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ACIS Administration Amendment Bill 2000
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ACIS Administration Amendment Bill 2000
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THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
ACIS ADMINISTRATION AMENDMENT BILL 2000
(Circulated by authority of the Minister for Industry, Science and Resources,
Senator the Honourable Nick Minchin)
ACIS ADMINISTRATION AMENDMENT BILL 2000
The ACIS Administration (Amendment) Bill 2000 will implement some minor changes to the ACIS Administration Act 1999 ('the Act') that have come to light in the course of setting up the administrative framework for the scheme.
The Automotive Competitiveness and Investment Scheme (ACIS) seeks to encourage competitive investment and innovation in the Australian automotive industry in order to achieve sustainable growth in the context of trade liberalisation.
The administrative framework for delivering the scheme to the Australian automotive industry is now well developed, and the proposed minor amendments set out in this Bill will enable the efficient delivery of the program, reducing the administrative burden on both participants and the Government.
The main change to the Act will be an increased capacity for regulations to define what is approved plant and equipment and approved research and development for the purposes of calculating benefits under the scheme. As a result, this will enable the maximum claimable value of investment in different kinds of plant and equipment and research and development to be set out in regulations. This will assist participants to determine what is and what is not eligible expenditure, in what is largely a self assessed scheme.
The regulations will now also be able to provide for investment loadings to cover all those incidental costs of investment which are extremely difficult to substantiate from a participant's point of view, and almost impossible to audit from an administrator's point of view. It is intended that these loadings will substitute for the labour costs of repairs and maintenance associated with investment in plant and equipment, and those low cost or short life items that are normally fully depreciated in the year of purchase.
The loadings will also substitute for overhead costs associated with research and development, removing the need for participants to substantiate and pro-rate costs where R&D activities occur in the same building as, for example, production activities.
As well as clarifying terms and phrases used in the legislation, this Bill will also introduce provisions to protect the scheme from "artificial" companies set up purely to take advantage of ACIS, that are not going to contribute to the sustainable growth of the Australian automotive industry. This will permit the benefits of the $2 billion scheme to be directed at those firms that are working to improve their competitiveness.
The Bill will not change the overall structure of the scheme and will not impact on the fiscal envelope, as the scheme is capped at $2 billion.
FINANCIAL IMPACT STATEMENTS
This Bill will have no additional financial impact.
ACIS ADMINISTRATION AMENDMENT BILL 2000
NOTES ON CLAUSES
Clause 1 Short title
This clause provides for the Bill, when enacted, to be cited as the ACIS Administration Amendment Act 2000.
Clause 2 Commencement
This clause provides that this Act will commence on Royal Assent.
Clause 3 Schedule(s)
This clause provides that the Schedule contains items that have the effect of amending the ACIS Administration Act 1999.
Schedule 1 - Amendment of the ACIS Administration Act 1999
Part 1 - General amendments
Item 1 Subsection 6(1)
This item states that the word "allowable," in relation to plant and equipment and research and development, will be defined in a new section 6A of the Act (see item 19 of this Schedule).
Item 2 Subsection 6(1) (definition of approved plant and equipment)
This item proposes the repeal of the current definition and states that a new definition of "approved plant and equipment" will now be set out in the new section 6A of the Act (see item 19 of this Schedule).
Item 3 Subsection 6(1) (definition of approved research and development)
This item proposes the repeal of the current definition and states that a new definition of "approved research and development" will now be set out in the new section 6A of the Act (see item 19 of this Schedule).
Items 4 & 5 Subsection 6(1) (definition of automotive machine tooling)
These items propose the repeal of the current definition and change the defined term "automotive machine tooling" to "automotive tooling," which is the recognised industry term. Consequential changes to this effect are made wherever the term appears in the Act (see items 48-58).
Item 6 Subsection 6(1)
This item, together with item 20 (proposed subsection 6(4)) provide that the phrase "for the MVP's own use" may be defined in regulations. Regulations may define circumstances when a particular investment will be taken to be for the Motor Vehicle Producer's (MVP's) own use, and therefore not claimable as type B or type C investment.
Item 7 Subsection 6(1)
This item provides that the meaning of the phrase "investment undertaken by a participant," which is used in the proposed new subsection 6(5), may be defined in regulations
Item 8 Subsection 6(1)
This item states that the phrase "maximum claimable value," in relation to allowable plant and equipment or allowable research and development is defined in the proposed new section 6A (see Item 19).
