Introduction
2.1
The committee received ten submissions which were published on the committee's inquiry website.
2.2
Those submissions that commented on Schedules 2 and 3 were in agreement with the proposed changes and no major concerns were expressed.
2.3
Schedule 1 received the most comment. Although there was general agreement from most submitters, there was a concern about definitional questions and the potential bureaucratic burden that would be incurred by business by the new legislation.
2.4
Accordingly, this chapter will focus on the concerns raised about Schedule 1 with subsequent committee comment.
Schedule 1
2.5
Schedule 1, which requires entities that operate electronic distribution platforms to report details about transactions relating to supplies made through their platforms to the Australian Taxation Office (ATO), received the most attention from submitters.
2.6
The concerns expressed about Schedule 1 essentially revolved around definitional questions and the extra bureaucratic requirements and how this may hinder business operations.
2.7
Uber was supportive of the amendments, but felt further streamlining of the process was necessary:
Uber supports the introduction of a formal statutory reporting regime in Australia, which builds on the existing ride-sourcing data-matching protocol that has been in place since October 2015. It is appropriate that this is codified as part of the statutory reporting framework in Schedule 1 of the Taxation Administration Act 1953 (the Act).
…However, there has been no progress on the recommendation to support Australians who earn using digital platforms through pre-fill of tax returns using data collected by the ATO under these regimes.
2.8
Airtasker supported the legislation in-principle, but noted:
Airtasker’s platform is able to create new Australian job opportunities because of the ease with which users can access the platform and its services. We refer to this ease of access as a 'frictionless' platform experience.
Anything which adds friction to the registration process makes it less likely that a customer will list a job, or a tasker will register to bid for a job listed. Requiring data from users during the registration process adds friction. Collection of data beyond what is already collected, or requiring it to be collected earlier in the process, adds friction. This inevitably reduces the number of job opportunities created on the platform.
2.9
During the public hearing Airtasker reiterated their concerns and added that privacy was also an issue:
We also believe strongly in user privacy. We believe that personal information about users should be safeguarded, and that we have a responsibility as a platform to respect our users' privacy. We also believe that government surveillance of user data should be minimised unless there is an explicit rationale provided. When we deal with police, regulators or the ATO, we are very much inclined to help when there are situations in which a specific case calls for gathering that data. But we are not inclined to be supportive of actions in which that data is shared liberally and over a long period of time with a backdoor type approach.
We really want to support this initiative that has been put forth. We are supportive of the proposed legislation, but we want to make sure the way Airtasker helps the ATO achieve its goals is also aligned with the goals of minimising unnecessary friction and respecting user privacy.
2.10
Mable Technologies supported the amendments in-principle but welcomed clarity on how they were to function:
…we are supportive of the intent of the Schedule 1 in so far as it further ensures ongoing transparency and compliance with those earning an income. Further we support information sharing where information held by government agencies is kept secure in accordance with privacy law and the Australian Privacy Principles. We will continue to prepare for the mandatory reporting expected to commence for 2023 and welcome further clarity on how the reporting regime will operate for small businesses and platforms such as Mable to ensure there is a level playing field with a light touch regulatory approach…
2.11
Hireup also supported the amendments, but felt further issues also needed to be addressed:
Hireup supports the proposed amendments contained within Schedule 1 of the bill… This bill takes a small but meaningful step towards ensuring platforms that operate within the NDIS are taking responsibility for their legal obligations and workforce. There is still a long way to go…
While Schedule 1 of the bill is supported, consideration should be given by the government to further safeguarding the integrity of the sector by applying stronger auditing and compliance mechanisms to other aspects of the operations of such organisations.
2.12
Deliveroo expressed concerns about the definitions of sharing and gig economies and felt that clarification was necessary so that they, and perhaps other businesses like them, would not be unnecessarily required to participate in the reporting regime:
In reviewing the draft legislation on introducing a third-party reporting regime which would require us to provide data on the revenue earned by our restaurant partners, we have strong concerns about whether: 1) we are covered under the definitions and 2) if we were to be included, the onerous cost and resourcing requirements to do so…
We believe these issues have not been properly considered by the committee and members may not be aware of the burden the proposed legislation will have on the restaurant sector in general and the small business hospitality sector. We urge the committee and Treasury to work closely in consultation with food delivery platforms and the restaurant sector to ensure the legislation meets the government's agenda, yet includes amendments to eliminate the burden on restaurants.
2.13
Menulog supported Schedule 1 in-principle, but felt it was cumbersome in its present form.
There is an extremely high volume of data that would potentially be required to be reported by on-demand delivery platforms like Menulog under Schedule 1 Item 15 of the bill. This would be operationally cumbersome, require additional resources diverted to reporting from other crucial areas of the business servicing restaurants and couriers and, would require a review and analysis on how it might be extracted from global Enterprise Resource Planning platforms.
2.14
Menulog concluded their submission with recommended amendments which they believed would made the legislation more workable.
