Page 6256 - Week 19 - Tuesday, 17 December 1991
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Mr Speaker, let me first address the masking provisions - that is, those that are unnecessary and serve only to disguise the real purpose behind this Bill. Clause 3(a) purports to clarify the exemption of labour costs which are ancillary to the supply of goods. This provision is not known to be causing any particular problems, and, if clarification is called for, then it can be provided, as in New South Wales and Victoria, by a commissioner's ruling.
The fact is, Mr Speaker, that the "Collaery clarification", so-called, will cause havoc in the building industry by catching several subcontractor arrangements which are currently exempted by commissioner rulings. I think we have seen this kind of legislation on the run before from Mr Collaery. For example, Mr Speaker, electrical and plumbing subcontractors now exempt would be caught by this Bill's amendments simply because labour costs would usually exceed the cost of goods supplied under such contracts.
What is also a worrying aspect of the Bill is the removal from the commissioner of any discretion to exclude from payroll tax labour costs in contracts which are genuinely ancillary to the supply of goods where those labour costs exceed 35 per cent of the contract price. The absence of such discretion has the potential to cause hardships and unfairness in the administration of the Act. This amendment is unnecessary and it is an amateurish interference in taxation administration by Mr Collaery.
Clause 3(b), Mr Speaker, is simply putting into the Act what is the clear meaning of the current provision. The so-called "Collaery clarification" serves no useful purpose other than to pretend to be doing something useful so that the real purpose of the Bill is not so apparent. Clauses 3(c) and 3(d) also serve no useful purpose as the commissioner has issued clear rulings exempting service contracts which do not in total exceed 90 days in any single financial year.
The trouble with the "Collaery clarification" is that it opens up avoidance opportunities which are not present in the commissioner's rulings, or in the New South Wales and Victorian provisions and rulings from which Mr Collaery sought his inspiration. The amateurish and so-called "clarification", in fact, only opens the door to smart avoidance practices by slightly altering the nature of the services provided by the subcontractor so that they can be categorised as different from those supplied earlier by him or her.
Clause 3(e) is the real purpose behind the Collaery Bill, and it is put there by Mr Collaery to legitimise tax evasion. Service contract provisions were introduced in the ACT, New South Wales, Victoria and Tasmania - and are under consideration in South Australia - because there was growing tax avoidance through the simple expedient of using
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