Submission No. 8 - Commissioner of Taxation


Parliamentary Joint Committee on the Australian Security Intelligence Organisation

Review of the Australian Security Intelligence Organization Legislation Amendment Bill 1999
Submissions

Submission No. 8 - Commissioner of Taxation

SUBMISSION BY COMMISSIONER OF TAXATION TO THE PARLIAMENTRY JOINT COMMITTEE ON THE PURPOSE AND EFFECT OF AMENDMENTS IN THE ASIO LEGISLATION AMENDMENT BILL 1999

INTRODUCTION

The primary role of the Commissioner of Taxation is to administer the Income Tax Assessment Act 1997 and other taxation laws. The Australian Taxation Office (ATO) is the Government's primary revenue collection agency.

2. In the course of performing his role, the Commissioner has access to a significant volume of information. The tax legislation administered by the Commissioner imposes secrecy obligations on the Commissioner, ATO employees and others who acquire information disclosed or obtained under taxation legislation about the affairs of taxpayers and others. These obligations prohibit the Commissioner and such others from making a record of, divulging or communicating to any person any such information, either directly or indirectly, except in the performance of their duties as an officer. Examples of the secrecy obligations can be found at section 16 of the Income Tax Assessment Act 1936 (ITAA36) and section 3C of the Tax Administration Act 1953 (TAA).

3. Both the ITAA36 and the TAA provide for exceptions to these secrecy obligations. For example, the TAA authorises the Commissioner to make tax information available to the following agencies in certain circumstances:

  • The National Crime Authority (section 3D TAA); and
  • Law enforcement agencies and eligible Royal Commissions (section 3E TAA).

4. None of these agencies can access tax information held by the ATO directly. Instead, the legislation authorises the Commissioner to disclose (ie to make available) tax information in his possession. The relevant agency can make a request for tax information in specified circumstances. Once the Commissioner is satisfied the relevant conditions are met, the ATO will then search for that information within the ATO and disclose it to the requesting agency. The requesting agency becomes subject to the taxation secrecy obligations stated in the TAA provision under which the information was provided. Broadly these preclude employees and others within the requesting agency from making a record of, divulging or communicating to any person any such tax information, except in certain prescribed circumstances.

  1. The Australian Security Intelligence Organisation Legislation Amendment Bill 1999 (ASIO Bill) inserts new provisions into the TAA. Proposed section 3EA will allow the Commissioner to disclose tax information to an authorised ASIO officer. The provisions are similar to section 3E of the TAA under which tax information can be provided to authorised law enforcement agencies and eligible Royal Commissions.
  2. The Commissioner understands that ASIO will use the tax information in the same manner as the prescribed law enforcement agencies (ie. for financial analysis).

    3. BACKGROUND

  3. There is currently no provision in taxation law that allows the Commissioner to pass tax information to ASIO.

OVERVIEW OF NEW PROVISIONS

8. New section 3EA will allow the Commissioner to disclose tax information to an ASIO officer provided the Commissioner is satisfied that the information is relevant to the performance of ASIO's functions under subsection 17(1) of the Australian Security Intelligence Organisation Act 1979 (ASIO Act). Subject to exceptions, section 3EA will also prohibit an ASIO officer, or a former ASIO officer, to whom the tax information is to be, or has been, disclosed from recording, divulging or communicating the information to another person and provides a penalty of two years imprisonment for breaches of that obligation.

9. New section 3EB will impose an obligation on barristers and solicitors not to record, divulge or disclose tax information where that information has been disclosed by an ASIO officer under an exception in new section 3EA. It will also impose that obligation on a person to whom the barrister or solicitor has divulged or disclosed the tax information under the exception to disclosure.

10. New section 3EC will impose obligations on the Inspector-General of Intelligence and Security holding office under the Inspector-General of Intelligence and Security Act 1986 or a member of staff appointed to assist the Inspector-General (IGIS officer) in cases where tax information is disclosed to an IGIS officer by an ASIO officer under one of the exceptions in new section 3EA.

