Tuesday, 30 May 2023

Gambling Taxation Bill 2023

Introduction and first reading

The PRESIDENT (12:08): I have a message from the Assembly:

The Legislative Assembly presents for the agreement of the Legislative Council ‘A Bill for an Act to consolidate and amend various gambling taxes, to make consequential amendments to the Casino Control Act 1991, the Casino (Management Agreement) Act 1993, the Gambling Regulation Act 2003 and the Taxation Administration Act 1997 and for other purposes’.

Jaclyn SYMES (Northern Victoria – Attorney-General, Minister for Emergency Services) (12:08): I move:

That the bill be now read a first time.

Motion agreed to.

Read first time.

Jaclyn SYMES: I move, by leave:

That the second reading be taken forthwith.

Motion agreed to.

Statement of compatibility

Jaclyn SYMES (Northern Victoria – Attorney-General, Minister for Emergency Services) (12:09): I lay on the table a statement of compatibility with the Charter of Human Rights and Responsibilities Act 2006:

In accordance with section 28 of the Charter of Human Rights and Responsibilities Act 2006 (Charter), I make this Statement of Compatibility with respect to the Gambling Taxation Bill 2023.

In my opinion, the Gambling Taxation Bill 2023 (Bill), as introduced to the Legislative Council, is compatible with the human rights as set out in the Charter. I base my opinion on the reasons outlined in this Statement.

Overview

The Bill consolidates the administration of Victoria’s gambling taxes by imposing the casino taxes, keno tax, and the wagering and betting tax. The Bill also makes a number of consequential amendments to the Casino Control Act 1991 (Casino Control Act), the Casino (Management Agreement) Act 1993 (Management Agreement Act), the Gambling Regulation Act 2003 (Gambling Regulation Act) and the Taxation Administration Act 1997 (Taxation Administration Act).

The Bill reflects the Government’s response to the Royal Commission into the Casino Operator and Licence by consolidating the casino tax provisions from the Management Agreement Act and the Casino Control Act into a standalone Act; and transferring responsibility for collecting casino taxes from the Victorian Gambling and Casino Control Commission (VGCCC) to the Commissioner of State Revenue (Commissioner) by leveraging the Taxation Administration Act’s tax administrative framework. Keno tax and wagering and betting tax are also relocated from the Gambling Regulation Act to the Bill. The Bill will impose wagering and betting tax at a rate of 10% from 1 July 2023 to 30 June 2024 and 15% on and after 1 July 2024.

The Bill amends the Taxation Administration Act to make the Bill a taxation law. The Commissioner will be responsible for administering casino taxes, keno tax, and wagering and betting tax (collectively referred to as the gambling taxes) imposed by the Bill. It is therefore necessary to consider the human rights issues raised by the provisions of the Taxation Administration Act to the extent that they apply to the Bill.

The consolidation of the gambling taxes in, and the application of the Taxation Administration Act to, the Bill, will engage several human rights in the Charter which I outline below.

Human rights issues

The human rights protected by the Charter that are relevant to the Bill are:

• Freedom of movement, as protected under section 12 of the Charter which provides that every person lawfully within Victoria has the right to move freely within Victoria and to enter and leave it and has the freedom to choose where to live.

• Privacy and reputation, as protected under section 13 of the Charter which provides that a person has the right to not to have his or her privacy, family, home or correspondence unlawfully or arbitrarily interfered with and not to have his or her reputation unlawfully attacked.

• Property rights, as protected under section 20 of the Charter which provides that a person must not be deprived of his or her property other than in accordance with law. This right is not limited where there is a law that authorises a deprivation of property, and that law is adequately accessible, clear and certain, and sufficiently precise to enable a person to regulate their conduct.

• The presumption of innocence, as protected under section 25(1) of the Charter which provides that a person charged with a criminal offence has the right to be presumed innocent until proved guilty according to law.

• Protection from self-incrimination, as protected under section 25(2)(k) of the Charter which provides that a person charged with a criminal offence is entitled without discrimination not to be compelled to testify against himself or herself or to confess guilt. The Supreme Court of Victoria has held that this right, as protected by the Charter, is at least as broad as the common law privilege against self-incrimination. It applies to protect a charged person against the admission in subsequent criminal proceedings of incriminatory material obtained under compulsion, regardless of whether the information was obtained prior to or subsequent to the charge being laid. The common law privilege includes immunity against both direct use and derivative use of compelled testimony.

• The right to a fair hearing, as protected under section 24 of the Charter which provides that a person charged with a criminal offence or a party to a civil proceeding have the right to a fair hearing. The right to a fair hearing applies to both courts and tribunals, such as the Victorian Civil and Administrative Tribunal (VCAT). Generally, the right to a fair hearing is concerned with procedural fairness and access to a court or tribunal, rather than the substantive fairness of a decision of a court or tribunal determined on the merits of a case.

For the reasons outlined below, the Bill is compatible with each of these rights.

Right to Property – Section 20

Imposition of keno tax and wagering and betting tax

Section 20 of the Charter provides that a person must not be deprived of his or her property other than in accordance with law. This right is not limited where there is a law which authorises the deprivation of property, and that law is adequately accessible, clear, and certain, and sufficiently precise to enable a person to regulate their conduct.

The clauses of the Bill imposing both keno tax and wagering and betting tax engage the right to property to the extent that a natural person taxpayer may be liable to keno tax or wagering and betting tax.

