Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . .

Legislative Assembly for the ACT: 2000 Week 4 Hansard (29 March) . . Page.. 1035 ..


Fringe Benefits Tax - Public Benevolent Institutions

MR WOOD: Mr Speaker, my question is to the Treasurer, Mr Humphries. The Treasurer would be aware of the Howard Government's proposal to limit from 1 July 2000 the exemption of public benevolent institutions from fringe benefits tax. He would know that many of those bodies have used salary packages to take advantage of the exemption from fringe benefit tax to boost staff payments. It is one way of giving a little more in a very tight situation. He would also know of their very great concern about that. I appreciate that this is predominantly a Federal matter because it is a taxation issue, but these changes are likely to have a very severe impact on bodies that the ACT Government funds very largely. To what extent has the ACT Government been able to look at this problem to assess the situation?. It must have had some input from these bodies. What is being done to assess the situation and the extent of the difficulty?

MR HUMPHRIES: I thank Mr Wood for that timely question. As a matter of fact, this issue was discussed only the week before last when the Australian treasurers met in Canberra to address issues associated with the tax reform process. One of the items placed on the agenda for that meeting was the impact of the Federal Government's changes in fringe benefit taxation on small community organisations. I have had a number of representations on that subject, one as recently as today, and I am certainly well aware that the effect of the change that the Commonwealth is proposing to make, which is basically to cap the amount of fringe benefits which can be claimed for taxation purposes, is to reduce the capacity of some organisations to offer, effectively, tax-free benefits to their employees or staff.

Mr Wood: Which they need to do because they are not heavily funded with other things.

MR HUMPHRIES: I concede Mr Wood's point. A number of organisations do rely quite heavily on those sorts of concessional arrangements with their employees, and not just non-government organisations. It is also true to say that salary packaging which employs the use of fringe benefits tax arrangements is in use in the Canberra Hospital and possibly other parts of the ACT government system. As I said, this issue was raised at the meeting of treasurers a week and a half ago. That meeting was held on a Friday. On the night before I chaired a meeting of state and territory Treasurers at which this issue was extensively discussed and there was a large measure of agreement that the issue needed to be raised with the Commonwealth and its view sought about softening the effect of its changes.

The Commonwealth's view is that, in effect, the use of these packages in the past has been a way of avoiding the payment of income tax and that it has been an arrangement which has been accessed in a way which has cost the Commonwealth Government money. Effectively, it has been a concession which has been delivered by public benevolent institutions of the States and Territories, but the Commonwealth has been paying for it above and beyond any arrangements that it has been prepared historically to consider. Mr Speaker, they want to limit the extent of that largesse that they are


Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . .