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Review of the Tax File Number Guidelines consultation paper

CONSULTATION PAPER

Purpose

The Office of the Australian Information Commissioner (OAIC) is undertaking a public consultation as part of its review of the Tax File Number Guidelines 1992 (TFN Guidelines).

The TFN Guidelines, issued under s 17 of the Privacy Act 1988 (Cth) (Privacy Act), are a legislative instrument and as such are binding.  The TFN Guidelines protect the privacy of individuals by regulating the collection, storage, use, disclosure, security and disposal of tax file number (TFN) information.

The existing TFN Guidelines are available from the OAIC's web site at www.oaic.gov.au/law/tax-file-numbers.html or in hard copy on request.

The OAIC has issued this paper for the purpose of assisting individuals, government agencies, and organisations to prepare comments on the following consultation documents:

  • draft revised TFN Guidelines - The proposed revisions to the TFN Guidelines are intended to enhance their clarity, language and presentation, without changing their policy intent
  • guidance material - The OAIC has also prepared draft guidance material for the draft revised TFN Guidelines, in the form of an information sheet containing frequently asked questions (FAQs). The information sheet will not form part of the TFN Guidelines. It will provide assistance in interpreting the TFN Guidelines, but is not legally binding.
  • updated 'Classes of Lawful Tax File Number Recipients' document - This document is currently attached to the annotated version of the existing TFN Guidelines. It is not legally binding, though it is issued in accordance with the TFN Guidelines, which require the Australian Taxation Office (ATO) and the Australian Prudential Regulation Authority (APRA)[1] to release publicly available information about matters including the classes of persons authorised to request TFNs. The ATO and APRA have produced an updated draft of the document for public comment.

This consultation paper and the consultation documents outlined above are also available in hard copy on request.

How to make comments

The Australian Information Commissioner invites your comments on the matters raised in this consultation paper.  The closing date for comment is 15 September 2011.

Submissions can be made to consultation@oaic.gov.au, GPO Box 5218 Sydney NSW 2001. You can also make comment on the OAIC blog at http://oaic.govspace.gov.au/.

Note: The OAIC intends to make all submissions publicly available.  Please indicate when making your submission if your submission contains confidential information which you do not wish to make public.  Requests for access to confidential comments will be determined in accordance with the Freedom of Information Act 1982 (Cth).

Privacy collection statement

The OAIC will use the personal information it collects in the course of this review only for the purpose of its review of the TFN Guidelines and related documents. 

Scope of the review

The main aims of the OAIC's review of the TFN Guidelines are to:

  • clarify the language and format of the TFN Guidelines and make them easier to read, understand and interpret
  • incorporate the advisory Commissioner's Notes into either the Guidelines themselves or the accompanying guidance material to help clarify the TFN Guidelines' meaning
  • bring the terminology up-to-date, by removing or changing references to agencies that no longer exist and to legislation which has been amended or repealed
  • update definitions so that they are consistent with relevant legislation and flexible enough to capture new legislation relating to the handling of TFNs
  • maintain the existing policy intent that underlies the TFN Guidelines to protect individuals' privacy by restricting the use and ensuring the careful handling of TFNs. 

The OAIC recognises that a review of the TFN Guidelines may stimulate interest in other issues that are outside the review's scope. Given that one of the aims of the review is to maintain the existing policy intent of the TFN Guidelines, the OAIC suggests that any comments and submissions that propose significant policy changes to privacy regulation should be directed in the first instance to the Department of the Prime Minister and Cabinet (DPMC) which has responsibility for administering the Privacy Act 1988 (Cth) (Privacy Act) and managing related law reform (http://www.dpmc.gov.au/).

TFN regulation and guidance overview

TFNs are unique numbers issued by the ATO to identify individuals, companies and others who lodge income tax returns with the ATO. Individuals who do not quote their TFN to employers and financial institutions have tax deducted from their income or interest payments at the highest marginal rate. Quotation of TFNs is also a condition of receipt of most Commonwealth government assistance payments.

