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1998-1999-2000
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
ACIS ADMINISTRATION AMENDMENT BILL 2000
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister
for Industry, Science and Resources,
Senator the
Honourable Nick Minchin)
ISBN: 0642 452822
ACIS ADMINISTRATION AMENDMENT BILL 2000
OUTLINE
The
ACIS Administration (Amendment) Bill 2000 will implement some minor changes to
the ACIS Administration Act 1999 ('the Act') that have come to light in
the course of setting up the administrative framework for the
scheme.
The Automotive Competitiveness and
Investment Scheme (ACIS) seeks to encourage competitive investment and
innovation in the Australian automotive industry in order to achieve sustainable
growth in the context of trade
liberalisation.
The administrative framework
for delivering the scheme to the Australian automotive industry is now well
developed, and the proposed minor amendments set out in this Bill will enable
the efficient delivery of the program, reducing the administrative burden on
both participants and the Government.
The main
change to the Act will be an increased capacity for regulations to define what
is approved plant and equipment and approved research and development for the
purposes of calculating benefits under the scheme. As a result, this will
enable the maximum claimable value of investment in different kinds of plant and
equipment and research and development to be set out in regulations. This will
assist participants to determine what is and what is not eligible expenditure,
in what is largely a self assessed scheme.
The
regulations will now also be able to provide for investment loadings to cover
all those incidental costs of investment which are extremely difficult to
substantiate from a participant's point of view, and almost impossible to audit
from an administrator's point of view. It is intended that these loadings will
substitute for the labour costs of repairs and maintenance associated with
investment in plant and equipment, and those low cost or short life items that
are normally fully depreciated in the year of purchase.
The loadings will also substitute for overhead
costs associated with research and development, removing the need for
participants to substantiate and pro-rate costs where R&D activities occur
in the same building as, for example, production
activities.
As well as clarifying terms and
phrases used in the legislation, this Bill will also introduce provisions to
protect the scheme from "artificial" companies set up purely to take advantage
of ACIS, that are not going to contribute to the sustainable growth of the
Australian automotive industry. This will permit the benefits of the $2 billion
scheme to be directed at those firms that are working to improve their
competitiveness.
The Bill will not change the
overall structure of the scheme and will not impact on the fiscal envelope, as
the scheme is capped at $2
billion.
FINANCIAL IMPACT
STATEMENTS
This Bill will have no
additional financial impact.
ACIS ADMINISTRATION AMENDMENT BILL 2000
NOTES ON
CLAUSES
Clause 1 Short
title
This clause provides for the Bill,
when enacted, to be cited as the ACIS Administration Amendment Act
2000.
Clause
2 Commencement
This clause provides that
this Act will commence on Royal
Assent.
Clause
3 Schedule(s)
This clause provides that
the Schedule contains items that have the effect of amending the ACIS
Administration Act 1999.
Schedule 1 - Amendment of the ACIS Administration Act 1999
Part 1 - General amendments
Item 1 Subsection
6(1)
This item states that the word
"allowable," in relation to plant and equipment and research and development,
will be defined in a new section 6A of the Act (see item 19 of this
Schedule).
Item 2 Subsection 6(1)
(definition of approved plant and
equipment)
This item proposes the repeal of
the current definition and states that a new definition of "approved plant and
equipment" will now be set out in the new section 6A of the Act (see item 19 of
this Schedule).
Item 3 Subsection 6(1)
(definition of approved research and
development)
This item proposes the repeal
of the current definition and states that a new definition of "approved research
and development" will now be set out in the new section 6A of the Act (see item
19 of this Schedule).
Items 4 &
5 Subsection 6(1) (definition of automotive machine
tooling)
These items propose the repeal of
the current definition and change the defined term "automotive machine tooling"
to "automotive tooling," which is the recognised industry term. Consequential
changes to this effect are made wherever the term appears in the Act (see items
48-58).
Item 6 Subsection
6(1)
This item, together with item 20
(proposed subsection 6(4)) provide that the phrase "for the MVP's own use" may
be defined in regulations. Regulations may define circumstances when a
particular investment will be taken to be for the Motor Vehicle Producer's
(MVP's) own use, and therefore not claimable as type B or type C
investment.
Item 7 Subsection
6(1)
This item provides that the meaning of
the phrase "investment undertaken by a participant," which is used in the
proposed new subsection 6(5), may be defined in
regulations
Item 8 Subsection
6(1)
This item states that the phrase
"maximum claimable value," in relation to allowable plant and equipment or
allowable research and development is defined in the proposed new section 6A
(see Item 19).
