The TIES issue 2010/23 records that there is an “inconsistency in the meaning of ‘entity’ between the Tax Administration Act 1953, A New Tax System (GST) Act 1999 and the A New Tax System (ABN) Act 1999.” The issue has been recorded as “in scope” however, it also notes that “Treasury is considering the legislative measures that would be required to address this issue, however because of complexity, the outcome may be protracted.” – see TIES website at http://www.ties.gov.au/registerOfIdeas.asp?sid=42&stat=Current
The recent ED dealing with self assessment of indirect taxes – which can be found at http://www.treasury.gov.au/contentitem.asp?NavId=037&ContentID=1939 – proposes an amendment to the Taxation Administration Act 1953 (TAA) to include a new section 14ZT that is proposed to state:
For the purposes of applying this Part to an objection under Subdivision 155 D in Schedule 1 to this Act, a reference in this Part to a person includes a reference to an entity (within the meaning of the A New Tax System (Goods and Services Tax) Act 1999).
As foreshadowed in the TIES comment, this is not the solution to the issue. In fact:
• the references throughout the TAA (other than Schedule 1) are to “person” rather than entity so the is an inherent asymmetry between the rulings, objections and review and penalty provisions in its identification of the taxpayer;
• the definition of “entity” used in the GST law, TAA, ABN Act, the 1997 Act and Tax Agent Services Act 2009 are not the same.
Most recently, the Clean Energy Bill 2011 (see http://climatechange.gov.au/en/government/submissions/clean-energy-legislative-package/clean-energy-bill-2011.aspx) imposes obligations on a “person” which is defined in section 5 of the Bill to mean any of the following:
(a) an individual;
(b) a body corporate;
(c) a trust;
(d) a corporation sole;
(e) a body politic;
(f) a local governing body.
You will appreciate that this definition is not the same as any of the definitions of “entity” in the other taxation laws. It may be that, in practice, the “person” may be the same legal person as is the “entity” defined in section 960-100 of the 1997 Act, it is not clear that this will always be the case and the omission of:
• partnerships;
• unincorporated associations; and
• rules about “capacity” in which a person acts,
indicates that the lack of symmetry in the key issue of rights and obligations will lead to difficulties in the future.
It may be that this drafting issue will be addressed in the passage of the package but, as the drafting of the last ten years of taxation law has not had the rigour to ensure that there is a consistency of definition is disturbing. This is particularly so where there has been as acceptance of the concept of a uniform tax code and harmonisation of administration, collection and recovery in the TAA. One small step before things get any worse would be to centre definitions that are applicable across the tax code in the TAA rather than the 1997 Act.