That this Bill be agreed to in principle.

Mr Speaker, this Bill amends the Payroll Tax Act 1987 (the Act) to clarify that wages paid by employment agents to contractors, who are bona-fide employers in their own right, continue to remain exempted.

On 22 April 1999, Mr Speaker, amendments to the Act were passed in this Assembly, which sought to address two court decisions; provide greater certainty and objectivity for taxpayers in order to reduce overall compliance costs and, where possible, be consistent with legislative amendments in Victoria and New South Wales.

The original timing for the amendments, which were Gazetted on 6 May 1999, was required due to the perceived threat to the ACT payroll tax revenue base from not providing legislative certainty under the employment agent provisions. The revenue threat has occurred by virtue of the outcomes of two Victorian Supreme Court cases which appeared to allow industry overall to interpret exemptions too broadly.

Mr Speaker, since the introduction of the legislation, representatives from the IT industry have, however, expressed strong concerns that the new legislation and the subsequent Revenue Circular would inadvertently impose payroll tax on contracts which are currently self assessed by the industry as exempt.