Items 9-13, 15 &
17-19 Subsection 6(1)
These items insert
two notes at the end of the definitions of types A-I investment referring to the
new subsection 6(5) and the new section 6C which set out further rules relating
to eligible investment (see items 20 and 21 of this
schedule).
Item 14 Subsection 6(1)
(definition of type F investment)
This item
provides that type F investment also includes investment in plant and equipment
used to facilitate the provision of automotive services. This means that
Automotive Machine Tool and Tooling Producers (AMTPs) will be permitted to claim
ACIS benefits for investment relating to the provision of automotive services,
as well as the production of automotive machine tools and tooling. Previously,
AMTPs that provided automotive services would have been required to be
registered as an Automotive Service Provider (ASP) as well in order to claim
benefits for investment relating to the provision of these
services.
Item 16 Subsection 6(1)
(definition of type G investment)
This item
provides that type G investment also includes investment in research and
development directed at facilitating the provision of automotive services. This
means that AMTPs will be permitted to claim ACIS benefits for investment
relating to the provision of automotive services, as well as the production of
automotive machine tools and tooling. Previously, AMTPs that provided
automotive services would have been required to be registered as an ASP as well
in order to claim benefits for investment relating to the provision of these
services.
Item 20 At the end of section
6
This item adds proposed new subsections
6(4) and (5) and provides that regulations may set out the circumstances when a
particular investment will be taken to be for the MVP's own use, and therefore
not claimable as type B or type C investment (see item 6 of this
schedule).
Item 21 After section
6
This item inserts a new subsection 6A(1)
which provides that regulations can be made setting out what is allowable plant
and equipment and research and development (proposed new paragraph 6A(1)(a)) and
the maximum claimable value of different kinds of allowable plant and equipment
and research and development (proposed new paragraph 6A(1)(b)). Proposed new
section 6A(2) sets out the definitions of terms introduced in this proposed
amendment. The intent is that the regulations will set out different methods
for calculating investment where, for example, plant and equipment is leased
rather than purchased, or set out what is included in the calculation of labour
costs associated with allowable research and development.
The regulations may also set out investment
loadings which are intended to cover labour costs of repairs and maintenance and
expensed items relating to allowable plant and equipment and overheads
associated with allowable research and development. These investment loadings
would reduce the administrative burden as participants would not have to
maintain records of expenditure on these items for the purposes of
ACIS.
This item also sets out a new section 6B
which provides that once plant and equipment is sold, it ceases to be approved
plant and equipment. This means that where approved plant and equipment is
bought and sold within a three year period, the investment in that plant and
equipment will no longer be included in the quarterly moving average calculation
of credits from the date the plant and equipment is
sold.
This item also inserts a new section 6C
which provides that guidelines may be made by the Minister setting out
circumstances where the Secretary can treat investment by a person (who may or
may not be a participant) as investment by a participant. It is intended that
the section will apply in the situation where a company who is a participant or
is eligible to be a participant changes its corporate identity through a
takeover or merger situation. Any investment undertaken by that company could
then be treated by the Secretary as investment undertaken by the new corporate
identity for the purposes of calculating benefits under
ACIS.
The Minister may make guidelines that are
to be taken into account by the Secretary when making a decision under proposed
new subsections 6C(4) or (5). Guidelines made by the Minister under proposed
new subsections 6C(2) and (4) are disallowable instruments under section 46A of
the Acts Interpretation Act
1901.
Item 22 Sections 14 and
15
This item repeals the previous sections
14 and 15 and inserts new sections 14, 14A, 14B and
15.
Proposed new section 14 sets out rules
providing a person can only hold one registration under ACIS at a time.
Therefore, a company is registered under ACIS in its own right cannot also be
registered as part of a group of related
companies.
Proposed new section 14A provides
that the Secretary must not register an applicant for registration unless the
Secretary is satisfied that applicant would further the purpose of the Act,
which is to "encourage competitive investment and innovation in the Australian
automotive industry in order to achieve sustainable growth..." The section
allows the Secretary to prevent the registration of a company set up
artificially for the purposes of ACIS that will not contribute to the
sustainable growth of the Australian automotive industry. This provision will
be mirrored in the deregistration provision, which is amended by item 46 of this
Schedule.
Proposed new section 14B provides
that the Minister may make guidelines for the Secretary to take into account
when making a decision not to register an applicant, or to deregister a
participant on the grounds that the company is not furthering the purposes of
the Act. The guidelines made under subsection 14B(2) are disallowable
instruments under section 46A of the Acts Interpretation Act
1901.
