Title Treasury Laws Amendment (COVID-19 Economic Response No. 2) Bill 2021
Database Explanatory Memoranda
Date 06-09-2021 10:35 AM
Source House of Reps
System Id legislation/ems/r6745_ems_0225d809-32e7-49b0-99b5-66a336e2d304


Treasury Laws Amendment (COVID-19 Economic Response No. 2) Bill 2021

2019-2020-2021

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

Treasury Laws Amendment (COVID-19 Economic Response No. 2) Bill 2021

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

(Circulated by authority of the

Treasurer, the Hon Josh Frydenberg MP)


Table of contents

Glossary............................................................................................................. 1

General outline and financial impact........................................................... 3

Chapter 1........... Amendments relating to Coronavirus economic response payments      7

Chapter 2........... Disclosure of tax information to Australian government agencies to facilitate COVID‑19 business support programs......................... 11

Chapter 3........... Tax-free treatment of payments from COVID-19 business support programs     15

Chapter 4........... Modification power........................................................... 19

Chapter 5........... Tax-free treatment of COVID-19 disaster payments... 23

Chapter 6........... Statement of Compatibility with Human Rights.......... 25

 

 


Glossary

The following abbreviations and acronyms are used throughout this explanatory memorandum.

Abbreviation

Definition

Bill

Treasury Laws Amendment (COVID-19 Economic Response No. 2) Bill 2021

Coronavirus

Coronavirus known as COVID-19

Coronavirus (Measures No. 2) Act

Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020

COVID-19

Coronavirus known as COVID-19

ITAA 1997

Income Tax Assessment Act 1997

Payments and Benefits Act

Coronavirus Economic Response Package (Payments and Benefits) Act 2020

TAA 1953

Taxation Administration Act 1953

 

 


General outline and financial impact

Schedule 1 – Amendments relating to Coronavirus economic response payments

Schedule 1 to the Bill amends the Payments and Benefits Act to allow the Treasurer to make rules for an additional kind of Coronavirus economic response payment to an entity where the payment is to provide support to the entity because it has been adversely affected by restrictions imposed by a State or Territory by way of a public health order that is directed at preventing or controlling the transmission of the Coronavirus between members of the public.

This measure facilitates the Government introducing support payments for entities adversely affected by a significant lockdown imposed by a State or Territory that affects the entities in relation to a period between 1 July 2021 and 31 December 2022.

Date of effect The Treasurer may establish a new payment scheme after the Bill receives the Royal Assent in relation to a period occurring between 1 July 2021 to 31 December 2022.

Proposal announced Not previously announced.    

Financial impact: Nil.

Human rights implications:  Schedule 1 to the Bill does not raise any human rights issue. See Statement of Compatibility with Human Rights — Chapter 6.

Compliance cost impact:  An exemption from Regulation Impact Statement requirements was granted by the Prime Minister as there were urgent and unforeseen events.

Schedule 2 – Disclosure of tax information to Australian government agencies to facilitate COVID-19 business support programs

Schedule 2 to the Bill makes amendments to the tax secrecy provisions in the TAA 1953 to allow protected information to be disclosed to Australian government agencies for the purposes of administering COVID-19 business support programs.

Date of effect The amendments commence the day after Royal Assent.

Proposal announced: Not previously announced.   

Financial impact The amendment is estimated to have no impact on receipts over the forward estimates period.

Human rights implications:  Schedule 2 to the Bill raises human rights issues. See Statement of Compatibility with Human Rights — Chapter 6.

Compliance cost impact An exemption from Regulation Impact Statement requirements was granted by the Prime Minister as there were urgent and unforeseen circumstances.

Schedule 3 – Tax-free treatment of payments from COVID-19 business support programs

Schedule 3 to the Bill makes amendments to the income tax law to make payments received by eligible businesses under certain COVID-19 business support programs administered by the Commonwealth non‑assessable non-exempt income so that the payments are not subject to income tax.

Date of effect The amendments commence the day after Royal Assent. The amendments apply to assessments for income years ending on or after 1 July 2021.

Proposal announced: Not previously announced.   

Financial impact The amendments are estimated to have no impact on receipts over the forward estimates period.

Human rights implications:  Schedule 3 to the Bill does not raise any human rights issue. See Statement of Compatibility with Human Rights — Chapter 6.

