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Legislative Assembly for the ACT: 2014 Week 8 Hansard (14 August) . .

Page.. 2655..

Amendment agreed to.

MR SMYTH (Brindabella) (8.20): I move amendment No 1 circulated in my name [see schedule 3 at page 2678]. My amendment seeks to move the date of the Treasurer's payroll tax changes to commence on 1 July 2015. Mr Barr and the Labor Party and Mr Rattenbury from the Greens have the opportunity to do the right thing by thousands of contractors and their families in the ACT. The fact that this bill was to start on 1 July 2014, then 1 October 2014 and now 1 January 2015 indicates what a debacle the introduction of this change has been.

During the whole budget and estimates process not only have we seen contractors having to foot the bill for Mr Barr's payroll tax changes but we also learned this week that if you are a contractor for Shared Services ICT you are also going to get a pay cut. This amendment is not contesting the government's aim to line up the ACT with the other jurisdictions. What my amendment does is try to address, and with industry and contractor support, the fact that there has not been a decent lead time, which is already having an adverse impact of having contractors bear the burden of the tax.

According to the budget papers, the Treasurer's change will bring in an additional $10 million every year over the forward estimates and in the Treasurer's comments regarding exempting existing contracts he commented:

... the grandfathering of existing contracts will introduce administrative complexity for the ACT Revenue Office and industry in administering multiple arrangements for different contractors ...

This ignores the fact that registration and lodgement of payroll tax is through self-reporting by the entity responsible for remitting the payroll tax and therefore would not be the administrative nightmare for the ACT Revenue Office that Mr Barr alludes to. Mr Barr may not be aware that there is precedence for exemption as highlighted by revenue circular PTX023 which refers to revenue circulars No 65 and No 69 where, in fact, a similar change was made. This circular states:

10. Where an employment agent has entered into a contract:

(a) prior to 6 May 1999;

(b) the terms of the contract were reliant upon the previous exemption regime;

(c) and evidenced in writing;

the contract will remain subject to the previous exemption regime for the term of that contract or until 30 June 2000, whichever occurs first.

This blows out the idea that you cannot grandfather these clauses. It has been done by the ACT Revenue Office and it can be done by the ACT Revenue Office.

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