Page 1877 - Week 05 - Thursday, 5 May 2011

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That this bill be agreed to in principle.

The Payroll Tax Bill 2011 repeals the Payroll Tax Act 1987 and proposes to replace it with a new act. This will harmonise the ACT’s payroll tax provisions, as far as possible, with the equivalent payroll tax legislation of New South Wales, Victoria, Tasmania, South Australia and the Northern Territory.

On 29 March 2007, state and territory treasurers announced a decision to overhaul payroll tax arrangements. This was aimed at achieving greater legislative and administrative harmony in a number of key areas.

This government has previously amended its payroll tax legislation to assist business by providing greater consistency with other Australian jurisdictions. In 2007, the Payroll Tax Amendment Act 2007 provided harmonisation in relation to motor vehicle and accommodation allowance exemptions, fringe benefits, grouping provisions and exemptions for work performed in another country. These measures came into operation on 1 July 2008.

Together with key measures that have already been incorporated, the bill is a further step in harmonising the ACT’s payroll tax legislation to provide common structure, definitions and provisions.

With around 70 per cent of registered payroll tax payers in the ACT also operating in other Australian jurisdictions, this government is keen to provide as much consistency in payroll tax legislation and administration as possible. The new act will reduce the administrative burden on ACT employers and their financial advisers. This is particularly important to ACT employers operating across a number of Australian jurisdictions. The harmonised legislation and administration will further assist them in understanding and complying with their payroll tax obligations.

The Payroll Tax Bill 2011 is a great example of how this government is working with all Australian states and the Northern Territory to bring about national reforms to help reduce the administrative burden on business.

Like all Australian jurisdictions, the ACT reserves the right to retain control over rates and thresholds. The bill does not alter the ACT’s payroll tax rate and the generous tax-free threshold, currently the highest in Australia at $1.5 million. The ACT will retain control of these aspects and other areas where there are ACT-specific policy differences. This will allow the ACT to tailor its tax policies to meet the specific economic needs of the territory and its businesses.

The harmonised provisions will be contained in the main body of the legislation and all ACT-specific policies will be provided for in the schedules. Other jurisdictions that have adopted the harmonised legislation have also retained their specific policies and provisions in schedules to their acts.

Examples of where ACT-specific provisions will be retained include the treatment of employment agents, exemptions for charities, maternity and adoption leave, as well as the current rate and threshold.

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