Commonwealth Consolidated Acts Commonwealth Consolidated ActsTaxation Administration Act 1953
1 After Division 288 in Schedule 1
Insert:
Division 290 -- Promotion and implementation of schemes
Table of Subdivisions
290 - A Objects of this Division
290 - B Civil penalties
290 - C Injunctions
290 - D Voluntary undertakings
Subdivision 290 - A -- Objects of this Division
Table of sections
290 - 5 Objects of this Division
290 - 5 Objects of this Division
The objects of this Division are:
(a) to deter the promotion of tax avoidance * schemes and tax evasion schemes; and
(b) to deter the implementation of schemes that have been promoted on the basis of conformity with a * product ruling in a way that is materially different from that described in the product ruling.
Subdivision 290 - B -- Civil penalties
Table of sections
290 - 50 Civil penalties
290 - 55 Exceptions
290 - 60 Meaning of promoter
290 - 65 Meaning of tax exploitation scheme
Promoter of tax exploitation scheme
(1) An entity must not engage in conduct that results in that or another entity being a * promoter of a * tax exploitation scheme.
Implementing scheme otherwise than in accordance with ruling
(2) An entity must not engage in conduct that results in a * scheme that has been promoted on the basis of conformity with a * product ruling being implemented in a way that is materially different from that described in the product ruling.
Note: A scheme will not have been implemented in a way that is materially different from that described in a product ruling if the tax outcome for participants in the scheme is the same as that described in the ruling.
Civil penalty
(3) If the Federal Court of Australia is satisfied, on application by the Commissioner, that an entity has contravened subsection (1) or (2), the Court may order the entity to pay a civil penalty to the Commonwealth.
Amount of penalty
(4) The maximum amount of the penalty is the greater of:
(a) 5,000 penalty units (for an individual) or 25,000 penalty units (for a body corporate); and
(b) twice the consideration received or receivable (directly or indirectly) by the entity and * associates of the entity in respect of the * scheme.
Note: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit.
Principles relating to penalties
(5) In deciding what penalty is appropriate for a contravention of subsection (1) or (2) by an entity, the Federal Court of Australia may have regard to all matters it considers relevant, including:
(a) the amount of the consideration received or receivable (directly or indirectly) by the entity and * associates of the entity in respect of the * scheme; and
(b) the deterrent effect that any penalty may have; and
(c) the amount of loss or damage incurred by scheme participants; and
(d) the nature and extent of the contravention; and
(e) the circumstances in which the contravention took place, including the deliberateness of the entity's conduct and whether there was an honest and reasonable mistake of law; and
(f) the period over which the conduct extended; and
(g) whether the entity took any steps to avoid the contravention; and
(h) whether the entity has previously been found by the Court to have engaged in the same or similar conduct; and
(i) the degree of the entity's cooperation with the Commissioner.
Recovery of penalty
(6) The penalty is a civil debt payable to the Commonwealth, and the Commissioner may, on behalf of the Commonwealth, enforce an order for an entity to pay the penalty as if it were an order made in civil proceedings against the entity to recover a debt due by the entity. The debt arising from the order is taken to be a judgment debt.
Reasonable mistake or reasonable precautions
(1) The Federal Court of Australia must not order the entity to pay a civil penalty if the entity satisfies the Court:
(a) that the conduct in respect of which the proceedings were instituted was due to a reasonable mistake of fact; or
(b) that:
(i) the conduct in respect of which the proceedings were instituted was due to the act or default of another entity, to an accident or to some other cause beyond the entity's control; and
(ii) the entity took reasonable precautions and exercised due diligence to avoid the conduct.
(2) The other entity referred to in paragraph (1)(b) does not include someone who was an employee or agent of the entity when the alleged conduct occurred.
Reliance on advice from the Commissioner
(3) The Commissioner must not make an application under section 290 - 50 for conduct referred to in subsection 290 - 50(1) in relation to an entity's involvement in a * scheme if:
(a) the scheme is based on treating a * taxation law as applying in a particular way; and
(b) that way agrees with:
(i) advice given to the entity or the entity's agent by or on behalf of the Commissioner; or
(ii) a statement in a publication approved in writing by the Commissioner.
