Banking Act (No. 2) 1973
No. 193 of 1973
AN ACT
To amend section 39 of the Banking Act 1959–1967, as amended by the Banking Act 1973.
[Assented to 17 December 1973]
BE IT ENACTED by the Queen, the Senate and the House of Representatives of Australia, as follows:—
Short title and citation
1. (1) This Act may be cited as the Banking Act (No. 2) 1973.
(2) The Banking Act 1959–1967, as amended by the Banking Act 1973, is this Act referred to as the Principal Act.
(3) Section 1 of the Banking Act 1973 is amended by omitting sub-section (3).
(4) The Principal Act, as amended by this Act, may be cited as the Banking Act 1959–1973.
Commencement.
2. This Act shall come into operation on the day on which it receives the Royal Assent.
Exchange control.
3. Section 39 of the Principal Act is amended by adding at the end thereof the following sub-sections:—
“(3) Where regulations in force under this section contain a provision prohibiting the doing of any act or thing except with the authority of the Reserve Bank, the Bank may, subject to sub-section (4), refuse to grant that authority on the ground that the act or thing involves or would involve, assists in or would assist in, or is or would be associated with, the avoidance or evasion of tax imposed by a law of Australia or of a Territory, but the foregoing shall not be taken as limiting the discretion of the Bank to refuse to grant any such authority on any other ground.
“(4) The Reserve Bank shall not refuse to grant authority to do an act or thing of the kind referred to in sub-section (3) on a ground referred to in that sub-section if there is produced to the Bank a statement by the Commissioner of Taxation, or by a person authorized in writing by the Commissioner of Taxation to furnish statements for the purposes of this sub-section, that, in the opinion of the Commissioner or the authorized person, as the case may be, the granting of the authority should not be refused on such a ground.
“(5) Where regulations as in force under section 39 of the Banking Act 1959–1967, or of the Banking Act 1959–1967 as amended by the Banking Act 1973, on or after 25 October 1973 but before the commencement of this sub-section contained a provision prohibiting the doing of an act or thing except with the authority of the Reserve Bank, the Bank shall be deemed to have had power to refuse to grant that authority on a ground referred to in sub-section (3).”.
Overview
The Banking Act (No. 2) 1973 was enacted by the Queen, the Senate, and the House of Representatives of Australia to address specific issues within the existing banking framework by amending the Banking Act 1959–1967. This Act was introduced to further refine the regulatory environment for banking operations, particularly in relation to exchange control measures. The primary objective of the Act was to grant the Reserve Bank of Australia additional discretion in refusing authority for certain banking activities that might be associated with tax avoidance or evasion. The Act achieved this by inserting new provisions into Section 39 of the Principal Act, which were designed to strengthen the regulatory oversight capabilities of the Reserve Bank while also ensuring that such powers were not exercised arbitrarily.
Scope and Application
The Banking Act (No. 2) 1973 applies to the Reserve Bank of Australia, which is tasked with regulating and overseeing the banking sector in Australia. This Act amends section 39 of the Principal Act, which is the Banking Act 1959–1967, as previously amended by the Banking Act 1973. The Act's provisions focus on exchange control, specifically allowing the Reserve Bank to refuse authority for certain acts or transactions if they involve the avoidance or evasion of tax imposed by Australian or Territory laws. However, this authority can be overridden if a statement is provided by the Commissioner of Taxation or an authorised person, affirming that the refusal should not be granted on tax avoidance or evasion grounds. This Act's jurisdiction is national, encompassing all banking entities within Australia, and it came into effect immediately upon receiving Royal Assent. Subordinate instruments may further define and refine the application of this Act.
Key Provisions
The Banking Act (No. 2) 1973 amends the Banking Act 1959-1967 by introducing new provisions concerning the Reserve Bank's authority over financial transactions, specifically targeting tax avoidance or evasion. Under section 39 of the Principal Act, as amended by this Act, the Reserve Bank is now empowered to refuse to grant permission for certain financial transactions if there is evidence that these transactions involve, assist in, or are associated with tax avoidance or evasion under Australian or Territory laws (subsection (3)). However, this power is not absolute; if a statement from the Commissioner of Taxation or an authorised person indicates that the authority should not be refused on these grounds, the Reserve Bank must grant the permission (subsection (4)). Additionally, the Act clarifies that the Reserve Bank has always had the power to refuse permission on these grounds for transactions that were subject to such prohibitions in regulations prior to the amendment (subsection (5)).
The Act imposes obligations on the Reserve Bank to exercise its discretion judiciously and in accordance with the guidance provided by the Commissioner of Taxation. It mandates that the Reserve Bank must not refuse permission for a transaction on the grounds of tax avoidance or evasion if a valid statement from the Commissioner of Taxation is presented. This ensures that the Reserve Bank's decisions are informed by expert tax assessment, thereby aligning financial regulatory practices with tax compliance standards. Additionally, the Act requires that the Reserve Bank consider any relevant statements from the Commissioner of Taxation when deciding whether to grant permission for transactions that are subject to its regulatory authority.
Failure to comply with the provisions of the Act can result in civil or criminal consequences. The Act does not explicitly outline penalties but implies that misuse of the Reserve Bank's discretionary powers could lead to legal ramifications. Specifically, if the Reserve Bank refuses permission without due consideration of the Commissioner of Taxation's statement, it may face legal challenges regarding its decision-making process. Additionally, entities or individuals involved in transactions that are later found to involve tax avoidance or evasion could face separate tax-related penalties under other relevant legislation, such as the Income Tax Assessment Act 1936. The precise nature and extent of penalties would depend on the specific circumstances and applicable laws.