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2010-2011-2012
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
TAX LAWS AMENDMENT (2012 MEASURES NO. 5) BILL 2012
REVISED EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)
THIS MEMORANDUM TAKES ACCOUNT OF AMENDMENTS MADE BY THE
HOUSE OF REPRESENTATIVES TO THE BILL AS INTRODUCED
Table of contents
Glossary .................................................................................................. 1
General outline and financial impact ....................................................... 3
Chapter 1 Conservation tillage refundable tax offset:
amendment to the definition of `eligible no-till
seeder' .......................................................................... 7
Chapter 2 Phase out of the mature age worker tax offset ............ 11
Chapter 3 Deductible gift recipients .............................................. 15
Chapter 4 Wine equalisation tax ................................................... 19
Index ..................................................................................................... 27
Glossary
The following abbreviations and acronyms are used throughout this
revised explanatory memorandum.
Abbreviation Definition
DGR deductible gift recipients
ITAA 1997 Income Tax Assessment Act 1997
MAWTO mature age worker tax offset
WET wine equalisation tax
WET Act A New Tax System (Wine Equalisation Tax)
Act 1999
1
General outline and financial impact
Conservation tillage refundable tax offset: amendment to the
definition of `eligible no-till seeder'
Schedule 1 to this Bill amends the definition of `eligible no-till seeder' in
section 385-235 of the Income Tax Assessment Act 1997 (ITAA 1997) to
ensure that an eligible no-till seeder can comprise just the tool, or the
combination of the cart and the tool.
This measure is favourable to taxpayers carrying on a primary production
business.
Date of effect: This measure applies to an eligible no-till seeder which
the taxpayer starts to use or has installed ready for use to carry on a
primary production business between 1 July 2012 and 30 June 2015. The
refundable tax offset is claimable in the taxpayer's income tax return for
the 2012-13, 2013-14 or 2014-15 income years. This is consistent with
the existing conservation tillage refundable tax offset provisions.
The measure may have a retrospective impact but are of a beneficial
nature to affected entities.
Proposal announced: This measure was announced in the Assistant
Treasurer's Media Release No. 058 of 29 June 2012.
Financial impact: The financial impact of this measure is not zero, but
rounded to zero, in each of the income years from 2012-13 to 2015-16.
Human rights implications: This Schedule does not raise any human
rights issue. See Statement of Compatibility with Human Rights --
Chapter 1, paragraphs 1.13 to 1.19.
Compliance cost impact: Nil.
Phase out the mature age worker tax offset
Schedule 2 to this Bill amends the ITAA 1997 to phase out the mature age
worker tax offset from 1 July 2012 for taxpayers born on or after
1 July 1957.
3
Tax Laws Amendment (2012 Measures No. 5) Bill 2012
Date of effect: The measure was announced on 8 May 2012 to take effect
on 1 July 2012.
Proposal announced: This measure was announced in the 2012-13
Budget.
Financial impact: This measure provides savings of $255 million over
the forward estimates period.
2012-13 2013-14 2014-15 2015-16
- $40.0m $85.0m $130.0m
Human rights implications: This Schedule does not raise any human
rights issue. See Statement of Compatibility with Human Rights --
Chapter 2, paragraphs 2.12 to 2.15.
Compliance cost impact: Nil.
Deductible gift recipients
Schedule 3 to this Bill amends the ITAA 1997 to update the list of
deductible gift recipients (DGRs) by adding one entity -- The Diamond
Jubilee Trust Australia -- as a DGR.
Date of effect: The listing of The Diamond Jubilee Trust Australia
applies to gifts made after 31 October 2012 and before 1 July 2015.
Proposal announced: This proposal was announced on
7 September 2012.
Financial impact: Nil.
Human rights implications: This Schedule does not raise any human
rights issue. See Statement of Compatibility with Human Rights --
Chapter 3, paragraphs 3.10 to 3.14.
Compliance cost impact: None.
