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Legislative Council - Fifty-First Parliament, Third Session (51-3)
2009-05-13 Daily Xml
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PAYROLL TAX BILL

Second Reading

Adjourned debate on second reading.

(Continued from 12 May 2009. Page 2254.)

The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Small Business) (21:44): I thank honourable members for their contributions to the debate. The Hon. Mark Parnell asked a number of questions, and I provide the following responses to those questions. The honourable member stated:

In the current bill attempts are being made to harmonise the exemptions between various states.

I point out that the public announcements in regard to payroll tax harmonisation have always confirmed that the rates, thresholds and exemptions would not be harmonised. The South Australian government considers that the rates, thresholds and exemptions are policy decisions that respective governments should make individually when considering the overall tax mix and revenue necessary to be used to deliver services to the community, such as health, education, and law and order.

I am advised that the only change being made to exemptions in the bill is that the current charitable bodies exemption will 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. The amendment will result in a minor widening of the exemption.

This amendment follows on from the inclusion of an exemption in the Payroll Tax (Harmonisation Project) Amendment Act 2008 for charitable bodies, which was one of a number of new exemptions adopted in South Australia on equity grounds, consistent with the Victorian and New South Wales position. Since that change was made, New South Wales and Victoria have again amended this exemption, and the change in the current bill is being made to maintain alignment in that regard.

I am also advised that no changes are being made to existing South Australian specific exemptions that are not provided in New South Wales and Victoria, which, for example, included exemptions for non-profit kindergartens and child-care centres.

The honourable member also asked: can the minister clarify that all organisations that are currently exempt from payroll tax under the existing legislation will continue to be exempt from payroll tax? Variations on that question include what types of organisations the government believes may be getting payroll tax relief for the first time under this new proposed arrangement and whether there are any organisations at all that are currently exempt from payroll tax that will have to pay in the future.

I am advised that all organisations that are currently exempt from payroll tax under the existing legislation will continue to be exempt from payroll tax because, as stated above, the only change to exemptions in this bill are to widen the charitable bodies exemption. As there will be a minor widening of the charitable bodies exemption, some organisations which are currently not exempt may become exempt. However, no particular organisation has been identified at this stage.

The honourable member also asked for clarification that 'charitable' does include non-profit, non-government environmental groups. I am advised that the term 'charitable body' is not defined in either the Payroll Tax Act 1971 or in the proposed Payroll Tax Act 2009. Therefore, the question of whether or not an organisation is a charitable body is determined in accordance with common law principles. According to common law principles, a body is charitable in the technical and legal sense if it is established for the relief of poverty, the advancement of education, the advancement of religion or other purposes beneficial to the community and its objects are directed towards public benefit.

In the main, environmental protection organisations are considered to be charitable for the purpose of the payroll tax exemption. However, whether the non-profit, non-government environmental groups referred to by the honourable member are exempt from payroll tax is a question of fact and considered on the individual facts and circumstances of that organisation, once they have applied for the exemption.

I am further advised that the Commissioner of State Taxation is only able to disclose taxation information where it does not identify a taxpayer either directly or indirectly. Therefore, I am unable to confirm or deny whether any specific organisation is currently receiving the benefit of the charitable bodies exemption for payroll tax purposes. The honourable member may wish to contact directly the particular organisation about which he is concerned to ascertain this information.

The honourable member has also asked for some detail about the interconnections between state and federal taxation regimes around the types of organisations that might be included; in particular, whether organisations on the Australian Tax Office's register of environmental organisations will be exempt from payroll tax in South Australia. In other words, is the test the same for payroll tax as it is for deductible gift recipients or is it some other test?

I am advised that in respect of the interconnections between state and federal taxation regimes around the types of organisations that might be considered charitable, the Australian Taxation Office determination provides a guide only for Revenue SA, and they are not bound by the Australian Taxation Office decision. Therefore, whether an environmental organisation is included on the register of environmental organisations deductible gift recipient or income exemption are certainly factors that would be considered, but they are by no means the sole test of whether an environmental organisation is exempt from payroll tax.

Organisations seeking to be exempt must first apply in writing to Revenue SA and provide records and documentation to support their application for exemption. Applications are then considered on a case by case basis, having regard to the organisation's constitution and/or memorandum and articles of association outlining the objectives under which the organisation operates; the details of the day-to-day activities and services provided by the organisation; the details of any commercial activities undertaken by the organisation applicable; and any other relevant information in support of the application. I again thank members for their indication of support for this bill.

Bill read a second time.

Committee Stage

In committee.

Clause 1.

The Hon. M. PARNELL: I thank the minister for his answers to the questions that I put on notice. I make the observation that I think it is a great pity that so few environment and conservation groups employ enough people to reach the threshold even to be considered for the payment of payroll tax. Certainly one such group is Greening Australia. They were the ones who led the charge last time to be exempted from payroll tax. I am pleased with the minister's answer that there are no hidden changes in relation to exemptions and that groups that are currently exempt will continue to be. I also accept his reasons why it is difficult to say whether the minor widening of the exemptions will result in any other groups being exempt. I guess we will wait to see what applications are lodged. I thank the minister for his answers to my questions.

Clause passed.

Remaining clauses (2 to 101), schedules and title passed.

Bill reported without amendment.

Third Reading

Bill read a third time and passed.

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