Classes of Electronic Payment System Transactions Exempt In The 2017/18 Year From Providing Third Party Reports Determination 2016

CLASSES OF ELECTRONIC PAYMENT SYSTEM TRANSACTIONS EXEMPT IN THE 2017/18 YEAR FROM PROVIDING THIRD PARTY REPORTS DETERMINATION 2016

General Outline of Instrument

1. This instrument is made under subsection 396-70(4) of Schedule 1 to the Taxation Administration Act 1953 (TAA 1953).
2. This instrument exempts, in the 2017/18 financial year, administrators of payment systems (within the meaning of the Payment Systems (Regulation) Act 1998) from having to include specified classes of transactions in reports prepared and lodged in relation to item 9 in the table included in section 396-55 of Schedule 1 to the TAA 1953. 
3. Under subsection 33(3) of the Acts Interpretation Act 1901, where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by-laws), the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.
4. The instrument is a legislative instrument for the purposes of the Legislation Act 2003.

Date of effect

5.      The instrument commences on 1 July 2017 and expires on 30 June 2018.

What is this instrument about

6.      Subdivision 396-B of Schedule 1 to the TAA 1953 introduced third party reporting arrangements that apply to payments made from 1 July 2017. Subdivision 396-B includes requirements for administrators of payments systems (within the meaning of the Payment Systems (Regulation) Act 1998) to provide a report concerning a transaction involving an electronic payment if:

(a) the transaction is facilitated by the payment system on behalf of an entity; and

(b) the administrator reasonably believes that the transaction:

(i) provides a payment to the entity, or provides a refund or cash to a customer of the entity; and

(ii) is for the purposes of a business carried on by the entity.

These requirements are listed as item 9 in the table included in section 396-55.

7.      This instrument exempts certain transactions from these reporting requirements in the 2017/18 financial year.

What is the effect of this instrument

8.      The list of excluded transactions provides certainty and a potential reduction in compliance cost for entities that may be impacted by the third party reporting legislation.  Reporting entities that have excluded transactions can omit that information from their reporting obligations.  

9.      Compliance cost impact: minor- there will be no or minimal impacts for both implementation and ongoing compliance costs. The legislative instrument is minor or machinery in nature.

Background

10.  This instrument was developed to ensure that the third party reporting regime operates efficiently and the compliance burden on reporters is minimised.

11.  Subsection 396-70(4) of Schedule 1 to the TAA 1953 allows the Commissioner, by legislative instrument, to exempt classes of transactions from being reported.

12.  Item 9 in the table at section 396-55 of Schedule 1 to the TAA 1953 requires an administrator of a payment system (within the meaning of the Payment System (Regulation) Act 1998) to report a transaction involving an electronic payment if the transaction is facilitated on behalf of an entity, and the administrator reasonably believes that the transaction was a payment to the entity, a refund or cash withdrawn by a customer of the entity, and is for the purpose of a business carried on by the entity.

13.  To reduce the administrative and compliance burden on administrators of payment systems the Commissioner will exempt, in the 2017/18 financial year, the following classes of transactions from being reported to the ATO:

• Payments processed by Bulk Electronic Clearing System (BECS) Framework Participants under the BECS governed by Australian Payments Clearing Association Limited.
• Payments processed by New Payments Platform (NPP) Participants using the NPP governed by NPP Australia Limited.

14.  The Commissioner does not require the reporting of the preceding classes of transactions in the 2017/18 year due to the complexity of the BECS payment system and that industry implementation of the NPP does not commence until part way through the 2017/18 year. This will allow for reporters to transition their reporting obligations over time, reducing the compliance burden for the participants implementing the NPP in the first year of reporting.

15.  From 1 July 2018, reporters will be required to start collecting and reporting data processed through the BECS and NPP payment systems.

Consultation

16.  In October/November 2015, the Australian Taxation Office (ATO) undertook consultation with key stakeholders such as the Australian Bankers Association (ABA), Australian Payments Clearing Association Limited (APCA), Customer Owned Banking Association (COBA), financial institutions, and payment administrators on the content to be included in the Legislative Instrument. Formal public consultation on the draft Legislative Instrument commenced on the 15 December 2015 and concluded on 15 February 2016. All reporting entities and the public were invited to participate in the consultation. At the conclusion of the consultation window, the ATO received two submissions from reporters raising a number of issues/concerns. Separate to this, the ATO also received an additional request for consideration via telephone that was directly related the Legislative Instrument. After consideration of the issues raised out of consultation, the ATO has agreed with some of the issues raised and made some changes to the Legislative Instrument and data specifications. Not all issues raised could be adopted by the ATO as the issues raised were inconsistent with the policy intent or not administratively feasible. Feedback was provided to the reporting entities that made a submission via consultation or telephone call on what the ATO could amend and what could not be adopted.

Legislative references:

Human Rights (Parliamentary Scrutiny) Act 2011

Legislation Act 2003

Payment Systems (Regulation) Act 1998)

Taxation Administration Act 1953

Statement of Compatibility with Human Rights

This Statement is prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

CLASSES OF ELECTRONIC PAYMENT SYSTEM TRANSACTIONS EXEMPT IN

THE 2017/18 YEAR FROM PROVIDING THIRD PARTY REPORTS

DETERMINATION 2016

This Legislative Instrument 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 of the Legislative Instrument

This Legislative Instrument exempts, in the 2017/18 financial year, administrators of payment systems (within the meaning of the Payment Systems (Regulation) Act 1998) from having to include specified classes of transactions in reports prepared and lodged in relation to item 9 in the table included in section 396-55 of Schedule 1 to the TAA 1953. 

Human rights implications

This Legislative Instrument does not engage any of the applicable rights or freedoms. It provides exemptions from reporting requirements which are considered to be minor in nature.

Conclusion

This legislative Instrument does not raise any human rights issues.