The imposition of both keno tax and wagering and betting tax is not arbitrary because both taxes are precisely formulated in Parts 3 and 4 of the Bill. These clauses are adequately accessible, clear, and certain, and sufficiently precise to enable affected natural person taxpayers to inform themselves of their legal obligations and to regulate their conduct accordingly. Furthermore, taxpayers will have the protections provided by the Taxation Administration Act including rights of objection, review, appeal, and refund of overpaid tax.

In relation to the casino taxes imposed under Part 2 of the Bill, the Melbourne Casino Operator is a body corporate. Natural persons will therefore not be liable to pay the casino taxes.

Wagering and betting groups – joint and several liability

Division 4 of Part 4 of the Bill provides for grouping provisions to apply to the collection of the wagering and betting tax to prevent the potential erosion of the tax base. The grouping provisions provide for the group to nominate a designated group entity which will register, lodge and pay wagering and betting tax on behalf of the group.

The provisions also provide for the joint and several liability of members of a group in respect of the group’s liability for tax; in other words, every member of a group (whether or not that member is a wagering and betting entity) is jointly and severally liable with the other members in respect of any period to pay the tax payable by the designated group entity of that group in respect of that period. Therefore, where a member of a group is a natural person, such as a sole trader or a partner, that natural person will be jointly and severally liable for tax that is payable by the designated group entity. The payment of tax based on joint and several liability may therefore engage the right to property of a natural person group member.

The purpose of joint and several liability provisions is to ensure the recovery of unpaid wagering and betting tax in the event of a default by the designated group entity. In my view, the imposition of joint and several liability on all members of a group is a reasonable and justified limitation on a natural person’s right to property, because this action is likely to be the most effective method of ensuring payment of the wagering and betting tax in the event of a tax default.

Consistent with non-grouped wagering and betting entities that are natural persons, any group liabilities will be assessed and administered in accordance with the Bill and the Taxation Administration Act which establishes the Commissioner’s powers and obligations, taxpayers’ right of objection, review, appeal and recovery. A person will not be deprived of his or her property other than in accordance with the law.

For the reasons above, in my view the clauses of the Bill are compatible with the right to property under section 20 of the Charter.

Investigative powers of tax officers

As noted above, the Taxation Administration Act will apply to the Bill. Part 9 of the Taxation Administration Act provides authorised officers with investigation powers to administer and enforce taxation laws. Section 20 of the Charter is relevant to a number of powers which provide for authorised officers to enter certain premises, and to seize or take items. These powers are discussed in detail below in relation to the right to privacy.

I consider that section 20 will not be limited by these powers, because any deprivation of property will occur in accordance with law. The circumstances in which investigators/authorised persons are permitted to seize or take items or documents are provided for by clear legislative provisions, and the powers are strictly confined. The items that may be taken or seized will be relevant to and connected with enforcing compliance with the Bill. For instance, a magistrate may only issue a search warrant if satisfied by evidence on oath or affidavit that there are reasonable grounds for suspecting that there is, or may be within the next 72 hours, a particular thing on the premises that may be relevant to the administration or execution of a taxation law. Further, under section 77 of the Taxation Administration Act, a document or thing may only be searched for, seized or secured against interference if it is described in the warrant issued by a magistrate.

The powers of an authorised officer include, under section 76 of the Taxation Administration Act, the power to seize a document or thing where the officer has reason to believe or suspect it is necessary to do so to prevent its concealment, loss, destruction or alteration. Similarly, section 83 of the Taxation Administration Act provides that an authorised officer may seize a storage device and the equipment necessary to access information on the device if the authorised officer believes, on reasonable grounds, that the storage device contains information relevant to the administration of a taxation law and it is not otherwise practicable to access the information on the device.

In my opinion, sections 76 and 83 of the Taxation Administration Act, as they will apply to the Bill, do not limit the right in section 20 of the Charter because they are sufficiently confined and structured, accessible, and formulated precisely such that any deprivation occurs in accordance with the law.

Further, these provisions guard against any permanent interference with property where no offence has been committed. For example, the Taxation Administration Act provides that reasonable steps must be taken to return a document or thing that is seized if the reason for its seizure no longer exists (section 84), and the document or thing seized must be returned within the retention period of 60 days, unless the retention period is extended by an order of the Magistrates Court (section 85).

For the reasons above, in my opinion the provisions of the Bill are compatible with the right to property in section 20 of the Charter.

Privacy and Reputation – section 13

An interference with privacy will limit the right in section 13(a) of the Charter if it is unlawful or arbitrary interference.

Requirement to provide information in returns

Clauses 13, 20 and 36 of the Bill require those liable to pay any of the gambling taxes to register with the Commissioner, lodge returns, and pay the requisite tax. As the Bill will be a taxation law under the Taxation Administration Act, section 10 of that Act provides that a taxpayer must provide in a return all information necessary for a proper assessment of tax liability, including any further information not otherwise required under a taxation law.

It is expected that most returns will be submitted by entities, rather than individuals, and not all the information required to be provided in a return will be personal information. However, to the extent that the collection of personal information may result in interference with a person’s privacy, any such interference will be lawful and not arbitrary. These provisions do not require that a person’s personal information be published, and only require the provision of information necessary to achieve the purpose of taxation administration. Accordingly, in my view they do not limit the right to privacy.

Section 92(1)(e) of the Taxation Administration Act permits a tax officer to disclose information obtained under or in relation to the administration or execution of a taxation law to a listed authorised recipient.

