written notice.”

    Page 22, line 11 – to delete “Supreme Court” and substitute –

    “appeal body”

    Page 22, after line 17 – to insert the following new subclause –

    “(8) In this section, ‘appeal body’ means the Court or Tribunal which has jurisdiction to hear appeals with respect to that matter under section 41.”

    Page45

    Recommendation 21: The Committee recommends that clause 42 of the Taxation Administration Bill 2001 be amended in the following manner –

    Page 23, lines 20 – 24 – to delete the lines

    Page 45

    Recommendation 22: The Committee recommends that clause 45 of the Taxation Administration Bill 2001 be amended in the following manner –

    Page 26, line 10 – to delete “on” and replace with –

    “within 30 days of”

    Page 46

    Recommendation 23: The Committee recommends that clause 63 of the Taxation Administration Bill 2001 be amended in the following manner –

    Page 35, line 22 – to insert after “them”

    “but not so as to recover more than the whole of the tax.”

    Page 47

    Recommendation 24: The Committee recommends that the Government consider amending clause 65 of the Taxation Administration Bill 2001 to allow for a new subclause (4) that provides that a garnishee notice is not to be served with respect to future entitlement to wages. This is on the basis that this type of garnishee is usually confined to moral obligations such as maintenance and child maintenance.

    Page 48

    Recommendation 25: The Committee recommends that clause 69 of the Taxation Administration Bill 2001 be amended in the following manner –

    Page 40, lines 20 – 25 – to delete the lines

    (Note: there will be consequential Clerk’s amendments to all the remaining sub-clauses of the clause.)

    Page 49

    Recommendation 26: The Committee recommends that clause 82 of the Taxation Administration Bill 2001 be amended in the following manner:

    Page 49, line 3 – to insert before “wilfully” –

    “Within the time during which the tax record is required to be kept”

    Page 51

    Recommendation 27: The Committee recommends that clause 86 of the Taxation Administration Bill 2001 be amended in the following manner –

    Page 52, lines 10 – 13 – to delete the lines and insert instead –

    “(4) The Commissioner is to allow a person required to provide information or relevant material under subsection (1) a reasonable time in which to provide the information or relevant material, and the person is to comply with subsection (1) within such reasonable time, or within such further time as the Commissioner allows.”

    Page 52

    Recommendation 28: The Committee recommends that clause 88 of the Taxation Administration Bill 2001 be amended in the following manner –

    Page 53, line 18 – to insert before “The” –

    “(1)”

    Page 53, after line 28 – to insert the following new subclause –

    “(2) The Commissioner must ensure that the person who would otherwise be entitled to possession of a document or instrument retained under subsection (1) is given a copy of it, or reasonable access to it, as appropriate.”

    Page 52

    Recommendation 29: The Committee recommends that clause 89 of the Taxation Administration Bill 2001 be amended in the following manner –

    Page 54, after line 7 – to insert the following new subclause –

    “(3) Where an investigator makes a recording under subsection (1), the person attending for examination may request a copy of the recording, and the investigator is to provide a copy to them within 30 days of the date of the request.”

    Page 53

    Recommendation 30: The Committee recommends that clause 90 of the Taxation Administration Bill 2001 be amended in the following manner –

    Page 54, line 27 – to delete from “authorised” to “so” and replace with –

    “given the investigator prior authorisation in writing to do so.”

    Page 55

    Recommendation 31: The Committee recommends that clause 91 of the Taxation Administration Bill 2001 be amended in the following manner –

    Page 55, line 11 – to insert after “Act” –

    “except where the power of entry is exercised pursuant to a warrant under section 90(2)(b)”

    Page 55, lines 13 – 15 – to delete from “specifically” to “open” and replace with

    “given specific prior authorisation in writing by the Commissioner with respect to those premises, breaking it open”

    Page 56, line 15 – to insert the following new subclause –

    “(2) Where an investigator exercises a power of entry pursuant to a warrant under section 90(2)(b), the investigator may only exercise those powers set out in section 91(1) that the warrant specifically authorises the investigator to use.”

    Page 56

    Recommendation 32: The Committee recommends that clause 93 of the Taxation Administration Bill 2001 be amended in the following manner –

    Page 58, lines 7 – 8 – to delete from “authorised” to “so” and replace with –

    “given the investigator prior authorisation in writing to do so”

    Page 56

    Recommendation 33: The Committee recommends that clause 102 of the Taxation Administration Bill 2001 be amended in the following manner:

    Page 62, line 3 – delete “5 years” and replace with –

    “12 months”

    Page 57

    Recommendation 34: The Committee recommends that clause 107 of the Taxation Administration Bill 2001 be amended in the following manner –

    Page 66, lines 4 – 6 – delete the lines.

    Page 66, lines 16 – 20 – to delete the lines.

    Page 58

    Recommendation 35: The Committee recommends that clause 108 of the Taxation Administration Bill 2001 be amended in the following manner –

    Page 67, line 11, to insert after “personally,” –

    “unless the contrary is proved,”

    Page 58

    Recommendation 36: The Committee recommends that the Taxation Administration Bill 2001 be passed subject to recommendations 1 – 7, 10 – 23, and 25 – 35.