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Legislative Council - Fifty-First Parliament, Third Session (51-3)
2009-04-28 Daily Xml
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PAYROLL TAX BILL

Introduction and First Reading

Received from the House of Assembly and read a first time.

Second Reading

The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Small Business) (16:32): 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 Bill 2009 (the 'Bill') repeals the Payroll Tax Act 1971 (the 'Act') and replaces it with a new Act that harmonises payroll tax provisions as far as possible with the equivalent payroll tax legislation of New South Wales and Victoria.

On 29 March 2007, all State and Territory Treasurers agreed to move towards the adoption of uniform positions in a number of key areas announced by New South Wales and Victoria in February 2007. The legislative amendments to implement these measures were contained in the Payroll Tax (Harmonisation Project) Amendment Act 2008, which was assented to on 26 June 2008 and came into operation on 1 July 2008.

The Payroll Tax (Harmonisation Project) Amendment Act 2008 provided payroll tax alignment between South Australia and New South Wales and Victoria in relation to motor vehicle allowances, accommodation allowances, fringe benefits, work performed outside a jurisdiction, employee share acquisition schemes, superannuation contributions for non-working directors and grouping provisions.

With key harmonisation initiatives already incorporated into the Act, the current provisions of the Act provide the same tax outcome in South Australia as for New South Wales and Victoria, with the exception of rates, thresholds and exemptions. Consequently it is not envisaged that there will be any significant revenue implications as a result of adopting the harmonised legislative model.

During debate on the Payroll Tax (Harmonisation Project) Amendment Act 2008 the Government flagged its intention that with effect from 1 July 2009, South Australia would adopt the harmonised payroll tax legislative model operating in New South Wales and Victoria to maximise the degree of uniformity both with those States and also with Queensland and Tasmania who had similarly announced that they would be moving towards greater harmony.

This Bill operates to repeal the Act and replace it with an Act that is harmonised both in style and substance with the legislative model implemented in New South Wales, Victoria and now Tasmania.

The Bill amends the operation of the Act in the following ways.

Firstly, it reduces by 1 week the current administrative due date of the annual adjustment return (including the monthly return for June) from 28 July to 21 July of each year. Most taxpayers currently pay their payroll tax within 21 days.

Secondly, it allows for designated group employers, with the Commissioner's approval, to lodge joint returns on behalf of specified members of the group. This will provide an administrative benefit to some employers but does not change the grouping arrangements in the context of the application of payroll tax.

Thirdly, it provides a specific provision for the collection and recovery of tax from certain third parties, including agents, trustees, executors and liquidators and provides indemnities and rights of recovery as between third parties who are required to pay tax and the person on whose behalf the tax is paid. These provisions will provide improved administration in relation to collection and recovery of tax. There will be no change to existing practice as recovery of tax was previously undertaken in accordance with the Taxation Administration Act 1996, which includes similar provisions.

The Bill also amends the operation of the current payroll tax arrangements by varying the exemption for charitable bodies and modifying grouping provisions. These amendments reflect recent changes to New South Wales and Victoria's harmonised legislation.

The current exemption for charitable bodies will also be amended to apply to wages paid by a non-profit organisation that has, as its sole or dominant purpose, a charitable purpose rather than a non-profit organisation that has a wholly charitable purpose.

In relation to the grouping provisions, the requirement that trustee companies be grouped together as related bodies corporate for payroll tax purposes is removed.

In moving to the harmonised legislative model, jurisdictions will have legislative provisions that relate to jurisdiction-specific circumstances.

The most significant of these jurisdiction-specific matters for South Australia is the retention of the current superannuation provisions that ensure that the payroll tax base includes contributions paid by an employer in respect of an unfunded or partly funded arrangement, and contribution holidays.

In summary, the introduction of a harmonised payroll tax legislative model will assist businesses in South Australia that operate in more than one jurisdiction by reducing the regulatory costs associated with administering payroll tax.

I also take this opportunity to thank the members of RevenueSA's Consulting Groups and Business SA who have taken the time to provide valuable assistance in the formulation of the Bill.

I commend this Bill to the House.

Explanation of Clauses

Part 1—Preliminary

1—Short title

2—Commencement

These clauses are formal.

3—Interpretation

This clause sets out definitions for the purposes of the measure.

4—Taxation Administration Act 1996

This clause provides that the Bill is to be read together with the Taxation Administration Act 1996, which deals with matters of administration and enforcement of the Bill and other taxation laws.

5—Act binds the Crown

This clause provides that the Bill binds the Crown.

Part 2—Imposition of payroll tax

Division 1—Imposition of tax

6—Imposition of payroll tax

This clause sets out the basis for liability under the Bill, by providing that payroll tax is imposed on all taxable wages, being wages that are not exempt from tax, and that have the requisite connection to SA. The definition of taxable wages is contained in clause 10 of the Bill.

7—Who is liable for payroll tax?

This clause imposes payroll tax on employers. An employer is liable for payroll tax in respect of all SA taxable wages paid or payable by that employer.

8—Amount of payroll tax

This clause provides that the method for determining an employer's payroll tax liability is contained in Schedules 1 and 2 of the Bill.