11. A perusal of these sections reveals that new subsection 3EA(1) is the enabling provision that allows the Commissioner to disclose tax information to ASIO in certain circumstances. The balance of Schedule 6 is either machinery provisions (eg definitions) or checks and balances concerning the communication and use of tax information provided to ASIO by the Commissioner under new subsection 3EA(1). These checks and balances include:

  • The number of requests for tax information received by the Commissioner from ASIO and the number of times that information was disclosed to ASIO will be reported to Parliament;
  • The ASIO Bill does not authorise either the Director-General of Security or the Inspector-General of Intelligence and Security to disclose tax information to either Parliament or to Ministers;
  • The imposing of general secrecy obligations on ASIO officers and IGIS officers prohibiting them from recording, divulging or disclosing any tax information they receive. The relevant provisions provide for specific exceptions to this general secrecy obligation. A penalty of imprisonment for two years is provided for if the relevant provision is breached; and
  • The imposing of a secrecy obligation on law enforcement agency officers who receive tax information from ASIO under new paragraph 3EA(3)(e).

Subsection 3EA(1)

12. Subsection 3EA(1) overrides any taxation secrecy provisions and allows the Commissioner to disclose tax information to an ASIO officer provided the Commissioner is satisfied that the information is relevant to the performance of ASIO's functions under subsection 17(1) of the ASIO Act.

13. Subsection 17(1) provides that the functions of ASIO are:

  1. to obtain, correlate and evaluate intelligence relevant to security;
  2. for purposes relevant to security and not otherwise, to communicate any such intelligence to such persons, and in such manner, as are appropriate to those purposes;
  3. to advise the Ministers and authorities of the Commonwealth in respect of matters relevant to security, in so far as those matters are relevant to their functions and responsibilities;
  4. to advise Ministers, authorities of the Commonwealth and such other persons as the Minister, by notice in writing given to the Director General, determines on matters relating to protective security; and
  5. to obtain within Australia foreign intelligence pursuant to section 27A of this Act or section 11A of the Telecommunications (Interception) Act 1979, and to communicate any such intelligence in accordance with this Act or the Telecommunications (Interception) Act 1979.

14. The term "security' in subsection 17(1) is defined in section 4 of the ASIO Act to mean:

"(a) the protection of, and of the people of , the Commonwealth and the several States and Territories from:

(i) espionage;
    1. sabotage;
    2. politically motivated violence;
    3. promotion of communal violence;
    4. attacks on Australia's defence system; or
    5. acts of foreign interference

whether directed from, or committed within, Australia or not; and
    1. the carrying out of Australia's responsibilities to any foreign country in relation to a matter mentioned in any of the subparagraphs of paragraph (a)."
  1. The Commissioner is currently negotiating a memorandum of understanding with ASIO to settle how this provision will be administered in practice. Discussions will also be held with the Inspector-General of Intelligence and Security.
  2. The MOU with ASIO will address:
  • the responsibilities of both agencies;
  • the scope of the assistance the ATO will provide for new section 3EA requests;
  • the principles and procedures that will be followed for new section 3EA requests;
  • security issues; and
  • consultation arrangements.

The MOU is still at draft stage, but will be finalised before the commencement of the ASIO Bill.

17. The MOU with ASIO will address a number of foundation issues in the administration of the new provisions.

18. For example, new section 3EA calls for the Commissioner to be satisfied that the tax information is relevant to the performance of ASIO's functions under subsection 17(1) of the ASIO Act before the information can be disclosed to ASIO. In order to satisfy the Commissioner that the tax information is relevant for any request, the ATO is proposing to rely on the letter containing the request to be signed personally by either the Director-General of Security, or an ASIO officer at Senior Executive Service level who has been authorised by the Director-General to make these requests, stating:

  • that the request is relevant to the performance of ASIO's functions;
  • the general nature of the matter being investigated; and
  • how the information will be used.

However that correspondence will not state the background facts that have led to the request being made.

19. This approach will allow the Commissioner to form an opinion that the tax information is relevant for the purpose specified in new subsection 3EA(1). The Commissioner will not seek to know the background facts because:

  • the ATO does not have the knowledge and skills to interpret the facts within the environment that ASIO operates;
  • Parliament has conferred upon the Director-General of Security the responsibility of administering the ASIO Act; and
  • Parliament has established IGIS to oversee the operations of ASIO, which includes requests under new section 3EA of the TAA.

