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Commercial Broadcasting (Tax) Bill 2017

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2016 - 2017

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

HOUSE OF REPRESENTATIVES

 

 

 

COMMERCIAL BROADCASTING (TAX) BILL 2017

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

(Circulated by authority of the Minister for Communications

Senator the Honourable Mitch Fifield)



COMMERCIAL BROADCASTING (TAX) BILL 2017

OUTLINE

In the 2017-18 Budget, the Government announced a comprehensive package of reforms that will improve the sustainability of Australia’s free-to-air broadcasting sector. Along with the Broadcasting Legislation Amendment (Broadcasting Reform) Bill 2017 (Reform Bill) , this Bill forms part of this historic reform.

To assist broadcasters to compete in the modern media environment, the Government will abolish broadcasting licence fees and datacasting charges and introduce a transmitter licence tax for the use of broadcast spectrum that more accurately reflects its use. Spectrum is essential to a digitally networked economy and a major contributor to Australia’s economic and social wellbeing. It is critical infrastructure enabling production for industrial, commercial, educational and social services. It also establishes similar tax arrangements for commercial broadcasters as currently apply to other commercial spectrum users.

The purpose of this Bill is to introduce a tax for transmitter licences issued under section 102 of the Radiocommunications Act 1992 that are associated with commercial broadcasting licences issued under Part 4 of the Broadcasting Services Act 1992 .

The tax would be applied to each individual transmitter, associated with the apparatus licence. The Minister may determine the amount of tax for each individual transmitter. This amount must not exceed the cap amounts specified in the Bill and the capped amount applies if no determination is in force. The tax will apply to transmitter licences in place as of 1July2017 and new ones issued on or after 1 July 2017. The tax would be applied on the issue, or anniversary of a licence. The tax, as proposed under this Bill, would come into legal operation on a retrospective basis on 1 July 2017, but only if the Reform Bill is also passed and receives the Royal Assent.

The Government has committed to broader spectrum reform (such as rewriting the Radiocommunications Act 1992 ). These tax arrangements are intended to provide certainty for the broadcasting industry while the reforms are finalised and implemented. Outcomes of these reforms will be considered in the five year statutory review by the Australian Communications and Media Authority on broadcast spectrum (as proposed by Schedule 7 to the Reform Bill). These two processes will inform the Minister on how to transition broadcast spectrum tax arrangements into the broader spectrum management framework as at July 2022. As such, the Minister may determine a date of termination for the proposed new tax that would be established as a result of this Bill.



FINANCIAL IMPACT STATEMENT

The tax imposed by this Bill is estimated to have the following impact on underlying cash:

 

2017-18

2018-19

2019-20

2020-21

Revenue gain ($m)

43.5

43.5

43.5

43.5

 



 

statement of compatibility with human rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Commercial Broadcasting (Tax) Bill 2017

The Commercial Broadcasting (Tax) Bill 2017 (the Bill) is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview of the Bill

The Bill forms parts of a comprehensive package of reforms announced by the Government on 6 May 2017 that will improve the sustainability of Australia’s free-to-air broadcasting sector. The other Bill forming part of the package is the Broadcasting Legislation Amendment (Broadcasting Reform) Bill 2017 (the Reform Bill).

To assist broadcasters to compete in the modern media environment, the Broadcasting Reform Bill would:

·          abolish licence fees and data casting charges that are currently payable by commercial television and radio broadcasters under the Television Licence Fees Act 1964 ; Radio Licence Fees Act 1964 ; Datacasting Transmitter Licence Fees Act 2006 ; and

 

·          disapply the taxation arrangements in the Radiocommunciations (Transmitter Licence Tax) Act 1983 in respect of commercial television and commercial radio broadcasters (commercial broadcasters) who hold a transmitter licence issued under section 102 of Radiocommunications Act 1992 (Radcomms Act).

In that context, the Bill would impose a new tax on transmitter licences issued under section 102 of the Radcomms Act that are associated with commercial broadcasting licences issued under Part 4 of the Broadcasting Services Act 1992 . The tax will be payable both on issuance of the licence and each anniversary of the day the licence came into force. The proposed new tax will apply to the relevant transmitter licences in force issued prior to 1 July 2017 and in respect of new transmitter licences issued on and from 1 July 2017.

