PAYROLL TAX (MISCELLANEOUS) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 18 October 2012.)

The Hon. I.F. EVANS (Davenport) (12:26): This bill contains two amendments to the Payroll Tax Act 2009 and really is about harmonising the definition of payroll between states. Essentially, the first amendment removes outdated references to the commonwealth legislation in the employee share scheme provisions. The commonwealth announced changes to the method of taxing employee share schemes in the 2009 budget. Retrospective commonwealth legislation was assented to on 14 December 2009 and included the transfer of relevant provisions from the Income Tax Assessment Act to the Income Tax Assessment Act 1997. The retrospective effect of the commonwealth legislation and changes in the way the new commonwealth legislation taxes shares and options has made it necessary to amend the provisions of this act.

Traditional provisions will allow employers to pay payroll tax on the grant of shares and options from 1 July 2009 before 1 July 2013 under the current provisions or under the current proposed new provisions. There is considered to be little material difference in the impact of the two sets of provisions but we are seeking industry feedback. We have only had one minor comment which I will read in for the Treasurer to consider between houses.

The second amendment clarifies the application of the maternity and adoption leave payroll tax exemption. At present the 14-week exemption period can be pro rata to the equivalent of 14 weeks leave for full-time employees who take their leave at less than full pay. The act does not provide the same treatment for part-time employees. The proposed amendment seeks to ensure consistent and fair treatment of the wages paid to full-time and part-time employees and will clearly state that the 14-week period can be pro rata for part-time employees also.

We sought feedback from a range of industry associations. The one that got back to us was the Law Society and, so the Treasurer can consider this matter, I will read it into Hansard and he can consider it between houses, and we will ask the minister in the other place for an answer in relation to the Law Society's point. We sent the bill to the Law Society. The Law Society advised us that the matter was considered by their Commercial Law Committee and they provided the following comments:

Clause 6.1—When a share or option is granted

This clause proposes to amend section 19(2) of the Payroll Tax Act 2009. We refer to the recent Full Federal Court decision in Federal Commissioner of Taxation v McWilliams [2012] FCAFC 105 in relation to the acquisition date of share options. We query whether this case was taken into account during the drafting of the proposed section 19(2) since, as we understand it, the policy is to reflect the Commonwealth provisions in relation to the employee share schemes. Further, the current section 19(2) refers to the repeal provisions of the Income Tax Assessment Act 1936 and we query whether a replacement of those references to the Income Tax Assessment Act 1997 is more appropriate or whether this is a specific intent to clarify when an option or share is granted.

Clause 6(2)—Vesting date.

This clause proposes to amend section 19 subsections (3) and (4) of the Payroll Tax Act...to reflect changes in the Commonwealth employee share scheme provisions by providing that the vesting date of a share or option is the date at the end of 7 years after the grant of the share or option. However, the Commonwealth IncomeTax Assessment Act 1997 includes another taxing point which is not referred to in these amendments. This is the cessation of employment in respect of which an employee acquires their interest (section 83A-115(5) and section 83A-120(5)). We query whether this specific taxing point in the Commonwealth provisions has been intentionally omitted in these amendments.

Clause 7—Value of shares and options

The proposed new section 23(6) refers to 'any other necessary modifications'. We query whether this provides sufficient certainty or whether other guidance will be provided to taxpayers in relation to what this term means.

The opposition supports the principle of the bill. I do not expect the Treasurer to clarify those matters now because they are very technical and relate to matters in the Federal Court but, if he could have a look at them between the houses and provide clarification in the upper house, that would be sufficient. On that basis, the opposition supports the bill.

The Hon. J.J. SNELLING (Playford—Treasurer, Minister for Workers Rehabilitation, Minister for Defence Industries, Minister for Veterans' Affairs) (12:31): I thank the opposition for their support and I am more than happy to get back to the member for Davenport between the houses with a response to the Law Society's query.

Bill read a second time.

Third Reading

The Hon. J.J. SNELLING (Playford—Treasurer, Minister for Workers Rehabilitation, Minister for Defence Industries, Minister for Veterans' Affairs) (12:32): I move:

That this bill be now read a third time.

Bill read a third time and passed.