9—When must payroll tax be paid?

This clause sets out when payroll tax must be paid. For wages paid or payable from July until May, payroll tax for each month must be paid by the 7th day of the following month. At the end of the financial year, registered employers must lodge an annual adjustment return, due by 21 July, which accounts for any underpayment or overpayment of tax throughout the year, and includes tax for wages paid or payable in the month of June. The Commissioner has the power to fix a different date for payment of payroll tax where the Commissioner believes that a person may leave Australia before their payroll tax liability arises.

Division 2—Taxable wages

10—What are taxable wages?

Subclause (1) defines taxable wages to mean wages, other than exempt wages, that are paid or payable by an employer for services performed, and that are:

paid or payable in SA (except if the relevant services are performed wholly in 1 other State or Territory); or

paid or payable outside SA for services performed wholly in SA; or

paid or payable outside Australia for services performed mainly in SA. Taxable wages do not include wages paid or payable in respect of services which are performed wholly in another country for a continuous period of more than 6 months. Such wages are exempt from tax from the commencement of the period of overseas service.

Subclause (2) provides a method for determining the jurisdiction in which wages are payable, in circumstances where the wages have not been paid at the time that the payroll tax liability arises.

Subclause (3) provides a method for determining the time and place of the payment of wages where the payment is made by way of an instrument (such as a cheque) or transfer of funds.

Subclause (4) provides that, in determining where services are performed in Australia, regard must be had only to the services performed in the month in respect of which the question arises.

Subclause (5) defines instrument for the purposes of subclause (3).

11—Wages not referable to services performed in a particular month

This clause provides that wages which are not referable to services performed in a particular month are taken to be paid or payable for services performed during the month in which they were in fact paid or became payable.

Division 3—Other

12—Liability for payroll tax not affected by subsequent amendment to Act

This clause provides that a liability for payroll tax arises and will be assessed in accordance with the provisions of the Bill as in force at the time the liability arises and such a liability, once having arisen, is not affected by a subsequent amendment to the Bill (except to the extent that the amendment operates retrospectively).

Part 3—Wages

Division 1—General concept of wages

13—What are wages?

This clause provides the general concept of wages for the purposes of the Bill. Wages means wages, remuneration, salary, commission, bonuses or allowances paid or payable to an employee, whether paid or payable at piece work rates or otherwise, and whether paid or payable in cash or in kind. The clause also provides that wages include:

an amount paid or payable as remuneration to a person holding an office under the Crown;

an amount paid or payable under any prescribed classes of contracts to the extent to which that payment is attributable to labour;

an amount paid or payable by a company as remuneration to a director;

an amount paid or payable as commission to an insurance or time-payment canvasser or collector;

any amount or benefit that is included as or taken to be wages under the Bill.

Division 2—Fringe benefits

14—Wages include fringe benefits

This clause provides that a fringe benefit constitutes wages for payroll tax purposes, with the exception of certain benefits which are exempt benefits under the Fringe Benefits Tax Assessment Act 1986 of the Commonwealth.

15—Value of wages comprising fringe benefits

Subclause (1) provides a formula for determining the value of a fringe benefit for payroll tax purposes. This value is the taxable value of the fringe benefit grossed up using the formula for 'Type 2 benefits' specified in the Fringe Benefits Tax Assessment Act 1986 of the Commonwealth. Under the Pay-roll Tax Act 1971, fringe benefits were grossed up using the 'Type 1 benefits' formula or the 'Type 2 benefits' formula accordingly.

Subclauses (2) and (3) specify the bases on which fringe benefits are to be included in monthly returns for payroll tax purposes. An employer must include the actual monthly value of the fringe benefits determined under subclause (1) unless the employer has made an election under clause 16, and that election is still in force.

16—Employer election regarding taxable value of fringe benefits

This clause permits employers to elect to declare 1/12 of the SA aggregate fringe benefits amount (grossed up using the formula for 'Type 2 benefits') included in a preceding annual FBT return. The clause provides a method for reconciling these monthly amounts at the end of the financial year with the current year's FBT return. An election, once made, may only be terminated with the approval of the Commissioner. The clause also specifies the basis on which a final adjustment of payroll tax is to be effected by an employer who ceases to be liable to payroll tax.

Division 3—Superannuation contributions

17—Wages include superannuation contributions

This clause provides that a superannuation contribution constitutes wages for payroll tax purposes. A superannuation contribution includes an employer contribution:

to a superannuation fund within the meaning of the Superannuation Industry (Supervision) Act 1993 of the Commonwealth;

as a superannuation guarantee charge within the meaning of the Superannuation Guarantee (Administration) Act 1992 of the Commonwealth;

to or as a form of superannuation, provident or retirement fund or scheme, including to the Superannuation Holding Accounts Special Account within the meaning of the Small Superannuation Accounts Act 1995 of the Commonwealth, and to a retirement savings account within the meaning of the Retirement Savings Accounts Act 1997 of the Commonwealth;

involving the crediting of an account of an employee, or any other allocation to the benefit of an employee (other than the actual payment of a contribution), or the crediting or the debiting of any other account, or any other allocation or deduction, so as to increase the entitlement or contingent entitlement of the employee under any form of superannuation, provident or retirement fund or scheme.

