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.
- 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.
- The Commissioner understands that ASIO will use the tax information
in the same manner as the prescribed law enforcement agencies (ie. for
financial analysis).
BACKGROUND
- 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:
- to obtain, correlate and evaluate intelligence relevant to security;
- 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;
- 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;
- 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
- 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;
- sabotage;
- politically motivated violence;
- promotion of communal violence;
- attacks on Australia's defence system; or
- acts of foreign interference
whether directed from, or committed within, Australia or not; and
- 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)."
- 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.
- 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:
- the prosecution of a person for a tax-related offence; or
- 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.
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