Page 2176 - Week 10 - Thursday, 26 October 1989
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the initial budget statement and made their views abundantly clear from a very early stage, the business sector appears to have skated over it, not to have really taken in what it meant, and finally panicked right at the last moment.
They were not as quite as clever as they might have been. However, because of the last-minute concerns that were raised, a further meeting was arranged with officers of the Treasury and the Office of Industry and Development this morning. At that meeting there was a broad representation of industry and their advisers to discuss the concerns that have come to light very recently. I have had a report back from the officers involved in that, and I believe that that meeting should have allayed many of the concerns that have been raised.
The concerns at the meeting, I am advised, centred on firstly the taxing of benefits, and in particular the possibility of the Fringe Benefits Tax Assessment Act being interpreted in a different manner by the commissioner for ACT revenue and the federal tax commissioner. Mr Speaker, on the fringe benefit issue, the commissioner for revenue has advised me that, for the purposes of completing their payroll tax returns, ACT employers may indeed rely upon rulings of the Australian taxation commissioner for calculating fringe benefits to be included for payroll tax liability. So there should not be a problem there.
The meeting this morning also discussed service contract provisions, and the business people present expressed some concern that the provisions in our Bill do not exactly mirror the legislation that is in force in New South Wales. On that issue of whether ACT legislation should, in fact, mirror the New South Wales provision, I would like to emphasise that, while the individual provisions may differ somewhat, the same underlying principles apply; namely, that if a person supplies labour to a business on a continuous basis and forms an integral part of that business, then that person is considered to be an employee and the payment received is wages. That is the principle which I think applies in both places.
Neither this Bill nor the New South Wales provisions attempt to tax payments to genuine independent contractors. I hope members will take very careful note of that fact. The Bill specifically provides exemption in cases where services are provided to the public generally and where the provision of labour is ancillary to the supply of goods.
The revenue commissioner has also advised that, where a person or a partnership employs staff to fulfil a contract, that contract would, as in New South Wales, be payroll tax exempt unless it forms part of a tax avoidance scheme. So it is only if it is apparent that it is a tax avoidance measure that there is any sort of a worry. The Bill deliberately does not follow New South Wales in arbitrarily exempting contracts over $500,000 and short-term arrangements. Such arrangements will be treated on their
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