Australian Privacy Foundation

Comments on Discussion Paper on
Taxation Security and Disclosure Provisions

General comments

1.	The Australian Privacy Foundation would welcome greater transparency and accountability in the way in which government agencies collect, use and disclose personal information. To the extent that this can be assisted by consolidating the secrecy and disclosure provisions in tax laws into one statute, we support the initiative.

2.	We also consider the principles governing the standardisation of privacy and secrecy law, set out in Chapter 3, to be appropriate.

3.	However, some proposals in the discussion paper would reduce transparency, and we do not support them for this reason. The relevant proposals are set out below.

4.	We have also addressed the ‘Questions for Consultation’. Our responses appear as Attachment A to this document.

Disclosure of publicly available information 

5.	The discussion paper states that information which is available to the public from other sources need not be protected by secrecy provisions, and that the only issue is whether the Tax Office should be obliged to bear the costs of providing it when asked to do so. We do not accept this position. 

6.	Personal information collected by the Tax Office will always include publicly available details, not least because the name – and often the address - of almost every individual taxpayer is available to the public in some form. The Tax Office is no different to any other government agency (or private organisation) in this respect, other than in degree. It exercises very strong collection powers and amasses an extraordinary amount of data in the course of performing its functions. 

7.	The very existence of the secrecy provisions illustrates the fact that the community considers tax information to be highly sensitive. Taxpayers reasonably expect that all the information that the Tax Office holds about them will be kept secure, whether it was collected directly from them or from another source.

8.	A distinction must be retained between personal information that the Tax Office collects to administer tax laws, including information that may already be publicly available elsewhere, and information that is held in generally available publications.  This distinction is maintained in the Privacy Act 1988 (Cth). The Tax Office has no obligation or authority to release the personal information it holds simply because 
the person asking for it could have obtained it from a public register, newspaper or other published material. The idea that the information could be sold is simply perverse.

Disclosure of non-identifying data

9.	The discussion paper correctly indicates that advances in data matching technology increase the risk that a recipient of non‑identifying data from the Tax Office may have the capacity to identify individuals. 

10.	When discussing non-identifying data, it is useful to distinguish between individual records from which identifiers have been removed (‘de-identified records’), and statistical reports. De-identified records can more easily be used for data matching and individuals may be able to be identified as a result. However, even statistical reports can inadvertently identify individuals and the Australian Bureau of Statistics has developed methods and standards to reduce this risk

11.	To reduce the risk of the information being used to identify individuals, the Tax Office should not be permitted to disclose de-identified records to the public in any form, in full or in part. 

12.	On the other hand, we encourage the Tax Office to release statistics where there is a benefit to the public generally, provided that the public benefit is identified and the Tax Office uses safeguards against re-identification such as those developed by the Australian Bureau of Statistics. 

13.	The discussion paper suggests two options for permitting access to non‑identifying data: either restrict access to government entities that would utilise it in the public interest, or extend access to other bodies and organisations on a ‘user pays’ basis. We support the first option and reject the second.

14.	We recognise that the public interest can be served by government entities using non-identifying tax data for research and policy development. We would not object to the disclosure of de-identified records to government entities for this purpose provided that, as a condition of disclosure, the recipient is required to retain control of the data, be directly accountable for how it is handled, and undertake not to attempt to identify individual tax payers or permit any organisation processing the data on its behalf to do so. 

15.	Ad hoc requests for access for private or commercial interests should not be granted, even if on a ‘user pays’ basis. It is neither the role nor function of the Tax Office to trade taxpayer information in any form.

Disclosure in the course of an officer’s duties

16.	We support the proposed clarification of the term ‘course of duties of an officer’ to assist Tax Office staff in determining whether disclosure can occur.

17.	However, the scope of the term should not include ‘disclosure to the Treasury for the purpose of providing advice to government on tax policy and law design’. It is not at all evident that personally identifying information, as opposed to non-identifying data, is necessary for this purpose.

Disclosure to Treasury portfolio agencies to prepare revenue forecasts

18.	The discussion paper proposes that there be a specific exception in the secrecy provisions for disclosures to Treasury officers for ‘tax policy development, costing, revenue forecasting and estimates purposes’. 

19.	In our view, there is no need to disclose personally identifying information about taxpayers for these purposes, which are about strategy rather than individual cases. Non-identifying information should be sufficient. 