Wine equalisation tax
Schedule 4 to this Bill amends the A New Tax System (Wine Equalisation
Tax) Act 1999 (WET Act) to ensure that a wine producer will not be
entitled to the wine equalisation tax (WET) producer rebate on other wine
4
General Outline and Financial Impact
they use in manufacture, except where the producer of the other wine (or
supplier) notifies the subsequent producer.
The amendments implement a voluntary notice system such that a
producer of the other wine (or supplier) may notify the subsequent
producer that the producer of other wine is entitled to rebate on a specified
amount of the other wine, or that the producer is not entitled to the rebate
on the other wine.
The amendments also make minor technical amendments to the WET Act.
The amendments update references to offences and penalties under the
Act to ensure that these provisions accord with current drafting practice.
Date of effect: The WET producer rebate amendments apply to
assessable dealings on or after 1 December 2012 or the day on which this
Bill receives the Royal Assent, whichever is later. The technical
amendments are taken to have effect on the day this Bill receives Royal
Assent.
Proposal announced: The measure was announced in the
2012-13 Budget, and was to commence on 1 July 2012. Its deferral from
the original start date was announced in the Assistant Treasurer's Media
Release No. 57 of 29 June 2012, to allow for continued consultation with
the wine industry.
Financial impact: The measure is estimated to result in a gain to Budget
revenue over the forward estimates period of $35 million, assuming a start
date of 1 December 2012, comprising:
2012-13 2013-14 2014-15 2015-16
$5m $10m $10m $10m
Human rights implications: This Schedule may raise human rights issues
because it contains an offence of strict liability, which may raise concerns
with respect to the presumption of innocence. See Statement of
Compatibility with Human Rights -- Chapter 4, paragraphs 4.42 to 4.50.
Compliance cost impact: Low. The measure is generally limited in scope
to wholesale sales of wine intended for further manufacture. The system
of voluntary notices is intended to minimise the burden imposed on small
and medium sized wineries.
5
Chapter 1
Conservation tillage refundable tax offset:
amendment to the definition of `eligible
no-till seeder'
Outline of chapter
1.1 Schedule 1 to this Bill amends the definition of `eligible no-till
seeder' in section 385-235 of the Income Tax Assessment Act 1997
(ITAA 1997) to ensure that an eligible no-till seeder can comprise just the
tool, or the combination of the cart and the tool.
Context of amendments
1.2 The conservation tillage refundable tax offset was introduced as
part of the Clean Energy (Consequential Amendments) Act 2011 and took
effect from 1 July 2012. It allows primary producers to claim a
15 per cent refundable tax offset on the purchase of new, eligible
conservation tillage equipment installed ready for use between
1 July 2012 and 30 June 2015. The tax offset is designed to encourage the
take up of conservation tillage farming practices to reduce soil disturbance
and erosion and improve water retention in the soil. It forms part of the
Carbon Farming Futures program which provides support for action on
the ground to reduce emissions, increase soil carbon and improve
productivity.
1.3 Eligibility for the tax offset requires, amongst other things, the
purchase of a new eligible no-till seeder which, under the current law, is a
no-till seeder comprising both the cart and the tool. The tool component
of a no-till seeder delivers the benefits of conservation tillage practices,
while the cart simply carries the seed and fertiliser. In practice, many
primary producers retain their existing cart (also known as an air cart)
when upgrading to a new tool (also known as a seeder bar).
1.4 Expanding the definition of an eligible no-till seeder to include
just the tool will facilitate primary producers' access to the tax offset and
consequently encourage the adoption of conservation tillage techniques.
1.5 On 29 June 2012, the Assistant Treasurer announced the
Government's intention to amend the eligibility requirements to allow
7
Tax Laws Amendment (2012 Measures No. 5) Bill 2012
primary producers who purchase just the tool to access the tax offset
(Media Release No. 058).
Summary of new law
1.6 The definition of an eligible no-till seeder is amended to ensure
that an eligible no-till seeder can comprise just the tool or the combination
of the cart and the tool.
Comparison of key features of new law and current law
New law Current law
An eligible no-till seeder can An eligible no-till seeder must
comprise just the tool, or the comprise the combination of the cart
combination of cart and tool. and tool.
