Commonwealth Entities (Payment Surcharges) Act 2024

Overview

The Commonwealth Entities (Payment Surcharges) Act 2024 was enacted by the Parliament of Australia to address the need for Commonwealth entities to charge and collect surcharges on payments, thereby ensuring a transparent and regulated approach to such financial transactions. This legislation aims to provide a legal framework for Commonwealth entities to impose additional charges for payment processing or preference of payment methods, whilst ensuring that these charges do not constitute taxation. The Act specifies that Commonwealth entities can charge and collect such surcharges only if authorised by a law of the Commonwealth, a State or a Territory, and outlines conditions under which surcharges may be refunded. The policy objective is to allow for the charging of payment surcharges by Commonwealth entities, whilst ensuring compliance with overarching Commonwealth payment surcharging policies, thereby maintaining a balance between operational needs and consumer protection. The Commonwealth Entities (Payment Surcharges) Act 2024, which commenced on 3 December 2024, provides a comprehensive legislative framework for Commonwealth entities to charge and collect payment surcharges, ensuring these charges are not equivalent to taxation. This Act aims to fill a legislative gap by clarifying the circumstances under which surcharges can be levied and collected, and establishing a process for refunds. The Minister is empowered to set policies governing the charging, collection, and refunding of payment surcharges, and mechanisms are in place for addressing non-compliance by Commonwealth entities. The Act's enactment is a response to the need for a regulated approach to payment surcharges, ensuring that these charges are both permissible and appropriately managed within the legal framework of Australia.

Scope and Application

The Commonwealth Entities (Payment Surcharges) Act 2024 authorises Commonwealth entities to charge and collect payment surcharges, as defined in the Act, on surchargeable payments. This Act applies to all Commonwealth entities, including those defined by the Public Governance, Performance and Accountability Act 2013, and it extends to any payment that is made under a law of the Commonwealth, a State or a Territory, provided that the payment is not already subject to a surchargeable payment. The Act commences on 3 December 2024, the day after receiving Royal Assent. It is important to note that the surcharges imposed cannot amount to taxation. The Act also allows for the refund of surcharges under certain circumstances and mandates that entities must adhere to Commonwealth payment surcharging policies, which may be established by the Minister through subordinate legislation. Non-compliance with these policies is subject to corrective action by the Minister. However, failure to comply with these policies does not affect the validity of decisions to charge, collect, or refund the surcharges. The Act's provisions are enforceable across the Commonwealth and apply to all Commonwealth entities, ensuring a uniform approach to the imposition and management of payment surcharges.

Key Provisions

The Commonwealth Entities (Payment Surcharges) Act 2024 (the Act) primarily authorises Commonwealth entities to charge and collect payment surcharges. Section 5 allows a Commonwealth entity to charge and collect a payment surcharge in relation to a payment if the entity has the power, function, or duty to collect the payment under a law of the Commonwealth, a State or a Territory, and the payment is not already a surchargeable payment. Section 6 permits a Commonwealth entity to refund a whole or part of a payment surcharge if the entity believes it is appropriate. Section 7 outlines the Commonwealth payment surcharging policies that Commonwealth entities must adhere to, and mandates that entities take all reasonable steps to comply with these policies. If an entity fails to comply, it must notify the Minister, who may then direct the entity to take specific actions related to the non-compliance. The Act imposes several obligations on Commonwealth entities. Firstly, entities must ensure that any payment surcharges they charge do not amount to taxation, as per section 5(2). Secondly, they must comply with Commonwealth payment surcharging policies as outlined in section 7(1). If the accountable authority of a Commonwealth entity becomes aware of non-compliance, they must notify the Minister in writing as soon as practicable, as specified in section 7(4). Additionally, the Minister has the authority to direct the entity to take specified actions to address the non-compliance, which the entity must comply with, subject to any other Commonwealth law, as per section 7(6) and (7). Under the Act, there are specific consequences for non-compliance. Section 7(4) mandates that if a Commonwealth entity’s accountable authority becomes aware of non-compliance with the payment surcharging policies, they must notify the Minister in writing as soon as practicable. Failure to comply with this notification requirement could lead to further action by the Minister. Section 7(6) stipulates that if the Minister issues a direction in response to a notification of non-compliance, the Commonwealth entity must comply with that direction. Non-compliance with such a direction could result in further legislative instruments or enforcement actions by the Minister, although specific civil or criminal penalties for non-compliance are not detailed within the Act itself.