On 17 March 2010, Tax Laws Amendment (Transfer of Provisions) Bill 2010 was introduced into the House of Representatives. The following is extracted from the Explanatory Memorandum.
The Bill rewrites provisions from the ITAA 1936 into the ITAA 1997 and the Taxation Administration Act 1953. The rewritten provisions are:
- Part VI (collection and recovery provisions);
- Schedule 2C (commercial debt forgiveness);
- Schedule 2E (luxury car leases);
- Schedule 2G (farm management deposits); and
- Schedule 2J (general insurance).
The rewritten provisions generally make no policy changes. However, they include the drafting changes needed to conform to the legislative approach used in the ITAA Act 1997, to simplify expression, and to remove any ambiguity.
The rewrites generally apply to the 2010-11 and later income years.
In media release No 2010/045, issued on 17 March 2010, the Assistant Treasurer, Senator Nick Sherry, announced new measures in the Bill to assist in the crackdown on "phoenix" activity by expanding and reforming the use of "security deposits" and significantly increasing penalties for failing to comply with the requirement to provide a security deposit.
Security deposits are payments, similar to a bond, that are required to be paid by a taxpayer at the direction of the Tax Commissioner in relation to an existing or future tax liability. Alternatively, the Commissioner may accept security in another form like a mortgage over property or a guarantee. Refusal to provide a security deposit is a criminal offence.
These changes have been introduced by the Bill as part of the rewrite of Part VI of ITAA 1936 into the Taxation Administration Act 1953.
In addition to boosting the ability to crackdown on phoenix activity, the updated provisions also apply to situations such as:
- where a taxpayer plans to temporarily carry on an enterprise in Australia and leave without returning;
- where the taxpayer has a history of non-compliance (including by defaulting on their tax liabilities);
- where the directors of a corporate taxpayer have a history of non-compliance; and
- where the Commissioner is granting a taxpayer the benefit of a payment arrangement.
The Assistant Treasurer also said that the penalty for non-compliance with a requirement to provide security has also been significantly increased for individuals from 20 penalty units ($2,200) to 100 penalty units ($11,000), and for companies from 100 penalty units ($11,000) to 500 penalty units ($55,000).
In media release No 2010/046, issued on 17 March 2010, the Assistant Treasurer commented on the introduction of the Bill and said that it brings Australia a step closer to having a single Income Tax Assessment Act.