Radiocommunications (Spectrum Licence Tax) Amendment Determination 2018 (No. 2)

EXPLANATORY STATEMENT

Approved by the Australian Communications and Media Authority

Radiocommunications (Spectrum Licence Tax) Act 1997

Radiocommunications (Spectrum Licence Tax) Amendment Determination 2018 (No. 2)

Authority

The Australian Communications and Media Authority (the ACMA) has made the Radiocommunications (Spectrum Licence Tax) Amendment Determination 2018 (No. 2) (the instrument) under subsection 7(1) of the Radiocommunications (Spectrum Licence Tax) Act 1997 (the Tax Act) and subsection 33(3) of the Acts Interpretation Act 1901 (the AIA).

Section 6 of the Tax Act imposes tax on a spectrum licence as follows:

• if a spectrum licence is in force on the initial holding date for the licence, tax is imposed on the initial holding date for the licence;
• if a spectrum licence is in force on a particular anniversary of the initial holding date for the licence, tax is imposed on that anniversary of the initial holding date for the licence.

Subsection 7(1) of the Tax Act provides that the ACMA may determine the amount of spectrum licence tax payable by spectrum licensees.

Subsection 33(3) of the AIA relevantly provides that where an Act confers a power to make a legislative instrument, 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.

Purpose and operation of the instrument

Background

The instrument amends the Radiocommunications (Spectrum Licence Tax) Determination 2014 (the Tax Determination).  The Tax Determination determines the amount of tax imposed by the Tax Act on the initial holding date for a spectrum licence, and on the anniversary of that date.  The Tax Determination determines different rates of tax in relation to different classes of spectrum licence.

The ACMA has traditionally set the amount of tax payable by spectrum licensees in order to recover the indirect costs of spectrum management activities such as international coordination, domestic planning, interference investigation and policy development.  The Tax Determination provides for the ascertainment of spectrum licence tax for a particular licence by reference to a “base amount”, which is different for licences in different frequency bands, and by reference to populations of licence areas, based on Census data.

The “base amounts” are the components of the tax formula that are calculated by reference to the indirect costs of its spectrum management functions attributable to spectrum licensees.  The method used to determine the base amounts first involves the calculation of the spectrum maintenance component (SMC) percentage.  The SMC percentage is calculated by reference to the tax collected by the ACMA from other licensees under the Radiocommunications Act 1992.  This tax (apparatus licence tax) is imposed by the Radiocommunications (Transmitter Licence Tax) Act 1983 and the Radiocommunications (Receiver Licence Tax) Act 1983.  The ACMA sets the amount of apparatus licence tax under these Acts on the basis that it partly represents the value of the licences and partly recovers the ACMA’s indirect costs of spectrum management attributable to apparatus licensees. The SMC percentage represents the total indirect cost of spectrum management expressed as a percentage of total apparatus licence tax revenue (i.e., it separates out the indirect cost recovery component of apparatus licence tax revenue from the value component). The SMC percentage is 20.18 per cent, based on the ACMA’s indirect costs, and apparatus licence tax revenue, for the 2016-2017 financial year.

The base amount for the 3.6 GHz band has been calculated as follows:

The amount of spectrum licence tax paid is calculated as a share of that base amount on a per population per MHz basis.

Allocation of 3.6 GHz spectrum licences

The Minister for Communications has made declarations[1] under section 153B of the Act in relation to the 3575 MHz to 3700 MHz frequency range (the 3.6 GHz band).  The ACMA will allocate, by auction, spectrum licences under the Act in accordance with those declarations.

The instrument amends the Tax Determination to set a new base amount for the calculation of spectrum licence tax for spectrum licences issued in the 3.6 GHz band.  The amount is $69,180.

A provision-by-provision description of the instrument is set out in the notes at Attachment A.

The instrument is a disallowable legislative instrument for the purposes of the Legislation Act 2003 (the LA).

Documents incorporated by reference

The instrument does not incorporate any documents by reference.

Consultation

Before the instrument was made, the ACMA was satisfied that consultation was undertaken to the extent appropriate and reasonably practicable, in accordance with section 17 of the LA. 

The ACMA released a consultation paper on the legislative instruments required for the allocation of spectrum licences in the 3.6 GHz band, published on the ACMA’s website.  The consultation was open from 18 May 2018 to 15 June 2018.  The consultation paper set out the ACMA’s proposal to amend Table 1 of the Tax Determination to include the 3.6 GHz band with frequency range of (3575–3700 MHz), total spectrum of 125 MHz and a base amount of $69,180. Three submission referred to the proposal concerning spectrum licence taxes. All submissions were taken into account when making the instrument.

Regulatory impact assessment

The Office of Best Practice Regulation (OBPR) has considered the changes to the spectrum licence taxes effected by the instrument and formed the opinion that no regulatory impact analysis is required. The OBPR reference number is 23824.

Statement of compatibility with human rights

Subsection 9(1) of the Human Rights (Parliamentary Scrutiny) Act 2011 requires the rule-maker in relation to a legislative instrument to which section 42 (disallowance) of the LA applies to cause a statement of compatibility with human rights to be prepared in respect of that legislative instrument. 

The statement of compatibility set out below has been prepared to meet that requirement.

Overview of the instrument

The instrument amends the Tax Determination to set a base amount for the calculation of spectrum licence tax for the 3.6 GHz band.  The Tax Determination determines different rates of tax in relation to different classes of spectrum licence.

Spectrum licence tax is an annual tax imposed under the Tax Act on spectrum licence holders. The tax is payable on the “initial holding date” for each spectrum licence, as determined by the ACMA, and on each subsequent anniversary of that initial holding day. The Tax Act provides that the amount of tax payable is ascertained in accordance with a determination made by the ACMA.

The instrument will affect spectrum licensees in the 3.6 GHz band. 

Human rights implications

The ACMA has assessed whether the instrument is compatible with human rights, being the rights and freedoms recognised or declared by the international instruments listed in subsection 3(1) of the Human Rights (Parliamentary Scrutiny) Act 2011 as they apply to Australia.

Having considered the likely impact of the instrument and the nature of the applicable rights and freedoms, the ACMA has formed the view that the instrument does not engage any of those rights or freedoms.

Conclusion

The instrument is compatible with human rights as it does not raise any human rights issues.

Attachment A

Notes to the Radiocommunications (Spectrum Licence Tax) Amendment Determination 2018 (No. 2)

Section 1 Name

This section provides for the instrument to be cited as the Radiocommunications (Spectrum Licence Tax) Amendment Determination 2018 (No. 2).

Section 2 Commencement

This section provides for the instrument to commence at the start of the day after it is registered on the Federal Register of Legislation. 

Section 3 Authority

This section identifies the provision of the Act that authorises the making of the instrument, namely subsection 7(1) of the Radiocommunications (Spectrum Licence Tax) Act 1997.

Section 4 Amendments

This section provides that the amendments set out in Schedule 1 have effect.

Schedule 1–Amendments

Item 1  Table 1 in Part 1 of Schedule 1

This item inserts a new item in Table 1 in Part 1 of Schedule 1. The effect of the new item 10 is to specify the base amount for the 3575-3700 MHz spectrum-licensed band.  The base amount is one of the factors used to calculate the spectrum licence tax.

[1] The Radiocommunications (Spectrum Re-allocation–3.6 GHz Band for Adelaide and Eastern Metropolitan Australia) Declaration 2018, the Radiocommunications (Spectrum Re-allocation–3.6 GHz Band for Perth) Declaration 2018, and the Radiocommunications (Spectrum Re-allocation–3.6 GHz Band for Regional Australia) Declaration 2018.