The amount of tax payable for each licence will depend on the spectrum that transmitter uses and the power level of the transmitter. The Minister may, by legislative instrument, determine the individual transmitter tax amounts, but these amounts must not exceed the individual transmitter amount caps as specified in the Bill. The administration arrangements associated with the assessment, and collection and recovery of the new tax are set out in Schedule 6 to the Reform Bill and the new tax would be administered by the ACMA.

The proposed new tax is intended to be for a period of 5 years, noting that the Minster would have the power, under clause 11 to the Bill to specify a ‘termination time’, and no further taxes would be imposed under the proposed new Act after the termination time. The new tax is intended to provide certainty for the commercial radio and television broadcasting industry while the reforms to the Radcomms Act (including transmitter licensing for commercial broadcasting) are completed. The arrangements for the assessment and collection of the new tax, including anti-avoidance prohibitions, are set out in Schedule 6 to the Reform Bill.



Human rights implications

Australia is a signatory to the International Covenant on Civil and Political Rights (the ICCPR), the International Covenant on Economic, Social and Cultural Rights (the ICESCR), and the Convention on the Rights of Persons with Disabilities (CRPD). These three conventions are listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

This Bill does not engage any of the applicable rights or freedoms. In coming to this conclusion, specific consideration was given to the following human rights relevant to broadcasting:

·          right to enjoy and benefit from science and culture (Article 15 ICESCR);

 

·          right to freedom of expression (Article 19 ICCPR);

 

·          promote access for persons with disabilities to new information and communications technologies (Article 9 CRPD); and

 

·          right of all persons with disabilities to freedom of expression (Article 21 CRPD).

The effects of the Bill are limited to holders of commercial broadcasting licences. The Bill also has no impact on any natural persons in the capacity of licensee as only qualified companies are eligible to hold such licences.

The measure will not affect individuals’ ability to enjoy and benefit from culture. The measure is strictly related to the taxation and licence fees payable by commercial broadcasters Individuals will not be prevented from taking part in cultural life via the services offered by the commercial broadcasters.

The measures will not inhibit the rights of individuals to express themselves through any media. The measure is limited to changes to the transmitter licence tax and will not introduce any restrictions on content.

The measures will not inhibit the rights of persons with disabilities from accessing information, exercising their right to freedom of expression, or from taking part in cultural life.

Conclusion

This Bill is compatible with human rights as it does not raise any human rights issues.



 

REGULATION IMPACT STATEMENT

Summary of the measures:

The Bill would impose new transmitter licence tax for commercial broadcasters using spectrum in the broadcasting spectrum bands leading to revenues of around $40 million per annum in total.

In addition, the Broadcasting Legislation Amendment (Broadcasting Reform) Bill 2017 would:

1.       Abolish the broadcasting licence fees paid by commercial broadcasters under both the Television Licence Fees Act 1964 and the Radio Licence Fees Act 1964 , from 2017-18 onwards, currently recovering around $125.7 million per year.

2.       Abolish the datacasting charges paid by commercial broadcasters under the Datacasting Charge (Imposition) Act 1998 , from 2017-18 onwards, currently recovering around $1.1 million per year.

3.       Abolish the apparatus licence fees currently paid by commercial broadcasters under the Radiocommunications (Transmitter Licence Tax) Act 1983 , currently recovering around $75,000 per year.

4.       Create a transitional support package of $4.6 million per year for the first five years to ensure that individual broadcasters are no worse off as a consequence of this Bill and measures 1, 2, 3 and 4.

5.       Require the Australian Communications and Media Authority (ACMA) to undertake and finalise a review of broadcasting pricing arrangements before 30 June 2022.

What are the regulatory impacts associated with these measures?

These measures are expected to have only minor regulatory impacts on businesses. They are not expected to have any impacts on individuals or community organisations.

The measures would simplify reporting requirements from broadcasters to the ACMA. As the commercial television and radio licence fees (determined yearly based on revenue) will be abolished, broadcasters will no longer need to report yearly data to the ACMA.



What are the regulatory costs/savings associated with these measures?

Reporting requirements are reduced for broadcasters. This reduces the time for businesses to complete reporting requests by an estimated 1,710 hours a year, which represents a reduction in annual average compliance costs of $57,225. This is based on assumptions that:

1.       327 returns are provided every year.

