Mitch Fifield (Victoria, Liberal Party, Manager of Opposition Business in the Senate) Share this | Link to this | Hansard source

The Tax Laws Amendment (Confidentiality of Taxpayer Information) Bill 2010 seeks to improve and consolidate the secrecy and disclosure provisions applying to taxation information. These provisions are currently spread across many tax laws and are often unclear and inconsistent. The coalition started the process to address this issue in government in 2006. The bill also proposes a new framework to protect the confidentiality of taxpayer information. It places a general prohibition on the disclosure of taxpayer information.

The coalition supports the intent of this bill. We support effective attempts to provide taxpayers, the ATO and stakeholders with clarity and certainty about the tax laws. The bill permits disclosure of taxpayer information among government agencies where the public benefit associated with the disclosure outweighs the need for taxpayer privacy. Such a determination is to be made with regard to the purpose for which the information is to be used, the potential impact on the individual from the disclosure and subsequent use of the information and whether the new disclosure would represent a significant departure from existing disclosure provisions. The coalition agrees that effective enforcement of the law might warrant transfer of such information on occasion. When it does, however, information transfers must be subject to appropriate safeguards.

The coalition had been concerned that the government would ignore the findings of the Senate Standing Committee on Economics inquiry into this bill on how safeguards in the bill could be appropriately strengthened. The Senate economics committee, which included Labor senators, made a unanimous recommendation that an appropriately authorised and senior tax officer be the decision maker when a determination needs to be made about the public benefit of disclosing taxpayer information. The coalition is moving amendments to this bill to include this recommendation.

We are also putting forward two further recommendations which are in keeping with the spirit of the committee’s report: that the Commissioner of Taxation will have to establish and publish on the ATO website procedures that taxation officers are to follow when disclosing protected information to ministers, other government agencies and law enforcement agencies; and that the tax office will have to publish the number of times a request was made to disclose taxpayer information and the number of times such disclosures were actually made to ministers or law enforcement agencies. These amendments, which have been circulated, provide appropriate protections for taxpayers without placing an undue burden on the Australian Taxation Office.

David Bushby (Tasmania, Liberal Party) Share this | Link to this | Hansard source

I rise to also speak on the Tax Laws Amendment (Confidentiality of Taxpayer Information) Bill 2010. This bill brings together a disjointed regime of tax information disclosure legislation by collating the relevant provisions. Tax legislation is an enormous and confusing area and any reduction in the complexity is to be applauded. We badly need some wins in this domain. Currently, our tax law has exploded, as with the Income Tax Assessment Act 1936 with its 5,156 pages and the Income Tax Assessment Act 1997 with its 10,806 pages, giving a total now standing at 15,962 pages. In addition, we have the regulations for both acts, the Taxation Administration Act, the International Tax Agreements Act and the superannuation legislation, which would add a few thousand more pages to the 15,962.

Perhaps this government has a master plan to simplify our tax legislation. The coalition was working towards this via its ANTS document, via its simplified business entity tax systems and also via its superannuation reforms. But, after the last three years under Labor, I see no evidence that this government has a simplification and tax legislation truncation plan. Treasurer Swan and Minister Shorten will need to refocus on this admirable goal, and drawing on the coalition’s success during the Howard-Costello years would be a productive first step.

This bill has been a subject of debate and scrutiny in both the 42nd and the 43rd parliaments. It was considered by the Senate Economics Legislation Committee and the Senate Standing Committee of Privileges. The coalition appreciates opportunities over the last month or so, which Minister Shorten has given us, to express our concerns re the bill and how it can be improved. What we have in this bill is a win for accountability and transparency, and it amply demonstrates the role that this chamber can play in legislating for review and scrutiny.

The bill has extended the ATO’s ability to share information by allowing it to be distributed to other agencies where it can be used to prosecute as well as investigate. The sharing of information amongst agencies can be a useful and time-saving measure—for example, when considering Centrelink child support payments, the income of a parent and Medicare liability. It is especially useful when it is a taxpayer who wants the information or indeed wants it to be relayed to another agency. But we must ensure that it is done correctly and transparently and that the fundamental right of privacy is respected. To quote the United Nations Universal Declaration of Human Rights, article 12 provides:

No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation. Everyone has the right to the protection of the law against such interference or attacks.

If the ATO were to be given untrammelled power to transfer information to all and sundry in the absence of a taxpayer knowing what is being done behind his or her back, that would do little to instil in taxpayers confidence in the ATO. They would see the ATO in an Orwellian light and be fearful of any dealings with the ATO. Hopefully, when the ATO is formulating its procedures it will make sure that it incorporates some health warnings in its various forms and transactions which say that it may transfer certain items of information to other agencies without the knowledge or consent of the taxpayer in question. Also, it might consider how it handles requests for information or transfers of such information which are made by the taxpayer concerned.