Compliance cost impact An exemption from Regulation Impact Statement requirements was granted by the Prime Minister as there were urgent and unforeseen circumstances.

Schedule 4 – Modification power

This Schedule was prepared by the Attorney-General’s Department.

Schedule 4 to the Bill amends Schedule 5 to the Coronavirus (Measures No. 2) Act to reintroduce a temporary mechanism for responsible Ministers to change arrangements for meeting information and documentary requirements under Commonwealth legislation, including requirements to give information and produce, witness and sign documents, in response to the challenges posed by COVID-19. This mechanism was previously included in Schedule 5 to the Coronavirus (Measures No. 2) Act as a temporary measure terminating at the end of 31 December 2020. The Bill will ensure that the mechanism is reintroduced under Schedule 5 to the Coronavirus (Measures No. 2) Act, in response to the ongoing challenges posed by COVID-19, and the mechanism will have effect until 31 December 2022.

Date of effect The amendments commence the day after Royal Assent.

Proposal announced:  Not previously announced.

Financial impact Nil.

Human rights implicationsSchedule 4 to the Bill does not raise any human rights issues. See Statement of Compatibility with Human Rights — Chapter 6.

Compliance cost impact An exemption from Regulation Impact Statement requirements was granted by the Prime Minister as there were urgent and unforeseen circumstances.

Schedule 5 – Tax-free treatment of COVID-19 disaster payments

Schedule 5 to the Bill amends the income tax law to make Commonwealth COVID‑19 disaster payments to individuals non-assessable non-exempt income so that the payments are not subject to income tax.

Date of effect The amendments apply to the 2020-21 income year and later income years for qualifying payments.

Proposal announced:  Not previously announced.

Financial impact This measure is estimated to result in a small but unquantifiable decrease in receipts over the forward estimates period.

Human rights implications:  Schedule 5 to the Bill does not raise any human rights issues. See Statement of Compatibility with Human Rights — Chapter 6.

Compliance cost impact An exemption from Regulation Impact Statement requirements was granted by the Prime Minister as there were urgent and unforeseen circumstances.

 


Chapter 1         
Amendments relating to Coronavirus economic response payments

Outline of chapter

1.1                  Schedule 1 to the Bill amends the Payments and Benefits Act to allow the Treasurer to make rules for a kind of Coronavirus economic response payment to an entity where the payment is to provide support to the entity because it has been adversely affected by restrictions imposed by a State or Territory by way of a public health order that is directed at preventing or controlling the transmission of the Coronavirus between members of the public.

Context of amendments

1.2                  The Payments and Benefits Act authorises the Treasurer to make rules to provide for payments to support entities directly or indirectly affected by the Coronavirus. Any payments authorised by the Payments and Benefits Act are collectively referred to as ‘Coronavirus economic response payments’.

1.3                  The first such Coronavirus economic response payment was the JobKeeper payment. The Coronavirus Economic Response Package (Payments and Benefits) Amendment Rules (No. 9) 2020 later introduced the JobMaker Hiring Credit payment.

1.4                  The amendments made by the Bill will facilitate the establishment of a national approach for Coronavirus business support payments across all States and Territories in the event that significant restrictions are imposed by way of a State or Territory public health order.

Summary of new law

1.5                  Schedule 1 to the Bill amends the Payments and Benefits Act to provide for an additional kind of payment authorised by the Act in relation to the period beginning 1 July 2021 until 31 December 2022.

1.6                  The payment must be for the purpose of providing financial support to entities that are adversely affected by restrictions imposed under a public health order of a State or Territory to prevent or control the transmission of the Coronavirus.

Comparison of key features of new law and current law

New law

Current law

The Treasurer is authorised to prescribe payment schemes that are for the primary purpose of improving the prospects of individuals getting employment in Australia. Payments under a scheme must be in relation to a relevant period that occurs from 7 October 2020 to 6 October 2022. This rule will continue to facilitate the JobMaker Hiring Credit scheme.

 

The Treasurer is also authorised to prescribe payment schemes that are for the purpose of providing financial support to entities that are adversely affected by restrictions imposed under a public health order of a State or Territory to prevent or control the transmission of the Coronavirus.