The TFN Guidelines

The TFN Guidelines, issued under s 17 of the Privacy Act, protect the privacy of natural persons by regulating the collection, storage, use, disclosure, security and disposal of TFN information. The Guidelines do not protect TFN information relating to entities such as corporations, partnerships, superannuation funds and trusts.

The TFN Guidelines are a legally binding, disallowable instrument and are registered on the Federal Register of Legislative Instruments (FRLI).  A breach of the TFN Guidelines amounts to an interference with the privacy of an individual, who may complain to the Information Commissioner and, where appropriate, seek compensation.

Commissioner's Notes

The OAIC has published on its website a version of the existing TFN Guidelines which is annotatedto include the advisory Commissioner's Notes.  The Commissioner's Notes appear underneath the existing TFN Guidelines in italics. They are not legally binding, but are intended to assist in interpreting the TFN Guidelines.

'Classes of lawful tax file number recipients' document

The annotated version of the TFN Guidelines also includes the 'Classes of lawful tax file number recipients' document. As with the Commissioner's notes, the document is not part of the TFN Guidelines and is not legally binding. It is a joint ATO/APRA document and constitutes part of the ATO's and APRA's obligations under the TFN Guidelines to publish information on the classes of persons or bodies who are authorised by law to request an individual's TFN. The document was last updated by the ATO and APRA in May 2011.

Taxation Legislation

Unauthorised use or disclosure of TFNs is also an offence under the Taxation Administration Act 1953 (Cth), as well as constituting a breach of the TFN Guidelines. However, unlike the Guidelines, the Act protects all TFNs and not just those of natural persons. Specifically, s 8WA places restrictions on unauthorised requirements or requests that a person's TFN be quoted. Section 8WB places restrictions on the unauthorised recording, maintaining a record of, use or disclosure of a person's TFN.

TFN rules are also partly contained in the Income Tax Assessment Act 1936 (Cth). Furthermore, the Data-matching Program (Assistance and Tax) Act 1990 (Cth) provides for, and regulates, the matching of records between the ATO and the assistance agencies using the TFN in part of the matching process.

Background

In 2008, the Australian Law Reform Commission (ALRC) recommended in its Report 108, For Your Information: Australian Privacy Law and Practice [2] that the former Office of the Privacy Commissioner (OPC) should review the TFN Guidelines in consultation with the ATO and other stakeholders. The Australian Government has accepted the ALRC's recommendation, noting that such a review is a matter for the Privacy Commissioner.[3]  

Following the ALRC recommendations, the OPC commenced a review of the TFN Guidelines in 2009-10 with the intention of updating the language, structure and terminology while maintaining the existing policy intent (to protect individual's privacy by restricting the use and ensuring the careful handling of TFNs). The OPC prepareda revised set of draft TFN Guidelines which was the subject of an initial targeted consultation in December 2009.

The OAIC is now undertaking a public consultation as the next stage of its review of the TFN Guidelines with the aim of registering new revised TFN Guidelines by the end of 2011.

Consultation documents

The OAIC has prepared the following consultation documents for public comment:

  • draft revised TFN Guidelines
  • draft guidance material in the form of a draft information sheet (to be published on the OAIC website) featuring FAQs relevant to the draft revised TFN Guidelines
  • updated Classes of lawful tax file number recipients document.

Draft revised TFN Guidelines

The OAIC has developed draft revised TFN Guidelines for the public consultation which incorporates feedback received in the December 2009 targeted consultation.

The draft revised TFN Guidelines include the following changes to the existing TFN Guidelines:

  • The TFN Guidelines have been re-ordered to reflect the information handling cycle depicted in the privacy principles[4], and the current legal convention for placing definitions at the beginning of legislative instruments. The new order is as follows:
    • Introduction
    • Guideline 1 - Meaning of terms
    • Guideline 2 - General
    • Guideline 3 - Collection of tax file number information
    • Guideline 4 - Tax file numbers provided incidentally
    • Guideline 5 - Use or disclosure of tax file number information
    • Guideline 6 - Storage, security and destruction of tax file number information
    • Guideline 7 - Staff training
    • Guideline 8 - Obligations of the Commissioner of Taxation and the Australian Prudential Regulation Authority to publish
    • Guideline 9 - Assistance agency obligations to publish
  • Guideline 8 in the draft revised TFN Guidelines combines existing Guidelines 3 and 3A which relate to the obligations of the Commissioner of Taxation and APRA (the existing TFN Guidelines refer to APRA's predecessor, the Insurance and Superannuation Commissioner) to publish information relating to the handling of TFNs. The OAIC is of the view that combining Guidelines 3 and 3A will make the TFN Guidelines more concise and enhance their readability while still delineating ATO and APRA obligations
  • The language used in the TFN Guidelines has been simplified, making them easier to read, understand and interpret
  • The advisory Commissioner's Notes have been incorporated into either the TFN Guidelines or into new guidance material to help clarify the TFN Guidelines' meaning
  • Terminology in the TFN Guidelines has been updated by removing or changing references to agencies that no longer exist and to legislation that has been amended or repealed
  • The definitions of 'Assistance agency law' (renamed 'Personal assistance law'), 'Superannuation law', and 'Taxation law' have been updated so that they are consistent with and apply to relevant legislation; and are flexible enough to capture new legislation relating to the handling of TFNs, thereby reducing the need for regular updates
  • The 'Assistance agency law' definition in the existing TFN Guidelines is limited to laws that deal with the handling of TFNs for the purposes of data-matching as set down in the Data-matching Program (Assistance and Tax) Act 1990 (Cth) (DMPAT Act). The draft revised TFN Guidelines remove this limitation so that the TFN Guidelines also apply to laws which authorise TFN handling that is outside the scope of the DMPAT Act.

The changes outlined above are designed to maintain the policy intent underlying the existing TFN Guidelines - to protect individuals' privacy by restricting the use and ensuring the careful handling of TFNs.

Classes of lawful tax file number recipients document

As stated above, the Classes of lawful tax file number recipients document (Classes document) is not part of the TFN Guidelines (though it is appended to the version of the TFN Guidelines available from the OAIC website) and is not legally binding.

The ATO and APRA have reviewed and updated the Classes document and have agreed to it being included as part of the public consultation process for the TFN Guidelines. The OAIC will inform the ATO and APRA of any comments it receives during the consultation that relate to the Classes document.[5]

Guidance material - information sheet with FAQs

The OAIC has prepared draft guidance material in the form of an information sheet with frequently asked questions (FAQs) relevant to the draft revised TFN Guidelines.

The FAQs incorporate the Commissioner's Notes (which are currently embedded in the annotated version of the existing TFN Guidelines available on the OAIC website), the Tax File Number Compliance Notes (also available on our website), and new material.

The FAQs are advisory only and not legally binding. They are based on the OAIC's understanding of how the Privacy Act  and the TFN Guidelinesapply.  

The Commissioner's Notes have been incorporated into the draft revised TFN Guidelines or moved into the information sheet for the following reasons:

  • the simplified language in the draft revised TFN Guidelines has made the additional clarification unnecessary
  • it is not the OAIC's usual practice to release an annotated version of the legislative instruments it makes
  • the legal status of the Commissioner's Notes may be unclear or confusing when included in or appended to binding TFN Guidelines.

Also the former OPC issued three Tax File Number Compliance Notes in January 1989, March 1990 and September 1990. 

As with the Commissioner's Notes, the Compliance Notes were intended to assist with interpretation of the TFN Guidelines and do not have the force of law.  However, the Compliance Notes are out of date and it is proposed that they be replaced by the information sheet.

Stimulus Questions

The OAIC has prepared the questions below which are intended to stimulate comments and reflections on the draft revised TFN Guidelines. They are not intended to confine the issues that may be raised.  You may wish to respond to some or even all questions, or to raise other issues in line with the aims of the OAIC's review.