2.       Each return requires an estimated five hours to produce.

3.       The average hourly wage for an individual in administrative and support services is $35 [1] .

 

Regulatory burden estimate (RBE) table

Average annual regulatory costs (from business as usual)

Change in costs

Business ($)

Community organisations ($)

Individuals ($)

Total change in cost ($)

Commercial broadcasters

-57,225

0

0

-57,225

 



ABBREVIATIONS

The following abbreviations are used in this explanatory memorandum.

ACMA

Australian Communications and Media Authority

AIA

Acts Interpretation Act 1901

BSA

Broadcasting Services Act 1992

LA

Legislation Act 2003

Radcomms Act

Radiocommunications Act 1992

 

 

 



NOTES ON CLAUSES

Clause 1 - Short title

Clause 1 provides that the Bill, when enacted, may be cited as the Commercial Broadcasting (Tax) Act 2017 .

Clause 2 - Commencement

Clause 2 provides for the commencement of the Bill.

The whole of the Bill, once passed, would commence on 1 July 2017, however this commencement is conditional upon the Broadcasting Legislation Amendment (Broadcasting Reform) Act 2017 also receiving the Royal Assent.

The conditional commencement provision is necessary as the imposition of the new tax, as proposed by the Bill, forms part of a fully integrated and historic package of media reforms. If the Bill is passed and receives the Royal Assent, it technically would be enacted but it would not come into operation unless the Broadcasting Legislation Amendment (Broadcasting Reform) Act 2017 also received the Royal Assent.

Clause 3 - Definitions

Clause 3 sets out the definitions of key terms used in the Bill.

The term, ‘associated with a commercial broadcasting licence’ would have the meaning given by clause 4.

The term, ‘broadcasting service’ would have the same meaning as in the BSA.

The term, ‘commercial radio broadcasting licence’ would have the same meaning as in the BSA.

The term, ‘commercial television broadcasting licence’ would have the same meaning as in the BSA.

The term, ‘indexation factor’, for a financial year, would have the meaning given by clause 12.

The term, ‘individual transmitter amount’ would have the meaning given by clause 8.

The term, ‘individual transmitter amount cap’ would have the meaning given by clause 9.

The term, ‘tax’ would mean the tax imposed by the Bill, once enacted.

The term, ‘termination time’ would have has the meaning given by clause 11.

The term, ‘transmitter’ would mean a radiocommunications transmitter under the Radcomms Act. Similarly, the term, ‘transmitter licence’ would be have the same meaning as in the Radcomms Act. A transmitter licence is an apparatus licence issued under that Act that authorises the operation of specified radiocommunications transmitters, or of radiocommunications transmitters of a specified kind. Commercial broadcasting services, and re-transmission of these services, are generally provided by use of a radiocommunications transmitter licensed under the Radcomms Act.

Clause 4 - Transmitter licence associated with a commercial broadcasting licence

Subclause 4(1) would set out the essential element for when a transmitter licence will be taken to be ‘associated with a commercial broadcasting licence’. A transmitter licence that is associated with a commercial broadcasting licence is the distinguishing criteria by which certain transmitter licences will be subject to the new tax.

Specifically, if a transmitter licence was or is issued under section 102 of the Radcomms Act and the related licence referred to in that section was allocated under Part 4 of the BSA then that transmitter licence is associated with a commercial broadcasting licence. The ACMA must issue to a commercial broadcaster who is allocated a broadcasting services bands licence under Part 4 of the BSA a transmitter licence under section 102 of the Radcomms Act.

In addition, if a transmitter licence was or is issued under section 100 of the Radcomms Act to a commercial broadcaster for the transmission or re-transmission of services under their broadcasting services bands licence on the basis of a decision of the ACMA under subsection 34(1) of the BSA, the transmitter licence is associated with a commercial broadcasting licence.

There a small number of these licences issued to commercial broadcasters while the ACMA continues to prepare licence area plans under section 26 of the BSA for the licence area. As licence area plans are finalised, commercial broadcasters will be transitioned onto section 102 licences. The intention is to impose taxes on these commercial broadcasters in the same manner as taxes are imposed on the commercial broadcasters who hold a transmitter licence issued under section 102 of the Radcomms Act.

Tax will be imposed on transmitter licences associated with a commercial broadcasting licence under clause 6 . The arrangements for the assessment and collection of the new tax, including anti-avoidance prohibitions, are set out in Schedule 6 to the Broadcasting Legislation Amendment (Broadcasting Reform) Bill 2017 (the Reform Bill).