A superannuation contribution also includes a non-monetary contribution, the value of which is to be worked out in accordance with clause 43 of the Bill.

The Bill retains the ability of the Treasurer to estimate the contingent liability of an employer for contributions that will be payable to or in respect of an employee who is a member of the old or new scheme of superannuation under the Superannuation Act 1988 or of any other unfunded or partly funded scheme of superannuation, and the Treasurer's estimate is to be treated as a contribution paid or payable by an employer in respect of an employee for the purposes of the definition of a superannuation contribution.

A superannuation contribution also constitutes wages if paid or payable in respect of a company director, or in respect of a person taken to be an employee under the contractor provisions in Division 7.

Division 4—Shares and options

18—Inclusion of grant of shares and options as wages

This clause provides that the grant of a share or option to an employee constitutes wages for payroll tax purposes.

The clause also ensures that the grant of a share or option by or to a third party may be subject to payroll tax under the third party payment provisions in clause 46 of the Bill.

19—Choice of relevant day

This clause permits employers to elect to treat the wages constituted by the grant of a share or option as having been paid or payable on the date the share or option is granted to the employee, or the date on which the share or option vests in the employee. The vesting date of a share is the date on which any conditions applying to the grant of the share have been met and the employee's legal or beneficial interest in the share cannot be rescinded. The vesting date for an option is the earlier of 2 dates, being the date on which the share to which the option relates is granted to the employee, or the date on which the employee exercises a right to have the share transferred or allotted to (or vest in) him or her. The clause adopts provisions of the Income Tax Assessment Act 1936 of the Commonwealth for determining when a share or option is granted.

20—Deemed choice of relevant day in special cases

This clause provides that, where an employer does not include the value of a grant of a share or option in its taxable wages for the financial year in which the grant occurred, the wages constituted by the grant are taken to have been paid or payable on the vesting date of the share or option. Where the value of a grant of a share or option is nil, or the wages constituted by such a grant would not be liable to payroll tax on the date of the grant, such wages will be treated as paid or payable on the date that the share or option was granted.

21—Effect of rescission, cancellation of share or option

This clause ensures that payroll tax will continue to be payable in respect of a grant of a share or option that is later withdrawn, cancelled or exchanged, if it is withdrawn, cancelled or exchanged for valuable consideration. The clause also allows an employer to reduce its taxable wages by the value of a grant of a share or option, where it previously paid payroll tax on the grant, and the grant is subsequently rescinded because the conditions attaching to it were not met.

22—Grant of share pursuant to exercise of option

This clause ensures that, where an employer has paid any applicable payroll tax in respect of the grant of an option, the subsequent grant of a share pursuant to the exercise of that option is not subject to payroll tax. Additionally, payroll tax is not payable where an employer grants a share pursuant to the exercise of an option, if the option was granted before 1 July 2003.

23—Value of shares and options

This clause provides for the valuation of grants of shares or options in accordance with Commonwealth income tax provisions. Any consideration paid by an employee in respect of the share or option is to be deducted from the value of the share or option for payroll tax purposes.

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

This clause ensures that the grant of a share or option to a director as remuneration for the appointment or services of the director constitutes wages for payroll tax purposes.

25—When services considered to have been performed

This clause provides that, where a grant of a share or option constitutes wages under the Bill, the services to which those wages relate will be taken to have been performed during the month in which the grant or vesting (whichever date applies, as determined under clauses 19 and 20) of the share or option occurs.

26—Place where wages are payable

This clause provides that wages constituted by the grant of a share or option will be taken to be paid or payable in SA if the share is a share in a company registered in SA or any other body corporate incorporated under a SA Act. If the wages are taken to be paid or payable outside SA, the grant of a share or option may still be liable to payroll tax in SA (under clause 10 (1) (b) or (c) of this Bill) if the grant is made for services performed wholly or mainly in SA.

Division 5—Termination payments

27—Definitions

This clause defines termination payment as a payment made in consequence of the retirement from, or termination of, any office or employment of an employee. This includes:

unused annual leave and long service leave payments; and

employment termination payments (within the meaning of section 82-130 of the Income Tax Assessment Act 1997 of the Commonwealth) that would be included in the assessable income of an employee under Part 2-40 of that Act, including transitional termination payments within the meaning of section 82-10 of the Income Tax (Transitional Provisions) Act 1997 of the Commonwealth, and any payment that would be an employment termination payment but for the fact it was received more than 12 months after termination.

The definition of termination payment also includes amounts paid or payable:

by a company as a consequence of terminating the services or office of a director; or

by a person who is taken to be an employer under the contractor provisions contained in Division 7, as a consequence of terminating the supply of services by a person taken to be an employee under those provisions.

28—Termination payments

This clause provides that a termination payment, as defined in clause 27, constitutes wages for payroll tax purposes.

