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Legislative Assembly for the ACT: 1998 Week 11 Hansard (10 December) . . Page.. 3432 ..

MS CARNELL (continuing):

The new Bill closely follows the same structure as the New South Wales Act, and continues to cover all the areas covered by the old Act, such as assessment and reassessment of tax liability and the payment of tax; refunds of overpaid tax; imposition of interest and penalties; record-keeping obligations of taxpayers; offences and prosecutions; tax officers' inspection and seizure powers and secrecy obligations; evidence for legal proceedings; grouping provisions; and objections and appeals.

Mr Speaker, the ACT has taken this opportunity to update a number of these provisions and to introduce new provisions, generally in line with New South Wales. The most important amendments and new provisions relate to assessments; refunds; interest and penalty on outstanding tax; arrangements for special tax returns; updated grouping provisions; and special anti-avoidance provisions. I will now explain each of these issues in more detail.

There are a number of new provisions which are related to the assessment process. The first is the provision which states that the acceptance of a return with payment attached is not regarded as an assessment. The current Act provides that the mere acceptance of a return is taken to be an assessment. The change in policy reflects the fact that the lodgment of a return by a taxpayer is based on information that, at the time of lodgment, is known only to the taxpayer. The Commissioner for ACT Revenue can make an assessment only after examining the taxpayer's books and records and verifying that such figures are correct.

The second change provides that the Commissioner for ACT Revenue can only make a reassessment within five years of an original assessment having been made, in line with New South Wales and the Australian Taxation Office. Under the old Act, reassessments could be made within six years. In line with this five-year limit, taxpayers are required to maintain relevant books and records for only five years, not six years. At the same time, requests for refunds must now be made within five years of the date that the liability arose.

The Bill enables the Commissioner for ACT Revenue, with the taxpayer's consent, to use a refund amount to offset a future tax liability. This would allow an overpayment of payroll tax, for example, to be offset against the following month's liability, an administrative saving for both the taxpayer and the Revenue Office.

Mr Speaker, under the old Act, failure to lodge a return by the due date automatically invoked a 200 per cent penalty, which could be wholly or partially remitted by the Commissioner for ACT Revenue. In addition, penalty for late payment arose when tax was not paid by the due date. Similar provisions were contained in most State tax laws and there was very little consistency of approach between jurisdictions. These have now been replaced by uniform interest and penalty provisions.

The Bill imposes an interest charge in all cases of late payment of tax which will comprise two components - a market rate and a premium. The market rate will either equate to the rate set out in section 214A(8) of the Commonwealth's Income Tax Assessment Act 1936 or, if considered appropriate, be a rate determined by the Minister, as in the current legislation. This component is designed to reflect the "opportunity cost" to the Government of not being able to use the revenue for the period that it remains unpaid.

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