Clause 5 - Extension to external Territories

Clause 5 ensures that the Bill extends to all of the external Territories.

Clause 6 - Imposition of tax

General

Subclause 6(1) provides that if a transmitter licence issued during the period between 1 July 2017 and the termination time (the Minister may determine a time under subclause 11(1) to be the termination time for the imposition of the tax), and is associated with a commercial broadcasting licence, then tax is imposed at both the following times while the licence is in force and before the termination time:

 

·          on the issue of the transmitter licence; and

 

·          each anniversary of the day the licence came into force.

The tax imposed by subclause 6(1) will only apply to transmitter licences issued after the start of 1 July 2017, and before the termination time, it does not apply to transmitter licences issued before 1 July which are dealt with by subclause 6(2).

Subclause 6(2) provides that if a transmitter licence was issued before 1 July 2017 and is associated with a commercial broadcasting licence, then tax is imposed on each anniversary, after 1 July 2017, of the day the licence came into force during the period where the licence is in force and before the termination time. This subclause imposes the tax on each anniversary of the issue of the transmitter licence after 1 July 2017. This reflects the intention that transmitter licence holders who were issued a licence before 1 July 2017 are also subject to the new tax for anniversaries which occur after 1 July 2017.

Subclause 6(3) provides that if a transmitter licence associated with a commercial broadcasting licence ceases to be in force during the period beginning at the start of 1 July 2017 and ending at the termination time and the licence is not renewed, and if the tax were imposed the day before the licence ceased to be in force was higher than the amount of tax imposed on the last anniversary, a tax would be imposed when the licence ceased to be in force.

The imposition of this tax is to account for any variations that may have occurred to the licence which would have resulted in a higher amount of tax being owed since the last anniversary. For example, if after the final anniversary and before the transmitter licence ceases to be in force, the holder varies the licence and the variation would have increased the amount of tax payable in respect of that licence, the imposition of this tax will allow the ACMA to collect the difference between the amount of tax that was paid, and the amount that should have been paid taking into account the variation to the licence. The amount of tax imposed by this provision will be a pro-rata amount for the period of time the higher amount would have applied. 

Subclause 6(4) provides that for the purposes of paragraph (3)(c), a variation that was made before 1 July 2017 is to be disregarded.

Transitional

Subclause 6(5) provides that if a person holds a transmitter licence at the start of 1 July 2017 and the transmitter licence is associated with a commercial broadcasting licence, and 1 July 2017 is not an anniversary of the issue of the day the licence came into force, then the tax is imposed on the holding of the transmitter licence at the start of 1 July 2017.

The imposition of this tax is to provide a one-off mechanism to collect tax for the period between 1 July 2017 and the next anniversary date of the transmitter licence. As transmitter licences can be issued on any day of the year, the provision will allow for the collection of the tax for the period between 1 July 2017 and the next anniversary of the relevant licence. This amount will be a pro-rata amount based on the number of days between 1 July and the next anniversary (see subclause 7(4)).

Clause 7 - Amount of tax

General

Subclause 7(1) provides that the amount of tax imposed by subclause 6(1) on the issue of a transmitter licence is the total of the individual transmitter amounts for the transmitters covered by the licence immediately after the licence came into force. The phrase individual transmitter amounts for the transmitters is defined in clause 8. While most transmitter licences only permit the use of single transmitters, there are licences where the licence permits the use of multiple individual transmitters. This provisions provides that if there are multiple transmitters on the licence when it comes into force, the amount of the tax is the sum total of the amounts for the individual transmitters on the licence.

Subclause 7(2) provides that the amount of tax imposed by subclauses 6(1) or (2) on an anniversary of the day a transmitter licence came into force is the sum total of the individual transmitter amounts for the transmitters covered by the licence at the start of the anniversary. The phrase ‘individual transmitter amounts’ is defined in clause 8. While most transmitter licences only permit the use of single transmitters, there are licences where the licence permits the use of multiple individual transmitters. This provisions provides that if there are multiple transmitters on the licence on the anniversary, the amount of the tax in respect of that licence will be the sum total of the amounts for the individual transmitters on the licence. This will ensure that if transmitters are added or removed from a licence, the intended tax will be imposed on the next anniversary.