20. Once the Commissioner is satisfied that the tax information is being sought for the purpose specified in new subsection 3EA(1), the ATO will gather the information sought from within the ATO. ASIO will not assist in this information gathering (the provisions in Schedule 6 allow the Commissioner to disclose the information requested, but do not give ASIO direct access to tax information generally). The tax information to be provided will be restricted to information already in the possession of the ATO. The ATO will not seek to acquire information that may be relevant to the request from other external sources under any of its powers to access information.

21. The MOU and administrative guidelines will also address the following issues:

  • Whether, as a general rule, requests for tax information should be made when the information can readily be obtained from other sources;
  • The assistance provided by the ATO will not be restricted to simply locating the material within the ATO. The ATO will also explain taxation law reflected in material to be made available to ASIO, and the meaning of various fields within taxation returns for different years of income;
  • The information will be gathered in a way that does not link the person or entity to any ASIO activity. Strict security arrangements will also be implemented in respect of these requests; and
  • Arrangements for reporting to Parliament.

Sections 3EA, 3EB and 3EC

22. Where tax information is passed by the ATO to an authorised ASIO officer, subsection 3EA(2) imposes secrecy obligations on that officer. In effect, recipients of that information cannot divulge or communicate the tax information to another person or make a record of the information, except in the circumstances mentioned in subsection 3EA(3).

23. Subsection 3EA(3) provides 5 exceptions to the prohibition contained in subsection 3EA(2). The exceptions apply to an ASIO officer (but not a former ASIO officer).

24. First, an ASIO officer may make a record of the tax information for the purposes of the performance of that officer's duties in carrying out ASIO's 17(1) functions.

25. Under the second exception, an ASIO officer may divulge or communicate the tax information to another ASIO officer for the purposes of the performance of that ASIO officer's duties in carrying out ASIO's 17(1) functions.

26. The ASIO officer to whom the tax information is disclosed by another ASIO officer is bound by the same secrecy obligation under subsection 3EA(2) as the ASIO officer to whom the Commissioner disclosed the information.

27. Thirdly, an ASIO officer may divulge or communicate the tax information to a barrister or solicitor representing a person in:

  • a prosecution of a person for a tax-related offence; or
  • proceedings for the making of a proceeds of crime order;

for the purposes of, or in connection with, the prosecution or proceedings.

28. The barrister or solicitor may only use the tax information as provided for in new section 3EB.

29. Fourthly, an ASIO officer may divulge or communicate the tax information to an authorised IGIS officer for the purposes of, or in connection with, the performance of that IGIS officer's duties in relation to ASIO or employees of ASIO.

30. The authorised IGIS officer may only use the tax information as provided for in new section 3EC.

31. Finally, an ASIO officer may divulge or communicate the tax information to a law enforcement agency officer for the purposes of, or in connection with:

  • the investigation of a serious offence; or
  • an investigation relating to the making, or proposed or possible making, of a proceeds of crime order; or
  • the prosecution, or proposed or possible prosecution, of a person for a tax-related offence; or
  • the proceedings, or proposed or possible proceedings, for the making of a proceeds of crime order.

The law enforcement officer may only use the tax information as provided for in amended section 3E.

32. Subsection 3EA(4) provides that if an ASIO officer or former ASIO officer has obtained tax information under subsections 3EA(1) or (3) or subsection 3EC(2), the person must not:

  • be required to divulge or communicate the tax information to a court; or
  • voluntarily give the tax information in evidence in proceedings before a court except in the course of:
    1. the prosecution of a person for a tax-related offence; or
    2. the proceedings for the making of a proceeds of crime order.

33. Sections 3EB and 3EC mirror section 3EA. There is a general obligation on barristers, solicitors and IGIS officers who have obtained tax information not to record the information or divulge or communicate the information to any other person. Each provision contains specific exceptions to enable them to communicate tax information in limited circumstances to enable them to perform their respective duties.

34. Section 3A of the TAA provides that the Commissioner has general administration of the TAA. Subsections 3EA(2), 3EB(1) and 3EC(1) provide for a penalty of imprisonment for 2 years for breaches of the respective secrecy obligations. Where the Commissioner has reason to believe that a person may have breached their secrecy obligations, the Commissioner will liaise with the Director-General of Security and the Inspector-General of Intelligence and Security to arrange for a person to investigate the breach of those obligations.

A copy of this submission is also available from the Committee Secretariat.