Taxation (Annual Rates for , Research and Development, and Remedial Matters) Bill

Transcription

1 Taxation (Annual Rates for , Research and Development, and Remedial Matters) Bill 13 February 2015 Hon Christopher Finlayson QC, Attorney-General Consistency with the New Zealand Bill of Rights Act 1990: Taxation (Annual Rates for , Research and Development, and Remedial Matters) Bill Purpose 1. We have considered whether the Taxation (Annual Rates for , Research and Development, and Remedial Matters) Bill (the Bill ) is consistent with the rights and freedoms affirmed in the New Zealand Bill of Rights Act 1990 (the Bill of Rights Act ). 2. We have concluded that the Bill appears to be consistent with the Bill of Rights Act. In reaching that conclusion we have considered the Bill s consistency with section 14 (freedom of expression), section 19(1) (freedom from discrimination) and section 21 (unreasonable search and seizure) of the Bill of Rights Act. The Bill 3. The Bill s main aims are to update and improve tax settings and simplify the administration of the child support scheme. It contains a number of remedial and minor amendments. 4. The Bill will amend the following Acts: Child Support Act 1991 Child Support Amendment Act 2013 Finance Act (No. 2) 1990 Goods and Services Tax Act 1985 Goods and Services Tax (Grants and Subsidies) Order 1992 Income Tax Act 2007 Income Tax Act 2004 Income Tax Act 1994 Tax Administration Act 1994 Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act Consistency of the Bill with the Bill of Rights Act Section 14 Freedom of Expression 5. Section 14 of the Bill of Rights Act affirms the right to freedom of expression, including the freedom to seek, receive and impart information and opinions of any kind in any form. Freedom of expression includes the right not to say anything or certain things.

2 Removing the specificity of the Commissioner s power to require personal information 6. Clause 8 of the Bill amends section 13 of the Child Support Act 1991, which empowers the Commissioner to require additional information from an applicant for a formula assessment for child support, so that the power is no longer explicitly to be used to ascertain listed matters. This potentially raises issues regarding the right not to express information protected under section 14 as it could be interpreted as significantly broadening the Commissioner s power to require personal information from applicants for child support. 7. We do not consider that the amendment significantly broadens the Commissioner s power to require information. Section 6 of Bill of Rights Act provides that, wherever an enactment can be given a meaning that is consistent with the rights and freedoms contained in the Act, that meaning shall be preferred to any other meaning. The Commissioner s power to require information is made in the context of decisions on whether to use a formula assessment in new sections 13 and 13A. Both section 13 and section 13A only allow the Commissioner to require additional information relevant to the assessment for child support. We consider that, in line with section 6 of the Bill of Rights Act, the power would be interpreted as limited to the information required in that context. We therefore consider the provision appears consistent with section 14 of the Bill of Rights Act. Section 19 Freedom from discrimination 8. Section 19(1) of the Bill of Rights Act affirms the right to be free from discrimination on the prohibited grounds of discrimination set out in the Human Rights Act Prohibiting beneficiaries from electing to end formula assessments of child support 9. Clause 11 of the Bill does not allow social security beneficiaries to elect to end a formula assessment of child support. Under section 21(1)(k)(ii) of the Human Rights Act, being a recipient of a benefit or entitlement under the Social Security Act 1964 or the Accident Compensation Act 2001 is a prohibited ground of discrimination. 10. Whether the provision is actually inconsistent with section 19(1) depends on whether some disadvantage is experienced by those affected by clause 11. We do not consider social security beneficiaries will be disadvantaged as the clause only removes their ability to choose the source of their entitlements; they cannot choose to receive money under a benefit that they would otherwise receive from a private citizen through child support. 11. Even if the clause appears to be inconsistent with section 19(1) we consider the inconsistency is justified under section 5 of the Bill of Rights Act. The provision reflects the existing statutory requirement for social security beneficiaries to be assessed for child support. The objective of the policy is to reduce public spending and reliance on social security benefits and to encourage individuals to take financial responsibility for their children. Restricting beneficiaries rights to elect to rely on Government benefits instead of retaining the entitlements they receive from private citizens through child support is rationally connected to this objective. The limitation is also proportional. Any negative

