Page 377 - Week 02 - Tuesday, 4 March 2008
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The benefits of payroll tax harmonisation are tangible. For those who employ in more than one jurisdiction, it will be easy to comply with the payroll tax legislation where it is the same in all states and territories. For groups, the introduction of a designated group employer to claim the whole amount of the group’s tax-free threshold should simplify the returns. The use of a single gross-up factor for fringe benefits also simplifies returns, and linking allowances to the amount set annually by the Australian Taxation Office will keep them current. The ACT already complies with two of the eight common provisions, these being the timing of lodgement and the inclusion of superannuation contributions for non-working directors as wages.
This bill amends existing employee share acquisition scheme provisions to limit payroll tax liability so that each jurisdiction can only include a share in a local company, or the option to acquire such a share, as wages paid in their jurisdiction. Such shares and options are only liable to payroll tax in the ACT if they are shares or options in an ACT company. In any other case, the share or option is taken to be paid outside the ACT. The exception to this general rule is only where the grant of the share or option is made for services performed wholly in the ACT, in which case they are subject to ACT payroll tax.
The other issues covered by the bill are in relation to motor vehicle and accommodation allowances, a range of fringe benefits, work performed outside a jurisdiction and grouping of businesses for payroll tax purposes. The bill adopts exemption rates for motor vehicle allowances and accommodation allowances in the ACT which are linked with those set annually by the Australian Taxation Office for income tax deduction purposes. This provides certainty and keeps the rates up to date. The bill also introduces uniform treatment of fringe benefits that are included as wages. The use of both type 1 and type 2 gross-up factors has been discarded and agreement has been reached to adopt the lower type 2 gross-up factor to calculate the amount deemed to be wages for payroll tax purposes.
A provision that is new to the ACT payroll tax regime is the adoption of an exemption for wages paid in the ACT for employees who work in another country for a continuous period of six months or more. Where an employee is on continuous assignment outside Australia for a period of six months or more, the exemption applies to wages paid for the whole assignment, including the first six months. However, wages paid for services in another country for less than six months will continue to be liable to payroll tax. If an employee returns to Australia for a holiday or to perform work related to the assignment for less than a month, their wages will continue to be exempt if the employee returns to the overseas country to continue the assignment. This will be administered in the same manner across all jurisdictions.
The major changes introduced by the bill are in relation to grouping provisions. The grouping of related or associated businesses is an anti-avoidance measure. Without grouping provisions, an entity could split its operations into several businesses, all of which have wages below the threshold, and consequently none of them incur a payroll tax liability. The ACT already has grouping provisions but they are not consistent with those agreed by all the jurisdictions. The ACT will adopt a model consistent with that of Victoria and New South Wales in relation to the grouping of businesses for
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