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Review of the Taxation Secrecy and Disclosure Provisions

Treasury Discussion Paper
Submission by the Office of the Privacy Commissioner

September 2006

Office of the Privacy Commissioner

The Office of the Privacy Commissioner (the Office) is an independent statutory body responsible for promoting an Australian culture that respects privacy. The Office, established under the Privacy Act 1988, has responsibilities for the protection of individuals' personal information that is handled by Australian and ACT government agencies, and personal information held by all large private sector organisations, health service providers and some small businesses. The Office also has responsibilities under the Privacy Act in relation to credit worthiness information held by credit reporting agencies and credit providers, and personal tax file numbers used by individuals and organisations.

Background

The Office welcomes the opportunity to provide a submission on the Review of Taxation Secrecy and Disclosure Provisions.

The Office understands that the Treasury has prepared this discussion paper in consultation with the Australian Taxation Office (ATO) and welcomes comments on:

• any of the ideas in the discussion paper; and
• any matters that may improve the operation of the tax secrecy and disclosure provisions.

Taxation Secrecy and Disclosure Provisions

The Office supports the aims of the review and recognises the need for standardising the Taxation Secrecy and Disclosure provisions to improve the consistency and application of Australia’s tax laws. Our understanding of the secrecy provisions in tax legislation is to provide protections for personal (taxpayer) information in addition to those protections already provided by the Information Privacy Principles (IPPs) in the Privacy Act. These provisions safeguard and enhance community confidence in the agencies that collect information, including personal information.

The Office understands that a major policy objective of the secrecy provisions in the tax system is to allow the system to function effectively by enabling members of the community who use the system to be confident that their information will be handled appropriately. However, the Office is concerned that any proposal to reduce privacy safeguards currently offered by the secrecy provisions could risk a lessening in that community confidence, therefore any proposal to amend the protections should be approached with great care.

Information Disclosure Framework

The Office understands that the proposed model for ascertaining allowable uses and disclosures of personal (taxpayer) information would be by applying the proposed Information Disclosure Framework.

It is the Office’s understanding that the proposed framework demonstrates an approach to disclosures based on the degree of connection that the use or disclosure of information has to the original use for which it was collected.

The Office appreciates Treasury’s recognition of the need to have specific secrecy provisions when handling people’s personal (taxpayer) information. The Office also acknowledges the various circumstances where the level of protection would need to be lessened to allow for required disclosures. Whilst the Information Disclosure Framework incorporates the need to assess the justifications for such disclosures in its framework, the Office believes that the framework might not provide a definitive indication about when a use or disclosure is permitted. As such, the Office is concerned that this framework may be too subjective and as such, potentially very difficult to apply.

When ascertaining whether the intended use or disclosure is permitted or not, it may be more appropriate to have a model that will yield more definitive responses. To this end, a preferred approach might be to have a set of standard secrecy protections but still include some exceptions stipulated by criteria which would permit the use or disclosure of personal (taxpayer) information. Whether or not personal (taxpayer) information can be used or disclosed in a manner not intended when the information was collected could be matched against the stipulated criteria to determine whether the suggested use or disclosure falls within one of the permitted exceptions to the secrecy protections.

This approach would allow for a more precise and unambiguous understanding of allowable uses and disclosures because it would be clearer whether a suggested use or disclosure falls within one of the exceptions to the secrecy provisions. If it does, then the use or disclosure is permitted. If it does not, then the use or disclosure is prohibited. Given the additional certainty, the application of this model may be more appropriate than the application of the Information Disclosure Framework.

The ATO should consider the interaction, if any, between the IPPs and proposed changes to the secrecy and disclosure provisions. If the current taxation secrecy protections were to be lessened or removed through application of the proposed Information Disclosure Framework, then the ATO should still be mindful of its obligations under the IPPs which would remain in effect.

Disclosure to the Commissioner of Taxation as an employee

The Office understands that one of the issues under discussion in chapter 5.3 of the discussion paper is a provision that will allow for the Commissioner of Taxation to have access to the taxpayer information of ATO employees. The Office recognises the intention of this proposal is to ensure that the ATO maintains high standards of taxation compliance by employees and fulfil community expectations that employees are not breaching tax laws. However, if this proposal is enacted, the Office would be concerned that the provision would lead to a reduction in existing taxation secrecy protections currently afforded to ATO employees.

The Office understands that if the current taxation secrecy protections were to be lessened or removed, tax employees would retain privacy protections provided under the IPPs, in particular IPP 10 which stipulates the limits on the use of personal information by Federal Government agencies.

Privacy impact assessment

The Office suggests that a privacy impact assessment be undertaken as part of the further development of the proposal. The Office has released its Privacy Impact Assessment Guide which is available at http://www.privacy.gov.au/publications/PIA06.pdf

The Guide provides Australian Government and ACT Government agencies with an introduction to the Privacy Impact Assessment (PIA) process. The Guide describes the purpose of a PIA and the general features of a PIA.

The Guide incorporates an IPP compliance checklist in Module E which was primarily developed by the Attorney–General’s Department.

Summary of Recommendations

The Office recommends that Treasury:

• reconsider its presently intended application of the Information Disclosure Framework;
• consider establishing a set of standard secrecy provisions but allow for exceptions by stipulating criteria that permit uses or disclosures of personal (taxpayer) information that was not intended when the information was collected;
• consider the issue of using ATO employees personal (taxpayer) information in light of its obligations under the IPPs; and
• undertake a Privacy Impact Assessment in relation to the proposed amendments to the secrecy and disclosure provisions.