Treasury has released an exposure draft of legislation which would give the ATO Commissioner the power to modify the outcomes of tax and superannuation legislation.
In May 2015 the, then, Assistant Treasurer Josh Frydenberg announced the Government intended to “provide the Commissioner with a statutory remedial power to allow for a more timely resolution of certain unforeseen or unintended outcomes in the taxation and superannuation law.”
The draft legislation is titled: Tax Laws Amendment (2016 Measures No. 1) Bill 2016: Commissioner’s remedial power.
Documents released by Treasury say: “This statutory remedial power, or Commissioner’s Remedial Power, would be a mechanism available to the Commissioner to ensure that tax laws can be administered consistently with their purpose or object. This power to modify the operation of a tax law will not change the requirement for the Commissioner to pursue an interpretation of the law which can achieve the purpose or object of the law in the first instance.”
“The Remedial Power is to be exercised as a power of last resort after the other options available to the Commissioner have been considered by the Commissioner and found not to provide a suitable solution. Although the power may be able to resolve some issues, there will still be many cases where it might be more appropriate for the Commissioner to seek an amendment to the primary legislation.”
The legislation, if passed, would give the ATO Commissioner the power to make a “disallowable legislative instrument to modify the operation of a taxation law to ensure the law can be administered to achieve its purpose or object.”
According to Treasury the Remedial Power won’t allow the ATO Commissioner to “alter or extend the purpose or object of the law.”
“Rather it will allow the Commissioner to modify the operation of a provision of a tax law where that modification is not inconsistent with the purpose or object of the provision.”
Also taxpayers will be prevented from following such a legislative instrument where it would leave them in a worse position, it appears:
An entity (the first) entity must treat a modification to the operation of the law as not applying to it and any other entity if it would produce a less favourable result for the first entity.
The ATO Commissioner must conduct “appropriate and reasonably practicable” consultation process, and receive advice that the Federal Budget impact would be “negligible”, before using the Remedial Power.
Additionally the Remedial Power legislative instruments will only take effect on or after the first day they can’t be disallowed by the Parliament. In other words the Parliament will have “a full opportunity to scrutinise the instrument and, if it considers necessary, to disallow it.”
Submission on the exposure draft close 15 January 2016.
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