Items 9-13, 15 & 17-19 Subsection 6(1)
These items insert two notes at the end of the definitions of types A-I investment referring to the new subsection 6(5) and the new section 6C which set out further rules relating to eligible investment (see items 20 and 21 of this schedule).
Item 14 Subsection 6(1) (definition of type F investment)
This item provides that type F investment also includes investment in plant and equipment used to facilitate the provision of automotive services. This means that Automotive Machine Tool and Tooling Producers (AMTPs) will be permitted to claim ACIS benefits for investment relating to the provision of automotive services, as well as the production of automotive machine tools and tooling. Previously, AMTPs that provided automotive services would have been required to be registered as an Automotive Service Provider (ASP) as well in order to claim benefits for investment relating to the provision of these services.
Item 16 Subsection 6(1) (definition of type G investment)
This item provides that type G investment also includes investment in research and development directed at facilitating the provision of automotive services. This means that AMTPs will be permitted to claim ACIS benefits for investment relating to the provision of automotive services, as well as the production of automotive machine tools and tooling. Previously, AMTPs that provided automotive services would have been required to be registered as an ASP as well in order to claim benefits for investment relating to the provision of these services.
Item 20 At the end of section 6
This item adds proposed new subsections 6(4) and (5) and provides that regulations may set out the circumstances when a particular investment will be taken to be for the MVP's own use, and therefore not claimable as type B or type C investment (see item 6 of this schedule).
Item 21 After section 6
This item inserts a new subsection 6A(1) which provides that regulations can be made setting out what is allowable plant and equipment and research and development (proposed new paragraph 6A(1)(a)) and the maximum claimable value of different kinds of allowable plant and equipment and research and development (proposed new paragraph 6A(1)(b)). Proposed new section 6A(2) sets out the definitions of terms introduced in this proposed amendment. The intent is that the regulations will set out different methods for calculating investment where, for example, plant and equipment is leased rather than purchased, or set out what is included in the calculation of labour costs associated with allowable research and development.
The regulations may also set out investment loadings which are intended to cover labour costs of repairs and maintenance and expensed items relating to allowable plant and equipment and overheads associated with allowable research and development. These investment loadings would reduce the administrative burden as participants would not have to maintain records of expenditure on these items for the purposes of ACIS.
This item also sets out a new section 6B which provides that once plant and equipment is sold, it ceases to be approved plant and equipment. This means that where approved plant and equipment is bought and sold within a three year period, the investment in that plant and equipment will no longer be included in the quarterly moving average calculation of credits from the date the plant and equipment is sold.
This item also inserts a new section 6C which provides that guidelines may be made by the Minister setting out circumstances where the Secretary can treat investment by a person (who may or may not be a participant) as investment by a participant. It is intended that the section will apply in the situation where a company who is a participant or is eligible to be a participant changes its corporate identity through a takeover or merger situation. Any investment undertaken by that company could then be treated by the Secretary as investment undertaken by the new corporate identity for the purposes of calculating benefits under ACIS.
The Minister may make guidelines that are to be taken into account by the Secretary when making a decision under proposed new subsections 6C(4) or (5). Guidelines made by the Minister under proposed new subsections 6C(2) and (4) are disallowable instruments under section 46A of the Acts Interpretation Act 1901 .
Item 22 Sections 14 and 15
This item repeals the previous sections 14 and 15 and inserts new sections 14, 14A, 14B and 15.
Proposed new section 14 sets out rules providing a person can only hold one registration under ACIS at a time. Therefore, a company is registered under ACIS in its own right cannot also be registered as part of a group of related companies.
Proposed new section 14A provides that the Secretary must not register an applicant for registration unless the Secretary is satisfied that applicant would further the purpose of the Act, which is to "encourage competitive investment and innovation in the Australian automotive industry in order to achieve sustainable growth..." The section allows the Secretary to prevent the registration of a company set up artificially for the purposes of ACIS that will not contribute to the sustainable growth of the Australian automotive industry. This provision will be mirrored in the deregistration provision, which is amended by item 46 of this Schedule.
Proposed new section 14B provides that the Minister may make guidelines for the Secretary to take into account when making a decision not to register an applicant, or to deregister a participant on the grounds that the company is not furthering the purposes of the Act. The guidelines made under subsection 14B(2) are disallowable instruments under section 46A of the Acts Interpretation Act 1901 .