Division 6—Allowances

29—Motor vehicle allowances

This clause provides that wages do not include the exempt component of a motor vehicle allowance, calculated in accordance with this clause. An employer need only pay payroll tax on the amount of the motor vehicle allowance that exceeds the exempt component. The exempt component is a function of the number of business kilometres travelled during the financial year and the exempt rate (being a rate prescribed by regulations under the Income Tax Assessment Act 1997 of the Commonwealth, or otherwise as prescribed by regulations under the Bill). The method for determining the number of business kilometres travelled is determined in accordance with Part 4 of Schedule 1.

30—Accommodation allowances

This clause provides that wages only include an accommodation allowance paid or payable to an employee for a night's absence from his or her usual place of residence to the extent that it exceeds the exempt rate. The exempt rate is ascertained by reference to Australian Taxation Office determinations in respect of reasonable daily travel allowance expenses, or is otherwise as prescribed by regulations under the Bill.

Division 7—Contractor provisions

31—Definitions

This clause contains the following definitions applicable to the contractor provisions:

contract which is defined to include an agreement, arrangement or undertaking, whether formal or informal and whether express or implied;

relevant contract which is defined to have the meaning given in clause 32 of the Bill;

re-supply which, in relation to goods acquired from a person, is defined to include a supply to the person of goods in an altered form or condition, and a supply to the person of goods in which the first-mentioned goods have been incorporated;

services which is defined to include results, whether goods or services, of work performed;

supply which is defined to include supply by way of sale, exchange, lease, hire or hire-purchase, and in relation to services includes the provision, grant or conferral of services.

32—What is a relevant contract?

Subclause (1) defines a relevant contract as one under which a person, in the course of a business carried on by that person, supplies services to another person, or is supplied with persons to perform work, or gives out goods to natural persons for work to be performed by those persons and for the re-supply of those goods to the first-mentioned person.

Subclause (2) provides that various contracts are not relevant contracts for payroll tax purposes. These include contracts under which a person, in the course of a business carried on by that person, is supplied with services meeting any of the following criteria:

the services are incidental to the supply or use of goods by the person who is supplying the services;

the services are of a kind not ordinarily required in the course of the person's business and which are provided by persons who are genuinely supplying services to the public generally;

the services are of a kind ordinarily required in the course of the person's business but are required for less than 180 days in a financial year;

the services are provided by a person for less than 90 days in a financial year;

none of the above criteria are met, but the Commissioner is satisfied that the services are supplied by a person who ordinarily supplied services of that kind to the public generally in the financial year in respect of which liability is being assessed.

The clause further provides that, in some cases, a contract is not a relevant contract where a contractor supplies services to a person, in the course of a business carried on by that person, and uses 1 or more additional persons to perform the work to which the services relate. Nevertheless, such a contract will be taken to be a relevant contract if the Commissioner determines that the contract or arrangement under which the services were supplied was entered into for the purposes of evading or avoiding tax.

The clause also provides that a contract is not a relevant contract if it relates to services supplied by an owner driver, insurance agent or direct selling agent, unless the Commissioner determines that the contract or arrangement under which the services were supplied was entered into for the purposes of evading or avoiding tax.

Lastly, the clause provides that the relevant contract provisions do not apply to employment agency contracts, which are covered by Division 8 of Part 3.

33—Persons taken to be employers

This clause provides rules for determining which of the parties to a relevant contract is taken to be the employer for payroll tax purposes.

34—Persons taken to be employees

This clause provides rules for determining which of the parties to a relevant contract is taken to be the employee for payroll tax purposes.

35—Amounts under relevant contracts taken to be wages

This clause provides that amounts paid or payable by an employer under a relevant contract are taken to be wages for payroll tax purposes. However, where only part of the amount paid or payable relates to the performance of work or re-supply of goods under the contract, the Commissioner has the power to determine how much of the overall amount paid or payable will be taken to be wages for payroll tax purposes.

The clause also provides that the following are taken to be wages:

any payment which would amount to a superannuation contribution if the parties to the relevant contract were actually in a relationship of employer and employee;

the value of any grant of a share or option, provided or liable to be provided by the person taken to be the employer, that would be wages under Division 4 if the parties to the relevant contract were actually in a relationship of employer and employee.

36—Liability provisions

This clause is designed to prevent double taxation. Where a person taken to be an employer has paid payroll tax in respect of a payment taken to be wages under the contractor provisions, no other person is liable to pay payroll tax in respect of that payment, or any other payment for the same work, unless any such payment is made for the purpose of avoiding tax.

Division 8—Employment agents

37—Definitions

This clause defines an employment agency contract, which includes an agreement, arrangement or undertaking under which an employment agent procures the services of another person (service provider) for a client of the agent. Due to the wide concept of person, a service provider may include a company, a partnership or a natural person. An employment agency contract does not include arrangements under which a contract of employment results between the service provider and the client.

38—Persons taken to be employers

This clause provides that an employment agent under an employment agency contract is taken to be an employer for payroll tax purposes.

39—Persons taken to be employees

This clause provides that the natural person who performs the work for the client of the employment agent is taken to be an employee of the employment agent. This clause applies to situations where the service provider is a company, partnership or trustee. It provides that the natural person who in fact performs the work is taken to be an employee of the employment agent.

