Northern Territory Second Reading Speeches

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TAXATION (ADMINISTRATION) AMENDMENT (OBJECTIONS AND APPEALS) BILL 2004

Bill presented and read a first time.

Mr STIRLING (Treasurer): Madam Speaker, I move that the bill be now read a second time.

This government prides itself on assisting Territory business and promoting a fairer, more equitable and robust tax system. Budget 2004 reduced the tax burden on Territorians. The payroll tax threshold has been lifted, and will be lifted further to $1m on 1 July 2005. The HIH levy was removed. The Territory is now the lowest taxing jurisdiction on small business of 20 staff or less, and will be the lowest taxing jurisdiction in Australia of 40 staff or less as of 1 July next year.

At that time, I announced the establishment of an independent appeals process from the decisions of the Taxation Commissioner. This bill achieves that. It is about promoting greater access to dispute resolution in our tax and mineral royalty system. This will be achieved by creating the Taxation and Royalty Appeals Tribunal. The creation of the tribunal aims to provide an alternative and inexpensive option to appeal objection decisions of the Commissioner of Taxes or Mineral Royalty Secretary.

In future, people dissatisfied with a stamp duty, payroll tax or mineral royalty objection decision will have a choice of appealing that decision either to the tribunal or the Supreme Court. This choice is a hallmark of a flexible and accessible taxation system.

The tribunal will be constituted by the Chief Magistrate, or a magistrate chosen by the Chief Magistrate. The Chief Magistrate may make rules and practice directions relating to the practice and procedure of the tribunal and setting fees in relation to appeals. In line with the aim of creating a less expensive alternative to the Supreme Court, the bill proposes that an appeal to the tribunal is to be determined on the papers where possible. This means the tribunal will generally determine the appeal on the information that was before the commissioner or the secretary at the time of deciding the objection, as well as additional information included by the taxpayer in their notice of appeal and written submissions of the parties.

However, the tribunal will be able to conduct a hearing if it believes that it cannot make a decision on the information before it. Considering an appeal on the papers limits the requirement for an appeal hearing and therefore limits the cost of legal representation for such a hearing. In effect, there should be little additional cost incurred in the appeal process beyond that incurred in the preparation of the originating objection.

Furthermore, determining an appeal on the papers should also ensure that tribunal appeals are less intimidating to a small business owner or an unrepresented taxpayer. In line with the government's objective of a fair and accessible tax system, appeals to the tribunal will be appeals de novo. This means that the tribunal stands in the shoes of the commissioner or secretary and either confirms the decision or otherwise makes what it considers is the correct decision. What is more, it is proposed that an appeal against an objection decision to the Supreme Court will also be an appeal de novo. This is a significant departure from the current approach, as a tax or mineral royalty payer will no longer be required to show some error in the commissioner's or secretary's reasoning before the tribunal or court is able to substitute its own decision.

The bill also provides that a tax or mineral royalty payer is not restricted to the grounds of their objection, and may provide additional submissions when filing an appeal against that decision with the tribunal or Supreme Court. Similarly, the bill clarifies that the commissioner or secretary may lodge further submissions on the appeal and is not restricted to the reasons given in the objection decision. Again, this is an important departure from the current arrangements which do not allow new grounds of objection to be submitted.

Further flexibility is introduced into the appeals process by enabling the Supreme Court to admit new evidence on appeal that was not before the commissioner or secretary if it is satisfied that the evidence is material to the decision. The commissioner or secretary will be permitted to reconsider their decision based on this new information which may resolve the matter in dispute without the appeal continuing any further. If the commissioner or secretary allowed the objection in whole or part as a result of this new information, the court can award costs in their favour. This recognises that the appeal may have been unnecessary if the tax or mineral royalty payer had provided the relevant information when they lodged their objection to the assessment. Together, these major departures remove restrictions on the manner in which a tax or mineral royalty payer can conduct an appeal against an objection decision in either the tribunal or the Supreme Court.

In reaching its decision, the tribunal will be required to keep a record of proceedings and to give written reasons for its decisions. This allows the decisions to be used in the future as precedent for the commissioner or secretary, or to aid the Supreme Court should there be an appeal from the decision of the tribunal.