Time limitation
(4) The Commissioner must not make an application under section 290 - 50 in relation to an entity's involvement in a * tax exploitation scheme more than 4 years after the entity last engaged in conduct that resulted in the entity or another entity being a * promoter of the tax exploitation scheme.
(5) The Commissioner must not make an application under section 290 - 50 in relation to an entity's involvement in a * scheme that has been promoted on the basis of conformity with a * product ruling more than 4 years after the entity last engaged in conduct in relation to implementation of the scheme.
(6) However, the limitation in subsection (4) or (5) does not apply to a * scheme involving tax evasion.
Exception where entity does not know result of conduct
(7) The Federal Court of Australia must not order an entity to pay a civil penalty in relation to the entity's engaging in conduct:
(a) that results in another entity being a * promoter of a * tax exploitation scheme; or
(b) that results in a * scheme that has been promoted on the basis of conformity with a * product ruling being implemented in a way that is materially different from that described in the product ruling;
if the entity satisfies the Court that the entity did not know, and could not reasonably be expected to have known, that the entity's conduct would produce that result.
Employees
(8) The Commissioner must not make an application under section 290 - 50 in relation to an individual's involvement in a * scheme as an employee if the Federal Court of Australia has ordered the individual's employer to pay a civil penalty under this Division in relation to the same scheme.
(1) An entity is a promoter of a * tax exploitation scheme if:
(a) the entity markets the scheme or otherwise encourages the growth of the scheme or interest in it; and
(b) the entity or an * associate of the entity receives (directly or indirectly) consideration in respect of that marketing or encouragement; and
(c) having regard to all relevant matters, it is reasonable to conclude that the entity has had a substantial role in respect of that marketing or encouragement.
(2) However, an entity is not a promoter of a * tax exploitation scheme merely because the entity provides advice about the * scheme.
(3) An employee is not to be taken to have had a substantial role in respect of that marketing or encouragement merely because the employee distributes information or material prepared by another entity.
290 - 65 Meaning of tax exploitation scheme
(1) A * scheme is a tax exploitation scheme if, at the time of the conduct mentioned in subsection 290 - 50(1):
(a) one of these conditions is satisfied:
(i) if the scheme has been implemented--it is reasonable to conclude that an entity that (alone or with others) entered into or carried out the scheme did so with the sole or dominant purpose of that entity or another entity getting a * scheme benefit from the scheme;
(ii) if the scheme has not been implemented--it is reasonable to conclude that, if an entity (alone or with others) had entered into or carried out the scheme, it would have done so with the sole or dominant purpose of that entity or another entity getting a scheme benefit from the scheme; and
(b) one of these conditions is satisfied:
(i) if the scheme has been implemented--it is not * reasonably arguable that the scheme benefit is available at law;
(ii) if the scheme has not been implemented--it is not reasonably arguable that the scheme benefit would be available at law if the scheme were implemented.
Note: The condition in paragraph (b) would not be satisfied if the implementation of the scheme for all participants were in accordance with binding advice given by or on behalf of the Commissioner of Taxation (for example, if that implementation were in accordance with a public ruling under this Act, or all participants had private rulings under this Act and that implementation were in accordance with those rulings).
(2) In deciding whether it is * reasonably arguable that a * scheme benefit would be available at law, take into account any thing that the Commissioner can do under a * taxation law.
Example: The Commissioner may cancel a tax benefit obtained by a taxpayer in connection with a scheme under section 177F of the Income Tax Assessment Act 1936 .
Subdivision 290 - C -- Injunctions
Table of sections
290 - 120 Conduct to which this Subdivision applies
290 - 125 Injunctions
290 - 130 Interim injunctions
290 - 135 Delay in making ruling
290 - 140 Discharge etc. of injunctions
290 - 145 Certain limits on granting injunctions not to apply
290 - 150 Other powers of the Federal Court unaffected
290 - 120 Conduct to which this Subdivision applies
This Subdivision applies to conduct of the kind referred to in subsection 290 - 50(1) or (2).
