PAYROLL TAX (NEXUS) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 26 May 2010.)

The Hon. R.I. LUCAS (16:18): I rise on behalf of the Liberal Party to indicate support for the second reading of the Payroll Tax (Nexus) Amendment Bill. The bill has passed the House of Assembly. There was a brief but succinct debate that ensued between a number of Liberal members and the Treasurer. No new issues appeared to be raised as a result of that discussion, although a couple of questions were asked. Put simply, this bill has evidently been agreed between all the jurisdictions. The intention is to apply it retrospectively to 1 July 2009. Essentially it will change, in certain circumstances where payroll tax is paid in the jurisdiction where an employee has their bank account, to where the employee resides or their principal place of residence. The circumstances where this will apply is where the employee is providing services across a number of jurisdictions, or at least more than one jurisdiction.

When we get into committee we will be able to tease out some of the details of the proposed changes and the way the current arrangements operate, but as best we can understand it, from the changes in the brief discussion the Treasurer had, there is no proposed change and there appears to be no problem with the circumstances where an employee is providing services in one jurisdiction during, I assume, the period of a month, given that payroll tax is paid on a monthly basis.

We are obviously talking about circumstances where one can now contemplate increasing numbers of people who work across state borders. With mining projects for example, it is quite common for people from Sydney or Melbourne to fly into the northern parts of South Australia to undertake work on a mining project. They may or may not be working across jurisdictions in a particular month.

It may well be that someone is working solely in South Australia in June 2010, even though they reside in Sydney. However, there may be circumstances where in June some work or services might be provided in South Australia and some in New South Wales. My understanding of the proposed changes is that we are talking about that particular set of circumstances and those particular employees.

The concerns that state tax officers or their equivalent have is that there may well be what they refer to as forum shopping; that is, employers and employees may get together and decide to make their wage payments and therefore pay their payroll tax in the jurisdiction that has the lowest rate of payroll tax, or the highest threshold, depending on the particular circumstances of the business involved and what might be advantageous for their tax purposes. So, all the jurisdictions have got together to try to stop what they see as forum shopping.

I respond to a question from the member for Davenport, who indicated that officers pointed out there had been one example of a problem. There was no committee stage in the House of Assembly, so I seek from the government and their officers more details on the particular example that had evidently been highlighted to the member for Davenport. We are asking not for the name of the company but for details of the example in terms of the specific problem, the possible extent of avoidable payroll tax involved and any other detail that might assist members in understanding the particular problem that the government and other jurisdictions are seeking to stamp out.

The member for Davenport indicated that the government evidently had not consulted with industry associations, and we congratulate him on undertaking that consultation. The result of the consultation was that the Motor Trade Association indicated that it supported the bill, that Business SA indicated that it supported the bill but that the Master Builders Association indicated that it opposed the legislation. The principal reason, as I understand from the member for Davenport's contribution, was the retrospective nature of the implementation of this proposal.

A further question I will put to the minister when he responds is: whilst we understand the government did not consult before, subsequent to the introduction of the legislation have any industry groups or industries contacted the government and expressed their concern about either the overall nature of the legislation or, indeed, any aspect of it?

In relation to consultation, it has certainly been my understanding and the practice of the former government and, at least until recent times, the practice of this current government, that when tax changes were made there was a consultative committee comprising tax professionals in South Australia—accountants and other finance related people. The exact name of the committee escapes me at the moment, but I think it is a joint committee in relation to taxation legislation that Treasury has always used to consult on proposed changes to tax legislation. It was a very sensible process.

On many occasions it was used successfully by the former government, and certainly by this government in previous years, to receive confidential informal advice, professional advice, prior to the introduction of legislation to the house. So my question specifically is: was that particular body, which I am sure the officers will know the name of, consulted, and if not, why not, and if they were consulted, were any concerns raised by that particular body in relation to the proposed legislation?

The member for Davenport sought written confirmation from the Treasurer in relation to what he thought might have been a changed definition for wages. My reading of the Treasurer's response is that he did not believe a written response was necessary, because he had taken advice and indicated that there had been no change to the definition and the practical impact of the wages section of the legislation. If that is the case, I would ask the minister to confirm that again on the record in this chamber during his response to the second reading.

With that, I indicate that the Liberal Party supports the second reading. We will reserve our position, obviously, in relation to the few brief answers to questions that we put to the minister, and as I said, when we get into the committee stage, there may well be one or two particular issues that we will seek to clarify in terms of both the current operation and the proposed different operation of the legislation.

Debate adjourned on motion of Hon. R.P. Wortley.