An avenue for appealing the tribunal's decision to the Supreme Court on a question of law is available to any of the parties to the tribunal proceedings. The bill also recognises that, in some situations, it may be more appropriate for an appeal to be heard by the Supreme Court rather than the tribunal, for example, such as where there are complex questions of law or fact that may require a formal hearing. For this reason, it is also proposed that the tribunal be provided with the power to refer an appeal to the Supreme Court if it considers that the court is the more appropriate venue to hear the matter.

To assist in keeping tribunal appeal costs low, it is proposed that each party to such an appeal pay their own costs, irrespective of the appeal outcome. The tribunal will, however, be able to direct one of the parties to the appeal to pay some or all of the costs of the other party in limited circumstances, for example, where a party fails to comply with an order of the tribunal. In addition, the tribunal can also require a representative of one of the parties to pay some or all of the costs of the other party where the representative has unnecessarily delayed or frustrated the tribunal proceedings.

The bill also establishes a uniform framework of procedures for objecting or appealing taxation or mineral royalty assessments.

The bill largely maintains the current procedures for lodging an objection or appeal, except where changes were necessary for the purposes of uniformity or equity. I will detail those changes. The bill proposes that objections are to be lodged within 60 days after the notice of the decision is issued by the commissioner or secretary. This is a change from the current practices, as it extends the time for objection to a stamp duty or mineral royalty assessment from 30 days to 60 days. It maintains the 60-day period for objecting to payroll tax assessments. The bill also proposes that the commissioner or secretary retain the power to extend time for the taxpayer to lodge an objection.

The bill also clarifies that the 60-day period runs from the date of issue of the notice of the decision rather than from the date of service or notification of the decision. This is because the date of issue is certain as it is written on the notice, whereas determining when a notice has been served can be more difficult, for example, because of postal delays.

One of the more noticeable changes to the current system of objections and appeals is in relation to the Mineral Royalty Act. The bill proposes that the current procedure under that act for establishing a board of review to advise the Treasurer on the correctness of an assessment is replaced with the choice of an appeal to the tribunal or the Supreme Court. The proposal recognises that the review process has never been used, and seeks to provide consistent treatment with the accepted procedure for appealing other revenue decisions. It also provides an established framework for the consideration of such appeals.

In addition, the bill ensures that a royalty payer is entitled to receive interest on any amount of royalty that has been overpaid, and is refunded to them as a result of a successful objection or appeal. This entitlement does not exist under the current legislation. Another matter in which the bill alters the current appeals process is that it provides that the court or tribunal will have the power to extend time for the lodging of an appeal to the court or tribunal respectively. This power currently sits with the Commissioner of Taxes for appeals to the Supreme Court.

Giving the court and tribunal this power removes any possible concern about the commissioner having any conflict of interest in deciding whether to extend time to appeal an objection decision, and is in line with the objective of creating a fair and accessible taxation system. As I mentioned earlier, the bill makes changes to the existing procedures for objections and appeals only where necessary for the purposes of uniformity or equity.

Other than the changes I have just described, the procedures set out in the bill replicate the existing procedures and rules and maintains the current policy. For example, new section 105Q replicates existing section 104 of the Taxation (Administration) Act in requiring the adjustment of tax if a person's liability is altered on objection or appeal. Similarly, new section 105R replicates section 105A of the Taxation (Administration) Act in providing for interest to be paid on a refund of tax arising from a decision on objection or appeal. New section 105S replicates section 105B of the Taxation (Administration) Act by directing that the commissioner's decisions outlined in that section are to be reviewed through the objections and appeals process rather than some other form of judicial review.

Finally, I turn to the transitional provisions in the bill. These provide that the new provisions apply to all decisions on objections made after 18 May 2004 where the tax or mineral royalty payer has not already lodged an appeal under the old objection and appeals provision. This government will be pushing for these new objection and appeal procedures to start as early as possible in 2005.

Madam Speaker, I commend the bill to honourable members.

Debate adjourned.

 

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