Presently, section 92(1)(e)(xv) provides that the VGCCC is an authorised recipient for the purposes of administering the Gambling Regulation Act and any regulations made under that Act. Consequential amendments to the Taxation Administration Act will now extend disclosure to include the Casino Control Act and the Management Agreement Act as a result of casino taxes being imposed by the Bill. Although the imposition, registration and return function lies with the Commissioner for the gambling taxes, there will be instances where a tax officer (as defined in section 3(1) of the Taxation Administration Act) may disclose information protected under section 91(1) of the Taxation Administration Act to the VGCCC to assist in its administration of the Casino Control Act, the Management Agreement Act and the Gambling Regulation Act with regard to such matters as disciplinary action and licence suspension.

The type of information that may be disclosed includes, but is not limited to, information regarding registration, lodgements of returns and payments by taxpayers, taxation defaults by taxpayers, and applications for objection, appeal and review under Part 10 of the Taxation Administration Act by taxpayers.

To the extent that a tax officer’s discretionary power to disclose protected information to the VGCCC interferes with a natural person’s right to privacy, I consider that interference to be neither arbitrary nor unlawful. These amendments ensure that the Commissioner and the VGCCC can exercise their respective regulatory and law enforcement functions in accordance with legislation. I therefore consider that these clauses do not limit the right to privacy.

Investigative powers of tax officers

The inclusion of the Bill as a taxation law under the Taxation Administration Act ensures that the investigative powers of the Commissioner and authorised tax officers apply to the gambling taxes. The following investigation powers may interfere with the right to privacy, as well as the right not to impart information, which forms part of the right to freedom of expression under section 15 of the Charter:

• Section 73 of the Taxation Administration Act provides that the Commissioner of State Revenue may, by written notice, require a person to provide the Commissioner with information, produce a document or thing in the person’s possession, or to attend and give evidence under oath.

• Section 76 of the Taxation Administration Act provides that an authorised officer may, at any reasonable time, enter and search any premises, and inspect, photograph or make copies of any document on the premises.

• Section 77 of the Taxation Administration Act provides that an authorised officer may apply to a magistrate for a search warrant in relation to a premises, including a residence, if the authorised officer considers on reasonable grounds that there is, or may be within the next 72 hours, on the premises a particular thing that may be relevant to the administration or execution of a taxation law.

• Section 83 of the Taxation Administration Act provides that an authorised officer may, or may require an employee of the occupier to, operate equipment on the premises to obtain information from a storage device that the authorised officer believes, on reasonable grounds, contains information relevant to the administration of a taxation law.

• Section 86 of the Taxation Administration Act provides that an authorised officer may, to the extent it is reasonably necessary to do so for the administration or execution of a taxation law, require a person to give information, produce or provide documents and things, and give reasonable assistance, to the authorised officer.

In each provision that permits investigators to exercise powers of entry and search, the powers of investigators and other authorised persons are clearly set out in the Taxation Administration Act and are strictly confined by reference to their purpose. They are also subject to appropriate legislative safeguards. In particular:

• A warrantless search under section 76 of the Taxation Administration Act cannot be conducted in respect of premises used for residential purposes except with the written consent of the occupier of the premises (section 76(6)). An authorised officer may not exercise a power under section 76 unless the officer produces, on request, his or her identity card (section 76(5)).

• A search warrant issued by a magistrate under section 73 of the Taxation Administration Act must specify the premises to be searched, a description of the thing for which the search is made, any conditions to which the warrant is subject, whether entry is authorised to be made at any time or during specified hours, and must specify a day not later than seven days after its issue after which the warrant ceases to have effect (section 77(3)). Where entry under warrant or pursuant to court order occurs, an authorised officer must issue an announcement and give persons on the premises an opportunity to allow entry, unless the officer believes on reasonable grounds that immediate entry is necessary to ensure the safety of a person, or ensure the effective execution of the search warrant is not frustrated (section 78). The authorised officer is also required to identify himself or herself and must give a copy of the warrant to the occupier of the premises (section 79).

• Further, Division 3 of Part 9 of the Taxation Administration Act includes broad secrecy obligations that prohibit tax officers from disclosing information obtained in relation to their functions, except as permitted under Part 9 of the Taxation Administration Act.

Clause 75 of the Bill also applies section 92 of the Taxation Administration Act, which permits the disclosure of information obtained in the administration of a taxation law. Specifically, section 92(1) permits the disclosure of such information for several different purposes, including in accordance with a requirement imposed under an Act, in connection with the administration or execution of a taxation law, to an authorised recipient such as the Ombudsman or a police officer of or above the rank of inspector, or in connection with the administration of a legal proceeding arising out of a recognised law. As with the search and seizure powers of authorised officers under this Part, permitted disclosures are strictly confined to their legitimate purposes and are subject to considerable legislative safeguards. In particular, section 94 of the Taxation Administration Act prohibits ‘secondary disclosure’, that is, disclosure of any information provided under section 92, unless it is for the purpose of enforcing a law or protecting public revenue, or a disclosure made with the consent of the person to whom the information relates (or at the request of a person acting on behalf of that person). Further, section 95 provides that an authorised officer is not required to disclose or produce in court any such information unless it is necessary for the purposes of the administration of a taxation law, or to enable a person to exercise a function imposed on the person by law.

Accordingly, to the extent that these investigation powers could interfere with a person’s privacy, any interference would not constitute an unlawful or arbitrary interference.