Detailed explanation of new law
1.7 The eligibility requirements for the conservation tillage
refundable tax offset are set out in section 385-175 of the ITAA 1997.
Amongst other things, a taxpayer is entitled to the tax offset for an income
year in respect of a depreciating asset if the asset is an eligible no-till
seeder.
1.8 An eligible no-till seeder is `a no-till seeder (comprising the
tool, or the combination of the cart and tool)' that has certain features.
[Schedule 1, item 1]
1.9 An `eligible no-till seeder' can comprise either the tool alone or
the combination of the cart and tool (but not the cart alone). It is the tool
component which delivers the benefits of conservation tillage.
1.10 The other elements of the definition of `eligible no-till seeder'
are set out in paragraphs 385-235(a) to (g). (These detail the essential disc
or tine features of a no-till seeder.)
Application and transitional provisions
1.11 This amendment commences on the day the Bill receives the
Royal Assent.
8
Conservation tillage refundable tax offset:
amendment to the definition of `eligible no-till seeder'
1.12 The amendment applies to an eligible no-till seeder which the
taxpayer starts to use to carry on a primary production business, or which
the taxpayer has installed ready for use to carry on a primary production
business, between 1 July 2012 and 30 June 2015. The refundable tax
offset is claimable in the taxpayer's income tax return for the 2012-13,
2013-14 or 2014-15 income years. This is consistent with the existing
conservation tillage refundable tax offset provisions. [Schedule 1, item 2]
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011
Conservation tillage refundable tax offset: amendment to the definition
of `eligible no-till seeder'
1.13 This Schedule is compatible with the human rights and freedoms
recognised or declared in the international instruments listed in section 3
of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
1.14 This Schedule amends the Income Tax Assessment Act 1997
(ITAA 1997) to expand the application of the conservation tillage
refundable tax offset (tax offset).
1.15 As part of the Government's Clean Energy Future Plan, the
Clean Energy (Consequential Amendments) Act 2011 amended the
ITAA 1997 to support action to reduce greenhouse gases in the farming
industry by providing a tax offset to encourage no-till farming practices.
1.16 Under the existing law, to be eligible for the tax offset, a
taxpayer is required, among other things, to have an eligible no-till seeder,
comprising `the combination of a cart and tool' (section 385-285 of the
ITAA 1997). As it is the tool component which delivers the benefits of
conservation tillage practices, item 1 of this Schedule amends the
definition of `eligible no-till seeder' to ensure that an eligible no-till
seeder can comprise `the tool, or the combination of cart and tool'. This
means that, provided other existing criteria are met, a taxpayer carrying on
a primary production business may be eligible to claim a 15 per cent
conservation tillage refundable tax offset whether they purchase just the
conservation tillage tool or a combination of the cart and the tool.
9
Tax Laws Amendment (2012 Measures No. 5) Bill 2012
1.17 Item 2 applies the amendments to the 2012-13, 2013-14 and
2014-15 income years. This enables the benefit conferred by item 1 to be
immediately available to eligible taxpayers. While the Schedule operates
retrospectively, the measure operates to the benefit of affected taxpayers.
Human rights implications
1.18 This Schedule engages and promotes the right to health in
Article 12 of the International Covenant of Economic, Social and Cultural
Rights. The UN Committee on Economic, Social and Cultural Rights has
interpreted Article 12 to extend to the underlying determinants of health,
including a healthy environment. No-till farming practices aim to reduce
soil disturbance and erosion, increase nutrient availability and reduce
water loss. These environmental benefits may lead to greater food
production capacity.
Conclusion
1.19 This Schedule is compatible with human rights. It promotes the
right to health.
Assistant Treasurer, the Hon David Bradbury
10
Chapter 2
Phase out of the mature age worker tax
offset
Outline of chapter
2.1 Schedule 2 amends the Income Tax Assessment Act 1997
(ITAA 1997) to phase out the mature age worker tax offset (MAWTO)
from 1 July 2012 for taxpayers born on or after 1 July 1957. Those
currently eligible because they were aged 55 years or older on
30 June 2012 are unaffected by the changes and remain eligible.
Context of amendments
2.2 The MAWTO is a non-refundable tax offset available to an
Australian resident individual who is aged 55 years or older in the year of
income and who has worked during the year.
