Page 2515 - Week 08 - Thursday, 30 June 2005
I went on to express the view that the health department, obviously and dramatically, has strayed from the relevant tax office ruling. The overall impression that I gained from the hearing was that ACT—
Mr Corbell: You are such an expert on tax law, aren’t you? You are a real expert on tax law.
MR MULCAHY: The health minister questions my knowledge on tax law. I am glad that he would say that because I have been very closely involved with fringe benefits tax law for a long time and worked very closely with the Australian government on those changes which, in fact, came in 20 years ago, minister. So I do profess some knowledge of FBT law and would be more than happy to have that debate on any occasion he would like to initiate it.
Certainly, the overall impression gained from the hearing was that ACT Health had employed tax consultants to work out a way for DGR status to be applied to ACT Health by comparing it to the New South Wales Area Health Service. As well as being an apples versus oranges comparison, the benchmarking was ill advised since specific advice from the ATO on the status of what they are now doing was not sought. And this has been admitted and confirmed.
To add to the absurdity, estimates was told that staff in the nursing and midwifery office, the genuine people involved in health care, did not qualify under ACT Health’s interpretation of the ruling, but the finance unit did. Isn’t that surprising? Where do you think the advice on payroll comes from? This was despite Dr Sherbon indicating that service delivery staff qualified for the exemption but those performing policy roles did not.
On the face of it, the decision to extend the FBT exemption appears to be wrong and may be based on erroneous advice from the consultants and a profound misreading of the ruling. This practice puts those employees claiming it at risk of understating their tax obligations and receiving an adverse tax assessment. They are the people we ought to be concerned about.
We have heard so much about the rights of workers in recent days and the terrible things that the commonwealth government is doing in trying to get rid of some anachronistic provisions in industrial relations but here we are, in our own backyard, putting at risk 4,000 or so of our own employees. It was disturbing to hear one of the people—I think one of the senior spokeswomen for the Australian Taxation Office—say that they were going to be looking at health service professionals as part of the crackdown this year on different occupations.
What troubles me is that there are assurances now going to be needed, I think, for people working in ACT Health that, if there is an adverse ruling received in relation to their position, then they should feel some measure of comfort that the government will address that themselves. Why should they be penalised for a scheme that was designed to shift the cost of employment to the commonwealth, which is effectively what has been accomplished by this device? It is one thing to seek to increase employees’ take-home