The Treasurer was authorised to prescribe payment schemes to provide financial support directly or indirectly to entities that are directly or indirectly affected by the Coronavirus in relation to a prescribed period that occurs from 1 March 2020 to 28 March 2021. This rule making power facilitated the JobKeeper scheme.

 

The Treasurer is authorised to prescribe payments schemes that are for the primary purpose of improving the prospects of individuals getting employment in Australia. Such payments must be in relation to a relevant period that occurs from 7 October 2020 to 6 October 2022. This rule facilitates the JobMaker Hiring Credit scheme.

Detailed explanation of new law

1.7                  The measure extends the circumstances in which the rules can make provision for payments that are authorised by the Payments and Benefits Act.

1.8                  The amendments made by the Bill achieve this by introducing a new power for the Treasurer to authorise payments by the Commonwealth to an entity that is adversely affected by a Coronavirus related State or Territory public health order in respect of a time that occurs on or after 1 July 2021 and on or before 31 December 2022. [Schedule 1, item 1, subsection 7(1B) of the Payments and Benefits Act]

1.9                  Rules will be made by the Treasurer to establish the payment, including setting out:

•       which entities qualify for the payment;

•       the amount payable and timing of payments; and

•       the obligations for recipients of the payment.

1.10              Any new payment scheme will be administered by the Commissioner of Taxation in accordance with general administrative framework set out in the Taxation Administration Act 1953.

Application and transitional provisions

1.11              The Treasurer may establish a new payment scheme after the Bill receives the Royal Assent in relation to a period occurring between 1 July 2021 to 31 December 2022.

 


Chapter 2         
Disclosure of tax information to Australian government agencies to facilitate COVID‑19 business support programs

Outline of chapter

2.1                  Schedule 2 to the Bill makes amendments to the tax secrecy provisions in the TAA 1953 to allow tax information to be disclosed to Australian government agencies for the purposes of administering COVID-19 business support programs.

Context of amendments

2.2                  On 13 July 2021, the Prime Minster, the Hon Scott Morrison MP announced the expansion of the COVID-19 Disaster Payment and the establishment of the COVID-19 business support program. Following this on 15 July 2021, the Prime Minister announced that the Commonwealth would facilitate administering COVID-19 business support payments for States and Territories.

2.3                  To assist Australian government agencies with administering programs declared by the Minister as COVID-19 business support programs, which may include compliance activities, Schedule 2 to the Bill amends the TAA 1953 to provide that it is not an offence for a taxation officer to disclose protected information to an Australian government agency where the information is disclosed for the purposes of administering a COVID-19 business support program.

Detailed explanation of new law

2.4                  Section 355-25 in Schedule 1 to the TAA 1953 provides that it is an offence for a taxation officer to disclose or record information that is protected information acquired as a taxation officer.

2.5                  Subsection 355-30(1) in Schedule 1 to the TAA 1953 provides that protected information is information that was disclosed or obtained under or for the purposes of a taxation law that both relates to the affairs of an entity and identifies, or is reasonably capable of being used to identify, the entity.

2.6                  Schedule 2 to the Bill inserts new table item 12 into the table in subsection 355-65(8) in Schedule 1 to the TAA 1953 to provide an exception to the prohibition against disclosing or recording protected information. This exception applies in respect of disclosures or records made to an Australian government agency for the purpose of administering a program declared to be a relevant COVID-19 business support program. [Schedule 2, item 1, table item 12, subsection 355-65(8) in Schedule 1 to the TAA 1953]

2.7                  The term ‘Australian government agency’ is defined in subsection 995-1(1) of the ITAA 1997 and applies to the Commonwealth, a State, a Territory, as well as one of their authorities.

2.8                  The administration of such a program by an Australian government agency may include any compliance action undertaken by the agency in respect of the program.

2.9                  The Minister can declare a program to be a COVID-19 business support program if they are satisfied that the program is in response to economic impacts of COVID-19 and directed at supporting businesses, the operation of which have been significantly disrupted as a result of a public health directive. [Schedule 2, item 2, subsection 355-65(8A) of TAA 1953]

2.10              Authorising the Minister to declare the programs that are eligible for information sharing is appropriate as it ensures the Government can respond quickly to changes in circumstances because of the unpredictable nature of COVID-19 outbreaks. It also ensures that information sharing is not automatically provided in respect of any new program that is developed by the Commonwealth or by a State or Territory. Rather, any new program must be actively considered and declared by the Minister as being eligible for information sharing.

2.11              The term ‘business’ is defined in subsection 995-1(1) of the ITAA 1997 as including any profession, trade, employment, vocation or calling, but does not include occupation as an employee. In working out whether a particular program is directed at supporting businesses, the Minister must have regard to the overall purpose and characteristics of the program.

2.12              A support program that is directed at supporting other entities or activities (such as individuals as employees or in a private capacity) would not be able to be the subject of a declaration. However, a program that applies to different types of entities could still be characterised as being directed at businesses if it substantially relates to supporting business entities. For example, a program that primarily relates to businesses but also applies to not-for-profits that are not also characterised as businesses could be a program that is directed at supporting businesses.

2.13              On-disclosures or records of the information covered by the exclusion are subject to a further prohibition in section 355-155 in Schedule 1 to the TAA 1953. The ‘original purpose’ exception to that prohibition in section 355-175 in Schedule 1 to the TAA 1953 will take into account any disclosures that are made for the same purposes as the new exception. This could include, for example, on-disclosures made by one agency to another where both agencies have a role in the administration of a COVID-19 business support program that has been declared by the Minister. This could arise if one Australian government agency is tasked with a co-ordination role for a business support program and another is empowered to undertake compliance action connected to a business support program.

2.14              The Privacy (Tax File Number) Rule 2015 continues to apply to information provided to Australian government agencies under this amendment. This regulates the collection, storage, use, disclosure, security and disposal of an individual’s tax file number information, that may be provided as part of protected information to an Australian government agency administering a business support program. 

2.15              A defendant bears the evidential burden in relation to the matters in this exception, as well as the existing exception for on-disclosures. The reversal of the burden of proof is consistent with the Attorney-General’s Department’s A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, September 2011 edition.

2.16              It is appropriate that the evidential burden be reversed in this situation. Matters relating to the disclosure of protected information and for which purposes (such as what information is being disclosed and for what purpose the disclosure is being made) are peculiarly within the knowledge of the person making the disclosure and can be raised in making their defence. It would be significantly more difficult and costly for the prosecution to disprove these facts.

Application and transitional provisions

2.17              The amendments made by Schedule 2 to the Bill apply to records or disclosures of information made on or after the day the Bill receives the Royal Assent, whether the information was obtained before, at or after that day.


Chapter 3         
Tax-free treatment of payments from COVID-19 business support programs

Outline of chapter

3.1                  Schedule 3 to the Bill makes amendments to the income tax law to make payments received by eligible businesses under certain
COVID-19 business support programs administered by the Commonwealth non-assessable non-exempt income, so that the
payments are not subject to income tax.

Context of amendments

3.2                  On 13 July 2021, the Prime Minster, the Hon Scott Morrison MP announced the expansion of the COVID-19 Disaster Payment and the establishment of the COVID-19 business support program. Following this on 15 July 2021, the Prime Minister announced that the Commonwealth would facilitate administering COVID-19 business support payments for States and Territories.

3.3                  Under the income tax law, business support payments of this nature are generally considered to be taxable income and subject to income tax by the Commonwealth.

3.4                  Extending non-assessable non-exempt income status to business support payments ensures these payments are not subject to income tax by the Commonwealth. This concessional treatment will provide an additional cashflow boost to eligible businesses and further support their economic recovery.

Summary of new law

3.5                  Schedule 3 to the Bill makes amendments to the income tax law to make payments received by eligible businesses under certain COVID‑19 business support programs administered by the Commonwealth (or a Commonwealth authority), non assessable non-exempt income.

3.6                  To obtain concessional treatment, among other things, the payment must be made under a program that is declared by the Minister. Schedule 3 to the Bill gives the Minister power to declare programs.

Detailed explanation of new law

3.7                  Schedule 3 to the Bill amends the income tax law to make payments received by eligible businesses non‑assessable non-exempt income. The effect of this is that the payments will not be subject to income tax.

3.8                  An entity is eligible for the concessional tax treatment if:

•       the payment was made under a program administered by the Commonwealth (or a Commonwealth authority) that has been declared eligible by the Minister;

•       the payment was received by the entity in the 2021-22 financial year; and

•       the entity carries on a business and has an aggregated turnover of less than $50 million.

