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Legislative Assembly for the ACT: 2001 Week 10 Hansard (28 August) . . Page.. 3340 ..

Payroll Tax Amendment Bill 2001

Mr Humphries , by leave, presented the bill and its explanatory memorandum.

Title read by Clerk.

MR HUMPHRIES (Chief Minister, Minister for Community Affairs and Treasurer) (11.27) I move:

This bill amends the Payroll Tax Act 1987 to prevent the potential loss in payroll tax revenue due to a possible loophole in the exemption provisions for apprentices and trainees. This potential problem is the result of changes over recent years by the Commonwealth government to former apprenticeship and traineeship schemes. This issue has been critical in recent months, with an increasing number of employers seeking to claim payroll tax exemptions well beyond the policy intention.

The act currently provides exemption from tax for wages paid or payable in certain specific cases. These include the first 12 months of wages paid in respect of a person employed as an apprentice and wages for a trainee employed under the Australian traineeship scheme and a person employed under an approved group apprenticeship scheme. However, in 1998 the Commonwealth government replaced apprenticeships and the Australian traineeship scheme with a new apprenticeship scheme.

The Commonwealth new apprenticeship scheme, or NAS, creates a number of potential issues that are impacting on the liability of some employers to payroll tax. There is less structure to the courses and the new scheme is available to a wider class of employees. Initially all employees were entitled to be registered as trainees, resulting in almost the entire work force in some companies and industries being registered as trainees, and hence employers may be able to claim exemption for all such employees' wages. There are also grounds for concern that courses now operate for periods longer than 12 months.

As a result of the broad nature of the changes to traineeships and apprenticeships under the new Commonwealth scheme, the ACT payroll tax exemption provisions may be rendered ineffective on policy grounds because, according to legal advice, the exemption provisions may operate to make either all employees under the new scheme exempt or no employees exempt. Neither of these situations satisfies the policy intention of the exemption provisions, which were intended to give a limited class of employees an exemption for a period not exceeding 12 months whilst undertaking competency-based training.

The new apprenticeship scheme is available to both new and existing employees and is potentially unlimited in duration. Both of these features run contrary to the original policy intent underlying these payroll tax exemptions.

The Payroll Tax Amendment Bill 2001 changes the conditions for the classes of wages upon which no payroll tax would be payable in the case of wages payable for first-time employees in the industry or occupation who are receiving approved training.

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