Page 2653 - Week 08 - Thursday, 14 August 2014
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While the exemption is intended to apply to subcontractors who are genuinely employing others, it is currently being applied by single-person companies. The employment agent engaging these companies thus exempts the wages from payroll tax. This application of the “genuine employer” exemption has created an inequity in the ACT’s payroll tax system.
The government is of the view that all contractors in similar circumstances should be treated consistently for payroll tax purposes, irrespective of the structure of their business affairs or the industry in which they operate. The amendments contained in this bill ensure that contractors will no longer be able to receive an exemption where a contractor employs themselves or joins with other unrelated contractors to create a payroll company. This bill will help provide more certainty to local employment agents and contractors in relation to their taxation obligations.
The ACT will continue to provide six other exemptions. The remaining exemptions will continue to apply where a contractor is a body corporate, partnership or sole trader or has two people working on a contract, one of whom is an employee of the business. The exemption for a single-person business will no longer be available.
The government has engaged with industry stakeholders since the removal of this exemption was announced. Like the opposition, we have received a range of responses from the community—
Mr Coe: Who has written to you saying it’s a good idea?
MR BARR: A number of people have. The government has received a range of responses from the community.
Mr Hanson interjecting—
MADAM SPEAKER: Order Mr Hanson! Mr Barr has the floor.
MR BARR: We have also taken into account the views put forward by the estimates committee. We have adjusted the implementation time frames in recognition of the industry’s need for time to adjust business practices as necessary. As I announced earlier in the week, the bill will now commence, by way of an amendment that I will move shortly, on 1 January 2015.
This gives certainty around when industry and taxpayers will need to withhold payroll tax and provides more time to accommodate the necessary changes that may be required. A number of people wrote to me asking for this change to be phased in, for it to have a part effect in one year and then come in in the next. We believe this amendment will achieve that outcome that was requested by many people who wrote to us.
The amendment which has been circulated in my name is minor and technical in nature. So in accordance with standing order 182A(c) it was not required to be considered by the scrutiny of bills committee but it was, of course, circulated in advance in accordance with the standing order. The amendment substitutes the commencement date of 1 July 2014 with 1 January 2015.
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