The words of one of our great governors-general and jurists, Sir Zelman Cowen, are helpful in this regard. In the 1969 Boyer lectures he observes:

A man without privacy is a man without dignity; the fear that Big Brother is watching and listening threatens the freedom of the individual no less than the prison bars

I also commend this quotation to our federal Privacy Commissioner’s attention and advise him that the Senate will no doubt expect his agency to review the ATO procedures and practices arising out of this bill and report on this matter as soon as possible during the life of the 43rd Parliament. Also, the Commonwealth Ombudsman should take an interest in this legislation and its practicalities and report as well.

As I said in my opening remarks, the Senate economics committee as well as the privileges committee both examined the bill in its earlier form. The Privileges Committee’s recommendations were implemented when the bill was reintroduced, so all that remain are those of the economics committee. The committee, after considering nine submissions, recommended that the bill be amended to state that an appropriately authorised tax officer should make the decision on whether information can be released because the public benefit outweighs the privacy of the taxpayer. I urge you to consider this and other amendments, as they bolster the integrity of the bill.

The other substantive problem is accountability and transparency of the use of powers by our regulators. Over the last two estimates periods, I have asked questions of a range of regulators, including the ATO, regarding their use of powers and their publishing of explanations of their processes. I have put a number of questions on notice to the ATO regarding coercive powers at the most recent estimates, to which I still await answers. These questions are—and I am going to read them out for the benefit of the Senate:

• What are the ATO’s coercive powers? How often has each power been used in the past five years?
• How many departure prohibition notice orders does the ATO currently have in force? Is it the case that if a court declares a departure prohibition order invalid the ATO can immediately issue a further DPO effectively over-riding the Court? Has this ever occurred? What are the procedures?
• Third, when exercising these powers what is the ATO position re suggesting that those under coercion seek the advice of an appropriate adviser so that their rights are respected?
• Does the ATO ever try to discourage a taxpayer in its dealings with the ATO from using lawyers?
• If you had heard of such an instance would that concern you and what would you do?
• In the UK the HM Revenue and Customs HMRC has a policy on its web site as follows:

This Code of Practice explains how the Fraud and Avoidance section of the Specialist Investigations directorate of HM Revenue & Customs (HMRC) carry out investigations. It applies to all investigations where the Civil Investigation of Fraud procedures (Code of Practice 9) are not used. Other sections of Specialist Investigations may also act under this Code from time to time. The Code promises that we will treat you fairly and courteously in accordance with the law and includes ‘Our service commitment to you’.

In respect of professional representation, it states:

We recommend that you approach a professional adviser to represent you during our investigation although, again, this is a matter for you.

So my final question was:

• Does the ATO have an equivalent statement on its web site or does it send written advice with these messages to taxpayers under scrutiny?

I expect a timely response from the ATO on these activities and look forward to a responsible regime being developed, because sunlight is the best disinfectant and, in the case of the use of intrusive coercive powers, it is a key requisite.

This bill, if amended, will require the ATO to publish how and how often they make decisions to disclose taxpayer information. My colleague Senator Cormann has informed me that the government has entered into good faith negotiations to allow sunlight to shine on the powers conferred by this bill once it becomes law, and Senator Fifield has today confirmed that. Consequently, in future ATO annual reports there will be disclosures on how often these transfers are being made, and the ATO will also be required to post on its website the procedures that it has formulated to guarantee integrity in decision making and compliance with the provisions of this new and consolidated regime. In addition, the bill will require the ATO to have procedures for authorising the transfer of information to law enforcement agencies which provide for some degree of independent sign-off by an SES officer outside the business line recommending the transfer.

The publication of the procedures and the frequency of use of the powers will give the Senate a starting point to question the use of these new powers when the ATO attends estimates and hearings of the Joint Standing Committee of Public Accounts and Audit. I commend the bill with those amendments.

Kate Lundy (ACT, Australian Labor Party, Parliamentary Secretary for Immigration and Citizenship) Share this | Link to this | Hansard source

The Tax Laws Amendment (Confidentiality of Taxpayer Information) Bill 2010 is a good example of the government’s commitment to reduce the volume and complexity of taxation law. The government has also decided to agree to opposition amendments to the bill that will provide for new approval procedures for particular disclosures by taxation officers under the bill, as well as new annual reporting requirements for disclosures made to ministers and law enforcement agencies.

The government notes that these amendments impose an additional administrative burden on the Australian Taxation Office. However, the government is prepared to accept the amendments, as it does not wish that this important piece of legislation be deferred, especially since the bill contains a small number of new disclosures that will enhance law enforcement activities. The government wishes to take this opportunity to thank senators who have contributed to this debate and commends the bill to the Senate.

Question agreed to.

Bill read a second time.