Page 2048 - Week 10 - Wednesday, 25 October 1989
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complex and the introduction of this provision will add significantly to the complexity of the payroll tax law as it now stands. Questions have already been raised at the Federal level as to whether the current fringe benefits tax law can be adequately administered, yet the Treasurer is ingenuous enough to believe that the Commonwealth provisions can simply be grafted onto our ACT legislation and administered by our small revenue office capability.
This provision in the Bill before us will merely compound the problem of assessing and collecting the legitimate tax payable under the Payroll Tax Act and will inevitably lead to contention and disputation with those who have to pay it. The test on the part of the ACT commissioner will be the determination of salary sacrifice in defining of benefit for assessment purposes.
Further to this debate is the issue of double-dipping. Employers are already being hit by the Commonwealth for benefits other than wages through income tax provisions. They are now going to be hit a second time through the expanded definition of "wage" in the guise of payroll tax if we allow this Bill to go through.
Another significant aspect of these provisions is the widening of the range of business transactions that have been brought within the definition of wages for the purpose of payroll tax, a very artificial definition indeed. These include where an employment agency is used by an employer then the payment to the agency may be deemed to be wages. Payments against service contracts will be deemed to be wages. Proposed section 3B creates the notion of having a deemed employer, a deemed employee and the payment of deemed wages. It is the commissioner who considers whether such an arrangement is or is not entered into for the purpose of tax avoidance, and this creates an extremely difficult and complicated area which, in effect, means taxation by discretion, the discretion being exercised by a public official.
It is also interesting to note there is an exemption from double taxation in circumstances where it is determined by the ACT commissioner that there is no tax avoidance scheme. It would therefore appear to be acceptable to levy a tax twice on the same payment if the commissioner perceives a situation of tax avoidance. It is, again, a question of discretion, and I do not see any grounds for appeal against those determinations.
Another area of concern arises from proposed section 5A, which allows the commissioner to set aside any agreement for the provision of staff or services where he considers that a tax avoidance arrangement is in place. A definition of such an arrangement is extremely wide and discretionary. In this situation the commissioner has absolute power to determine that a party is an employer or that the payment will be regarded as wages, and no independent criteria are provided in the Bill to determine how this assessment and determination will be made.
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