2.3 The MAWTO phases in from the first dollar of `net income from
working', that is income from working less any relevant deductions, at the
rate of five cents per dollar, with the full $500 offset being available to all
mature age workers when their net income from working reaches $10,000.
The offset is reduced at the rate of five cents per dollar for each dollar
above $53,000, resulting in the offset being completely phased out by
$63,000.
2.4 Net income from working consists of the sum of:
· personal services income (including salary and wages);
· assessable income from a business;
· assessable farm management repayment amounts;
· reportable fringe benefits; and
· reportable superannuation contributions;
less the sum of the taxpayer's deductible expenses relating to their
assessable personal services or business income.
11
Laws Amendment (2012 Measures No. 5) Bill 2012
2.5 The MAWTO is a high cost method of facilitating mature age
workforce participation. The Government will be investing in better
targeted workforce participation programs.
2.6 By phasing out the MAWTO, the Government will be
maintaining the MAWTO for people who have already built this benefit
into their household budgets.
Summary of new law
2.7 Schedule 2 introduces a new eligibility requirement for the
MAWTO by restricting access to the MAWTO to those who are already
age eligible, that is, those born on or before 30 June 1957.
Comparison of key features of new law and current law
New law Current law
Workers who are born on or before Workers who are 55 years or older at
30 June 1957 are eligible for the the end of the income year are
MAWTO. eligible for the MAWTO.
Detailed explanation of new law
2.8 Section 61-550 of ITAA 1997 explains when a taxpayer is
eligible for the MAWTO. The explanation is changed to state that only
taxpayers born on or before 30 June 1957 and who have worked during
the relevant income year will be eligible for the MAWTO. [Schedule 2,
item 1, section 61-550]
2.9 Section 61-555 sets out that the object of Subdivision 61-D is to
provide an incentive to work for those aged 55 or over. This is amended
to restrict eligibility to those taxpayers born on or before 30 June 1957.
[Schedule 2, item 2, section 61-555]
2.10 From 1 July 2012, entitlement to the MAWTO is restricted to
taxpayers born on or before 30 June 1957. Age eligibility for the
MAWTO will be maintained for those taxpayers who are aged 55 years or
older on 30 June 2012. [Schedule 2, item 3, section 61-560]
12
Phase out of the mature age worker tax offset
Application and transitional provisions
2.11 These amendments apply on or after 1 July 2012.
[Schedule 2, item 4]
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011
Phase out of the mature age worker tax offset
2.12 This schedule is compatible with the human rights and freedoms
recognised or declared in the international instruments listed in section 3
of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
2.13 This schedule amends the Income Tax Assessment Act 1997 to
phase out the mature age worker tax offset from 1 July 2012 for taxpayers
born on or after 1 July 1957.
Human rights implications
2.14 This schedule does not engage any of the applicable rights or
freedoms.
Conclusion
2.15 This schedule is compatible with human rights as it does not
raise any human rights issues.
Assistant Treasurer, the Hon David Bradbury
13
Chapter 3
Deductible gift recipients
Outline of chapter
3.1 Schedule 3 to this Bill amends the Income Tax Assessment
Act 1997 (ITAA 1997) to update the list of deductible gift recipients
(DGRs) by adding one entity as a DGR.
3.2 All references to legislative provisions in this chapter are to the
ITAA 1997.
Context of amendments
3.3 The income tax law allows income tax deductions for taxpayers
who make gifts of $2 or more to DGRs. To be a DGR, an organisation
must fall within one of the general categories set out in Division 30 or be
specifically listed by name in that Division.
3.4 DGR status assists eligible funds and organisations to attract
public support for their activities.
3.5 The Diamond Jubilee Trust Australia has been established to
raise funds in Australia for the commemoration of Her Majesty
Queen Elizabeth II's Diamond Jubilee. It will collect funds for the
purpose of delivering charitable projects for the support and advancement
of individuals of all ages, with a focus on the poor and disadvantaged,
through supporting the work of the Queen Elizabeth Diamond Jubilee
Trust in the UK.
