Page 378 - Week 02 - Tuesday, 4 March 2008
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payroll tax purposes. Entities will be grouped where they use common employees, where they are commonly controlled companies or where controlling interests can be traced to give a more than 50 per cent interest. Interests may be held directly and indirectly by the entities, and can be aggregated to form a controlling interest. The formation of these groups will use common tests across the states and territories.
Related corporations under the Corporations Act of the commonwealth will automatically be grouped. There is no discretion to exclude a member from the group for any reason. However, in other cases, the commissioner has a discretion to exclude a member from the group where they operate independently. This currently applies in the ACT only to entities that are grouped because of the use of common employees. The bill widens this discretion to members that have been grouped under any of the grouping provisions. For administrative ease and consistency with New South Wales and Victoria, the bill omits the grouping provisions currently in the ACT Taxation Administration Act and inserts a new group of provisions within the Payroll Tax Act.
The final concept introduced by the bill is the use of a designated group employer to claim the appropriate payroll tax-free threshold for the entire group. No other group member will be able to claim a deduction. They will, instead, pay at the flat rate of payroll tax. The introduction of this concept requires amendment of the current formulas used to calculate payroll tax. So that all formulas in the act are similar in style, the bill introduces an equivalent of all the Victorian formulas used to calculate payroll tax.
When this bill was introduced, I advised the Assembly that, in addition to the eight measures agreed by the national project, New South Wales and Victoria have already implemented further changes that resulted in both states adopting new payroll tax acts on 1 July 2007. These acts are based on the same template with a separate schedule dealing with jurisdiction-specific provisions—that is, provisions where they chose to maintain their differences, including different rates and thresholds.
The ACT already complies with some of the bilateral project measures. There is no payroll tax liability for portable long service leave and redundancy schemes, and termination payments to non-employee directors and deemed employees are already included as wages. The existing exemption for wages paid for maternity or adoption leave in the ACT provides a benefit in relation to a wider range of people than the New South Wales or Victorian provisions.
Participating in the national project provides tax reform in the national interest, with benefits for all employers who operate across jurisdictions. If investigations show that the ACT and ACT employers would benefit from further reform, I anticipate that a future bill will implement appropriate measures from the New South Wales and Victoria bilateral project. If feasible, the ACT may adopt the New South Wales and Victorian payroll tax acts as a model for a new ACT payroll tax act when all harmonisation issues have been fully investigated.
The provisions in this bill are consistent with the New South Wales and Victorian payroll tax acts and are also in accord with changes being made by all other jurisdictions in relation to the eight agreed areas of concern. I commend the Payroll
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