Classes of Government Related Entities Exempt from Providing Third Party Reports Determination 2016

General Outline of Determination

1. This instrument is made under paragraph 396-70(4)(a) of Schedule 1 to the Taxation Administration Act 1953 (TAA 1953).
2. This instrument exempts specified classes of government related entities from having to prepare and lodge reports in relation to items 1 and 2 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. This instrument is a legislative instrument for the purposes of the Legislation Act 2003.

Date of effect

5.                  This instrument commences on 1 July 2017.

What is this instrument about

6.                  Subdivision 396-B of Schedule 1 to the TAA 1953 introduced third party reporting arrangements that apply to transactions that happen from 1 July 2017. Subdivision 396-B includes requirements for government related entities to provide a report concerning the provision of a grant to an entity that has an ABN and consideration for the supply of services. These requirements are listed as items 1 and 2 in the table included in section 396-55.

7.                  This instrument exempts certain entities from these reporting requirements.

What is the effect of this instrument

8.                  The effect of this instrument is to reduce the compliance burden for certain classes of entities by not having to prepare and lodge a report. These classes of entities have been identified as having:

• made grants and payments to recipients with low compliance risks;
• made low value and low volume grants and payments; or
• a high risk of double reporting, as a large number of controlling entities make grants and payments on behalf of the identified classes.

1. Although some grants and payments will not be reported due to these exemptions, the reporting of information would place a disproportionately high compliance cost on the reporter relative to the benefit of providing the information to the Australian Taxation Office (ATO). Exempting certain entities is consistent with a broader objective of the third party reporting regime to minimise overall compliance costs.
2. 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

11.              This instrument has been developed to ensure that the third party reporting measure operates efficiently and the compliance burden on reporters is minimised.

12.              Exempting these classes of entities from this reporting measure strikes a considered balance between the compliance risks and minimising the reporting burden.

Consultation

13.              The consultative period for the draft legislative instrument commenced on 15 December 2015 and concluded on 15 February 2016. The ATO provided some entities with extensions of time until 19 February 2016 to ensure stakeholders received a fair opportunity to respond.

14.              The ATO distributed an invitation to provide feedback to at least six government forums known to the ATO, and to over 580 stakeholders known to the ATO from previous consultation activities. Those canvassed included federal government departments, representatives from a number of state government departments and smaller government entities, and local councils. The public were also invited to provide feedback during the consultation period.

15.              The ATO considered all issues in preparing the final legislative instrument. The majority of the feedback sought clarification about the application of the legislative instrument to specific circumstances and the ATO provided clarification. Where appropriate, additional clarity was added by making changes to the draft. Further guidance is provided in this explanatory statement in response to stakeholder feedback. 

Legislation Act 2003

Taxation Administration Act 1953

Human Rights (Parliamentary Scrutiny) Act 2011

Statement of compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

CLASSES OF GOVERNMENT RELATED ENTITIES EXEMPT 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 instrument exempts specified classes of government related entities from having to prepare and lodge reports in relation to items 1 and 2 in the table included in section 396-55 of Schedule 1 to the Taxation Administration Act 1953 (TAA 1953).

Exempting these classes of entities from this reporting measure strikes a considered balance between the compliance risks and minimising the reporting burden.

Human rights implications

This Legislative Instrument does not engage any of the applicable rights or freedoms. It exempts specified classes of entities from preparing and lodging reports, so they will not need to collect or provide the range of personal information required in the report to the Commissioner of Taxation.

Conclusion

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.