Page 191 - Week 01 - Wednesday, 17 February 1993
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The ACT is the only Australian jurisdiction to rely upon rulings instead of legislation for the main exemptions from payroll tax on service contracts.
Madam Speaker, the only substantial exemption Mr De Domenico is interested in obtaining is for partnerships, and this exemption is not provided in any other Australian jurisdiction except by commissioner rulings.
The smokescreen gets thicker. Mr De Domenico, in his speech, used the term "buddy gang" in reference to a partnership and, by inference, attempted to give the term some meaning in law as a formal working relationship. Madam Speaker, no jurisdiction in Australia allows exemptions for informal groups or persons, or for buddy gangs, as they were described by Mr De Domenico. In New South Wales the chief commissioner, in the revenue circular that Mr De Domenico referred to - which is actually payroll tax ruling PT11 - requires that a buddy gang partnership, in establishing its bona fides, must have evidence in the form of a formal partnership agreement, use of a joint bank account or lodgment of a partnership income tax return. In South Australia it must at least be a genuine partnership.
In every case the rulings emphasise the relevant anti-avoidance provisions. If in the examples given by Mr De Domenico those arrangements were entered into with the intention of either avoiding or evading payroll tax, he is correct in saying that the commissioner would challenge the basis of the relationship. In fact, any taxation commissioner would. Madam Speaker, anyone can enter into a partnership or other working relationship with another person or other persons and, if there is opportunity to reduce or eliminate tax, that is all the incentive that may be required. It is surely very plain to see that, if the principals in such a relationship actually provide the labour in a service contract, that is no different from those same people providing labour as individuals.
The Commissioner for ACT Revenue has closely studied the way these provisions are administered in New South Wales and in Victoria. These were the first two States to introduce service contract provisions to curb tax avoidance. The ACT was the third, with Tasmania and South Australia following. Looking at the substance provided in this Bill, I believe that the commissioner is to be congratulated. I express grave concern at officers of the ACT Administration being slighted by a number of the comments made here this afternoon. I am extremely concerned and will study very closely the transcript of the speeches this afternoon by both Mr Kaine and Mr De Domenico. If it is borne out that they have impugned these people, I will be seeking redress before this Assembly. Madam Speaker, I call upon this Assembly to reject out of hand the amendment which Mr De Domenico and the Opposition propose to facilitate tax avoidance in the ACT and call upon members to support the Government's Bill.
MR DE DOMENICO (4.47): Madam Speaker, let me attempt in one or two sentences to tell you how irrelevant the past 15 minutes have been. Mr Lamont, proposed new subsection (3) retains the anti-avoidance provision; it has not been altered. For Mr Lamont to stand up here and talk about the noisy demand of members of the building industry and then suggest that - - -
Mr Lamont: Some.
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