Page 179 - Week 01 - Wednesday, 17 February 1993
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The other question that people might tend to ask from time to time is: Exactly when will these exemptions apply? That is an interesting question and I will try to have a look at the maze and see what comes out of it. Exemptions, of course, apply in respect of certain contract payments. One is where the main object of the contract is the provision of goods or equipment by the contractor, for example, let us say, the supply of a bobcat. Another example is where the service provided is not in the mainstream activity of the business. A third example is where the contract relates to owner-drivers. Additionally, the commissioner has advised through a revenue ruling - and that is also a salient point - that, where the nature of the contract did not require the contractor to provide services for a period of, say, in excess of 90 days in any financial year, no payroll tax liability would arise. By the way, the 90-day period is considered by the commissioner to be 90 working days or 120 calendar days.
The revenue ruling provides an exemption where the contractor is an employer in his or her own right. Ironically, it is worth noting that comparable provisions in the New South Wales Payroll Tax Act provide for the above exemptions and others by way of legislation and not by way of revenue ruling, the contents of which are unenforceable at law. This means that the Commissioner for ACT Revenue must exercise his discretionary power to exempt a particular payment from payroll tax, whereas taxpayers in New South Wales have the benefit of such exemptions through the relevant provisions of the legislation. Obviously, greater certainty exists for taxpayers in New South Wales. But it is not only taxpayers in New South Wales that have this greater certainty. It is definite that every other jurisdiction - State and Territory - in this country provides that buffer of legislation, except the ACT. So later on, in the detail stage, I will be proposing an amendment to put the ACT in line in that respect with other States and Territories in the country.
It is understood that payments to contractors who operate as partners are not subject to payroll tax in New South Wales, provided a genuine partnership exists. However, in the ACT such payments are subject to payroll tax unless the partnership employs labour on that particular job. The commissioner has said that, if an employer, upon review of their payroll tax obligations under the service contract provisions, voluntarily disclosed an understatement of payroll tax before an audit, the culpability penalties or penalty tax might be reduced or waived and a 20 per cent interest penalty would be imposed. The service contract provisions are confusing, to say the least.
Mr Berry: Are you speaking to the amendment you have not moved?
MR DE DOMENICO: No, I am not. It is likely that non-compliance may in many cases be caused by the lack of definition of when a service contract arrangement exists. However, as usual, the onus of complying with the legislation rests on the taxpayer.
In short, what the Liberal Party is saying is that we will not be voting against the legislation before us but there are anomalies in that legislation. If the Government is really concerned about making sure that ACT small businesses in particular are not placed at a disadvantage compared to those businesses operating in New South Wales and elsewhere, they might see fit to consider carefully the amendment before them which will be debated later on.
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