[Schedule 3, item 2, section 59-98(1) of the ITAA 1997]

3.9                  The Minister may, by legislative instrument, declare a program to be an eligible program if the Minister is satisfied that, in effect:

•       the program is responding to the economic impacts of COVID-19; and

•       the program is directed at supporting businesses whose operations have been significantly disrupted because of a public health directive.

[Schedule 3, item 2, section 59-98(2) of the ITAA 1997]

3.10              The concessional tax treatment is targeted at payments received by businesses with an aggregated turnover of less than $50 million. These are businesses that have generally had significant disruption to their business operations because of COVID-19 health directives.

3.11              For a program to meet the eligibility criteria regarding purpose and effect, the program does not need to explicitly address the criteria. The Minister must only be satisfied of these circumstances. The eligibility criteria also ensures that only payments made under programs that are directed at supporting businesses will obtain concessional tax treatment.

3.12              The term ‘business’ is defined in subsection 995-1(1) of the ITAA 1997 as including any profession, trade, employment, vocation or calling, but does not include occupation as an employee. In working out whether a particular program is directed at supporting businesses, the Minister must have regard to the overall purpose and characteristics of the program.

3.13              A support program that is directed at supporting other entities or activities (such as individuals as employees or in a private capacity) would not be able to be the subject of a declaration. However, a program that applies to different types of entities could still be characterised as being directed at businesses if it substantially relates to supporting business entities. For example, a program that primarily relates to businesses but also applies to not-for-profits that are not also characterised as businesses could be a program that is directed at supporting businesses.

3.14              Authorising the Minister to declare the programs that are eligible for information sharing is appropriate as it ensures the Government can respond quickly to changes in circumstances because of the unpredictable nature of COVID-19 outbreaks. It also ensures that payments made under programs are not automatically provided concessional tax treatment in respect of any new program that is developed by the Commonwealth. Rather, any new program must be actively considered and declared by the Minister as being eligible.

3.15              The concessional tax treatment will provide an additional cash flow boost to eligible businesses, further supporting their economic recovery.

3.16              The list of non-assessable non-exempt income provisions of the ITAA 1997 has also been updated to include this new provision. [Schedule 3, item 1, section 11-55 of the ITAA 1997]

Application and transitional provisions

3.17              The amendments commence on the day after the Bill receives Royal Assent. [Clause 2]

3.18              The amendments apply assessments for income years ending on or after 1 July 2021. This application of amendments ensures that entities can treat eligible payments as non-assessable non-exempt income in the income year in which the entity receives the payment.


Chapter 4         
Modification power

Outline of chapter

4.1                  Schedule 4 to the Bill amends Schedule 5 to the Coronavirus (Measures No. 2) Act to reintroduce a temporary mechanism for responsible Ministers to change arrangements for meeting information and documentary requirements under Commonwealth legislation, including requirements to give information and produce, witness and sign documents, in response to the challenges posed by COVID-19.

Context of amendments

4.2                  This mechanism was previously included in Schedule 5 to the Coronavirus (Measures No. 2) Act as a temporary measure terminating at the end of 31 December 2020.

4.3                  Schedule 5 to the Coronavirus (Measures No. 2) Act was a general instrument-making power that enabled responsible Ministers to make a determination temporarily adjusting arrangements for meeting information and documentary requirements under Commonwealth legislation in response to COVID‑19 restrictions. Schedule 5 and any determinations made under Schedule 5 were repealed on 31 December 2020.

4.4                  Schedule 4 to the Bill seeks to reinstate the operation of Schedule 5 to the Coronavirus (Measures No. 2) Act to 31 December 2022.

4.5                   In light of the ongoing nature of COVID‑19 both in Australia and globally, including the possibility of restrictions on movement or gatherings being suddenly imposed, the power to amend arrangements for meeting information and documentary requirements remains necessary.

Summary of new law

4.6                  Schedule 4 to the Bill amends Schedule 5 to the Coronavirus (Measures No. 2) Act to allow the responsible Minister for an Act or legislative instrument that requires or permits certain matters (including the giving of information and the signature, production and witnessing of documents) to temporarily alter or adjust these requirements or permissions in response to circumstances relating to COVID-19.