Proposed new section 15 provides that
if a participant applies for a second registration under ACIS, and the
application is granted, this will have the effect of cancelling the existing
registration from immediately before the day on which the later application for
registration is granted.
Item 23 At the end
of section 17
This item provides that under
proposed new subsection 17(4), regulations may define the phrase "at least one
kind of automotive component" for the purposes of sections 17 and 31 of the
Act.
Item 24 Subsection
23(3)
This item provides for repeal of the
current subsection 23(3) and in its place substitutes proposed new subsection
23(3) which provides that business plans provided with registration applications
will be able to contain particulars relating to investment and sales from 1
January 1999.
Item 25 After paragraph
26(2)(f)
This item inserts proposed new
paragraph in subsection 26(2) providing that the Secretary must also consider
whether the requirements of the new section 14A have been met in determining
whether an applicant should be granted registration under
ACIS.
Item 26 Subsection
26(3)
This item recognises in subsection
26(3) the addition of paragraph
26(2)(g).
Items 27 & 28 After paragraph
29(1)(a) and 29(2)(a)
These items provide
that the Secretary may also consider whether a person or company has been
convicted of an offence against the law of a foreign country, in determining
whether or not that person or company is a fit and proper person for the
purposes of granting registration under
ACIS.
Item 29 Paragraph
29(2)(b)
This item amends paragraph
29(2)(b) so that it is consistent with the wording in paragraph
29(1)(a).
Item 30 At the end of subsections
31(1) and (2)
This item inserts a note at
the end of subsections 31(1) and (2) referring to the new subsection 17(4)
inserted by item 23 of this schedule.
Items
31 - 34 & 36
These items repeal
subsection 35(3), paragraphs 36(c) and (e), 37(1)(b) and (d), 38(1)(b) and
39(1)(b) and (d). These requirements for the first quarterly return are no
longer necessary, as this information may be collected in the business plan
provided with an application for
registration.
Item 35 Paragraph
38(1)(d)
This item replaces the existing
paragraph 38(1)(d) with one requiring AMTPs to provide details of sales of
automotive services provided during the quarter. This figure will contribute to
the calculation of the 5% of sales limit for the participant for the following
ACIS year.
Items 37 - 43 Subsections 42(1)
and 42(2) and sections 43 -51
The
amendments proposed by these items provide that the Secretary will be able to
calculate the unmodulated production and investment credits for participants as
soon as practicable after receiving a participant's quarterly return. This
means that, if a participant provides its quarterly return within the 45 day
maximum time allowed, the Secretary can immediately calculate the participant's
benefits, rather than waiting for the 45 day period to
elapse.
Item 44 Subsections 109(2), (3) and
(4)
This item sets out proposed amendments
to replace subsections 109(2), (3) and (4) and requires annual updates of
business plans to be provided with each third quarter return, rather than before
31 October every year. Business plan updates are an essential tool for
calculating the modulation rate (to assess whether expected benefits fit within
the overall budget for the scheme) and, therefore, it is important that they be
provided on time.
A company registered in the
second or third quarter of an ACIS year is required to provide its first update
in the third quarter of the ACIS year following the year of
registration.
Item 45 Subsection
110(4)
This item proposes the omission of
the words "for more than 6 months" in the current provision. The effect will be
that the Secretary may deregister a participant who fails to provide a business
plan update with its third quarter return, as set out in section 109. This
increases the incentive for participants to provide updated business plans on
time, as these business plans are necessary to determine the modulation rate to
apply in the next period.
Item 46 At the end
of subsection 110(5)
This item mirrors the
proposed new section 14A inserted by item 22 of this schedule. This item
provides for proposed new paragraph 110(5)(c), the effect of which is that the
Secretary may deregister a participant if the Secretary determines that the
registration of the participant does not further the purposes of the Act. The
section allows the Secretary to deregister a company set up artificially for the
purposes of ACIS that will not contribute to the sustainable growth of the
Australian automotive industry.
Item
47 Before paragraph 111(a)
This item
inserts into section 111 several proposed new kinds of decisions affecting duty
credit which may be reviewed by the appropriate merits review tribunal.
Decisions on these matters by the administrative tribunal or the Federal Court
(or Federal Magistrates Court) are limited by sections 112 and 113 of the Act to
apply only from the date the decision is made, and not before that
date.
Part 2 - Consequential amendments on
change of term from
"automotive machine
tooling" to "automotive tooling"
Items
48-58
These items amend the phrase
"automotive machine tooling" to read "automotive tooling" wherever it appears in
the Act. "Automotive tooling" is the recognised industry term.