2.15
Similarly, the Tech Council also supported Schedule 1 in-principle, but felt that further refinements were necessary to make it more workable:
TCA members appreciate the need for greater transparency of legal income generated via sharing economy platforms and look forward to working constructively with the government on the design and introduction of the reporting regime.
…we believe the definition of an electronic platform may need further clarification and possibly further exemptions before it is expanded in 2023. This is because many different types of platforms could be caught by the very broad definition in the legislation, even where they do not raise concerns about individuals earning taxable income. In these cases, the reporting may be disproportionate to the tax risk. Data collection and reporting obligations imposed on online sharing platform providers should also be targeted and tested before full-scale introduction in 2023 to ensure they are efficient, proportionate and responsible.
2.16
At the public hearing, Ms Kate Pounder, CEO of the Tech Council, strengthened the argument that a pilot phase was needed to ensure the new amendments function as they should:
…we think it would be beneficial to allow some more time for industry and the ATO to make sure that the right data is being collected for the right purpose and that there are the appropriate safeguards around that to make sure that it's accurate for its use. We're therefore recommending considering deferring the start date of the full reporting scheme beyond 2023 to instead enable a pilot phase first. That would allow industry and the ATO to work together to make sure that the right platforms are being caught and to make sure that data can be sampled and tested, and we can make sure that it can be appropriately captured and also make sure that it's being targeted to the right purposes and that the cost of the collection doesn't start to exceed the value of the revenue that might be captured.
2.17
The Tax Institute suggested that the legislation as it stands, coupled with the discretionary powers of the ATO, is sufficient to achieve the stated goals:
The Tax Institute broadly supports the measures in the Treasury Laws Amendment (2021 Measures No. 7) Bill 2021.... Protecting the integrity of our tax system from those who do not willingly participate in it is crucial. Increasing transparency goes a long way to achieving this. We consider Schedule 1 of the bill enhances the transparency of the tax system and facilitates increased tax compliance. The reporting requirements should also assist the ATO to understand the level of compliance by
sharing-economy participants and to optimally apply its resources accordingly.
Transparency goes a long way to building trust. However, to build trust we need transparency not only over taxpayer information but also in respect of our regulators—for example, in relation to how they are performing and how they are using data to achieve relevant outcomes. We trust there will be enduring and heightened transparency of the ATO's performance commensurate with the increased data being made available to it by the operation of this measure.
Sharing-economy platforms are inherently digital. Accordingly, in our opinion, they are well equipped to collect, store and report the data required under the TPRS. We acknowledge that some operators may have to collect additional information from participants on their platforms which they do not already collect. However, when balanced against the need for integrity in the tax system, we consider this an appropriate step…
In discussions with our members, industry and other professional associations, we have heard requests for specific exemptions to be included in the provisions. It is our opinion that the broad drafting of the provisions contained in the bill is appropriate to reduce complexity in the system. It also reduces the incidence of loopholes which can be managed or manipulated over time as technologies evolve and as the way in which we deliver goods and services adapts. Any carve-out can be provided by the ATO where it can be demonstrated that the inclusion was inconsistent with the policy intent and the data collected was not useful in the administration of the tax rules. We do not consider exemptions for certain providers should be contained within the law itself. We are of the view this would add complexity to the system and create opportunities for platform providers to structure their arrangements to circumvent reporting obligations.
We acknowledge that if data is reported elsewhere in the system it is not necessary to be captured twice. We consider the law adequately addresses this. However, to provide an exemption based on size, either of the operator or the participant, creates undue risk in the system. This risk can arise by way of structuring and/or operation. Thresholds invite manipulation, which ensures that one can remain safely out of scope. The existing TPRS rules provide the ATO scope to exclude particular entities or groups of entities which are impacted by the rules where they are not otherwise intended to be captured. This discretion is a key power for the commissioner as the administrator and custodian of our system.
Committee comment
2.18
The committee notes the broad support for Schedules 2 and 3 and is satisfied that these amendments be passed without further comment. The committee also notes that Schedule 1 is also broadly supported. Ongoing efforts to address the black economy have been welcomed and Schedule 1 is an important first step in addressing tax discrepancies in the online marketplace.
2.19
The committee recognises the issues raised by submitters about Schedule 1 as part of this inquiry. As indicted by the Tax Institute, there would appear to be enough discretion within the arrangements to accommodate the concerns expressed. Nonetheless there is utility in the Treasury and the ATO maintaining a dialogue with stakeholders and interested parties to ascertain if further fine tuning is necessary during implementation.
2.20
The committee is satisfied that the bill will deliver on its intent with regard to providing information to the ATO on transactions made through electronic platform operators as required by Schedule 1, as well as the intent of Schedules 2 and 3. Accordingly, the committee recommends the bill be passed.
2.21
The committee recommends that the bill be passed.
Senator Slade Brockman
Chair
Liberal Senator for Western Australia