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DEBITS TAX BILL 1990*
NEW SOUTH WALES
EXPLANATORY NOTE
(This Explanatory Note relates to this Bill as introduced into Parliament)
The Commonwealth Government has announced that it will cease to impose
debits tax in order that the tax may be imposed by the States. The purpose of this
Bill is to provide for the imposition of debits tax by the State of New South Wales.
The provisions of the Bill are based on the provisions of the Debits Tax Act 1982
and the Debits Tax Administration Act 1982 of the Commonwealth.
The Commonwealth Treasurer has agreed that if the States pass appropriate
legislation, the Commonwealth Commissioner of Taxation will collect the tax on
behalf of the States until the end of 1992. The Bill also enables the necessary
transitional arrangements to be made.
The tax imposed by the proposed Act applies to all debits (other than debits
specifically exempted from the tax) made to an account kept with a financial
institution (including a bank) resulting from the drawing of a cheque or payment
order.
Exemption from the tax will generally be available for bodies such as governments
and public benevolent bodies.
The types of debit recognised in the proposed Act arc:
exempt debit
- a class of debit which is never to be subject to
the tax irrespective of the nature of the
account (e.g. a debit made to reverse a prior
credit entry or a debit which is subsequently
reversed)
excluded debit
- broadly, a debit to an account held by a person
or body entitled to exemption from the tax
(e.g. a government or public benevolent body)
taxable debit
- a debit to an account, other than an exempt
debit
* Amended in committee -- see table at end of volume.
each taxable debit of not less than $ 1 made by a financial institution to a taxable
account
each eligible debit of not less than $1 made by a financial institution to an
exempt account
each eligible debit of not less than $ 1 made to an amount kept outside New
South Wales by a New South Wales resident where the debit was made to avoid
tax that would have been payable if the debit had been to an account kept in
New South Wales
The amount of tax to be imposed in respect of a debit is determined by reference
to the amount of the debit. The amount of tax, which is specified in Schedule 1 to
the proposed Act, is:
Amount of debit
Amount
of Tax
Not less than $ 1 but less than $100
15c
Not less than $100 but less than $500
35c
Not less than $500 but less than $5,000
75c
Not less than $5,000 hut less than $10,000
$1.50
$10,000 or more
$2.00
References in this Bill to monetary penalties are expressed in penalty units. Under
section S6 of the Interpretation Act 1987, 1 penalty unit is currently equivalent to
$100.
PART 1 -- PRELIMINARY
Clause
Act.
1 specifies the short title of the proposed
Clause 2 provides for the proposed Act to commence on a proclaimed day or days.
A proclamation may be made so as to have effect from 1 December 1990 or a later
day.
Clause 3 contains definitions for the purposes of the proposed Act.
Clause 4 requires a debit made to an account
in respect of 2 or more account
transactions to be treated as separate debits in relation to each of those account
transactions.
Clause 5 requires a debit made in a
currency other than an Australian currency
to be expressed in terms of Australian currency.
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Clause 7 enables the delegation of functions by the Chief Commissioner.
Clause 8 imposes the tax as previously described.
Clause 9 determines the amount of tax to be imposed.
Clause 10 establishes the liability to pay the tax imposed by the proposed Act. The
financial institution and the account holder are jointly and severally liable to pay the
tax imposed on a taxable debit made to a taxable account. The account holder of an
account other than a taxable account is liable to pay the tax imposed on an eligible
debit made to the account.
Clause 11 specifies when the tax is to be paid.Tax payable by a financial institution
in respect of a taxable debit made during a month is to be paid by the 14th day after
the end of the month. Tax payable by an account holder under an assessment of tax
made by the Chief Commissioner is to be paid within 14 days after the day on which
notice of the assessment is served on the person.
Clause 12 creates a statutory right for financial institutions to recover from their
customers tax paid in accordance with the proposed Act.
Clause 13 governs the issue
and revocation
of certificates of exemption by the
Chief Commissioner. The function of a certificate of exemption is to authorise a
financial institution to make tax-free debits to the account to which the certificate
relates.
Clause 14 creates offences relating to the forging or unlawful alteration of
certificates of exemption and misrepresentations concerning certificates of
exemption.
Clause 15 requires the furnishing of periodic returns by financial institutions to
the Chief Commissioner of taxable debits made during the periods to which the
returns relate to taxable accounts kept with the financial institutions.
Clause 16 enables the Chief Commissioner, on application made in accordance
with the clause, to refund any amount of tax overpaid by a financial institution, other
than an amount paid as a result of an assessment made by the Chief Commissioner.
Clause 17 enables the Chief Commissioner, on application made in accordance
with the clause, to make 8 refund in respect of tax which has been paid by a financial
institution in respect of an excluded debit made to a taxable account.
Clause 18 entitles a financial institution, if it wishes to dispute the amount of tax
payable by it in respect of a return, to request the Chief Commissioner to make an
assessment of
the amount of tax payable.
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Clause 20 imposes additional tax, as a penalty, on a financial institution o r account
holder who fails to furnish information required by the proposed Act to the Chief
Commissioner or who furnishes false or misleading information.
Clause 21 enables the Chief Commissioner to amend an assessment at any time
within 3 years after it is made and provides for the effect of any such amendment.
Clause 22 ensures that in any objection or dispute relating to an assessment, the
objector can only challenge the correctness of the assessment and not any act or
omission of the Chief Commissioner in making the assessment.