Freedom of Movement – section 12

Section 12 of the Charter provides that every person lawfully within Victoria has the right to move freely within Victoria. As the Bill will be administered under the Taxation Administration Act, the administration of the gambling taxes may involve the exercise of the investigative powers provided in section 73 of the Taxation Administration Act. These investigative powers may also be exercised in relation to the collection of reportable information under Part 9 of the Taxation Administration Act.

If, under section 73(1)(b) of the Taxation Administration Act the Commissioner exercises their power to direct a natural person to attend and give evidence in relation to a matter, a natural person’s right to move freely within Victoria may be engaged. Section 73(8) makes it an offence to refuse to comply with a direction made under section 73(1)(b). However, section 73(5) provides that a person required to attend and give evidence orally is to be paid expenses in accordance with prescribed scale.

It is arguable that a person’s right to move freely within Victoria may be engaged when the Commissioner exercises their power under section 73(1)(b).

However, although the power to compel a natural person to attend a particular place at a particular time technically limits that person’s freedom to choose to be elsewhere at that time, this differs qualitatively from the types of measures that Victorian courts have regarded as engaging the right to freedom of movement, such as restrictions placed on a person’s place of residence, or ability to leave their residence, and police powers to conduct a traffic stop.

To the extent that section 73 of the Taxation Administration Act is capable of being considered to limit the right of freedom of movement, I consider that any such limit is demonstrably justified under section 7(2) of the Charter, as the Commissioner’s power to compel a natural person’s attendance to give evidence will in certain circumstances be essential to obtain the information needed for the proper administration of the gambling taxes imposed by the Bill.

Presumption of innocence – section 25(1)

Defences of Reasonable Excuse

The right to be presumed innocent may be considered relevant to several offences under the Taxation Administration Act that place an evidential burden on the defendant, and which apply to the gambling taxes as a result of clause 75 of the Bill.

As outlined above, section 73 of the Taxation Administration Act empowers the Commissioner to issue a written notice requiring a person to provide information, produce a document or thing, or give evidence. Section 73A provides that the Commissioner may certify to the Supreme Court that a person has failed to comply with a requirement of a notice issued under section 73. The Supreme Court may inquire into the case and may order the person to comply with the requirement in the notice. Section 73A(4) provides that a person who, without reasonable excuse, fails to comply with an order of the Supreme Court under s 73A(2), is guilty of an offence.

Section 88 of the Taxation Administration Act makes it an offence for a person, without reasonable excuse, to refuse or fail to comply with a requirement made or to answer a question of an authorised officer asked in accordance with sections 81 or 86 of the Taxation Administration Act.

Section 90 establishes a defence of reasonable compliance for offences relating to the investigation powers of authorised officers under Part 9 of the Taxation Administration Act. It provides that a person is not guilty of an offence if the court hearing the charge is satisfied that the person could not, by the exercise of reasonable diligence, have complied with the requirement to which the charge relates, or that the person complied with the requirement to the extent that he or she was able to do so.

Clauses 20, 36 and 48 of the Bill also introduce offence provisions that place an evidential burden on the defendant. Clause 20 makes it an offence for a keno entity that becomes liable for keno tax to fail to apply to the Commissioner for registration under Division 3 of Part 3 of the Bill before the end of the first month in which the entity becomes liable unless the entity has a reasonable excuse for not applying for registration. Clause 36 imposes a similar offence on a wagering and betting entity that fails to apply to the Commissioner for registration under Division 3 of Part 4 of the Bill in relation to wagering and betting tax unless the entity has a reasonable excuse for not applying. Clause 48 makes it an offence for the designated group entity of a group to fail to apply to the Commissioner for registration under Division 4 of Part 4 of the Bill unless the entity has a reasonable excuse.

Although these provisions require a defendant to raise evidence of a matter to rely on a defence, I am satisfied that the provisions impose an evidential, rather than legal burden. Courts in other jurisdictions have generally taken the approach that an evidential onus on a defendant to raise a defence does not limit the presumption of innocence. The defences and excuses provided relate to matters within the knowledge of the defendant, which is appropriate in circumstances where placing the onus on the prosecution would involve the proof of a negative which would be very difficult.

For the above reasons, I am satisfied that neither the Bill’s offence provisions, nor those of the Taxation Administration Act as applied to the gambling taxes in the Bill, limit the right to be presumed innocent in section 25(1) of the Charter.

Failure to exercise due diligence

The right to be presumed innocent is also relevant to section 130C of the Taxation Administration Act, which establish the criminal liability of an officer of a body corporate for the failure to exercise due diligence in certain circumstances, and which imposes a legal burden of proof on that officer. Section 130C provides that if a body corporate commits a specified offence, such as giving false or misleading information to tax officers contrary to section 57(1), or tax evasion contrary to section 61, an officer of the body corporate is also deemed to have committed the offence.

Section 130C(3) provides that it is a defence to a charge for an officer of a body corporate to prove that they exercised due diligence to prevent the commission of the offence by the body corporate. The defence in 130C(3) of the Taxation Administration Act imposes a legal burden on the defendant. However, I am of the view that the imposition of a legal burden to rely on the defence of due diligence is compatible with the right to presumption of innocence in section 25(1) of the Charter, as any limits on the right will be reasonably justified under section 7(2) of the Charter. Section 130C applies only to a narrow range of offences of dishonesty, and only to officers of a body corporate as persons who carry on a specific role and possess significant authority and influence over the body corporate. The gambling industry is highly regulated, and special responsibilities and obligations apply to persons who participate in the gambling industry. Courts in other jurisdictions have held that the presumption of innocence may be subject to limits particularly where, as here, the offence is of a regulatory nature. Further, a defence is available for the benefit of an accused to escape liability where they have taken reasonable steps to ensure compliance in respect of what could otherwise be an absolute or strict liability offence.