3.6 The listing is time limited, and will allow The Diamond Jubilee
Trust Australia to collect tax deductible donations after 31 October 2012
and before 1 July 2015. This is to reflect the period of fundraising for
Her Majesty's Diamond Jubilee.
Summary of new law
3.7 The amendment adds The Diamond Jubilee Trust Australia as a
DGR to Division 30 of the ITAA 1997 for a time limited period.
15
Tax Laws Amendment (2012 Measures No. 5) Bill 2012
Detailed explanation of new law
The Diamond Jubilee Trust Australia (ACN 159 853 460)
3.8 Taxpayers may claim a deduction for gifts made to
The Diamond Jubilee Trust Australia after 31 October 2012 and before
1 July 2015. [Schedule 3, item 1, item 9.2.2 in the table in subsection 30-80(2) of the
ITAA 1997]
Consequential amendments
3.9 Changes have been made to update the index in Division 30 of
the ITAA 1997 to add The Diamond Jubilee Trust Australia. [Schedule 3,
item 2, item 44AAAA in subsection 30-315]
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011
Deductible gift recipients
3.10 This Schedule is compatible with the human rights and freedoms
recognised or declared in the international instruments listed in section 3
of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
3.11 This Schedule adds The Diamond Jubilee Trust Australia as a
DGR to Division 30 of the ITAA 1997 for a time limited period.
Human rights implications
3.12 This Schedule does not engage any of the applicable rights or
freedoms.
16
Deductible gift recipients
Conclusion
3.13 This Schedule is compatible with human rights as it does not
raise any human rights issues.
Assistant Treasurer, the Hon David Bradbury
17
Chapter 4
Wine equalisation tax
Outline of chapter
4.1 Schedule 4 to this Bill amends the A New Tax System (Wine
Equalisation Tax) Act 1999 (WET Act) to ensure that a wine producer is
not entitled to the wine equalisation tax (WET) producer rebate on other
wine (that is, wine acquired from a third party) they use in manufacture,
except where the producer of the other wine (or supplier) notifies the
subsequent producer.
4.2 The amendments implement a voluntary notice system such that
a producer of the other wine (or supplier) may notify the subsequent
producer that the producer of other wine is entitled to rebate on a specified
amount of the other wine, or that the producer is not entitled to the rebate
on the other wine.
4.3 The amendments introduce an offence of strict liability where a
person gives a notice that is false or misleading.
4.4 The amendments also make minor technical amendments to the
WET Act. The amendments update references to offences and penalties
under the Act to ensure that these provisions accord with current drafting
practice.
4.5 The amendments commence on the day of Royal Assent.
4.6 All references to legislative provisions in this chapter are
references to the WET Act, unless otherwise stated.
Context of amendments
4.7 Schedule 4 to this Bill implements the Government's
2012-13 Budget announcement to protect the integrity of the WET rebate,
and was originally announced to commence on 1 July 2012. Its deferral
from the original start date was announced in the Assistant Treasurer's
Media Release No. 57 of 29 June 2012, to allow for continued
consultation with the wine industry.
19
Tax Laws Amendment (2012 Measures No. 5) Bill 2012
4.8 The WET rebate scheme entitles a wine producer (or group of
producers) to a rebate for certain dealings in wine, at a rate of 29 per cent,
up to a maximum of $500,000 per financial year.
4.9 Currently, it is possible for different wine producers to be
eligible for multiple WET rebates for the same quantity of wine. This
outcome typically arises when one producer acquires wine from another
producer and then blends or further manufactures the wine.
4.10 Where wine is blended to create a commercially distinct
product, potentially both the producer of the wine constituting the blend
and the producer of the blended wine are able to claim a WET rebate.
Under the quoting arrangements, the payment of WET is generally
deferred until the last wholesale sale. However, the producer of the
constituent wine and the producer of the blended wine are entitled to the
WET rebate equal to the WET amount that would have been payable on
the sale, had the purchaser not quoted. Therefore, the producer of the
blended wine would be entitled to the WET rebate on the total value of the
blended wine. This presents a situation where multiple producers may
claim rebates on the same quantity of wine.
