Page 190 - Week 01 - Wednesday, 17 February 1993
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Mr Humphries: Must you?
MR LAMONT: I need to repeat things to get them through to you. Whether a payment or payments under a contract exceed $500,000 in a year is absolutely meaningless if one is trying to decide whether the payee is an independent contractor or not. Other grounds for exemption - for example, the supply of goods is the primary purpose of the contract, or the contractor is an owner-driver - are more appropriate and less open to abuse. Madam Speaker, in this day and age it is not difficult to visualise payments for consultancy or other personal services exceeding $500,000 and being made to private companies or trusts in order to minimise payroll tax. Yet again the ACT's approach is superior and should not be jettisoned for inferior models interstate.
Madam Speaker, we come now to paragraph 3(c) - the real purpose, one imagines, behind the amendments and behind Mr De Domenico's Bill. It is proposed because the Opposition has succumbed to the persistent pressure of a few who cannot accept that their cosy arrangements for acquiring labour ought to attract payroll tax in the same way as they would if the alternative of employing labour had been used. Madam Speaker, service contract provisions were introduced in the ACT, New South Wales, Victoria, Tasmania and South Australia because there was growing tax avoidance through the simple expedient of using so-called contractors in lieu of employees. As with all tax avoidance, the honest paid for the dishonest, and the service contract provisions address this simple fact of life. Similarly, the employment agent provisions were introduced because more businesses were substituting full-time employees with agency personnel. In essence, the service contract and employment agency provisions bring within the payroll tax net payments for labour when provided by contractors who are considered to be a mere substitute for direct employment of labour.
I repeat that the Act does not seek to catch genuine independent contractors and specifically exempts payments to contractors who provide services to the public generally. What Mr De Domenico's amendment seeks to do in relation to employment agents is to exempt certain categories of labour contracts simply because the subcontractor is a partnership or, in the case of a sole trader, if he or she arranges with another person to work on the job. The Opposition's Payroll Tax (Amendment) Bill will extend this to all labour contracts. (Extension of time granted) It would appear that the Opposition has missed the most important factor of the service contract and employment agent provisions - that is, that the emphasis of the provisions is not on the structure of the arrangement but on the substance of the relationship between a principal, or employment agent, and the person or persons performing the labour. That point they have consistently missed or misrepresented.
Madam Speaker, Mr De Domenico also wishes to compare the ACT's position in partnerships with that of other jurisdictions that have payroll tax on service contracts. I think it should be noted immediately that no jurisdiction that has payroll tax on service contracts and employment agents has legislation that provides exemption from tax where only the partners are engaged on a labour service contract. The exemptions, where applied, are available only through the use of the relevant State taxation commissioner's discretion. Maybe Mr De Domenico should go back and research what he is saying. Madam Speaker, Mr De Domenico, in the presentation speech to his Bill, stated:
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