40—Amounts taken to be wages

This clause provides that any amount paid or payable (or the value of any benefit which would be a fringe benefit or a payment which would be a superannuation contribution) to or in relation to the service provider in respect of the provision of services under the employment agency contract is taken to be wages paid or payable by the employment agent. However, such a payment or benefit is not taken to be wages if it would be exempt from payroll tax under Part 4 of the Bill (other than under Division 4 or 5 or clause 50 of that Part) had the service provider been paid by the client as an employee. It is a requirement that the employment agent receives a declaration to that effect from the client. This clause also provides that if it is not reasonably practicable to determine the extent to which an amount, benefit or payment constitutes wages, the Commissioner may accept a return, or make an assessment, in which the amount on which payroll tax is levied is determined on the basis of estimates

41—Liability provisions

This clause is designed to prevent double taxation. Where an employment agent has paid payroll tax in respect of an amount or benefit taken to be wages under an employment agency contract, no other person is liable to pay payroll tax in respect of wages paid or payable in respect of the provision of those services by the service provider for the client.

42—Agreement to reduce or avoid liability to payroll tax

This clause provides that if an employment agency contract has the effect of reducing or avoiding the liability of any party to the contract to assessment, imposition or payment of payroll tax, the Commissioner may disregard the contract and determine any party to it to be an employer and any payment in respect of the contract to be wages. A notice of the determination must be served on the person taken to be an employer.

Division 9—Other

43—Value of wages paid in kind

This clause sets out the method for determining the value of wages (except fringe benefits, shares and options) that are paid or payable in kind.

44—GST excluded from wages

This clause provides for GST to be excluded from wages in circumstances where payment for a supply of services is taken to be wages under the Bill and the payment includes an amount of GST.

45—Wages paid by group employers

This clause provides that a reference in the Bill to wages paid or payable by a member of a group includes wages that would be taken to be paid or payable by a member of a group if the member were the employer of the employee to whom the wages were paid.

46—Wages paid by or to third parties

This clause ensures that payments of money or provision of other valuable consideration, which is referable to an employee's services to his or her employer, is taken to be wages paid or payable by the employer to the employee (and therefore subject to payroll tax), even if the amount is paid, or the benefit is provided, by:

a third party to the employee; or

the employer to a third party; or

a third party to a third party.

The same principles apply to payments of money or provision of other valuable consideration by way of remuneration for the appointment or services of a company director.

47—Agreement etc to reduce or avoid liability to payroll tax

This clause is an anti-avoidance provision which relates to agreements etc under which a natural person performs services for or on behalf of another person, and a payment in respect of those services is made to a person related or connected to the natural person. If such an agreement has the effect of reducing or avoiding the liability of any party to the agreement to assessment, imposition or payment of payroll tax, the Commissioner may disregard the agreement and determine any party to it to be an employer and any payment in respect of the agreement to be wages. A notice of the determination must be served on the person taken to be an employer.

Part 4—Exemptions

Division 1—Non-profit organisations

48—Non-profit organisations

This clause provides an exemption for non-profit organisations. Wages are exempt from payroll tax if they are paid or payable by a religious institution or a public benevolent institution. In order to qualify for exemption, the wages must be paid or payable for work of a kind ordinarily performed in connection with the religious or public benevolent purposes of the institution, and to a person engaged exclusively in that kind of work.

The clause also provides an exemption for wages paid or payable by a non-profit organisation that has wholly charitable, benevolent, philanthropic or patriotic purposes. The wages must be paid or payable for work of a kind ordinarily performed in connection with those purposes, and to a person engaged exclusively in that kind of work.

Wages are not exempt under this clause if they are paid or payable by a school, an educational institution, a company in which an educational institution has a controlling interest, or an instrumentality of the State. However, schools and persons providing educational services may be exempt from payroll tax under Division 2 of this Part.

Division 2—Education and training

49—Schools and educational services and training

This clause provides a payroll tax exemption for wages paid or payable by schools and certain other educational bodies. The exemption is specific to SA. The content of the exemption is set out in Division 1 of Part 3 of Schedule 2 to the Bill.

50—Community Development Employment Project

This clause provides that wages are exempt from payroll tax if they are paid or payable to an Aboriginal person who is employed under an employment project of the Community Development Employment Project.

Division 3—Health services providers

51—Health services providers

This clause provides that wages paid or payable by an employer who provides health services otherwise than for the purpose of profit or gain are exempt wages. The wages must be paid or payable to a person engaged exclusively in the provision of health services, or work that is incidental to the provision of health services.. A health care service provider is defined in Division 2 of Part 3 of Schedule 2.

52—Division not to limit other exemptions

This clause ensures that the provisions relating to the exemption for health care service providers do not limit the application of any other payroll tax exemption. In other words, the exemption for health care service providers may co-exist with other exemptions. An example is given of a health care service provider which is also an exempt non-profit organisation under clause 48 of the Bill.

