Helen Coonan (NSW, Liberal Party, Minister for Communications, Information Technology and the Arts) Share this | Hansard source

Firstly, I will deal with the amendment that Senator Sherry has now moved concerning the alignment of the definitions of facilitation payments in the tax act with those in the Criminal Code. This is a very interesting area. I can recall very clearly chairing a special subcommittee of the Joint Standing Committee on Treaties that looked critically at the treaty and the enabling legislation. My memory is a bit hazy and I do not quite recall whether we actually dealt specifically with these issues, Senator Murray—I am just thinking about it as I respond to Senator Sherry.

The government has of course now adopted the OECD’s 1996 recommendation that member countries deny tax deductibility for bribes made to foreign public officials. That comes on top of the key strategy of making it a criminal offence to pay bribes to foreign public officials. As indeed debate has reminded us all, it was part of the OECD’s Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, which came into force in Australia on 17 December 1999. In October 2006 Australia will respond to the OECD’s working group on bribery on how recommendations in its January 2006 report, which examined the convention’s application, have been addressed. The Attorney-General has carriage of responding to the OECD report.

As to whether the law in relation to facilitation payments is not aligned, the OECD report itself noted—and this deals to some extent with the alleged lack of congruence between the two:

The ATO believes that the definition of “routine government action” under subsection 26-52(4) of the Income Tax Act, which is identical to the definition under subsection 70.4(2) of the Criminal Code, is sufficient support to restrict facilitation payments to those of a minor nature. It is the position of the ATO that due to the definition of “routine government actions” of a minor nature, as specified under the Income Tax Act, it is not possible that a payment in order to obtain such an action could be anything but “minor”.

Moreover, the deputy commissioner in charge of serious noncompliance indicated at the recent estimates hearing—at which I was present, as Senator Sherry alludes—that, in practice, the income tax law and the Criminal code have the same requirements. For those reasons, the government does not support the amendment.

Further, in response to Senator Murray, the Criminal Code sets out its own points of defence. The code of course is a separate act to the Income Tax Assessment Act. It is not a defence to say that a tax deduction has been allowed. I am pretty sure that that is the correct position—I am getting nods. I think that deals substantially with Senator Murray’s points. For those reasons, the government will not be supporting Senator Sherry’s amendment.