Page 2050 - Week 10 - Wednesday, 25 October 1989
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There has been little consultation with those people directly affected by the Bill - the business sector. I have consulted the Master Builders Association, CARD, the Confederation of the ACT Industry and BOMA, bodies which have not been consulted by the Government on this matter. I do not believe that the Assembly should accept the Bill without careful examination and without full and appropriate consultation with all those who will be affected by its introduction. I urge and strongly advise the Assembly to defer this Bill until such consultation occurs.
MR DUBY (12.09): Mr Kaine in his address kept repeating how complicated this piece of legislation is. I do not regard it as all that complicated. He also referred to the increase in payroll tax as an increase in taxes. Such is not the case either. The payroll tax rate is not being increased. What is being done in this piece of legislation is to close loopholes in the legislation which people have been using to avoid the correct and proper payment of payroll tax.
For those people who, like Mr Kaine, find it extraordinarily complicated, perhaps I can give some simple examples of what this legislation is trying to achieve. As we all know, the threshold for payroll tax is $432,000, so whilst I am talking about an individual employee, it is quite logical that there would be eight or ten perhaps in the firm involved. An employer can have someone on a salary of $50,000 and choose, for the sake of argument, to pay him $40,000 under the pay-as-you-earn system and subsequently give the employee a benefit of around $10,000 per annum in some other form, whether it be payment of children's school fees, provision of a motor vehicle or some other similar arrangement.
Under those arrangements fringe benefits tax is currently paid on that additional $10,000 to the Commonwealth and this Territory raises revenue on the $40,000 worth of payroll. This legislation simply aims to rectify that situation so that whilst it is apparently clear, and obviously clear to me, that the actual payroll is in the order of $50,000 and not $40,000 with a fringe - it is really $50,000 - the full amount of payroll tax will be levied on $50,000, not $40,000. That to me seems perfectly fair and reasonable. It uses the provisions that are applicable under the fringe benefits tax legislation to assess whatever that additional income is.
Clearly the employer in the situation that I have just outlined is now going to face the problem. This is what Mr Kaine is objecting to. He is saying that the employer is currently paying the correct amount of payroll tax on $40,000 and the fringe benefits tax on the other $10,000, and now he is going to have to pay payroll tax on $50,000, plus the fringe benefits tax on $10,000. Well, any employer with any brains in that situation will soon
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