The purpose of these provisions is to ensure compliance with the Bill by deterring intentional acts of dishonesty in the administration of the gambling taxes imposed by the Bill. A person who elects to undertake a position as officer of a body corporate accepts that they will be subject to certain requirements under the Bill and the Taxation Administration Act and will be expected to be able to demonstrate their compliance with these requirements. This includes the expectation that an officer of a body corporate can demonstrate compliance with a requirement to exercise due diligence to prevent the commission of these offences of dishonesty by the body corporate taxpayer. Moreover, whether an officer of a body corporate has exercised due diligence is a matter peculiarly within the knowledge of that person. Such persons are best placed to prove whether they exercised due diligence. Conversely, it would be very difficult for the prosecution to prove the matter in the negative. Accordingly, I am of the view that section 130C(3) of the Taxation Administration Act, as applied by the amendment in clause 75 of the Bill, is compatible with the right to the presumption of innocence protected by the Charter.

Self-incrimination – section 25(2)(k)

Section 25(2)(k) of the Charter provides that a person charged with a criminal offence is entitled not to be compelled to testify against himself or herself or to confess guilt. The Supreme Court has held that this right, as protected by the Charter, is at least as broad as the common law privilege against self-incrimination. It applies to protect a charged person against the admission in subsequent criminal proceedings of incriminatory material obtained under compulsion, regardless of whether the information was obtained prior to or subsequent to the charge being laid. The common law privilege includes immunity against both direct use and derivative use of compelled testimony.

Section 86 of the Taxation Administration Act, which will apply to the Bill provides that an authorised taxation officer may, in the exercise of his or her investigative functions, require a person to give information, produce or provide documents and things, and give reasonable assistance, to the authorised officer. It is an offence to fail to comply with a requirement made or to answer a question under this section. Section 87(1) limits the right to protection against self-incrimination by providing that a person is not excused from answering a question, providing information, or producing a document or thing on the ground that to do so might tend to incriminate the person or make the person liable to a penalty. Section 87(2) provides that, if a person objects to answering a question, providing information, or producing a document or thing, the answer, information, document or thing is not admissible in any criminal proceeding other than proceedings for an offence against a taxation law, or proceedings for an offence in the nature of perjury.

In my view, section 87 of the Taxation Administration Act is a reasonable limit on the right to protection against self-incrimination under section 7(2) of the Charter. The ability of an authorised officer to require a person to give information or answer questions will be necessary for the proper administration of the Bill. To this end, I note that the information, answers, or documents obtained are only admissible in proceedings for an offence relating to the proper administration of the Bill, and section 87(2) of the Taxation Administration Act otherwise preserves both the direct use immunity and derivative use immunity.

Further, with respect to the power of an authorised officer to require the production of documents, I note that at common law, the protection accorded to the compelled production of pre-existing documents is considerably weaker than the protection accorded to oral testimony or to documents brought into existence to comply with a request for information. This is particularly so in the context of regulated industry, where documents or records are required to be produced during the course of a person’s participation in that industry and exist for the dominant purpose of demonstrating that person’s compliance with his or her relevant duties and obligations. The duty to provide documents in this context is consistent with the reasonable expectations of these individuals as persons who operate within a regulated scheme.

I am of the view that there are no less restrictive means available to achieve the purpose of enabling the proper administration of the Bill, as providing an immunity that applies to the offence of perjury or an offence under the Bill or the Taxation Administration Act would unreasonably obstruct the role of the authorised person to investigate compliance with the Bill. Accordingly, I consider that this clause is compatible with the right not to be compelled to testify against oneself in section 25(2)(k) of the Charter.

Fair Hearing – section 24(1)

Clause 79 of the Bill inserts a new subsection (12) into section 135 of the Taxation Administration Act to provide that it is the intention of sections 5, 12(4), 18(1), 96(2) and 100(4) of the Taxation Administration Act, as those sections apply after the commencement of clause 12, to alter or vary section 85 of the Constitution Act 1975. These provisions preclude the Supreme Court from entertaining proceedings of a kind to which these sections apply, except as provided by those sections.

A central purpose of this Bill is to alter current taxing arrangements in relation to the gambling taxes and in particular, to bring the casino taxes under the administration of the Taxation Administration Act. Section 5 of the Taxation Administration Act defines the meaning of a non-reviewable decision in relation to the Taxation Administration Act, which will apply to the Bill. ‘Non-reviewable’ is referred to in sections 12(4) and 100(4) of the Taxation Administration Act.

The reason for limiting the jurisdiction of the Supreme Court in relation to a compromise assessment under section 12 of the Taxation Administration Act is that agreement has been reached between the Commissioner and a taxpayer on the taxpayer’s liability, and the purpose of section 12 would not be achieved if a compromise assessment were reviewable.

Section 18 of the Taxation Administration Act establishes a procedure, the adherence to which is a condition precedent to taking any further action for recovering refunds. The purpose of the provisions is to give the Commissioner the opportunity to consider a refund application before any collateral legal action can be taken. The purpose of these provisions would not be achieved if the Commissioner’s actions were subject to review.

