Page 1114 - Week 04 - Thursday, 21 April 1994
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The new agreement will be given effect by the passage of complementary Commonwealth, State and Territory legislation and will not become effective until legislation has been enacted in all jurisdictions. I present the explanatory memorandum to the Bill.
Debate (on motion by Mr Kaine) adjourned.
PAYROLL TAX (AMENDMENT) BILL 1994
MS FOLLETT (Chief Minister and Treasurer) (10.59): I present the Payroll Tax (Amendment) Bill 1994.
Title read by Clerk.
MS FOLLETT: I move:
That this Bill be agreed to in principle.
Madam Speaker, the Payroll Tax Act 1987 provides for the imposition of payroll tax on ACT employers where the Australia-wide wages of the employer or group of employers exceed the $500,000 tax free threshold. Section 3A of the Act sets out the amount to be included in the calculation of an employer's liability to payroll tax. This section provides that, where a non-cash benefit is provided by an employer, the value of the benefit is to be included for payroll tax purposes. The value of the benefit is its value as a fringe benefit for the purposes of the Commonwealth Fringe Benefits Tax Assessment Act 1986 - the FBT Act.
The FBT Act was recently amended to change the method of calculating an employer's liability for fringe benefits tax. From 1 April 1994, the Commonwealth will assess fringe benefits tax liability on the tax inclusive value of the fringe benefit in the hands of the employee. In order to calculate this tax inclusive value, employers are required to increase current fringe benefits tax values to 193 per cent. As this value is currently used to calculate ACT payroll tax amounts, these amendments would result in an almost doubling of ACT employers' payroll tax liability in respect of the fringe benefits component of their wages bill.
In response to representations from taxpayer groups such as the Australian Taxpayers Association, New South Wales has moved to amend its legislation to limit payroll tax liability to the actual value of the fringe benefit to the employee. Victoria has instigated administrative measures to achieve the same result, while Tasmania and South Australia are yet to take some action in this regard. Western Australia, Queensland and the Northern Territory do not rely on the FBT Act for payroll tax purposes.
It is considered that the approach being adopted in New South Wales and Victoria is fair to taxpayers, and a similar approach in the Territory will maintain the ACT payroll tax base at existing levels, even though the fringe benefits tax liability for employers is substantially increased by virtue of the Commonwealth changes. Also, at a practical level, for the ACT to adopt a different approach would put us out of step with
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