Independent Review - Department of the Treasury
On 20 September 2018, the Government introduced the Treasury Laws Amendment (Black Economy Taskforce Measures No. 2) Bill 2018 and the Excise Tariff Amendment (Collecting Tobacco Duties at Manufacture) Bill 2018 to provide measures to combat the negative economic and social impact of the black economy.
The Treasury Laws Amendment (Black Economy Taskforce Measures No. 2) Bill 2018 will deny income tax deductions for certain payments if businesses have not complied with withholding obligations. For example, under the Pay-As-You-Go Withholding System, employers must withhold an amount for employee’s wages, as well as for other payments for work and services. Businesses must also withhold an amount from a payment to another business which has not provided its Australian Business Number. If businesses do not fulfill their withholding obligations for such payments at all, they will not be allowed to claim any tax deductions with the Australian Taxation Office (ATO) for those payments.
This Bill also expands the Taxable Payments Reporting System (TPRS) to road freight, Information technology (IT) and security, investigation or surveillance industries. Businesses engaged in these activities will be required to report to the ATO details of transactions which involve engaging other entities to undertake these services on their behalf.
Furthermore, the Bill combats the illicit trade in tobacco by changing the excise framework. The Bill will make excise duty on tobacco due and payable at the time of its manufacture, rather than when the tobacco is delivered for home consumption. This amendment will curtail the potential for tobacco that has not had excise duty paid on it being ‘leaked’ into the black market.
The Excise Tariff Amendment (Collecting Tobacco Duties at Manufacture) Bill 2018 provides for the calculation of tobacco excise on manufactured tobacco.
It should be noted that there is currently no domestic manufacturing of tobacco. These Bills complement legislation introduced by the Assistant Minister for Home Affairs that moves the taxing point for imported tobacco to when it enters the country.
The Department of the Treasury certified the Black Economy Taskforce Final Report as an independent review meeting the standards of a Regulation Impact Statement (RIS). The Office of Best Practice Regulation (OBPR) does not assess the quality of independent reviews.
The Department of the Treasury was compliant with the Australian Government RIS requirements. However, the Treasury was not consistent with best practice at the transparency stage. This is because the independent review was not included in the explanatory memorandum of the bill.
The Department of the Treasury estimates the average annual regulatory cost for the extension of the TPRS to high risk industries at $4,223,000. The Department of the Treasury estimated an average regulatory reduction per annum for the tobacco excise tariff amendment of $198,931. The OBPR has agreed with these estimates.
Please note: the Black Economy Taskforce Report is web accessible in PDF only and any accessibility queries should be directed to the Department of the Treasury.