If an entity has engaged, is engaging or is proposing to engage in conduct to which this Subdivision applies or would apply, the Federal Court of Australia may, on the application of the Commissioner, grant an injunction:
(a) restraining the entity from engaging in the conduct; and
(b) if, in the Court's opinion, it is desirable to do so--requiring the entity to do something.
The Federal Court of Australia may, before considering an application for an injunction under section 290 - 125, grant an interim injunction restraining an entity from engaging in conduct to which this Subdivision applies.
290 - 135 Delay in making ruling
If:
(a) an entity applied in writing to the Commissioner for a * product ruling in relation to a * scheme; and
(b) the Commissioner has neither made the ruling nor told the entity in writing that the Commissioner has declined to make the ruling;
the Commissioner must not make an application under section 290 - 125 in relation to conduct or proposed conduct by an entity in relation to the scheme until the Commissioner makes the ruling or tells the entity in writing that the Commissioner has declined to make the ruling.
290 - 140 Discharge etc. of injunctions
The Federal Court of Australia may discharge or vary an injunction granted under this Subdivision.
290 - 145 Certain limits on granting injunctions not to apply
Restraining injunctions
(1) The power of the Federal Court of Australia under this Subdivision to grant an injunction restraining an entity from engaging in conduct of a particular kind may be exercised:
(a) if the Court is satisfied that the entity has engaged in conduct of that kind--whether or not it appears to the Court that the entity intends to engage again, or to continue to engage, in conduct of that kind; or
(b) if it appears to the Court that, if an injunction is not granted, it is likely that the entity will engage in conduct of that kind--whether or not the entity has previously engaged in conduct of that kind and whether or not there is an imminent danger of substantial damage to anyone if the entity engages in conduct of that kind.
Performance injunctions
(2) The power of the Federal Court of Australia under this Subdivision to grant an injunction requiring an entity to do something may be exercised:
(a) if the Court is satisfied that the entity has refused or failed to do that thing--whether or not it appears to the Court that the entity intends to refuse or fail again, or to continue to refuse or fail, to do that thing; or
(b) if it appears to the Court that, if an injunction is not granted, it is likely that the entity will refuse or fail to do that thing--whether or not the entity has previously refused or failed to do that act or thing and whether or not there is an imminent danger of substantial damage to anyone if the entity refuses or fails to do that act or thing.
290 - 150 Other powers of the Federal Court unaffected
The powers conferred on the Federal Court of Australia under this Subdivision are in addition to, and not instead of, any other powers of the Court, however conferred.
Subdivision 290 - D -- Voluntary undertakings
Table of sections
290 - 200 Voluntary undertakings
290 - 200 Voluntary undertakings
(1) The Commissioner may accept a written undertaking given by an entity for the purposes of this section in connection with furthering the objects of this Division.
(2) The entity may withdraw or vary the undertaking at any time, but only with the consent of the Commissioner.
(3) If the Commissioner considers that the entity that gave the undertaking has breached any of its terms, the Commissioner may apply to the Federal Court of Australia for an order under subsection (4).
(4) If the Court is satisfied that the entity has breached a term of the undertaking, the Court may make one or both of the following orders:
(a) an order directing the entity to comply with that term of the undertaking;
(b) any other order that the Court considers appropriate.
2 At the end of Division 298 in Schedule 1
Add:
Subdivision 298 - B -- Civil penalties
Table of sections
298 - 80 Application of Subdivision
298 - 85 Civil evidence and procedure rules for civil penalty orders
298 - 90 Civil proceedings after criminal proceedings
298 - 95 Criminal proceedings during civil proceedings
298 - 100 Criminal proceedings after civil proceedings
298 - 105 Evidence given in proceedings for penalty not admissible in criminal proceedings
298 - 110 Civil double jeopardy
298 - 80 Application of Subdivision
This Subdivision applies for the purposes of the provisions (the civil penalty provisions ) set out in this table.
Application of Subdivision | ||
Item | Provision | Brief description |
1 | Division 290 | Civil penalties for the promotion and implementation of schemes |
298 - 85 Civil evidence and procedure rules for civil penalty orders
The Federal Court of Australia must apply the rules of evidence and procedure for civil matters when hearing proceedings for a civil penalty order under the civil penalty provisions.