Division 1 of Part 10 of the Taxation Administration Act establishes an exclusive code for dealing with objections, and this Division will also apply where the Commissioner issues an assessment in relation to any of the gambling taxes. This code establishes the rights of objectors in a statutory framework and precludes any collateral actions for review of the Commissioner’s assessment. The objections and appeals provisions of Part 10 of the Taxation Administration Act establish that review of assessments is only to be undertaken in accordance with an exclusive code identified in that Part. The purpose of these provisions would not be achieved if any question concerning an assessment was subject to judicial review except such judicial review as provided by Division 2, Part 10 of the Taxation Administration Act.

A power is provided to the Commissioner under section 100 of the Taxation Administration Act, which provides that Commissioner with discretion to allow an objection to be lodged even though it is out of time, provided the out of time objection is lodged within 5 years after the date of service of the notice of assessment or decision on the taxpayer. This decision is non-reviewable to ensure the efficient administration of the Taxation Administration Act and to enable outstanding issues relating to assessments to be concluded expeditiously.

In this context, I am satisfied that, to the extent that limiting the jurisdiction of the Supreme Court may limit a person’s fair hearing rights as protected under section 24(1) of the Charter, any such limit would be demonstrably justified.

The classification of certain decisions under the Taxation Administration Act as ‘non-reviewable’ is directly related to the particular statutory purpose and context of those particular decisions, and the Taxation Administration Act provides an alternative regime for dealing with objections, which is necessary for the efficient discharge of the Commissioner’s functions under the Taxation Administration Act, which will now include the administration of the Bill as a taxation law.

Accordingly, I confirm that the Bill is, in my opinion, compatible with the right in section 24(1) of the Charter.

Conclusion

For these reasons set out above, in my opinion, the Bill is compatible with the rights protected by sections 12, 13, 20, 24, 25(1) and 25(2)(k) of the Charter.

The Hon. Jaclyn Symes MP

Attorney-General

Minister for Emergency Services

Second reading

Jaclyn SYMES (Northern Victoria – Attorney-General, Minister for Emergency Services) (12:09): I move:

That the bill be now read a second time.

Ordered that second-reading speech, except for the statement under section 85(5) of the Constitution Act 1975, be incorporated into Hansard:

The Gambling Taxation Bill 2023 delivers a significant recommendation of the Royal Commission into the Casino Operator and Licence (Royal Commission) to strengthen the casino taxation arrangements for Crown Melbourne. The Bill also consolidates the administration of a number of Victoria’s gambling taxes. The Bill also implements 2022–23 and 2023–24 budget measures.

Casino taxes

As the casino operator, Crown Melbourne is required to pay casino taxes to the State under its Management Agreement with the State. The Management Agreement has the force of a statutory enactment through the Casino (Management Agreement) Act 1993 (Management Agreement Act). The Victorian Gambling and Casino Control Commission (VGCCC) is currently responsible for collecting and administering these taxes.

Casino tax applies to Crown Melbourne’s gaming revenue from table games and electronic gaming machines (EGMs) installed at the casino, as well as the gaming revenue from commission-based players or ‘high rollers’ (predominantly international players). In addition, Crown Melbourne is liable for a 1 per cent community benefit levy on its total gaming revenue, the full amount of which is contributed to the Hospitals and Charities Fund.

Additional casino taxes apply to gaming revenue and commission-based player revenue, which are payable by Crown in respect of a financial year if those revenues exceed a certain amount.

Royal Commission

The report of the Royal Commission, released on 26 October 2021, found Crown Melbourne improperly claimed deductions from gaming revenue over a number of years to reduce its tax bill. As a result, it was found to have underpaid millions of dollars in casino tax to the State. The Royal Commission identified Crown Melbourne’s lack of compliance with its tax obligations was emblematic of its disregard of the law, including evidence of persistent efforts to obstruct the regulator. It was a significant instance of misconduct in a pattern that led Commissioner Finkelstein to conclude Crown Melbourne was not suitable to hold the Victorian casino licence.

To remedy this, the Royal Commission recommended that casino taxation arrangements be brought under the Taxation Administration Act 1997 (TAA). The TAA contains a standardised set of administration and enforcement provisions applying to a number of Acts defined as taxation laws under the TAA, which are administered by the Commissioner of State Revenue (Commissioner) and the State Revenue Office (SRO).

After the release of the report of the Royal Commission on 26 October 2021, the Government has acted decisively – committing to strengthen the casino’s oversight so that misconduct of the type uncovered in the Royal Commission cannot happen again. Strengthening tax arrangements for the casino operator is a key area of reform.

The Bill implements the Royal Commission’s recommendation by transferring casino taxation provisions to a new Gambling Taxation Act, which will fall under the scope of the TAA from its commencement on 1 July 2023. As all taxation laws under the TAA are administered by the Commissioner, casino tax administration will also transfer from the VGCCC to the SRO from 1 July 2023. As a specialist administrator of tax legislation, the SRO is well placed to provide the strongest level of oversight in relation to Crown’s tax affairs. The SRO has the capacity to conduct rigorous compliance, including the ability to impose taxation penalties.

In transferring taxing provisions from the Management Agreement Act, the Bill makes the necessary changes to transfer administrative responsibility for collecting tax from the VGCCC to the Commissioner, such as by imposing the requirement for the casino operator to register with the Commissioner and to lodge and pay its tax liability monthly.

The VGCCC will remain responsible for collecting other amounts owned by Crown Melbourne under the Management Agreement Act and the Casino Control Act 1991, such as the annual supervision charge that was recently reintroduced in the Casino Legislation Amendment (Royal Commission Implementation and Other Matters) Act 2022.