4.7                  A determination under this mechanism may apply retrospectively. However, a determination will be beneficial to individuals and business by retrospectively validating approaches to providing information or meeting documentary and witnessing requirements that may otherwise have been invalid.

4.8                  This mechanism is necessary to respond flexibly to the unprecedented challenges of COVID-19, particularly the challenges posed by social distancing measures.

4.9                  The mechanism is temporary and will cease to have effect at the end of 31 December 2022.

Comparison of key features of new law and current law

New law

Current law

A Minister responsible for an Act or legislative instrument that requires or permits certain matters relating to information and documentation may determine that different arrangements apply in response to COVID-19.

No equivalent.

Detailed explanation of new law

4.10              Item 1 of Schedule 4 to the Bill introduces the new Schedule 5 to the Coronavirus (Measures No. 2) Act.

4.11              This item applies in relation to a provision of an Act or legislative instrument (known as an affected provision) that requires or permits any of the following matters (known as relevant matters):

•       the giving of information in writing;

•       the signature of a person;

•       the production of a document by a person;

•       the recording of information;

•       the retention of documents or information;

•       the witnessing of signatures;

•       the certification of matters by witnesses;

•       the verification of the identity of witnesses; and

•       the attestation of documents.

[Schedule 4, item 1, section 1(1) of Schedule 5]

4.12              The responsible Minister for an affected provision may determine by legislative instrument that, for a specified time period:

•       the affected provision is varied or does not apply; or

•       another provision specified in the determination applies.

[Schedule 4, section 1(2) of Schedule 5]

4.13              The time period specified in a determination can be a period that starts before Schedule 4 to the Bill commences. Applying the determination retrospectively will be beneficial to individuals and business as it will retrospectively validate approaches to providing information or meeting documentary and witnessing requirements that may otherwise have been invalid.

[Schedule 5, section 1(3) of Schedule 5]

4.14              The responsible Minister must not make a determination unless they are satisfied that the determination is in response to circumstances relating to COVID-19.

[Schedule 4, section 1(4) of Schedule 5]

4.15              A responsible Minister is defined as:

•       any Minister who administers the Act which is being varied; or

•       if the affected provision is a provision of a legislative instrument – any Minister who administers the enabling legislation under which a legislative instrument is made.

[Schedule 4, section 1(5) of Schedule 5]

4.16              A determination made by a responsible Minister has effect accordingly and will not operate after 31 December 2022. Likewise, the instrument-making power is intended to be temporary. The provisions inserted by Schedule 4 to the Bill will be repealed at the end of 31 December 2022. [Schedule 5, items 1(6), (7) and (8)]

Consequential amendments

4.17              Nil.

Application and transitional provisions

4.18              Schedule 4 to the Bill will commence on the day after the Bill receives Royal Assent. Determinations made under the powers provided for by Schedule 5 to the Coronavirus (Measures No. 2) Act, amended by Schedule 4 to the Bill, can apply retrospectively.

4.19              The provisions inserted by Schedule 4 to the Bill will be repealed at the end of 31 December 2022. Any determination made under the new mechanism will also cease to operate at the end of 31 December 2022.

 


Chapter 5         
Tax-free treatment of COVID-19 disaster payments

Outline of chapter

5.1                  Schedule 5 to the Bill amends the income tax law to make Commonwealth COVID-19 disaster payments to individuals non‑assessable non-exempt income so that they are not subject to income tax.

Context of amendments

5.2                  The Prime Minister, Treasurer, Minister for Emergency Management and the Minister for Government Services jointly announced on 3 June 2021 the establishment of the COVID-19 disaster payment. The payment provides support to eligible individuals that live or work in hotspot areas and have had their income affected by COVID-19 restrictions.

5.3                  The Commonwealth payments are being made by Services Australia to eligible individuals. Under the income tax law payments of this nature to compensate for lost income are generally subject to income tax by the Commonwealth.

5.4                  Extending non-assessable non-exempt income tax treatment to COVID‑19 disaster payments ensures that the payments are not subject to income tax by the Commonwealth. This concessional treatment ensures that appropriate support is provided to qualifying individuals facing the economic consequences of COVID-19 movement restrictions in hotspot areas affecting their ability to earn an income.