3 effect on the beneficiary will be minimal because both child support and beneficiary entitlements depend on the beneficiary s circumstances. 12. We therefore consider the rule prohibiting social security beneficiaries electing to end formula assessments is consistent with section 19 of the Bill of Rights Act. Providing exemptions for Australian regulated superannuation saving withdrawals 13. Clause 133 of the Bill exempts Australian superannuation scheme interests from the standard rules around interests in foreign investment funds. This potentially raises issues of discrimination on the basis of national origin in contravention of section 21(1)(g) of the Human Rights Act, which would be inconsistent with section 19(1) of the Bill of Rights Act. 14. We do not consider the exemption to be discriminatory as it can benefit people of any national origin who have worked in Australia and acquired interests in Australian regulated superannuation savings. We also do not consider there is discrimination in regard to people who have interests in other countries superannuation schemes. They are not in a comparable position as New Zealand does not have the same level of reciprocity of entitlements with any other country. We therefore consider that the exemption is consistent with section 19(1) of the Bill of Rights Act. Section 21 Unreasonable search and seizure 15. Section 21 of the Bill of Rights Act affords everyone the right to be free from unreasonable search and seizure, whether of the person, property, correspondence or otherwise. Overriding Inland Revenue Act provisions through Approved Information Sharing Agreements 16. Clause 233 of the Bill allows the Commissioner to supply personal information about an identifiable individual under an Approved Information Sharing Agreement (AISA) despite any provision in any Inland Revenue enactment that would otherwise preclude that information being shared and/or used in certain ways. Of particular relevance, the amendment will enable information gathered by Inland Revenue to be used in criminal prosecutions. 17. There is a question as to whether sharing information under an AISA is itself considered a search and seizure for the purposes of section 21 of the Bill of Rights Act In any event we consider the amendment is consistent with section 21. Our reasoning is set out below. 18. The Courts have determined the Commissioner s power to obtain information from individuals does not amount to unreasonable search and seizure. [1] Relevant to that determination were the public interest in ensuring tax is paid and the protections afforded by tax secrecy provisions. [2] 19. Broader information sharing powers afforded by the amendment will affect those tax secrecy provisions. We consider, however, the broader information sharing powers are commensurate with the greater public interest in efficiently detecting and prosecuting

4 serious crime. The general public s reasonable expectations of privacy, which underlie section 21 of the Bill of Rights Act, [3] must be considered in the context of the public interest in combating crime and the general trend toward information sharing between government agencies. 20. AISAs must specify the safeguards that will apply to protect the privacy of individuals and ensure that any interference with that privacy is minimised. [4] The Governor-General may also impose conditions on how an AISA can modify the application of information privacy principles. [5] An AISA in the tax context is highly likely to modify the application of information privacy principle 11(a). That principle prohibits the disclosure of agency-held personal information unless the disclosure is, or is directly connected to, one of the purposes for which the information was obtained. [6] 21. The amendment only allows information sharing under an AISA to override Inland Revenue Acts. Individual instances of information sharing will be subject to protections provided by the Evidence and Bill of Rights Acts and pre-trial discovery procedures. The Evidence Act contains privileges against self incrimination and for communications with legal advisers. [7] The privilege against self incrimination can be removed by enactment, or waived by the privilege-holder, expressly or by necessary implication. [8] Despite the Commissioner s statutory powers, we consider the privileges in the Evidence and Bill of Rights Acts will still apply in certain cases of information sharing resulting in non-tax criminal prosecution. Privileged information can be ruled inadmissible by a judge. [9] Court rules also allow parties to challenge the admissibility of evidence contained in a brief and resolve the matter between counsel or in court. [10] 22. Bill of Rights Act protections relevant in individual instances of information sharing include the right to observance of natural justice (section 27), the right not to be compelled to be a witness or confess guilt (section 25(d)) and the right to present a defence (section 25(e)). 23. Information sharing under an AISA may be considered a search and seizure by proxy. Assessing consistency with the Bill of Rights Act in this case involves substantially the same considerations as where the Commissioner s original information gathering is assessed. The justification for the search and seizure power is the public interest in detection and prosecution of crime. The safeguards again include the Privacy Act provisions concerning AISAs and Bill of Rights and Evidence Act protections for individual instances of information sharing. The risk of fishing expeditions is limited as information shared can still only be gathered on tax grounds. 24. We consider, consistent with section 21 of the Bill of Rights Act, clause 233 of the Bill allows for reasonable search and seizure because any AISA would not override existing non- IRD statutory protections in this area of the law. The amendment therefore appears to be consistent with section 21 of the Bill of Rights Act whether or not information sharing under an AISA is considered a search and/or seizure. Conclusion

5 25. We have concluded that the Bill appears to be consistent with the rights and freedoms affirmed in the Bill of Rights Act. Jeff Orr Chief Legal Counsel Office of Legal Counsel Footnotes [1] New Zealand Stock Exchange v Commissioner of Inland Revenue [1992] 3 NZLR 1 (PC). [2] New Zealand Stock Exchange v Commissioner of Inland Revenue, above n 1 at [22]. [3] R v Grayson and Taylor [1997] 1 NZLR 399 (CA). [4] Privacy Act 1993, s 96I(2)(d). [5] Privacy Act 1993, s 96J. [6] Privacy Act 1993, section 6, principle 11(a). [7] Evidence Act 2006, ss 60, 54. [8] Evidence Act 2006, ss 65, 60(3). [9] Evidence Act 2006, s 52. [10] High Court Rule 9.11, District Court Rule Disclaimer In addition to the general disclaimer for all documents on this website, please note the following: This advice was prepared to assist the Attorney-General to determine whether a report should be made to Parliament under s 7 of the New Zealand Bill of Rights Act 1990 in relation to the Taxation (Annual Rates for , Research and Development, and Remedial Matters) Bill. It should not be used or acted upon for any other purpose. The advice does no more than assess whether the Bill complies with the minimum guarantees contained in the New Zealand Bill of Rights Act. The release of this advice should not be taken to indicate that the Attorney-General agrees with all aspects of it, nor does its release constitute a general waiver of legal professional privilege in respect of this or any other matter. Whilst care has been taken to ensure that this document is an accurate reproduction of the advice provided to the Attorney-General, neither the Ministry of Justice nor the Crown Law Office accepts any liability for any errors or omissions.