The Bill amends the Casino Control Act 1991 to ensure an effective regulatory structure by clearly delineating the regulatory role of the VGCCC and the taxation role of the Commissioner. The Bill expands the grounds for the VGCCC to take disciplinary action against the casino to include any contraventions of the new Gambling Taxation Act or the TAA. Additionally, under the TAA the SRO will be empowered to disclose pertinent information obtained in administering casino taxes to the VGCCC, where disclosure is appropriate and relevant to the VGCCC’s regulatory or disciplinary functions.

The Bill amends the Management Agreement Act to cease all tax obligations under the Management Agreement from 1 July 2023 so that casino taxes will be imposed exclusively under the new Act on and after that date. A “no liability” provision will be inserted into the Management Agreement Act to prevent any inadvertent liability to the State from arising due to this change to taxation arrangements.

Equalisation of casino and club tax rates on gaming machines

In line with the 2022–23Budget announcement, this Bill increases total rates on casino gaming machines from 1 July 2023 so that Crown Melbourne is subject to the same tax structure as venue operators with club entitlements. Crown Melbourne currently pays a lower tax rate on its gaming machines than smaller clubs. This initiative will increase the maximum marginal tax rate for electronic gaming machines operated at the casino from 31.57 per cent to 60.67 per cent (plus the 1 per cent community benefit levy).

Equalising the gambling tax rates between the casino and clubs operating gaming machines ensures the Victorian Government receives a fair share of the super profits Crown Melbourne earns from operating gaming machines, without affecting its economic viability. It will improve taxation equity by ensuring the taxes paid by Crown Melbourne, the largest gambling venue in the State, are not lower than rates at smaller, not-for-profit, community-based venues. Commission-based play on gaming machines will continue to be taxed at 10 per cent (inclusive of the community benefit levy).

Wagering and betting tax and keno tax

The introduction of this Bill provides an opportunity to consolidate the various gambling taxes that are already administered by the Commissioner under the TAA. Under the Gambling Regulation Act 2003 (Gambling Regulation Act), taxes are imposed on operators offering wagering and betting or keno products, which are administered by the Commissioner and SRO as taxes under the TAA.

From 1 January 2019, the Government introduced a point of consumption framework for the taxation of wagering and betting to level the playing field for wagering operators and better aligns Victoria’s tax system with the increasingly digital betting environment. The wagering and betting tax for wagering and betting entities is 10 per cent on the net wagering revenue derived from customers located in Victoria, with an annual $1 million tax free threshold. The tax is administered by the Commissioner under the TAA, and wagering and betting entities must apply to register with the Commissioner, lodge returns and pay tax monthly. The majority of revenue raised from the tax is paid into the Hospitals and Charities Fund, but a proportion (currently 3.5 per cent of net wagering revenue per month) is paid to the Victorian racing industry to support its viability and competitiveness. An annual contribution is also made out of wagering and betting tax revenue in support of the ANZAC Day Proceeds Fund.

From 15 April 2022 a point of consumption framework has also applied to keno tax under the Gambling Regulation Act. Providers of keno products are liable for a tax of 24.24 per cent on the net keno revenue generated from customers located in Victoria, which is administered by the Commissioner and the SRO as a tax under the TAA.

Given the shared subject matter and administrative aspects of these taxes, the Bill relocates taxing provisions for keno tax and wagering and betting tax from the Gambling Regulation Act to the new Act with minimal changes. Consolidating these taxing provisions together with the casino tax provisions will simplify administration by the SRO.

2023–24 budget measure – wagering and betting tax

The new wagering and betting tax provisions will implement an in increase the wagering and betting tax rate from 10 per cent to 15 per cent of net wagering revenue from 1 July 2024, bringing Victoria into line with the rate that applies in New South Wales and most other states and territories. The tax rate will remain at 10 per cent for the 2023–24 financial year.

The new tax rate will enable the Government to lift the amount of net wagering revenue that is paid to the Victorian Racing Industry from 3.5 per cent to 7.5 per cent. The balance of revenue from the tax will continue to be distributed to the Hospitals and Charities Fund and the ANZAC Day Proceeds Fund.

Taxation Administration Act

The Bill amends the TAA to ensure the new Act constitutes a taxation law, allowing its full suite of provisions to apply. The TAA contains extensive provisions to deal with tax collection and refunds, interest and penalty tax on unpaid tax, debt recovery, record-keeping obligations, objections and other administrative matters.

The TAA creates offences with significant penalties for taxpayers who fail to provide all necessary information in lodgements to enable tax liabilities to be properly assessed, to keep proper records or to comply with requirements of the Commissioner or an authorised officer investigating a taxpayer’s compliance. There are serious offences under the TAA for the provision of false or misleading information to tax officers, making deliberate omissions of information, engaging in tax evasion or obstructing the Commissioner or an authorised officer exercising an investigatory function.

A key finding of the Royal Commission is that the existing Management Agreement does not adequately provide for the imposition of penalties in respect of Crown Melbourne’s underpayment of tax, apart from penalty interest. Leveraging the TAA’s administrative framework means a standardised framework for interest and penalty tax will apply to casino taxes from 1 July 2023. Interest on unpaid tax under the TAA applies at a market rate of interest, updated annually, plus a premium rate of 8 per cent per year. The Commissioner may also impose penalty tax on unpaid tax in the event of a tax default. Penalty tax is an additional amount of tax starting at 25% of the unpaid amount; however, it can be varied depending on the circumstances to reflect the degree of the taxpayer’s culpability. Penalty tax may be increased up to 90% for the most serious forms of misconduct. If appropriate, the Commissioner may also remit interest or penalty tax.