Detailed explanation of new law

5.5                  Schedule 5 amends the income tax law to make Commonwealth COVID-19 disaster payments non-assessable non-exempt income. [Schedule 5, item 2, section 59‑96 of the ITAA 1997]

5.6                  The amendment ensures that payments received by an individual are not subject to income tax where they satisfy the definition of a COVID-19 disaster payment under the COVID-19 Disaster Payment (Funding Arrangements) Act 2021. This Act establishes a special appropriation to draw funds from the Consolidated Revenue Fund for the payment of COVID-19 disaster payments. The term COVID-19 disaster payment is defined in that Act to mean a payment or grant of financial assistance covered by item 492 of the table in Part 4 of Schedule 1AB to the Financial Framework (Supplementary Powers) Regulations 1997. The Regulations authorise payments to eligible individuals under the COVID‑19 disaster payment that live or work in hotspot areas and have had their income affected by COVID‑19 restrictions.

Consequential amendments

5.7                  The table in section 11-55 of the ITAA 1997 lists provisions that make amounts non-assessable non-exempt income. Schedule 5 amends the table to include COVID-19 disaster payments. [Schedule 5, item 1, table item headed ‘Coronavirus economic response’ of the table in section 11-55 of the ITAA 1997]

Application and transitional provisions

5.8                  The amendments apply to assessments for the 2020-21 income year and later income years. [Schedule 5, item 3]

5.9                  Although the amendments apply retrospectively, they are wholly beneficial for affected individuals as they ensure that any COVID-19 disaster payments they receive are not subject to income tax. Without the amendments these payments would form part of their assessable income.

5.10              Schedule 5 commences on the day after Royal Assent. [Clause 2]

 


Chapter 6         
Statement of Compatibility with Human Rights

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

Schedule 1 – Amendments relating to Coronavirus economic response payments

6.1                  Schedule 1 to 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

6.2                  Schedule 1 to the Bill amends the Payments and Benefits Act to allow the Treasurer to make rules for a kind of Coronavirus economic response payment to an entity where the payment is to provide support to the entity because it has been adversely affected by restrictions imposed by a State or Territory public health order that is directed at controlling the transmission of COVID-19.

Human rights implications

6.3                  Schedule 1 to the Bill does not engage any of the applicable rights or freedoms.

Conclusion

6.4                  Schedule 1 to the Bill is compatible with human rights as it does not raise any human rights issues.

Schedule 2 – Disclosure of tax information to Australian government agencies to facilitate COVID-19 business support programs

6.5                  Schedule 2 to 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

6.6                  Schedule 2 to the Bill makes amendments to subsection 355‑65(8) of Schedule 1 to the TAA 1953 to include an additional purpose for which protected information can be disclosed, and to whom.

6.7                  A taxation officer will be permitted to disclose protected information to an Australian government agency for the purposes of administering a COVID-19 business support program. The Privacy (Tax File Number) Rule 2015 continues to apply to information provided to Australian government agencies under this amendment. This regulates the collection, storage, use, disclosure, security and disposal of an individual’s tax file number information, that may be provided as part of protected information to an Australian government agency administering a business support program.

6.8                  Protected information is information disclosed or obtained under a taxation law as defined in section 355-30 of the TAA 1953. An Australian government agency is a Commonwealth, State or Territory (or a Commonwealth, State or Territory authority) as defined in section 995‑1(1) of the ITAA 1997.

6.9                  The disclosure of protected information ensures that Australian government agencies can address the needs of businesses more efficiently and effectively and reduces the risk of businesses receiving inadequate or inappropriate support.

Human rights implications

6.10              The amendments made by Schedule 2 to the Bill engage:

•       the right to be presumed innocent until proven guilty according to the law in Article 14(2) of the International Covenant on Civil and Political Rights; and

•       the prohibition on arbitrary or unlawful interference with privacy contained in Article 17 of the International Covenant on Civil and Political Rights.

6.11              The amendments made by Schedule 2 to the Bill engage Article 14(2) of the International Covenant on Civil and Political Rights as the amendments provide for an exception to the prohibition of a taxation officer disclosing protected information. The prohibition is a criminal offence. A taxation officer wishing to rely on the exception bears the evidential burden in relation to the matters.

