Page 4452 - Week 15 - Thursday, 22 November 1990
Next page . . . . Previous page . . . . Contents . . . . Debates(HTML) . . . . PDF . . . .
This Bill amends the Financial Institutions Duty Act 1987. The Financial Institutions Duty Act provides for the imposition of duty on financial institutions in the Australian Capital Territory. The Act is being amended to remove anomalies, improve operational efficiency and address avenues of potential tax avoidance. The avoidance measures being introduced will complement the higher level of financial institutions duty that will be imposed following the abolition of the Commonwealth debits tax.
This increase of 0.02 per cent in financial institutions duty to a level of 0.08 per cent is a consequence of the decision of the Commonwealth Government to abolish the Commonwealth debits tax, or BAD tax, as it is usually called, and reduce financial assistance grants to the States and Territories in proportion to estimated receipts from the tax. States and Territories are expected to take up the additional revenue capacity available to them after the Commonwealth vacates this field of taxation.
At this stage I understand that all other States and the Northern Territory are intending to introduce debits tax legislation to fill the gap. However, for the sake of simplicity, and after consultation with important industry groups and financial institutions of the ACT, the ACT has decided to increase financial institutions duty as an alternative to introducing a Territory debits tax. I announced the Government's intention to follow this course on 25 October of this year, and I am pleased to report that responses to the ACT's choice of alternatives has been very favourable.
To return to the Bill, there are three important amendments which require special comment. As residents of the ACT are aware, there are a significant number of Commonwealth, State and Territory departments and organisations operating in the ACT. Existing financial institutions duty legislation does not specifically bind the Crown or adequately limit exemptions to government departments and authorities engaged in commercial activity, in some instances in competition with ACT taxpayers.
The amending Bill binds the Crown, insofar as it can be bound by ACT laws, repeals existing Crown exemption provisions and replaces these with an exemption limited to departments and authorities that are solely funded from appropriations of the consolidated revenue funds of the ACT, Commonwealth, State or Territory. This will allow the imposition of duty on government organisations that operate on a commercial or semicommercial basis, other than Commonwealth departments and authorities established under Commonwealth legislation, providing them with exemption from State and Territory taxes. The amendments provide for a three-month transition period, to 28 February 1991, to allow government organisations to reapply for exemption, where appropriate.
Next page . . . . Previous page . . . . Contents . . . . Debates(HTML) . . . . PDF . . . .