20.	Furthermore, the definition of Treasury officer appears elastic. If it refers to any staff member of any Treasury portfolio agency (as the title of the relevant section of the discussion paper suggests) the extent of the possible disclosures is significant and can change. We note that the Treasury portfolio currently includes the Australian Bureau of Statistics, the Australian Competition and Consumer Commission, the Australian Prudential Regulatory Authority, the Australian Securiities and Investments Commission, the Australian Office of Fianancial Management, the Corporartions and Markets Advisory Committee, the Inspector-General of Taxation, the National Competition Council and the Productivity Commission as well as the Tax Office and the Department of the Treasury. 

21.	We do not support this proposal. 

Disclosure for the purpose of protecting public finances

22.	An exception to the secrecy provisions to allow disclosure for ‘the primary purpose of protecting public finances’ would be too broad.  Just about any activity of any government agency involving the collection or expenditure of public money could be described as ‘protecting public finances’.

23.	The compilation of exceptions to the secrecy provisions, and the standardisation of procedures to authorise disclosures, must not be at the expense of transparency. Combining disclosures to different agencies for different purposes under a broad heading will reduce transparency and accountability.

24.	Any exception to the secrecy provisions should be more specific. For example, the main reason given in support of this proposal is the need to ensure that applicants for government benefits and services get their correct entitlements by verifying either their identity or the information they have provided. Therefore, the exception could be for ‘identity verification’ and ‘information verification.’  This would clarify that, in these cases, the Tax Office could disclose information only to confirm or deny the accuracy of the information provided by the individual.

25.	Alternatively, the agencies that are most likely to request information for the purposes envisaged by this provision could be given express powers in their program legislation to collect taxpayer information in certain circumstances. This would place a greater onus on the requesting agency to justify why it needs the information, rather than leaving it to the Tax Office to determine the validity of the request.

Disclosure to third parties with taxpayer consent

26.	We do not support the proposal to permit the Tax Office to provide confidential taxpayer information direct to third parties with the taxpayer’s consent. 

27.	First, there is too much risk that individuals will be coerced by third parties to give their consent to the disclosure. It is not sufficient to require that consent is ‘express, voluntary and informed’. As the discussion paper notes, a taxpayer who refuses to consent could be denied access to goods or services. For example, access to credit services, employment and rental accommodation could easily become conditional on the taxpayer providing access to their tax information. 

28.	This concern is not mere conjecture. Precedents exist with regard to health information, consumer credit information and criminal history, where individuals are commonly required to agree to third party access as a condition of service or employment. There is no reason to believe that similar pressure would not be exerted on individuals to consent to third party access to tax information.

29.	Second, there is a greater risk of unauthorised access and use of tax information. Tax Officers would not be in a position to check the bona fides of all the additional third parties that would claim to have the taxpayer’s consent for access. Even though the Tax Office has actively promoted among its staff a respect for privacy and confidentiality, breaches of the security provisions continue to be detected. It is reasonable to expect third party organisations without such stringent security controls and a culture of confidentiality to have even greater difficulty in ensuring that information is accessed and used only as permitted and is protected from disclosure. Furthermore, most businesses in Australia are not required to comply with privacy legislation. This means that, in collecting and handling personal information, they are not compelled to collect only what is necessary and to protect it from misuse or unauthorised disclosure.

30.	Third, where third party access is permitted with consent, there is less transparency because the individual is less likely to know what information has been disclosed. Where third parties seek consent for access to personal information, they typically require the individual to agree in general terms rather than specifying exactly which details may be released. The third party can then negotiate with the holder of the information about what is disclosed. On the other hand, if the third party has to ask the individual to provide the information it requires, the individual knows what details the third party is given. 

31.	We do not support any change to the current approach, whereby the taxpayer – not the Tax Office - provides the necessary information to the third party.

32.	Finally, we have a reservation about the notion of ‘deeming’ a person to have consented to the Tax Office disclosing their tax information to a minister if the person has already directly disclosed information to the minister or a parliamentary committee. 

33.	Disclosure in such circumstances should normally rest on the reasonable expectations or consent (implied or express) of the individual. The notion of ‘deeming’ could downplay the need to exercise care about the circumstances in which the individual disclosed the information and why, and how much information (if any) the Tax Office should then release, in what form, and on what conditions (e.g. that the recipient should keep it confidential).

Disclosure to law enforcement agencies

34.	We do not support the notion of expanding disclosures to law enforcement and intelligence agencies by introducing into taxation laws a ‘catch-all’ disclosure provision modeled on IPP11.1(e) which allows disclosure that is ‘reasonably necessary for the enforcement of a criminal law or of a law imposing a pecuniary penalty’. 