Proposed new section 15 provides that if a participant applies for a second registration under ACIS, and the application is granted, this will have the effect of cancelling the existing registration from immediately before the day on which the later application for registration is granted.
Item 23 At the end of section 17
This item provides that under proposed new subsection 17(4), regulations may define the phrase "at least one kind of automotive component" for the purposes of sections 17 and 31 of the Act.
Item 24 Subsection 23(3)
This item provides for repeal of the current subsection 23(3) and in its place substitutes proposed new subsection 23(3) which provides that business plans provided with registration applications will be able to contain particulars relating to investment and sales from 1 January 1999.
Item 25 After paragraph 26(2)(f)
This item inserts proposed new paragraph in subsection 26(2) providing that the Secretary must also consider whether the requirements of the new section 14A have been met in determining whether an applicant should be granted registration under ACIS.
Item 26 Subsection 26(3)
This item recognises in subsection 26(3) the addition of paragraph 26(2)(g).
Items 27 & 28 After paragraph 29(1)(a) and 29(2)(a)
These items provide that the Secretary may also consider whether a person or company has been convicted of an offence against the law of a foreign country, in determining whether or not that person or company is a fit and proper person for the purposes of granting registration under ACIS.
Item 29 Paragraph 29(2)(b)
This item amends paragraph 29(2)(b) so that it is consistent with the wording in paragraph 29(1)(a).
Item 30 At the end of subsections 31(1) and (2)
This item inserts a note at the end of subsections 31(1) and (2) referring to the new subsection 17(4) inserted by item 23 of this schedule.
Items 31 - 34 & 36
These items repeal subsection 35(3), paragraphs 36(c) and (e), 37(1)(b) and (d), 38(1)(b) and 39(1)(b) and (d). These requirements for the first quarterly return are no longer necessary, as this information may be collected in the business plan provided with an application for registration.
Item 35 Paragraph 38(1)(d)
This item replaces the existing paragraph 38(1)(d) with one requiring AMTPs to provide details of sales of automotive services provided during the quarter. This figure will contribute to the calculation of the 5% of sales limit for the participant for the following ACIS year.
Items 37 - 43 Subsections 42(1) and 42(2) and sections 43 -51
The amendments proposed by these items provide that the Secretary will be able to calculate the unmodulated production and investment credits for participants as soon as practicable after receiving a participant's quarterly return. This means that, if a participant provides its quarterly return within the 45 day maximum time allowed, the Secretary can immediately calculate the participant's benefits, rather than waiting for the 45 day period to elapse.
Item 44 Subsections 109(2), (3) and (4)
This item sets out proposed amendments to replace subsections 109(2), (3) and (4) and requires annual updates of business plans to be provided with each third quarter return, rather than before 31 October every year. Business plan updates are an essential tool for calculating the modulation rate (to assess whether expected benefits fit within the overall budget for the scheme) and, therefore, it is important that they be provided on time.
A company registered in the second or third quarter of an ACIS year is required to provide its first update in the third quarter of the ACIS year following the year of registration.
Item 45 Subsection 110(4)
This item proposes the omission of the words "for more than 6 months" in the current provision. The effect will be that the Secretary may deregister a participant who fails to provide a business plan update with its third quarter return, as set out in section 109. This increases the incentive for participants to provide updated business plans on time, as these business plans are necessary to determine the modulation rate to apply in the next period.
Item 46 At the end of subsection 110(5)
This item mirrors the proposed new section 14A inserted by item 22 of this schedule. This item provides for proposed new paragraph 110(5)(c), the effect of which is that the Secretary may deregister a participant if the Secretary determines that the registration of the participant does not further the purposes of the Act. The section allows the Secretary to deregister a company set up artificially for the purposes of ACIS that will not contribute to the sustainable growth of the Australian automotive industry.
Item 47 Before paragraph 111(a)
This item inserts into section 111 several proposed new kinds of decisions affecting duty credit which may be reviewed by the appropriate merits review tribunal. Decisions on these matters by the administrative tribunal or the Federal Court (or Federal Magistrates Court) are limited by sections 112 and 113 of the Act to apply only from the date the decision is made, and not before that date.
Part 2 - Consequential amendments on change of term from
"automotive machine tooling" to "automotive tooling"
These items amend the phrase "automotive machine tooling" to read "automotive tooling" wherever it appears in the Act. "Automotive tooling" is the recognised industry term.