Division 4—Maternity and adoption leave

53—Maternity and adoption leave

This clause provides an exemption from payroll tax in respect of paid maternity leave and paid adoption leave. Employers providing paid maternity or adoption leave are entitled to an exemption from tax for any wages paid or payable to an employee, up to a maximum of 14 weeks maternity leave or adoption leave. The maternity leave exemption is available in respect of leave provided to female employees. The adoption leave exemption is available in respect of leave provided to employees of either gender.

54—Administrative requirements for exemption

This clause provides that an employer wishing to claim an exemption for paid maternity or adoption leave must obtain certain records and keep them for a period of at least 5 years, as required by section 53 of the Taxation Administration Act 1996.

Division 5—Volunteer firefighters and emergency service volunteers

55—Volunteer firefighters

This clause provides an exemption from payroll tax for wages paid or payable to an employee in respect of any period when he or she was engaged as a volunteer member of a SACFS organisation within the meaning of the Fire and Emergency Services Act 2005 in responding to any situation that involved or may have involved an emergency under that Act.

56—Emergency service volunteers

This clause provides an exemption from payroll tax for wages paid or payable to an employee in respect of any period when he or she was engaged as a volunteer member of an emergency services organisation under the Fire and Emergency Services Act 2005 in responding to any situation that involved or may have involved an emergency under that Act.

57—Limitation of exemption

This clause provides that the exemptions for volunteer firefighter and emergency service duty do not apply to wages paid or payable as part of approved leave.

Division 6—Local government

58—Councils

This clause provides an exemption for wages paid or payable by a council.

59—Limitation on local government exemptions

This clause provides that councils and their subsidiaries are not entitled to an exemption for wages paid or payable in respect of specified activities.

60—Specified activities

This clause specifies activities for the purposes of clause 59, including the supply of electricity and gas, water supply, sewerage, and the conduct of other activities. An exemption is also not available for wages paid or payable in respect of construction of buildings or works, or installation of plant, machinery or equipment, for use in or in connection with any such activities. The list of non-exempt activities can be extended by regulation.

Division 7—Other government and defence

61—State Governors

This clause provides that wages paid or payable by the Governor of a State are exempt wages.

62—Defence personnel

This clause provides an exemption for wages paid or payable to an employee who is on leave from employment by reason of being a member of the Defence Force of the Commonwealth, or the armed forces of any part of the Commonwealth of Nations.

63—War Graves Commission

This clause provides an exemption for wages paid or payable by the Commonwealth War Graves Commission.

Division 8—Foreign government representatives and international agencies

64—Consular and non-diplomatic representatives

This clause provides an exemption for wages paid or payable by a consular or other representative in Australia to members of his or her official staff. This exemption does not apply to a diplomatic representative.

65—Trade commissioners

This clause provides an exemption for wages paid or payable by a Trade Commissioner representing any other part of the Commonwealth of Nations in Australia, to members of his or her official staff.

66—Australian–American Fulbright Commission

This clause provides an exemption for wages paid or payable by the Australian-American Fulbright Commission.

Part 5—Grouping of employers

Division 1—Interpretation

67—Definitions

This clause provides definitions of business and group for the purposes of this Part.

68—Grouping provisions to operate independently

This clause provides that the fact that a person is not a member of a group constituted under 1 of the grouping provisions does not prevent them from being a member of a group constituted under any of the other grouping provisions.

Division 2—Business groups

69—Constitution of groups

This clause ensures that when 2 or more groups form part of a larger group, the 2 or more smaller groups are not considered as groups in their own right.

70—Groups of corporations

This clause provides that corporations constitute a group if they are related bodies corporate within the meaning of the Corporations Act 2001 of the Commonwealth.

71—Groups arising from the use of common employees

This clause provides for groups arising from the inter-use of employees. Where:

1 or more employees of an employer perform duties for 1 or more businesses carried on by the employer and 1 or more other persons; or

1 or more employees of an employer are employed solely or mainly to perform duties for 1 or more businesses carried on by 1 or more other persons; or

1 or more employees of an employer perform duties for 1 or more businesses carried on by 1 or more other persons, being duties performed in connection with or in fulfilment of the employer's obligation under an agreement, arrangement or undertaking for the provision of services to any of those persons,

the employer and each of those other persons constitutes a group.

72—Groups of commonly controlled businesses

This clause provides for groups arising through common control of 2 businesses.

Under this clause, a group exists where a person, or a set of persons, has a controlling interest in each of 2 businesses. The entities carrying on the businesses are grouped.

The rules for determining whether a person (or set of persons) has a controlling interest in a business vary depending upon the type of entity conducting the business (eg a corporation, partnership or trust), and generally relate to the level of ownership or control of the business, or of the entity conducting the business.

In some circumstances, a person or set of persons will be taken to have a controlling interest in a business on the basis that a related person or entity has a controlling interest in that business. More specifically:

if a corporation has a controlling interest in a business, any related body corporate of the corporation (within the meaning of the Corporations Act 2001 of the Commonwealth) will also be taken to have a controlling interest in the business;

if a person or set of persons has a controlling interest in a business, and the person or set of persons who carry on that business has a controlling interest in another business, the first-mentioned person or set of persons is taken to have a controlling interest in the second-mentioned business;

if a person or set of persons has a controlling interest in the business of a trust, and the trustee(s) of the trust has a controlling interest in the business of another entity (being a trust, corporation or partnership), the person or set of persons is taken to have a controlling interest in the business of that other entity.