298 - 90 Civil proceedings after criminal proceedings
The Court must not make a civil penalty order under the civil penalty provisions against an entity if the entity has been convicted of an offence constituted by conduct that is substantially the same as the conduct in relation to which the civil penalty order would be made.
298 - 95 Criminal proceedings during civil proceedings
(1) Proceedings for a civil penalty order under the civil penalty provisions against an entity are stayed if:
(a) criminal proceedings are started or have already been started against the entity for an offence; and
(b) the offence is constituted by conduct that is substantially the same as the conduct in relation to which the civil penalty order would be made.
(2) The proceedings for the order may be resumed if the entity is not convicted of the offence. Otherwise, the proceedings for the order are dismissed.
298 - 100 Criminal proceedings after civil proceedings
Criminal proceedings may be started against an entity for conduct that is substantially the same as conduct in relation to which a civil penalty order under the civil penalty provisions could be made regardless of whether a civil penalty order has been made against the entity.
298 - 105 Evidence given in proceedings for penalty not admissible in criminal proceedings
Evidence of information given or evidence of production of documents by an entity is not admissible in criminal proceedings against the entity if:
(a) the entity previously gave the evidence or produced the documents in proceedings for a civil penalty order under the civil penalty provisions against the entity (whether or not the order was made); and
(b) the conduct alleged to constitute the offence is substantially the same as the conduct in relation to which the civil penalty order was sought.
However, this does not apply to a criminal proceeding in respect of the falsity of the evidence given by the entity in the proceedings for the civil penalty order.
298 - 110 Civil double jeopardy
If an entity is ordered to pay a civil penalty under the civil penalty provisions in respect of particular conduct, the entity is not liable to a civil penalty under some other provision of a * Commonwealth law in respect of that conduct.
Part 2 -- Consequential amendments
Income Tax Assessment Act 1997
3 Subsection 995 - 1(1)
Insert:
"product ruling" means a public ruling under the Taxation Administration Act 1953 that states that it is a product ruling.
4 Subsection 995 - 1(1)
Insert:
"promoter" has the meaning given by section 290 - 60 in Schedule 1 to the Taxation Administration Act 1953 .
5 Subsection 995 - 1(1)
Insert:
"tax exploitation scheme" has the meaning given by section 290 - 65 in Schedule 1 to the Taxation Administration Act 1953 .
Taxation Administration Act 1953
6 Subsection 16 - 35(1) in Schedule 1 (note 2)
After "administrative", insert "and civil".
7 Subsection 16 - 43(2) in Schedule 1 (note)
After "administrative", insert "and civil".
8 Subsection 16 - 140(3) in Schedule 1 (note 2)
After "administrative", insert "and civil".
9 Section 255 - 1 in Schedule 1
Before "A tax - related liability ", insert "(1)".
10 At the end of section 255 - 1 in Schedule 1
Add:
(2) A civil penalty under Division 290 is not a tax - related liability .
11 Part 4 - 25 in Schedule 1 (heading)
Repeal the heading, substitute:
Part 4 - 25 -- Charges and penalties
12 Section 288 - 10 in Schedule 1 (note 2)
After "administrative", insert "and civil".
13 Section 288 - 20 in Schedule 1 (note 2)
After "administrative", insert "and civil".
14 Division 298 in Schedule 1 (heading)
Repeal the heading, substitute:
Division 298 -- Machinery provisions for penalties
Subdivision 298 - A -- Administrative penalties
15 Section 298 - 5 in Schedule 1
Repeal the section, substitute:
This Subdivision applies if:
(a) an administrative penalty is imposed on an entity by another Division in this Part; or
(b) a penalty is imposed on an entity by Subdivision 162 - D of the * GST Act.
16 Section 420 - 5 in Schedule 1 (note 2)
After "administrative", insert "and civil".
17 Application
The amendments made by this Schedule apply in relation to conduct engaged in on or after the day on which this Act receives the Royal Assent.