Subclause 7(3) deals with determining the amount of tax when a licence covered by the new tax terminates before the next scheduled anniversary day and there has been a variation in the licence since the last anniversary. The intention is that if since the last anniversary there was a variation which would have resulted in a higher amount of tax being owed, that the higher tax amount is to be collected. In such cases, a pro-rata amount will be collected for the period of time that the higher tax amount would have been owed. Specifically, subclause 7(3) provides that the amount of tax imposed by subclause 6(3) on a licence ceasing to be in force, where there has been a variation to the licence, is worked out using the following formula:

 

The term, ‘days in period of variation’, in the formula at subclause 7(3) is defined to mean the period beginning at the start of the day after the first or only occasion on which  the licence was varied, and ending at the end of the day before the licence ceased to be in force.

The term, ‘days in the financial year’, in the formula at subclause 7(3) means the number of days in the financial year.

The term, ‘amount of excess’, in the formula at subclause 7(3) means the amount of excess tax determined under subparagraph 6(3)(d). The amount of the excess tax is the additional tax that is imposed as a result of a variation to the licence since the last anniversary day.

Transitional

Subclause 7(5) provides that the amount of transitional tax imposed by subclause 6(5) on the holding of a transmitter licence at the start of 1 July 2017 is worked out using following formula:

For the purposes of the formula at subclause 7(5), the amount of anniversary tax means the amount of tax that would be imposed by subclause 6(2) on a particular anniversary of the day the transmitter licence came into force, if it were assumed that 1 July 2017 were that particular anniversary.

For the purposes of this formula, pre-anniversary days means the number of days in the period beginning 1 July 2017 and ending at the start of the day of the anniversary of the day the licence came into force that occurs during the financial year beginning on 1 July 2017.

This subclause provides that the amount of the transitional one-off tax is a pro-rata amount calculated by reference to the number of days between 1 July 2017 and the next anniversary of the licence. As the amount of anniversary tax is determined by the amount imposed under subclause 6(2), it will also apply to the total of the individual transmitter amounts for the transmitters covered by the licence at the start of 1 July 2017.

Clause 8 - Individual transmitter amount

Subclause 8(1) provides that for the purposes of the Bill the individual transmitter amount for a transmitter covered by a transmitter licence at a particular time in a financial year is, if a determination is in force under subsection (2) at the time, the amount worked out under the determination. If no determination is in force the individual transmitter amount is the individual transmitter amount cap for the transmitter for the financial year.

This provision reflects that subclause 8(2) provides the Minister with a power to determine by legislative instrument, subject to upper limits, the amount of the tax for individual transmitters. If a determination is not in force, then then amount of the tax for individual transmitters will be the cap for the financial year set out in clause 9.  

Subclause 8(2) provides that the Minister may, by legislative instrument, make a determination for the purposes of paragraph (1)(a). This is the power for the Minister to determine the individual transmitter amounts that are to be used to calculate the amount of tax imposed under clause 6 and calculated under clause 7.

There is also a note to this subsection directing readers to clause 13 of the Bill which deals with the disallowance of a determination. This reflects that there are special disallowance provisions for determinations made by the Minister under subclause 8(2).

Subclause 8(3) provides that a determination made under subclause 8(2) may provide for difference amounts in relation to different classes of transmitter, periods, classes of licences, or licences held by different classes of persons. This provision makes it clear that any determination made by the Minister may provide for different individual transmitter amounts for the different categories listed.

Subclause 8(4) provides that subclause 8(3) does not limit subsection 33(3A) of the AIA. This provision makes it clear that subsection 33(3A) of the AIA applies to the power to make a determination under subclause 8(2).

Subclause 8(5) provides that subsection 12(2) of the LA does not apply to the first determination made under subclause 8(2). As the first determination cannot take effect until the special disallowance period has passed, this is required as the first determination can commence on 1 July 2017 (refer subclause 13(3)) and be applied retrospectively.

Subclause 8(6) provides that the individual transmitter amount for a transmitter covered by a transmitter licence at a particular time in a financial year must not exceed the individual transmitter amount cap for the transmitter for the financial year. There is also a note to this subsection directing readers to clause 9 of the Bill which deals with the individual transmitter amount cap. This provision makes it clear that the Minister’s power to determine the individual transmitter amounts is constrained by the individual transmitter amount caps set out in clause 9.