73—Groups arising from tracing of interests in corporations

This clause provides for groups arising from the tracing of interests in a corporation.

Under this clause, an entity (being a person or 2 or more associated persons) and a corporation form part of a group if the entity has a controlling interest in the corporation. Such a controlling interest exists if the entity has a direct interest, an indirect interest, or an aggregate interest in the corporation, and the value of that interest exceeds 50%. Division 3 applies in making this determination. This clause also contains a definition of associated person, and defines a number of other relevant terms.

74—Smaller groups subsumed by larger groups

This clause provides that, where any person is a member of 2 or more groups, those groups will form a single group. Under clause 69, the smaller groups which have been subsumed cease to exist as groups for the purposes of the legislation. This clause also provides that if 2 or more members of a group have together a controlling interest in a business (within the meaning of section 72), all the members of the group and the person or persons who carry on the business together constitute a group.

Division 3—Business groups—tracing of interests in corporations

75—Application

This clause applies this Division for the purposes of grouping an entity with a corporation under clause 73.

76—Direct interest

This clause provides that an entity has a direct interest in a corporation if the entity can directly or indirectly exercise, control the exercise, or substantially influence the exercise of voting power attached to voting shares in the corporation. The clause also provides that the percentage interest of voting power which an entity controls is the percentage of total voting power which the entity can exercise, control the exercise of, or substantially influence the exercise of.

77—Indirect interest

This clause provides that an entity has an indirect interest in a corporation (called the indirectly controlled corporation) if the entity is linked to that corporation by a direct interest in another corporation (called the directly controlled corporation) that has a direct and/or an indirect interest in the indirectly controlled corporation. The clause also provides that the value of an indirect interest in an indirectly controlled corporation is determined by multiplying the value of the entity's direct interest in the directly controlled corporation by the value of the directly controlled corporation's interest in the indirectly controlled corporation.

78—Aggregation of interests

This clause provides that an entity has an aggregate interest in a corporation when it has either a direct interest and 1 or more indirect interests, or 2 or more indirect interests. The clause also provides that the value of an entity's aggregate interest is the sum of the entity's direct and indirect interests in that corporation.

Division 4—Miscellaneous

79—Exclusion of persons from groups

This clause provides the Commissioner with a discretion to exclude a member from a group if satisfied that the business conducted by that member is independent of, and not connected with, the business conducted by any other member of the group. In considering the application of this discretion, the Commissioner will have regard to the nature and degree of ownership and control of the businesses, the nature of the businesses, and any other relevant matters. The discretion is not available for corporations that are related bodies corporate under section 50 of the Corporations Act 2001 of the Commonwealth.

80—Designated group employers

This clause provides that the members of a group or the Commissioner may designate 1 member of the group to be the designated group employer for the group. The designated group employer is the member entitled to claim the benefit of the threshold on behalf of the group when calculating its payroll tax liability.

81—Joint and several liability

This clause provides for the joint and several liability of every member of a group where any one of them fails to pay an amount required under the Bill. The Commissioner is entitled to recover the whole amount payable from any member of the group.

Part 6—Adjustments of tax

82—Determination of correct amount of payroll tax

This clause provides that this Part applies to both group and non-group employers, and defines various terms which are used in the Part. Where an employer is a group employer for parts of a financial year, and a non-group employer for other parts of the same financial year, separate adjustments are to be made in respect of any period as a group employer, and any period as a non-group employer.

83—Annual adjustment of payroll tax

This clause provides for an annual adjustment of payroll tax at the end of each financial year in accordance with the calculations in Schedule 1. Where an employer has paid too much tax throughout a financial year, the employer may apply for a refund from the Commissioner. Conversely, where an employer has not paid enough tax throughout a financial year, the employer must make up the difference in their annual return.

84—Adjustment of payroll tax when employer changes circumstances

This clause requires an employer to make an adjustment of payroll tax if they change their circumstances at any time during a financial year, meaning that they cease to pay or be liable to pay wages, become a member of a group, or cease to be a member of a group. The adjustment is made at the time that the employer's circumstances change, and relates to the period commencing from the start of the financial year (or the last change of circumstances, whichever is more recent) and ending with the change of circumstances. The adjustment requires an employer to compare their monthly returns with their actual liability for the period (using the annual payroll tax calculations in Schedule 1, pro-rated for the number of days in the period). The employer is then required to make up any tax shortfall to the Commissioner.

Any payments made under this clause are taken into account in the employer's annual adjustment calculation at the end of the financial year.

85—Special provision where wages fluctuate

This clause ensures that an employer who only pays or is liable to pay wages for part of a financial year receives the benefit of the payroll tax threshold for the whole year if the Commissioner determines that, by reason of the nature of the employer's trade or business, the wages paid or payable by the employer fluctuate with different periods of the year. If the employer only conducts that trade or business in Australia for part of the financial year, they can still seek a determination under this clause, and if successful, will receive the benefit of the payroll tax threshold for that part of the financial year.

