Taxation Administration Amendment (Recovery Of Tax Debts) Act 1986

Administered by Department of the Treasury

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Taxation Administration Amendment (Recovery of Tax Debts) Act 1986

No. 144 of 1986

 

An Act relating to the recovery of tax debts

[Assented to 9 December 1986]

BE IT ENACTED by the Queen, and the Senate and the House of Representatives of the Commonwealth of Australia, as follows:

Short title, &c.

1. (1) This Act may be cited as the Taxation Administration Amendment (Recovery of Tax Debts) Act 1986.

(2) The Taxation Administration Act 19531 is in this Act referred to as the Principal Act.

Commencement

2. This Act shall come into operation on the day on which it receives the Royal Assent.

3. After section 14zk of the Principal Act the following section is inserted in Part V:


Modification of limitation laws applying to the recovery of tax debts

“14zka. (1) In this section—

‘limitation law’ means a law in force in a State or Territory that provides, or has the effect of providing—

(a) that an action or proceeding in a court of the State or Territory shall not be brought on; or

(b) for the extinction of, or of a right or title in relation to,

a cause of action of a particular kind specified, or ascertained in accordance with, that law after the end of a period (in this section referred to as the ‘limitation period’) specified in, or ascertained in accordance with, that law;

‘objection’ has the same meaning as in the Taxation (Interest on Overpayments) Act 1983;

‘tax debt’ means an amount due and payable as a tax liability.

“(2) If a limitation law applies, or applied, by virtue of section 64 of the Judiciary Act 1903, in relation to a cause of action to recover a tax debt, that law, in that application at a particular time (in this sub-section referred to as the ‘application time’), is modified, and shall be deemed always to have been modified, as follows:

(a) where—

(i) a person lodges, or lodged, an objection against an assessment, or a decision of the Commissioner, relating to the tax debt; and

(ii) if the limitation period had commenced on the day the objection procedure in relation to the objection last ceased to be pending before the application time, the limitation period would have ended on a later day than the day on which the limitation period would have ended but for the modification made by this paragraph,

the limitation period shall be taken to end, or to have ended, on that later day;

(b) a tax debt payable under any of the following provisions shall not be taken to be, or to have been, a penalty or a sum by way of penalty:

(i) section 70 of the Australian Capital Territory Taxation (Administration) Act 1969;

(ii) section 17 of the Bank Account Debits Tax Administration Act 1982;

(iii) section 46 of the Estate Duty Assessment Act 1914;

(iv) Part VIII of the Fringe Benefits Tax Assessment Act 1986;

(v) Part VII of the Income Tax Assessment Act 1936 or that Part as applied for the purposes of any other taxation law;


(vi) Part VII of the Pay-roll Tax (Territories) Assessment Act 1971;

(vii) Part VIII of the Sales Tax Assessment Act (No. 1) 1930 or that Part as applied for the purposes of any other Act providing for the assessment of sales tax;

(viii) Part VI of the Tobacco Charges Assessment Act 1955;

(ix) Part X of the Wool Tax (Administration) Act 1964;

(x) a repealed provision of a taxation law, being a provision—

(a) that was repealed by the Taxation Laws Amendment Act 1984; and

(b) under which a person was liable to pay additional charge, additional duty, additional tax or an amount in addition to an amount of tax or duty, otherwise than by reason of the late payment, or the non-payment, of an amount of a tax liability.

“(3) Subject to sub-section (4), sub-section (2) applies in relation to a cause of action that accrued before, or that accrues after, the commencement of this section.

“(4) Where—

(a) before 25 September 1986, a court had given a decision on a demurrer to so much of a defence as alleged that a limitation law applied in relation to a cause of action to recover a tax debt; or

(b) both of the following sub-paragraphs apply:

(i) before 25 September 1986, a court had given a judgment, or made an order, determining a cause of action to recover a tax debt;

(ii) the application of a limitation law was raised as an issue in the action or proceeding on that cause of action,

sub-section (2) does not apply in relation to that cause of action.

“(5) For the purposes of paragraph (2) (a), the objection procedure in relation to an objection shall be taken to be pending at a particular time if—

(a) the Commissioner had not given written notice of the Commissioner’s decision on the objection before that time;

(b) both of the following sub-paragraphs apply:

(i) before that time, a person made an application for an extension of time in connection with a proceeding under a taxation law or the Administrative Appeals Tribunal Act 1975 in relation to the objection;

(ii) no decision had been made in relation to that application before that time;


(c) the time for instituting proceedings under a taxation law or the Administrative Appeals Tribunal Act 1975 in relation to the objection had not ended at that time; or

(d) at that time, there is a proceeding that—

(i) had been instituted under a taxation law or the Administrative Appeals Tribunal Act 1975 in relation to the objection; and

(ii) has not been determined.