4.11 The further manufacture of wine involves one wine producer
selling unfinished wine (for example, raw wine that has undergone
primary fermentation) to another wine producer. The subsequent wine
producer then undertakes the further manufacture of wine. Under current
legislation, assuming both manufacturing processes meet the legislative
definition of `manufacture', both wine producers may be entitled to the
producer rebate.
4.12 The amendments will ensure that wine producers will not be
able to claim multiple rebates for the same quantity of wine.
4.13 The amendments are in response to concerns raised by the wine
industry and the Australian National Audit Office.
Summary of new law
4.14 This Schedule amends the WET Act to reduce entitlement to the
producer's rebate, if the producer's wine was manufactured using other
wine, except where the producer of the other wine (or supplier) provides a
notice.
4.15 The amendments implement a voluntary notice system such that
a producer of the other wine (or supplier) may notify the subsequent
producer that the producer of other wine is entitled to rebate on a specified
20
Wine equalisation tax
amount of the other wine, or that the producer is not entitled to the rebate
on the other wine.
4.16 The amendments apply special rules to a New Zealand
participant that has not yet been entitled to the producer rebate, for the
purposes of determining the amount of the earlier producer rebate.
4.17 The amendments apply to assessable dealings on or after
1 December 2012, or the day on which this Bill receives the Royal Assent,
whichever is later.
Comparison of key features of new law and current law
New law Current law
If wine is manufactured using Where wine is manufactured using
somebody else's wine, the amount of other wine, the producer of the wine
the rebate that a producer is entitled may be entitled to the rebate on the
to is reduced by the sum of the total value of the wine, and their
amounts of any earlier producer rebate is not reduced by any earlier
rebates relating to the wine. producer rebates relating to the other
The amount of any earlier producer wine.
rebate depends on whether the
producer is notified.
Where a producer is notified of the
amount of the producer's rebate for
the other wine that was used in
manufacture, the earlier producer
rebate is so much of the amount of
the producer rebate relating to the
other wine so used.
Where a producer is not notified, the
earlier producer rebate is the amount
equal to what would have been the
producer's rebate for the other wine,
as relates to the other wine so used, if
the producer had been entitled to the
full producer rebate on the other
wine.
Where a producer is notified that the
producer of the other wine is not
entitled to a producer rebate for the
other wine, there is no earlier
producer rebate and the producer may
be eligible for the full rebate.
21
Tax Laws Amendment (2012 Measures No. 5) Bill 2012
Detailed explanation of new law
4.18 Schedule 4 to this Bill amends the WET Act to ensure the WET
producer rebate generally cannot be claimed more than once on a single
quantity of wine.
4.19 The amendments implement a voluntary notice system such that
a producer of wine (the 'first producer') may notify a subsequent producer
who purchases that wine that the first producer is either not entitled to the
rebate on the wine or is entitled to rebate on a specified amount of wine.
4.20 Where no notice is given, the WET producer rebate for the
producer who purchases the wine is reduced by the amount attributable to
the purchased wine.
Earlier producer rebates
4.21 Division 19 of the WET Act governs entitlement to a WET
rebate and the amount of the rebate.
4.22 Section 19-15 provides for calculation of the amount of WET
rebate that a wine producer or group of producers may claim in a financial
year. The amount of a rebate a producer may claim is reduced by the sum
of any earlier producer rebates relating to the wine. [Schedule 4, item 1,
subsection 19-17(1)]