Clause 9 -Individual transmitter amount cap

Subclause 9(1) provides a table to be used to determine an annual individual transmitter amount cap for the financial year beginning 1 July 2017. The table is a matrix and sets out annual caps for individual transmitters based on the maximum power that the transmitter is authorised to operate at under the licence and the frequency band that the transmitter uses. The table setting the individual transmitter amount caps for the financial year beginning on 1 July 2017 is set out below. For example, to determine the individual transmitter cap for a medium powered transmitter operating in the UHF band, the amount is the figure in the medium powered row that corresponds with the UHF column, that amount is $186,611.00.

Individual transmitter amount cap—financial year beginning on 1 July 2017

Item

Maximum power of the transmitter

Cap if transmitter operates in the AM band

Cap if transmitter operates in the FM band

Cap if transmitter operates in the VHF band

Cap if transmitter operates in the UHF band

1

Low

$40

$405

$18,661

$18,661

2

Medium

$365

$4,053

$186,611

$186,611

3

High

$3,648

$40,533

$1,866,114

$1,866,114

 

Subclause 9(2) provides a formula for determining an individual transmitter amount cap for the financial year beginning 1 July 2018 and later financial years. The formula is as follows:

For the purpose of the formula, an indexation factor means the indexation factor for the financial year and the previous individual transmitter amount cap means the individual transmitter amount cap for the transmitter for the previous financial year. The indexation factor is determined under clause 12 of the Bill.

Band

Subclause 9(3) provides the definitions of the various bands for the purposes of this section. This is required because depending on the frequency band being transmitted, a different part of the spectrum is used for that transmission. For example, if a transmitter is operating in the AM band, it will be transmitting in the frequency between 526.6 to 1606.5 kHz.

Band

Item

A transmitter operates in this band...

...if the transmitter operates in this frequency range.

1

AM band

526.6 to 1606.5 kHz (inclusive)

2

FM band

87.5 to 108 MHz (inclusive)

3

VHF band

174 to 230 MHz (inclusive)

4

UHF band

520 to 694 MHz (inclusive)

 

Maximum power of transmitter

Subclause 9(4) provides the definitions of the various transmitter powers for the purposes of this section. A transmitter licence will specify a maximum power level at which a transmitter can operate. The power level of a transmitter will be determined based on the maximum level at which the transmitter can operate. For example, if a licence specified that a transmitter can operate in the VHF frequency band at a maximum power of 14,000 Watts ERP, therefore the transmitter would be a medium powered transmitter.

 

Maximum power of transmitter

Item

The maximum power of a transmitter is...

...if the transmitter operates in the AM band, and, under the transmitter licence, the maximum power for the transmitter is...

...if the transmitter operates in the FM band, and, under the transmitter licence, the maximum power for the transmitter is...

...if the transmitter operates in the VHF band, and, under the transmitter licence, the maximum power for the transmitter is...

...if the transmitter operates in the UHF band, and, under the transmitter licence, the maximum power for the transmitter is...

1

Low

n/a

not more than 150 Watts ERP

not more than 150 Watts ERP

not more than 600 Watts ERP

2

Medium

not more than 220 volts CMF

greater than 150 Watts ERP but not more than 15,000 Watts ERP

greater than 150 Watts ERP but not more than 15,000 Watts ERP

greater than 600 Watts ERP but not more than 60,000 Watts ERP

3

High

greater than 220 volts CMF

greater than 15,000 Watts ERP

greater than 15,000 Watts ERP

greater than 60,000 Watts ERP

 

The acronym ‘CMF’ stands for cymomotive force and is a term well understood by industry. CMF is expressed in volts and is used to measure the power of a transmitter that transmits at the AM frequency band. The acronym ‘ERP’ stands for Effective Radiated Power and is another term that is well understood by industry. ERP is expressed in Watts and is used to measure the power of a transmitter operating in the FM, VHF or UHF frequency band.

Clause 10 - Persons liable to pay tax

Subclause 10(1) specifies the persons who will be liable to pay tax as imposed by the Bill on the issue of a transmitter licence. Given that only a commercial radio or television broadcaster would be eligible to hold the transmitter licences covered by the new tax, they would liable to pay tax on the issuance of any new transmitter licence.