“(6) For the purposes of sub-section (5)—

(a) a proceeding in relation to an objection that has lapsed or otherwise been terminated shall be taken to have been determined; and

(b) the time for instituting a proceeding in relation to an objection shall not be taken not to have ended by reason only of the possibility that an extension of that time may be granted.

“(7) In determining whether a limitation law applies, or applied, by virtue of section 64 of the Judiciary Act 1903, in relation to a cause of action to recover a tax debt, the preceding provisions of this section shall be disregarded.”.

 

NOTE

1. No. 1, 1953, as amended. For previous amendments, see Nos. 28, 39, 40 and 52, 1953; No. 18, 1955; No. 39, 1957; No. 95, 1959; No. 17, 1960; No. 75, 1964; No. 155, 1965; No. 93, 1966; No. 120, 1968; No. 216, 1973; No. 133, 1974; No. 37, 1976; Nos. 19 and 59, 1979; Nos. 39 and 117, 1983; No. 123, 1984; No. 65, 1985 (as amended by No. 193, 1985); Nos. 4, 47, 104, 123 and 168, 1985; and Nos. 41, 46, 48 and 49, 1986.

 

[Minister’s second reading speech made in—

House of Representatives on 24 September 1986

Senate on 10 October 1986]

Overview

The Taxation Administration Amendment (Recovery of Tax Debts) Act 1986 was enacted by the Parliament of Australia to address the issue of extending the time limits for the recovery of tax debts, ensuring that the Commonwealth could effectively pursue outstanding liabilities beyond the constraints imposed by state and territory limitation laws. This Act amends the Taxation Administration Act 1953 to modify the application of state and territory limitation laws in relation to tax debts. The policy objective of the Act is to provide the Commissioner of Taxation with a more extended period to institute proceedings for the recovery of tax debts, particularly in instances where objections are lodged against assessments or decisions. This legislative intervention ensures that the Commonwealth’s ability to recover tax debts is not unduly restricted by the differing limitation periods stipulated in various state and territory laws.

Scope and Application

The Taxation Administration Amendment (Recovery of Tax Debts) Act 1986 applies to all entities and individuals who owe a tax debt in Australia, including those who may have lodged an objection against an assessment or decision of the Commissioner relating to the tax debt. The Act modifies the limitation laws applicable to the recovery of tax debts in accordance with state and territory laws and seeks to ensure that such debts can be recovered within the prescribed limitation periods. The Act's application extends across the Commonwealth of Australia, as it is a federal law. Notably, the Act does not apply to causes of action where a court had already given a decision on a demurrer or judgment before 25 September 1986, or where the application of a limitation law was raised as an issue in the action or proceeding before that date. The Act also provides that certain tax debts will not be treated as penalties or sums by way of penalty, which is a significant aspect of its application. The Act can be further extended or restricted through subordinate instruments, although such extensions or restrictions are not explicitly detailed in the text of the Act itself.

Key Provisions

The Taxation Administration Amendment (Recovery of Tax Debts) Act 1986 amends the Taxation Administration Act 1953 by inserting a new section 14zka in Part V. This section modifies the limitation laws applicable to the recovery of tax debts. Section 14zka(1) defines key terms such as "limitation law", "objection", and "tax debt". Section 14zka(2) provides that if a limitation law applies to a cause of action to recover a tax debt, the law is modified to extend the limitation period if an objection against an assessment or decision of the Commissioner relating to the tax debt is lodged, or if it would have ended later but for the modification. Section 14zka(2) also specifies that tax debts under certain provisions are not considered penalties. Section 14zka(3) states that the modification applies to causes of action that accrued before or after the commencement of this section. However, Section 14zka(4) excludes certain causes of action from the modification if a court had previously ruled on the application of a limitation law or if the application of a limitation law was raised as an issue before 25 September 1986. The Act imposes several obligations on the parties involved. For instance, it requires that the Commissioner of Taxation must give written notice of their decision on an objection within the specified timeframes, as per Section 14zka(5). Additionally, taxpayers must ensure that they lodge objections within the allowable periods and adhere to any extensions granted. The Act also mandates that proceedings must be instituted within the statutory time limits, as outlined in Section 14zka(5)(c) and (d). Failure to comply with these obligations can result in the limitation period being adversely affected, potentially barring the recovery of the tax debt. Breach of the provisions of this Act can result in significant legal consequences. While the Act itself does not specify particular offences or penalties, it is integral to note that non-compliance with tax laws, including the failure to address tax debts as modified by this Act, can lead to other legal actions under separate tax legislation. For example, under the Taxation Administration Act 1953, failure to pay tax debts can lead to enforcement actions such as garnishee notices, seizure of assets, or even prosecution for tax evasion. The penalties for such offences can include substantial fines and, in severe cases, imprisonment. Therefore, adherence to the modified limitation laws and timely objection procedures is crucial to avoid these severe repercussions.

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