4.23 The amendments introduce the term earlier producer rebate.
[Schedule 4, items 1 and 3, subsection 19-17(2) and section 33-1]
4.24 Where a producer is notified of the amount of the producer's
rebate for other wine that was used in manufacture, the `earlier producer
rebate' is so much of the amount of the producer rebate relating to the
other wine so used. [Schedule 4, item 1, paragraph 19-17(2)(a)]
4.25 Where a producer is not notified, the earlier producer rebate is
the amount equal to what would have been the producer's rebate for the
other wine, as relates to the other wine so used, if the producer had been
entitled to the full producer rebate on the other wine. [Schedule 4, item 1,
paragraph 19-17(2)(b)]
4.26 Where a producer is notified that the producer of the other wine
is not entitled to a producer rebate for the other wine, there is no earlier
producer rebate. That is, a producer will be treated as being entitled to the
rebate relating to the other wine used in the manufacture of the producer's
wine. [Schedule 4, item 1, subsection 19-17(2)]
22
Wine equalisation tax
New Zealand producers
4.27 Subsection 19-5(2) requires that wine tax must be paid on the
wine before a New Zealand participant becomes entitled to the rebate. As
such, a New Zealand participant may not be entitled to the rebate at the time
of the sale of the wine.
4.28 The amendments ensure that a New Zealand participant who is
not entitled to the rebate because wine tax has not been paid on that wine,
will be taken to be entitled to the rebate. The amount of the rebate is taken
to be the amount equal to 29 per cent of the approved selling price for the
other wine. [Schedule 4, item 1, subsection 19-17(5)]
4.29 Apart from the effect described above, the amendments do not
affect a New Zealand participant's entitlement to the rebate. In particular,
the amendments do not affect the operation of subsection 19-10(4).
Subsection 19-10(4) restricts a New Zealand participant's entitlement to a
WET rebate where there is a dealing in wine produced in New Zealand, and
a producer rebate has previously been paid in respect of the wine.
Notices system
4.30 The amendments provide that a producer of the other wine may
notify, using the approved form, that they are entitled to a producer rebate
on a specified amount for the other wine; or they are not entitled to a
producer rebate for the other wine. A supplier (who is not the producer) of
the other wine may also notify. This is intended to cover situations where a
wholesale distributor may pass on a notice received from a producer.
[Schedule 4, item 1, subsection 19-17(3)]
4.31 The amendments establish an offence where a person gives a
notice that contains a statement that is false or misleading, or omits a matter
or thing, without which the statement is false or misleading. The penalty is
20 penalty units. [Schedule 4, item 2, subsection 19-28(1)]
4.32 The offence is an offence of strict liability. [Schedule 4, item 2,
subsection 19-28(2)]
4.33 Guidance issued by the Attorney-General's Department (AGD) on
the application of strict liability has been considered on whether the use of
strict liability is justified. The conclusion is that strict liability is
appropriate for this case for the following reasons.
· The provision of notices is a fundamental part of the
measure, and the use of strict liability is considered necessary
to protect revenue from the wine equalisation tax regime.
23
Tax Laws Amendment (2012 Measures No. 5) Bill 2012
· The offence is regulatory, and is an offence that is only
engaged where producers or suppliers choose to provide a
notice.
· Where a producer provides a notice, the offence relates to
facts which are within the producer's knowledge or to which
they have ready access. Where a supplier provides a notice,
the defence of mistake of fact may cover situations where the
supplier has been provided with a false or misleading notice.
· The offence is not punishable by imprisonment and the
offence is less than the 60 penalty units, as recommended by
the AGD for strict liability offences.
4.34 The offence intends that producers have responsibility to be
aware of whether or not they are entitled to a rebate for a particular sale of
wine, where they choose to provide a notice of entitlement.
4.35 Where a wholesale sale of wine includes a sale of two or more
types of wine, these amendments ensure that the sale is treated as if there
were separate wholesale sales for each type of wine. [Schedule 4, item 1,
subsection 19-17(4)]
4.36 For example, where a sale of wine involves the sale of a shiraz
and chardonnay, and the producer chooses to notify for both, separate
notices must be issued.