The Bill acquits the Royal Commission’s recommendation to introduce an enhanced taxation framework for Crown Melbourne, ensuring a comprehensive range of offences and taxation penalties apply to penalise and deter future misconduct. Extending a more comprehensive range of monetary penalties under the TAA to apply to contraventions of tax obligations by Crown Melbourne, including its senior executives, will strengthen the compliance framework under which Crown operates and ensure Crown’s behaviour as a taxpayer is consistent with maintaining a social licence to operate.

Jurisdiction of the Supreme Court of Victoria

I draw the members’ attention specifically to clause 79 of the Bill. This clause of the Bill proposes to limit the jurisdiction of the Supreme Court to ensure that the legislative regime under the Taxation Administration Act 1997 extends to the new Act in the same way as in relation to any other taxation law. Accordingly, I provide a statement under section 85(5) of the Constitution Act 1975 of the reasons for altering or varying that section by this Bill.

Section 85(5) of the Constitution Act 1975

Jaclyn SYMES: I wish to make a statement under section 85(5) of the Constitution Act 1975 of the reasons for altering or varying that section by the Gambling Taxation Bill 2023 (bill).

Section 85 of the Constitution Act 1975 vests the judicial power of Victoria in the Supreme Court and requires a statement to be made when legislation that directly or indirectly repeals, alters or varies the court’s jurisdiction is introduced. Clause 79 of the bill inserts a new subsection (12) into section 135 of the Taxation Administration Act 1997 to provide that it is the intention of sections 5, 12(4), 18(1), 96(2) and 100(4) of the Taxation Administration Act 1997, as those sections apply after the commencement of the bill, to alter or vary section 85 of the Constitution Act 1975.

The bill consolidates the various gambling tax provisions, namely the casino taxes (which include the community benefit levy), keno tax and wagering and betting tax (referred to collectively as the gambling taxes).

Provisions that impose and calculate casino taxes under the Casino (Management Agreement) Act 1993 will be transferred to part 2 of the bill, and new provisions covering registration, lodgement of returns and payment of casino taxes to the commissioner of state revenue are also introduced.

Provisions that impose keno tax and wagering and betting tax under the Gambling Regulation Act 2003 are being relocated to part 3 and part 4 of the bill respectively, and part 5 of the bill permits the making of regulations.

Divisions 1, 2 and 3 of part 6 of the bill make several consequential amendments to the Casino Control Act 1991, the Casino (Management Agreement) Act 1993 and the Gambling Regulation Act 2003 to facilitate the relocation of the gambling taxes to the bill.

Division 4 of part 6 of the bill makes consequential amendments to the Taxation Administration Act 1997 to enable the gambling taxes to be administered under the Taxation Administration Act 1997 as a taxation law.

The Supreme Court’s jurisdiction is altered to the extent that the Taxation Administration Act 1997 provides for certain non-reviewable decisions and establishes an exclusive code that prevents proceedings concerning an assessment or refund or recovery of tax being commenced except as provided by that act. It is desirable that the legislative regime under the Taxation Administration Act 1997 applies to the gambling taxes in the bill in the same way as it does to other taxes administered under the Taxation Administration Act 1997.

Accordingly, in order to ensure that the jurisdiction of the Supreme Court is limited in relation to the gambling taxes in the bill in the same way as it is in relation to other Victorian taxes, it is necessary to provide that it is the intention of this bill for the relevant provisions of the Taxation Administration Act 1997 to apply to the administration of the gambling taxes and for the jurisdiction of the Supreme Court to be altered accordingly.

Section 5 of the Taxation Administration Act 1997 defines the meaning of ‘non-reviewable decision’ in relation to that act, which will also apply to the gambling taxes within the bill. No court, including the Supreme Court, has jurisdiction or power to entertain any question as to the validity or correctness of a non-reviewable decision.

Section 12(4) of the Taxation Administration Act 1997 provides that the making of a compromise assessment is a non-reviewable decision. Similarly, section 100(4) provides that a decision by the commissioner of state revenue not to permit an objection to be lodged out of time is a non-reviewable decision. Decisions may be made under section 12(4) or section 100(4) in relation to the collection of the gambling taxes.

Section 18(1) of the Taxation Administration Act 1997 prevents proceedings being commenced in the Supreme Court for the refund or recovery of a tax except as provided in part 4 of the Taxation Administration Act 1997. As the gambling taxes will be taxes for the purposes of section 18(1), proceedings for their refund or recovery will be similarly limited.

Section 96(2) of the Taxation Administration Act 1997 prevents a court (including the Supreme Court) considering any question concerning an assessment of a tax except as provided by part 10 of the Taxation Administration Act 1997. As the gambling taxes will be taxes for the purposes of section 96(2), proceedings in relation to any assessment of gambling taxes would be similarly limited.

To ensure that the jurisdiction of the Supreme Court is limited in relation to the gambling taxes in the same way as it is in relation to other taxes, it is necessary to provide that it is the intention of sections 5, 12(4), 18(1), 96(2) and 100(4) of the Taxation Administration Act 1997 to alter or vary section 85 of the Constitution Act 1975.

I commend the bill to the house.

Georgie CROZIER (Southern Metropolitan) (12:13): I move:

That debate on this bill be adjourned until later this day.

Motion agreed to and debate adjourned until later this day.