Payroll Tax (Exemption for Small Business) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 6 September 2018.)

The Hon. R.I. LUCAS (Treasurer) (16:42): I thank honourable members for their general indications of support for the legislation. This is a major reform in terms of the abolition of payroll tax for all small businesses. We welcome support for the legislation.

Bill read a second time.

Committee Stage

In committee.

Clause 1.

The Hon. F. PANGALLO: We strongly support this payroll tax and what it will do to help small business in South Australia. We had some contact from a group of accountants who were concerned about the mechanics of all this. Administratively, they felt it was probably better to do it at the end of the financial year. There was going to be too much work for them to do to comply by the end of December. What they want and what I would ask is: will there be any information or an education campaign that you intend to roll out once this bill is passed that will give businesses, particularly small businesses, an idea of how they can comply with this so that it does not become a burden for them?

The Hon. R.I. LUCAS: The simple answer to the honourable member's question is yes. Can I prefix that by saying that, with the wonderful benefit of hindsight, I agree 100 per cent that it would have been much more administratively simple for the then Liberal opposition to have promised to introduce payroll tax abolition at the end of the financial year, so that it was for a full financial year rather than having this, in essence, transitional six-month period from 1 January next year.

It has added considerable extra complexity in the drafting of the legislation. RevenueSA, Treasury and parliamentary counsel have said the drafting of the legislation has been complicated. In one financial year we are going to have a combination of the former government's old system and the new government's abolition.

The bottom line is the government made a commitment to try to abolish payroll tax as soon as possible, but the greater benefit is to reduce taxes for small businesses so they can start to employ more people. Yes, it has been more complicated for parliamentary counsel and for those of us who have to understand the legislation and, yes, it is going to be more complicated for accountants in terms of interpreting it. We accept all of that, but the greater goal, the light on the hill, is to reduce the tax of small business as soon as possible, even if it has been significantly more complicated than we would have ever contemplated when we were in opposition. I can give you that frank response.

The answer to your question is, yes, there will need to be an education program. Information will be made available on the RevenueSA website, but there will also be the capacity for accountants and/or other business people to ring and make contact and have explanation as it is required in relation to these things. We would hope to have relatively simple to understand and explain, as far as that is possible, information for accountants and financial advisers that will assist many small businesses in terms of complying with the requirements of payroll tax legislation. It is a transitional issue. We will manage it as best we can. We acknowledge the concerns being expressed, and we will do the best we can to ameliorate those concerns.

The Hon. F. PANGALLO: How soon will you roll out this education program once the law is passed?

The Hon. R.I. LUCAS: My advice is as soon as possible after the legislation passes. Let's assume it passes this week and gets assent in the next week. We are at the end of October. We would imagine that sometime in November we will be able to start rolling out the initial stages of an education and information program and then build on that as we have more time.

The Hon. F. PANGALLO: Can you provide some detail of what the education program will be? Is it just simply going to be advertisements in newspapers? How will you be contacting small businesses?

The Hon. R.I. LUCAS: It will be a combination of things. The government indicated that, whilst we were not undertaking any publicly-funded campaign supporting the state budget, we did reserve the right to make a modest contribution towards an advertising campaign to highlight the payroll tax initiative once it commenced, and that will be on 1 January.

In November, what is contemplated is both website information and a telephone number but, equally, RevenueSA has a list of all registered payroll tax payers and so information will be sent directly to the payroll tax payer in relation to their obligations and requirements. That can, of course, be shared with their accountant or financial adviser and, at the same time, we will be able to provide further assistance if accountants are having difficulty in terms of understanding or complying with the terms of the legislation. The website and trained officers within RevenueSA will be there trying to provide that sort of assistance as well.

Clause passed.

Clauses 2 to 10 passed.

Clause 11.

The Hon. R.I. LUCAS: I move suggested amendment No. 1:

Amendment No. 1 [Treasurer–1]—

Page 13, lines 1 to 4 [clause 11(4) and (5)]—Delete subclauses (4) and (5) and substitute:

(4) Schedule 2, clause 6(3), formula—delete the formula and substitute:

This amendment to the payroll tax bill seeks to correct an inconsistency between the monthly and annual deduction amounts provided in the bill to some employers. The formula for determining an employer's monthly deduction amount in the current bill can result in a situation where the sum of the monthly deductions for a business will be less than the annual deduction they are entitled to.

The issue would only impact a small number of businesses, being those who begin or cease operating part way through a year. While this would have no impact on the total tax paid by those businesses for the year following the annual reconciliation process, it does have the potential to impact negatively a business's cash flow during the year. This inconsistency was identified by RevenueSA as part of its systems development and testing and, as a result of that, I move this corrective amendment in my name.

Suggested amendment carried.

The Hon. R.I. LUCAS: I move suggested amendment No. 2:

Amendment No. 2 [Treasurer–1]—

Page 14, lines 9 to 12 [clause 11(12) and (13)]—Delete subclauses (12) and (13) and substitute:

(12) Schedule 2, clause 9(3), formula—delete the formula and substitute:

This suggested amendment is consequential on the one that we have just passed.

Suggested amendment carried; clause as suggested to be amended passed.

Title passed.

Bill reported with suggested amendment.

Third Reading

The Hon. R.I. LUCAS (Treasurer) (16:55): I move:

That this bill be now read a third time.

Bill read a third time and passed.