Similarly, subclause 10(2) sets out who is liable to pay tax imposed by the Bill on the anniversary of the day a transmitter licence came into force. It will be commercial broadcasters who held licences at the start of the anniversary of those licences.

Subclause 10(3) specifies that tax imposed by the Bill on the cessation of a licence will be payable by the person who held the licence immediately before the licence ceased to be in force.

Subclause 10(4) deals with the persons liable to pay a tax imposed by the Bill on the holding of a transmitter licence at the start of 1 July 2017. It will be payable by broadcasters who held transmitter licences at the start of 1 July 2017.

Clause 11 - Termination time

Clause 11 provides that the Minister may, by legislative instrument, determine that a specified time is the termination time for the purpose of this Bill. The termination time must not be earlier than the commencement of the determination. No further tax would be imposed after the termination time. It is expected that if the Minister were to make such a determination in the future, it would be after five years of its operation, in order to transition the commercial broadcasters to a spectrum usage charging regime.

Clause 12 - Indexation Factor

 

Subclause 12(1) provides that for the purposes of this Bill, the indexation factor for a financial year is the number, calculated to 3 decimal places (rounding up if the fourth decimal place is 5 or more) using the following formula:

For the purposes of the formula, base March quarter means the last March quarter before the reference March quarter.

For the purposes of the formula, March quarter means the last March quarter before the financial year.

Subclauses 12(2) and (3) are intended to deal with the correct index number to be used and the index reference period for the purposes of the indexation factor calculation. Subclause 12(3) provides that if the Australian Statistician changes the index reference period for the Consumer Price Index (CPI), then only the index number published in terms of the new index reference period must be used. However, subclause 12(2) provides that any later publication of an index number by the Australian Statistician must be disregarded for the purposes of clause 12.



Clause 13 - Disallowance of determinations

Scope

Subclause 13(1) outlines that this section applies to ministerial determinations made under subclause 8(2).

 

Disallowance

Subclause 13(2) sets out the process for disallowance of the ministerial determinations that would be made under subclause 8(2). Either House of Parliament may, following a motion upon notice, pass a resolution disallowing the determination. Notice and timeframe requirements are set out at subclauses 13(2)(a) and (b).

 

If a resolution disallowing the determination is not passed by either House, and the determination is the first one made under subclause 8(2) the determination takes effect retrospectively at the start of 1 July 2017 (refer subclause 13(3)).

Subclause 13(4) provides that if a resolution disallowing the determination is not passed by either House and the determination is not the first determination made under subclause 8(2), it takes effect on the day immediately after the last day upon which such a resolution could have been passed if it were assumed that notice of a motion to disallow the determination was given in each House on the last day of the 15 sitting day period of that House mentioned in paragraph (2)(a).

Subclause 13(5) makes clear that section 42 (disallowance) of the LA does not apply to the determination. Two notes are included to remind readers that the 15 sitting day notice period mentioned in paragraph (2)(a), and the 15 sitting day disallowance period mentioned in paragraph (2)(b), are consistent with paragraphs 42(1)(a) and (b) of the LA, respectively.

 

Clause 14 - Rebates

 

Clause 14 provides that the Minister, by legislative instrument, may make rules that make provisions for rebates of the whole or part of an amount of tax payable by a person. It is expected that the rebates could be applied, where there is a strong policy rationale, to specified classes of transmitters or persons, or different periods.

 

Clause 15 - Act does not impose a tax on property of a State

Subclause 15(1) provides that the Bill, once enacted, would not impose a tax on ‘property of any kind belonging to a State’. Subclause 15(2) provides that the expression ‘property of any kind belonging to a State’ has the same meaning as in section 114 of the Constitution.

It is included to address the unlikely event that a State may end up owning the entire shareholdings in a commercial broadcaster (for example, through a ‘bail out’ package where a broadcaster in a particular location was no longer able to operate), and the High Court were to find that in such circumstances the State included the commercial broadcaster owned by the State.

This provision is included for consistency with section 114 of the Australian Constitution which prohibits the Commonwealth imposing taxes on States.   

Clause 16 - Transitional - powers to make legislative instruments

Clause 16 provides that the Minister must not make a legislative instrument under this Act before the day this Bill, once passed, receives the Royal Assent. This is consequential to clause 13 which allow the ministerial determination made under subclause 8(2) to have retrospective commencement.