PAYROLL TAX (MISCELLANEOUS) AMENDMENT BILL

Second Reading

Second reading.

The Hon. G.E. GAGO (Minister for Agriculture, Food and Fisheries, Minister for Forests, Minister for Regional Development, Minister for Tourism, Minister for the Status of Women) (17:56): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation inserted in Hansard without my reading it.

Leave granted.

The Payroll Tax (Miscellaneous) Amendment Bill 2012 (the 'Bill') contains two amendments to the Payroll Tax Act 2009 (the 'Act') in order to maintain payroll tax harmonisation across Australia. These amendments are proposed to take effect from 1 July 2013.

The first amendment removes outdated references to Commonwealth legislation in the employee share scheme provisions. The Commonwealth Government announced changes to the method of taxing employee share schemes in the 2009 Budget, which took effect from 1 July 2009. Retrospective Commonwealth legislation was assented to on 14 December 2009, and included the transfer of the relevant provisions from the Income Tax Assessment Act 1936 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 have made it necessary to amend provisions of the Act to reflect the Commonwealth changes.

Transitional provisions will allow employers to pay payroll tax on the grant of shares and options from 1 July 2009 to before 1 July 2013 under the current provisions or under the proposed new provisions. There is considered to be little material difference in the impact of the two sets of provisions.

The second amendment clarifies the application of the maternity and adoption leave exemption. Currently, the 14-week exemption period can be pro-rated to the equivalent of 14 weeks leave for full-time employees who take their leave at less than full pay, but the Act arguably does not provide equivalent treatment for part-time employees. To ensure consistent and equitable treatment of wages paid to full-time and part-time employees and in line with current administrative practice, this amendment will put beyond doubt that the 14-week period can be pro-rated for part-time employees on the basis of the wages that would have normally been paid for that period.

This government is committed to enhancing the productivity and competitiveness of the South Australian economy by ensuring that no unnecessary burden is imposed on South Australian business. In line with this commitment the government has continued efforts to maintain the harmonisation of payroll tax legislation across Australia, which has seen significant administrative savings for business. To maintain harmonisation these amendments were developed in consultation with the other States and Territories.

I commend this Bill to the House.

Explanation of Clauses

Part 1—Preliminary

1—Short title

2—Commencement

3—Amendment provisions

These clauses are formal.

Part 2—Amendment of Payroll Tax Act 2009

4—Amendment of section 3—Interpretation

This clause removes a reference in the definition of share in the Act to a provision of the Income Tax Assessment Act 1936 of the Commonwealth that has been repealed. As a result, a 'stapled security' will have its ordinary meaning for the purposes of the definition.

5—Amendment of section 18—Inclusion of grant of shares and options as wages

This clause amends section 18 to provide that a grant of a share or an option to an employee by an employer, in respect of services performed by the employee, constitutes wages for the purposes of Part 3 Division 4 of the Act only if the share or option is an ESS interest and is granted to the employee under an employee share scheme (within the meaning of section 83A–10 of the Income Tax Assessment Act 1997 of the Commonwealth). A grant of a share or an option to an employee by an employer that is not an ESS interest under an employee share scheme will be taxable as a fringe benefit under Part 3 Division 2 of the Act.

6—Amendment of section 19—Choice of relevant day

This clause (in subclause (1)) amends section 19 to set out the circumstances in which a share or option is taken to be granted to a person for the purpose of determining when payroll tax is payable. The provision replaces a reference to a repealed provision of the Income Tax Assessment Act 1936 of the Commonwealth which previously set out those circumstances.

Subclause (2) amends section 19 to provide that the vesting date of a share or option is taken to be the date at the end of 7 years after the grant of the share or option, if it has not occurred before that date.

7—Amendment of section 23—Value of shares and options

The Act currently provides that the value of shares or options is to be determined in accordance with provisions of the Income Tax Assessment Act 1936 of the Commonwealth that have been repealed. This clause provides that the value of shares or options is either the market value or the amount determined in accordance with new provisions in the Income Tax Assessment Act 1997 of the Commonwealth. The employer may elect the method by which the value of the share or option is determined in any return lodged by the employer. Subclause (1) makes a consequential amendment.

8—Amendment of section 24—Inclusion of shares and options granted to directors as wages

This clause amends section 24 to make it clear that the grant of a share or option by a company to a director of the company who is not an employee of the company is to be taxed under Part 3 Division 4 of the Act or as a fringe benefit.

9—Amendment of section 53—Maternity and adoption leave

This clause makes an amendment that clarifies the exemption (in section 53) from payroll tax wages paid or payable in respect of 14 weeks maternity leave. The amendment provides that wages are exempt from payroll tax if they are paid or payable in respect of a period of maternity leave equivalent to 14 weeks part-time leave at a reduced rate of pay. For example, the exemption may apply to wages paid or payable for maternity leave that extends to 28 weeks at half of the part-time rate of pay that would normally apply to the employee.

10—Amendment of Schedule 3—Transitional provisions

This clause provides for transitional provisions that—

(a) validate any decision made by an employer before the commencement of the proposed amendments to treat the grant of a share or an option as a fringe benefit for the purposes of payroll tax (rather than as a share or option under Part 3 Division 4 of the Act) if that decision would have been validly made had the proposed amendments been in force; and

(b) allow for certain shares or options to continue to be treated as shares or options to which Part 3 Division 4 (as amended by the Act) applies, even if, as a result of the amendments, the shares or options should be treated as fringe benefits under Part 3 Division 2, if the shares or options were granted before 1 July 2013.

Debate adjourned on motion of Hon. D.W. Ridgway.

At 17:58 the council adjourned until Thursday 15 November 2012 at 14:15.