Stimulus Questions for the draft revised TFN Guidelines

  • 1) Reading, understanding and interpreting the TFN Guidelines
    • a. Are the draft revised TFN Guidelines easy to read, or could the language be simplified so that it is easier to understand and interpret?
    • b. Is the revised order of the draft revised TFN Guidelines appropriate? Should the order of the existing TFN Guidelines be maintained or would it be useful to rearrange them in some other way?
    • c. Is the merging of the existing Guidelines 3 and 3A, which relate to the obligations of the Commissioner of Taxation and APRA to publish information relating to the handling of TFNs, into a single Guideline (proposed Guideline 8) appropriate?
  • 2) References to agencies and legislation
    • a. How should references to agencies and legislation in the TFN Guidelines be amended, to ensure they are relevant, accurate, and up-to-date?
    • b. Are you aware of agencies or legislation which should be referred to (including under definitions) that are not currently included? Please give reasons (e.g.legislative authorisation/requirements).
    • c. Are you aware of agencies or legislation which are referred to in the Guidelines that should not be included? Why? (e.g.repealed/amended).
  • 3) Definitions
    • a. Should agencies continue to be defined or referred to by name, or in accordance with their relevant functions?
    • b. If by name, which agencies should be included and why?
    • c. Is the OAIC's revised approach for the definitions of 'assistance agency law' (renamed 'personal assistance law'), 'taxation law' and 'superannuation law' appropriate?
    • d. Are there other updates you would suggest to ensure the definitions in Guideline 1 (Meaning of terms) are accurate, up-to-date, and appropriate?
  • 4) The OAIC's proposed approach is to incorporate the Commissioner's Notes (advisory notes annotated in italics to the existing TFN Guidelines) into the revised TFN Guidelines themselves or accompanying guidance material 
    • a. Does this make the Guidelines easier to read, understand and interpret?
    • b. Are there any examples where the Commissioner's Notes make the existing TFN Guidelines clearer than the draft revised TFN Guidelines?
    • c. Have the Commissioner's Notes been adequately incorporated in the draft revised TFN Guidelines and accompanying guidance material?
  • 5) Are there any other ways in which the TFN Guidelines could be enhanced, while also maintaining their existing purpose and underlying intent?

Stimulus Questions for the information sheet/FAQs

The OAIC has prepared the stimulus questions below on matters that could be considered in developing the information sheet/FAQs for the draft revised TFN Guidelines. 

  • 1) Is this information sheet helpful, easy to read, accessible to the general public, and does it provide adequate assistance to you in interpreting the TFN Guidelines?
  • 2) Is this information sheet a useful and relevant substitute for guidance material currently found in the Commissioner's Notes and the Compliance Notes?
  • 3) Are there any forms, brochures or other external material of relevance to the handling of TFNs that you believe should be referenced in the information sheet?
  • 4) Is there any information that should be amended?
  • 5) Are there any other ways in which the information sheet could be enhanced?

[1] The TFN Guidelines refer to the the Insurance and Superannuation Commission (ISC). Legislative changes have caused the ISC to cease to exist and have split its functions between the Australian Prudential Regulations Authority (APRA) and the Australian Securities and Investments Commission. The functions relating to TFNs have been transferred to APRA. For this reason, any reference to the ISC in the existing TFN Guidelines should be read as a reference to APRA, pursuant to the Acts Interpretation Act 1901 (Cth).

[2] ALRC 2008, For Your Information: Australian Privacy law and Practice, recommendation 30-7, see http://www.austlii.edu.au/au/other/alrc/publications/reports/108/.

[3] Australian Government 2009, Enhancing National Privacy Protection - Australian Government First Stage Response to the ALRC Report 108, pages 76 and 85, see http://www.pmc.gov.au/privacy/alrc.cfm.

[4] The proposed re-ordering of the TFN Guidelines (where possible) generally reflects the information handling cycle depicted in the current National Privacy Principles (NPPs), the Information Privacy Principles (IPPs) and the proposed Australian Privacy Principles (APPs) - see exposure draft (the APPs) at www.aph.gov.au/Senate/committee/fapa_ctte/priv_exp_drafts/guide/exposure_draft.pdf

[5] The Classes document refers to the order of the existing Guidelines, for example it refers to Guidelines 3.1, 3A.1 and 9.2. Following the public consultation the OAIC will consult with the ATO and APRA to ensure the Classes document is consistent with the revised Guidelines.