35.	This provision has been problematic because it does not effectively limit the breadth, depth or frequency of disclosure. If either the Tax Office or a law enforcement agency maintained that it was ‘reasonably necessary’ to do so, there is nothing in the provision to prevent comprehensive databases of taxpayer information being routinely disclosed to any other government agency acting in a law enforcement capacity and then searched and matched with any other records from any other source to identify if any individual may have breached any ‘criminal law or law imposing a pecuniary penalty’.

36.	Furthermore, as ‘law enforcement’ functions are increasingly being assumed by, or vested in, organisations that have not traditionally been considered law enforcement agencies, this exception now permits a wider variety of disclosures than may have originally been envisaged, with less transparency. It is unwise and unacceptable to adopt a new disclosure provision for tax information that does not effectively contain either the purposes for which the disclosures occur or the potential recipients, and is not effectively able to be monitored.

37.	If there is a need to permit the use and disclosure of tax information to prosecute non-tax related crime, then a provision that specifically permits it should be put in place. We would expect it to be accompanied by a provision along the lines of that in IPP11.2, that the Tax Office must keep a record of every disclosure it makes for this purpose.

38.	As the discussion paper indicates, law enforcement and national security agencies have adequate powers to collect information. 

Disclosure to the Commissioner of Taxation as an employer

39.	We see no reason for the routine disclosure of information about the personal tax affairs of Tax Office employees to the Commissioner of Taxation. 

40.	Tax Office staff should have the same rights as the rest of the community to challenge Tax Office decisions, which may entail late lodgment of returns or disputes about amounts to be paid. If their tax affairs were routinely scrutinised by their supervisors, any discrepancies could be interpreted as a sign of a failure to comply with the laws or to appreciate the need to uphold them – regardless of the merits of the case. Their employment record and future prospects would be blemished, regardless of the skills, knowledge and ability with which they perform their duties.
41.	We also wonder if the proposal would undermine the privacy of taxpayers generally. First, it is likely that scrutiny of Tax Officers would not stop at the individual. Tax Office staff can be expected to have a sophisticated understanding of tax law and their tax management strategies could well involve their family members and others with whom they have a financial connection. It is therefore likely that the tax affairs of spouses, children, other relatives, and business partners would be scrutinised as well. Second, we doubt that staff members whose own tax information is not treated confidentially will be as disposed to valuing the privacy and confidentiality of information about other tax payers as they are under current arrangements.

Attachment A

Questions for Consultation

1.	Should the tax secrecy and disclosure provisions be built around a primary principle of protecting taxpayers’ privacy? 

A. Yes.

2.	Is there benefit in the idea that the various tax secrecy and disclosure provisions  should be standardised with the assistance of an information disclosure framework and placed in the Taxation Administration Act 1953?

A.	Standardisation is acceptable in principle but not at the expense of current privacy protections. See our submission.

3.	What is the optimal balance between the protection of taxpayer information held by the Tax Office and the need for disclosure to address government’s information requirements in delivering entitlements and meeting law enforcement and integrity provisions?

A.	No single answer – see our comments on specific proposals to expand grounds for disclosure.

4.	Should a person who is given protected information under secrecy and disclosure provisions also be subject to strict secrecy requirements?

A.	Yes – very important

5.	Should penalties for all offences in respect of unauthorised disclosures be standardised, or are there circumstances in which the penalties for breach of the tax secrecy and disclosure provisions should vary according to the type of tax involved?

A.	In principle, standardise – it is not primarily about ‘harm; but about a principle of confidentiality.

6.	Do you agree that the further the use of the information is from the reason it was collected, the greater the level of justification should be for the information to be disclosed?

A. Yes – good principle.

7.	Is there benefit in including a consent provision in the tax law to allow a taxpayer to request the Tax Office to provide their confidential information to a third party?

A. No – see submission.

8.	Should the Tax Office be able to disclose taxpayer information to law enforcement and intelligence agencies for the investigation and prosecution of non-tax related crimes?

A.	The proposal is not acceptable – a more tailored approach is preferable. See submission.

9.	Should the Commissioner of Taxation, as an employer, have access to Tax Office information about his employees and others providing services to the Tax Office?

A.	No - see submission.

10.	Should the Tax Office be able to disclose taxpayer information to a third party who is owed a duty by the taxpayer?

A.	We have no objection to the proposal as described in the discussion paper, which concerns providing information to employees about compliance by employers with the Superannuation Guarantee. We would expect any such disclosure provision to be specific to the employment relationship. Any other expected scenario should be specifically accommodated, rather than covered by a ‘catch all’ provision.