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Legislative Assembly for the ACT: 1997 Week 11 Hansard (4 November) . . Page.. 3496 ..

MRS CARNELL (Chief Minister and Treasurer) (10.43): I ask for leave to present the Payroll Tax (Amendment) Bill 1997.

Leave granted.

MRS CARNELL: I present the Payroll Tax (Amendment) Bill 1997, together with its explanatory memorandum.

Title read by Clerk.

MRS CARNELL: I move:

That this Bill be agreed to in principle.

Mr Speaker, this Bill amends the Payroll Tax Act 1987 to provide as "wages", for payroll tax purposes, all employer-funded superannuation contributions. The Act defines wages to include "other benefits", which, since the judgment in CPS Credit Union Co-Operative (ACT) Ltd v. Commissioner for ACT Revenue (AAT 1994), has been interpreted as including a payment to a superannuation fund by an employer.

By administrative arrangement, these payments, for payroll tax liability purposes, were limited to superannuation contributions by employers that were a substitute for direct salary. This was in line with government policy prior to July 1996. On 24 June 1996 the Government announced the extension of the payroll tax base to cover all employer-funded superannuation contributions from 1 July 1996. In conjunction with the extension of the payroll tax base, the Government also reduced the payroll tax rate from 7 per cent to 6.85 per cent. These measures were consistent with those taken in New South Wales. However, New South Wales has specifically included these types of payments within its Payroll Tax Act. Recently, Mr Speaker, issues raised by taxpayers and their representatives indicate that the ACT's reliance on the 1994 AAT case previously referred to may be misplaced. Judgments in the Supreme Court of New South Wales and Victoria have raised doubts on the ACT's ability to legally enforce the taxation of employer-funded superannuation contributions post 1 July 1996 pursuant to the Act.

Mr Speaker, this legislative weakness may have a significant adverse financial impact on the ACT. A minimum superannuation contributory rate of 6 per cent, based on the Federal superannuation guarantee charge, on 1996-97 payroll tax collections of $110m would represent a possible threat to the Territory's revenue collection for that financial year of $6.6m, plus interest, and possibly even higher for following financial years. Mr Speaker, to protect the past revenue legitimately collected in accordance with government policy and for the ongoing stability of the Territory's revenue base, the Government has been left with no alternative but to legislate to validate past revenue collections and, by doing so, ensure that the ACT is able to provide adequately for its ongoing social and economic programs. The Bill, Mr Speaker, therefore also proposes to address this potential threat to ACT revenue by validating tax paid on employer-funded superannuation payments, with effect from 1 July 1996.

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