Page 4989 - Week 13 - Thursday, 12 November 2009
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The question that arises is in a situation where an entity engages the services of a company to perform a service. This could be to do some electrical work or some plumbing work—that is, a one-off piece of work. The concern of business is whether this arrangement creates a payroll tax liability for the entity that obtains the services. I am pleased to advise that, after raising the matter with the Treasurer’s office, we have been assured that this provision does not lead to an unintended consequence. When this provision is read in the context of other provisions in the Payroll Tax Act, particularly section 4 of the principal act, the concern is resolved. In principle there is no payroll tax liability placed on anyone who employs a contractor to perform a particular service on an infrequent basis. I thank the Treasurer’s office for that response and for resolving that matter. With these comments, the opposition will be supporting the bill.
MS HUNTER (Ginninderra—Parliamentary Convenor, ACT Greens) (3.59): The Greens will be supporting this amendment to the Payroll Tax Act. As we understand it, this change is part of the ongoing payroll tax harmonisation as has been agreed between all state and territory governments. In seeking to cover employees working in more than one jurisdiction, it seems logical to agree on one location for the payment of payroll tax rather than the jurisdiction where the employees have a bank account.
It is reasonable to argue that the state of residence incurs the most expense in relation to provision of services for the employee. In any case, what the ACT may lose in relation to employees earning an income in the ACT and living interstate will be balanced out by people in the opposite situation. We have been advised that, while the ACT has a significant share of interstate residents working in the ACT, mainly from New South Wales, the amendments being proposed will not disadvantage the ACT financially. In the worst case scenario, as we understand, the ACT will break even. It is expected these new arrangements will provide greater clarity to employers and reduce compliance costs. The Greens will be supporting the amendment.
MR STANHOPE (Ginninderra—Chief Minister, Minister for Transport, Minister for Territory and Municipal Services, Minister for Business and Economic Development, Minister for Aboriginal and Torres Strait Islander Affairs and Minister for the Arts and Heritage) (4.01): I am acting for Ms Gallagher, the Treasurer, who is unable to be here this afternoon, so I will close the debate on her behalf.
This bill amends the nexus provisions that determine in which jurisdiction the payroll tax is payable in situations where an employee works in more than one jurisdiction in a month, such as the airline industry. The changes will not affect employers with employees providing services in the ACT only.
The current nexus for an employee who works in more than one jurisdiction based on the location of an employee’s bank account is outdated and no longer appropriate. Today’s modern electronic banking practices allow the centralising of banking operations. This, together with anecdotal evidence from the ACT Revenue Office, has suggested that this has, in some cases, led taxpayers to “forum shop” for the jurisdiction with the most attractive payroll tax rates and thresholds.
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