PART 5 -- OBJECTIONS AND APPEALS
Clause 23 defines tax, for the purposes of the proposed Part, to include additional
tax under clause 20 or 34 so as to confer rights of objection and appeal in respect
of any form of tax payable under the proposed Act.
Clause 24 enables a person dissatisfied with an assessment, or with certain
decisions of the Chief Commissioner, to lodge an objection with the, Chief
Commissioner. The clause requires the Chief Commissioner to determine the
objection and to notify the person of the decision. An objector dissatisfied with the
decision is given a right, after the granting of an approval by the Chief Commissioner
(which, in specified circumstances, the Chief Commissioner is required to grant), to
appeal to the Supreme Court.
Clause 25 provides for an appeal by an objector to the Supreme Court to be by
way of rehearing and enables the Court, on giving its decision, to determine the
amount of any tax payable as a result of the decision.
Clause 26 places on the objector the onus of establishing on the balance of
probabilities that the tax in question was incorrectly assessed.
Clause 27 provides for the payment of any tax assessed or refund calculated by the
Supreme Court.
Clause 28 provides that the lodging of an objection or a p p a l does not affect the
objector's liability to pay tax, except to the extent otherwise permitted by the Chief
Commissioner.
Clause 29 provides for the manner of lodgment of documents or other items with
the Chief Commissioner.
Clause 30 enables the Chief Commissioner to stale a case to the Supreme Court
on a question of law.
Clause 31 provides for the giving of certificate and other documentary evidence
signed by the Chief Commissioner in proceedings under the proposed Part.
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Clause 32 requires tax due and payable under the proposed Act to be paid to the
Chief Commissioner and gives the Chief Commissioner the right to sue for the
recovery of unpaid tax in a court of competent jurisdiction.
Clause 33 authorises the Chief Commissioner to grant an extension of time for
the payment of tax
Clause 34 imposes additional tax at the rate of 20% p.a. by way of penalty for late
payment of tax The clause also gives the Chief Commissioner a limited power to
remit the additional tax
Clause 35 provides for the giving of certificate and other documentary evidence
signed by the Chief Commissioner in proceedings for the recovery of unpaid tax
Clause 36 makes it an offence for a person:
* to fail or neglect to furnish a return or information or to comply with a
requirement of the Chief Commissioner;
* without just cause, to fail or neglect to give evidence, answer questions or
produce records required by the Chief Commissioner or an authorised officer;
* to furnish a false return or give a false answer.
Clause 37 makes it an offence for a person to evade or attempt to evade tax
Clause 38 enables a prosecution for an offence to be commenced within 3 years
after the date of the: offence or, in the case of an offence relating to the furnishing
of a return, at any time.
Clause 39 provides that payment of a penalty does not relieve the offender from
any liability to pay tax
Clause 40 makes it an offence to obstruct an officer acting in the administration
of the proposed Act or the regulations made under it.
Clause 41 specifies the circumstances in which information obtained in the
administration of the proposed Act OF the regulations made under it may or may not
be disclosed.
Clause 42 enables informations for offences to be laid in the name of the Chief
Commissioner by authorised officers and sets out the procedure for instituting
prosecutions.
Clause 43 provides for the summary prosecution of offences in Local Courts.
Clause 44 requires a financial institution to furnish an annual return to the Chief
Commissioner setting out details of exempt accounts kept by the financial institution
during the year.
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Clause 46 requires an officer duly authorised by the Chief Commissioner to be
given access, at reasonable times, to all books, records and other documents held by
any person.
Clause 47 enables the Chief Commissioner to require, in writing, any person to
furnish any information, to attend before the Chief Commissioner and answer
questions, on oath or otherwise, or to produce any books, records or other
documents in the person's custody.
Clause 48 causes service of a document on a member of a partnership or on the
committee of management of an unincorporated association or other body of
persons to be taken to be adequate service of the document on each member of the
partnership, association or body.
Clause 49 enables the Chief Commissioner to compromise a claim for tax because
of difficulty in ascertaining the amount of tax
Clause 50 enables the Chief Commissioner to garnishcc money owed to or held
on behalf of a taxpayer who has defaulted in payment of tax
Clause 51 requires financial institutions to preserve, for a minimum of 5 years,
records sufficient to enable their liability for tax to be assessed.
Clause 52 provides for the authentication of documents issued by the Chief
Commissioner for the purposes of the proposed Act.
Clause 53 enables the Governor-in-Council to make regulations for the purposes
of the proposed Act.
Clause 54 provides for the amendment of the Acts specified in Schedule 2.
Clause 55 is a formal provision which gives effect to the Schedule of transitional
provisions.
SCHEDULE 1 -- AMOUNT OF TAX
Schedule 1 sets out the amount of tax payable according to the amount of the
taxable debit or eligible debit.
SCHEDULE 2 -- CONSEQUENTIAL AMENDMENT OF OTHER ACTS
Schedule 2 provides for the consequential amendment of the following Acts:
Business Franchise Licences (Petroleum Products) Act 198'7
Business Franchise Licences (Tobacco) Act 1987
Health Insurance Levies Act 1982
Land Tax Management Act 1956
Pay-roll Tax Act 1971
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As it is proposed that the Commonwealth Commissioner of Taxation will
continue to collect debits tax on behalf of the States until the end of 1992, Schedule
3 contains provisions that will enable the necessary arrangements for this to be done
to be made between the New South Wales Chief Commissioner of Stamp Duties and
the Commonwealth Commissioner of Taxation.
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