6.12              It is appropriate that the evidential burden be reversed in this situation as matters relating to the disclosure and for which purposes (such as what information is being disclosed and for what purpose the disclosure is being made) are peculiarly within the knowledge of the person making the disclosure and can be raised in making their defence. It would be significantly more difficult and costly for the prosecution to disprove these facts.

6.13              The amendments made by Schedule 2 to the Bill are compatible with Article 17 of the International Covenant on Civil and Political Rights as its engagement will neither be unlawful or arbitrary.

6.14              In order for an interference with the right to privacy to be permissible, the interference must:

•       be authorised by law;

•       be for a reason consistent with the International Covenant on Civil and Political Rights; and

•       be reasonable in the particular circumstances.

6.15              The United Nations Human Rights Committee has interpreted the requirement of ‘reasonableness’ to imply that any interference with privacy must be proportional to the end sought and be necessary in the circumstances of any given case.

6.16              The amendments are not arbitrary as they are aimed at a legitimate objective and are reasonable and proportionate in achieving that objective.

6.17              The COVID-19 pandemic has required quick, efficient and effective responses to deal with its economic impacts.

6.18              The amendments are reasonable and proportionate in achieving this objective as they only allow the disclosure information about the affairs of an entity held by the Commissioner of Taxation to an Australian government agency for the purpose of administering the COVID-19 business support program and the information will be subject to strict privacy and confidentiality safeguards.

Conclusion

6.19              Schedule 2 to the Bill is compatible with human rights as it does not limit any applicable human rights or freedoms.

Schedule 3 – Tax-free treatment of payments from COVID-19 business support programs

6.20              Schedule 3 to the Bill is compatible with human rights and freedoms recognised or declared in the international instruments listed in sections 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

6.21              Schedule 3 to the Bill makes amendments to the income tax law to make payments received by eligible businesses under certain COVID‑19 business support programs administered by the Commonwealth non-assessable non-exempt income so that the payments are not subject to income tax.

6.22              To obtain concessional treatment, among other things, the payment must be made under a program that is declared by the Minister. Schedule 3 to the Bill gives the Minister power to declare programs.

Human rights implications

6.23              Schedule 3 to the Bill does not engage any of the applicable rights or freedoms.

Conclusion

6.24              Schedule 3 to the Bill is compatible with human rights as it does not raise any human rights issues.

Schedule 4 – Modification power

6.25              Schedule 4 to 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

6.26              Schedule 4 to the Bill amends Schedule 5 to the Coronavirus (Measures No. 2) Act to provide a temporary mechanism to change arrangements for meeting information and documentary requirements under Commonwealth legislation, in response to circumstances relating to COVID‑19. In particular, social distancing measures are expected to cause difficulties with meeting information and documentary requirements, including signature, witnessing and production of documents.

6.27              Under this mechanism, a responsible Minister may determine that provisions in Commonwealth legislation containing particular information or documentary requirements are varied, do not apply or that another provision specified in the determination applies, for a specified time period. The mechanism must not be exercised by a responsible Minister unless the Minister is satisfied that the determination is in response to circumstances relating to COVID-19.

6.28              The mechanism is temporary and will be repealed at the end of 31 December 2022. Any determination made under the mechanism will also cease to operate at the end of 31 December 2022.

Human rights implications

6.29              Schedule 4 to the Bill does not engage any of the applicable rights or freedoms.

6.30              Each instrument made under the power provided for in Schedule 5 to the Coronavirus (Measures No. 2) Act, amended by Schedule 4 to the Bill, will be disallowable and will include a human rights compatibility statement assessing the impact of the instrument on human rights and freedoms.

Conclusion

6.31              Schedule 4 to the Bill is compatible with human rights as it does not raise any human rights issues.

Schedule 5 – Tax-free treatment of COVID-19 disaster payments

6.32              Schedule 5 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

6.33              Schedule 5 amends the income tax law to make Commonwealth COVID-19 Disaster Payments to individuals non-assessable non-exempt income so that the payments are not subject to income tax.

Human rights implications

6.34              Schedule 5 does not engage any of the applicable rights or freedoms.

Conclusion

6.35              Schedule 5 is compatible with human rights as it does not raise any human rights issues.