Technical amendments to the WET Act
4.37 The amendments update references to offences and penalties
under the Act. This ensures that these provisions are updated to current
drafting practice. [Schedule 4, items 5 to 11, subsections 13-15(4) and 27-5(2), and
sections 13-35 and 19-30]
Commencement provisions
4.38 Schedule 4 to this Bill commences on the day of Royal Assent.
Application and transitional provisions
4.39 These amendments in Part 1 apply to assessable dealings on or
after the day (the application day) that is the later of 1 December 2012 or
the day of Royal Assent. [Schedule 4, item 4]
24
Wine equalisation tax
4.40 Where wine was manufactured using other wine that was
supplied before the application day, the amendments apply as if the
producer had been notified that the producer of the other wine is not
entitled to a producer rebate for the other wine, and the offences relating
to false and misleading statements did not apply. [Schedule 4, item 4]
4.41 The amendments in Part 2 apply from the day of Royal Assent.
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011
Wine equalisation tax rebate
4.42 This Schedule is compatible with the human rights and freedoms
recognised or declared in the international instruments listed in section 3
of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
4.43 Schedule 4 to this Bill amends the A New Tax System (Wine
Equalisation Tax) Act 1999 (WET Act) to ensure that a wine producer
will not be entitled to the wine equalisation tax (WET) producer rebate on
other wine they use in manufacture, except where the producer of the
other wine (or supplier) notifies the subsequent producer.
4.44 The amendments implement a voluntary notice system such that
a producer of the other wine (or supplier) may notify the subsequent
producer that the producer of other wine is entitled to rebate on a specified
amount of the other wine, or that the producer is not entitled to the rebate
on the other wine.
4.45 The amendments introduce an offence of strict liability where a
person gives a notice that is false or misleading.
Human rights implications
4.46 This Schedule may raise human rights issues because it contains
an offence of strict liability, which may raise concerns with respect to the
presumption of innocence. The reasons for inserting an offence of strict
25
Tax Laws Amendment (2012 Measures No. 5) Bill 2012
liability has been assessed in light of guidelines provided by the
Attorney-General's Department and are consistent with those guidelines.
4.47 The offence intends that producers have responsibility to be
aware of whether or not they are entitled to a rebate for a particular sale of
wine, where they choose to provide a notice of entitlement.
4.48 The reasons for establishing a strict liability offence is that it is
considered as necessary for protecting the revenue within the wine
equalisation tax regime. Furthermore, the relevant matters are regulatory,
the offence relates to facts which are within the producer's knowledge or
to which they have ready access, and the penalty is below the 60 penalty
units, as recommended by the Attorney General's Department.
4.49 The mistake of fact defence may cover situations where a
supplier passes on a notice from a producer which is false or misleading.
Conclusion
4.50 This Schedule is compatible with human rights because the aim
of revenue protection is legitimate. To the extent that this Schedule may
limit those rights, those limitations are reasonable, necessary and
proportionate to the aim.
Assistant Treasurer, Hon David Bradbury
26
Index
Schedule 1: Conservation tillage refundable tax offset:
amendment to the definition of `eligible no-till seeder'
Bill reference Paragraph number
Item 1 1.8
Item 2 1.12
Schedule 2: Phase out of the mature age worker tax offset
Bill reference Paragraph number
Item 1, section 61-550 2.8
Item 2, section 61-555 2.9
Item 3, section 61-560 2.10
Item 4 2.11
Schedule 3: Deductible gift recipients
Bill reference Paragraph number
Item 1, item 9.2.2 in the table in subsection 30-80(2) of the 3.8
ITAA 1997
Item 2, item 44AAAA in subsection 30-315 3.9
Schedule 4: Wine equalisation tax
Bill reference Paragraph number
Item 1, subsection 19-17(1) 4.22
Items 1 and 3, subsection 19-17(2) and section 33-1 4.23
Item 1, paragraph 19-17(2)(a) 4.24
Item 1, paragraph 19-17(2)(b) 4.25
27
Tax Laws Amendment (2012 Measures No. 5) Bill 2012
Bill reference Paragraph number
Item 1, subsection 19-17(2) 4.26
Item 1, subsection 19-17(5) 4.28
Item 1, subsection 19-17(3) 4.30
Item 1, subsection 19-17(4) 4.35
Item 2, subsection 19-28(2) 4.32
Item 2, subsection 19-28(1) 4.31
Item 4 4.39, 4.40
Items 5 to 11, subsections 13-15(4) and 27-5(2), and sections 13-35 4.37
and 19-30
28
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