Part 7—Registration and returns

86—Registration

This clause provides that an employer who pays wages in SA must register for payroll tax if their total Australian wages exceeds the weekly exemption level during any 1 month. If the employer is a member of a group, the total Australian wages paid or payable by all members of the group determines whether the employer should register for payroll tax. If a registered employer's wages fall below the weekly exemption level during any 1 month, the Commissioner may cancel that employer's registration.

87—Returns

This clause provides that every employer who is registered, or required to be registered, under the Bill must lodge a monthly return within 7 days after the end of each month except June, and an annual adjustment return (including the monthly return for June) by 21 July of each year. The Commissioner may vary the time within which a specified employer is required to furnish returns and the period in relation to which a specified employer, or employers of a specified class, are required to furnish returns generally, or returns relating to wages of a specified kind.

This clause also provides that designated group employers may, with the Commissioner's approval, lodge joint returns on behalf of specified members of the group.

Part 8—Collection and recovery of tax

Division 1—Agents and trustees generally

88—Application

This clause provides that this Division applies to an agent or trustee for an employer, and states that nothing in the Division limits the application of the Part 5 grouping provisions to agents and trustees.

89—Agents and trustees are answerable

This clause provides that an agent or trustee for an employer may be treated as the employer and is subject to all of the employer's obligations arising from the payment of taxable wages under the Bill.

90—Returns by agent or trustee

This clause provides that an agent or trustee must make returns, in its representative capacity only, and where a person is an agent or trustee for more than 1 employer, returns for each employer must be made separately.

91—Liability to pay tax

This clause provides that an agent or trustee must retain enough money to pay payroll tax out of any money which comes to the agent or trustee in their representative capacity, and provides for the personal liability of the agent or trustee in some circumstances where they fail to do so.

92—Indemnity for agent or trustee

This clause provides an agent or trustee who pays tax in its representative capacity with an indemnity and right of recovery against the employer.

Division 2—Special cases

93—Tax not paid during lifetime

This clause provides for the lodgment of returns and payment of tax by the trustee of a deceased estate where the deceased person did not make complete and accurate returns during his or her lifetime, and therefore escaped full payment of tax. The amount of tax payable is a charge on the estate with priority over all other encumbrances.

94—Payment of tax by executors or administrators

This clause provides for the assessment and recovery of tax from executors or administrators of an employer's estate where an employer dies without paying all of the tax payable up to the date of death.

95—Assessment if no probate within 6 months of death

This clause provides for the assessment of a deceased person where probate has not been granted within 6 months of their death. The clause requires the Commissioner to advertise the notice of assessment, and permits any person claiming an interest in the estate of the deceased to lodge an objection. Once an assessment has been advertised and confirmed under this clause, the Commissioner may rely on the general rights to recover unpaid tax contained in the Taxation Administration Act 1996.

96—Person in receipt or control of money for absentee

This clause provides that the Commissioner may recover tax from any person (the controller) who has the receipt, control or disposal of money belonging to a person (the principal) who is liable for tax, and who is resident out of Australia. The clause requires the controller to retain sufficient money to pay the tax, and provides for the personal liability of the controller in some circumstances where it fails to do so. It also provides the controller with an indemnity and right of recovery against the principal.

97—Agent for absentee principal winding-up business

This clause provides for the recovery of tax from an agent of an absentee principal who has been required to wind-up the principal's business. The agent is required to notify the Commissioner of the intention to wind-up the business before taking any steps to do so, and must pay any payroll tax liability from the assets of the business. The agent is penalised for failure to comply with these obligations, and made personally liable for the tax.

98—Recovery of tax paid on behalf of another person

This clause provides a general right of recovery for any person who pays tax for another person under the provisions of the Bill.

99—Liquidator to give notice

This clause provides for the recovery of tax from a liquidator of an employer which is registered or required to be registered under the Bill. A liquidator is obliged to set aside assets to the value of the amount of tax notified by the Commissioner as being payable by the employer, and is liable as trustee to pay the tax to the extent of the value of those assets. The liquidator is penalised for failure to comply with these obligations, and made personally liable for the tax.

Part 9—General

100—Returns etc to be completed in manner approved by Commissioner

This clause provides that a return, application, statement, notice or any other document relating to the payment of payroll tax that is to be provided to the Commissioner for the purposes of the Bill or the Taxation Administration Act 1996 must be provided in a manner and form determined or approved by the Commissioner.

101—Regulations

This clause provides powers to make regulations for the purposes of the Bill.

Schedule 1—Calculation of payroll tax liability

This Schedule makes provision for matters relating to the calculation of payroll tax liability.

Schedule 2—South Australia Specific Provisions

This Schedule contains provisions relating to payroll tax, including exemptions from payroll tax, that are specific to South Australia.

Schedule 3—Repeal and transitional provisions

This Schedule repeals the Pay-roll Tax Act 1971 and contains transitional arrangements for the implementation of the measure.

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

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