Northern Territory Second Reading Speeches Northern Territory Second Reading Speeches[Index] [Search] [Bill] [Help]
| Madam Speaker, I move that the bill be now read a second time. You may recall as part of a national project to reduce payroll tax compliance costs for businesses, the government introduced a new Payroll Tax Act 2009, which commenced on 1 July 2009. This new act is almost identical to the payroll tax legislation in New South Wales, Victoria, Tasmania, and South Australia, and is consistent with Queensland and the Australian Capital Territory. In keeping with the principle of harmonisation, all states and territories have announced they will be introducing new nexus rules for imposing payroll tax on wages paid to employees performing services in more than one state or territory in a calendar month. The Payroll Tax Amendment Bill 2009 gives effect to this, and follows a media release which I issued on 1 July 2009. As agreed between all states and territories, these amendments will be taken to operate from 1 July 2009. This ensures all jurisdictions have the same taxing nexus, so employers do not become liable for tax on the same wages in more than one state or territory. However, until the Administrator’s assent is declared, employers are not required to submit returns based on the new rules. Also, to alleviate any possible issues in the transition to the new nexus rules, taxpayers will be permitted to make any necessary changes as part of the annual adjustment process at the end of the 2009-10 financial year. Under the new payroll tax nexus rules provided by the bill, where an employee provides services in more than one state or territory in a calendar month, payroll tax is to be paid to the state or territory in which the employee’s principal place of residence is located. This is instead of where the wages are paid, which is the nexus currently. The place where wages are paid is usually determined by reference to where the employee’s bank account is located. Imposing payroll tax under the current nexus rule is problematic, outdated, and inequitable. Electronic commerce and centralised bank processing have resulted in accounts being located in jurisdictions which have no link to where an employee works, or where an employer is based. This is inequitable, and causes problems for employers in complying with payroll tax legislation. Employers are often unaware of the location of the account where the wages of each employee is deposited. The possible situation where an employee instructs an employer to deposit his or her wages into two different accounts is also problematic. Technically, this may result in the employer being liable to payroll tax in more than one state or territory and, yet, the employer may not be trading there. Moreover, if the Payroll Tax Act 2009 were administered in this way, ensuring payroll tax is paid to the correct states or territories, would place a significant red-tape burden and compliance cost on both employers and the government. Where the employee does not reside in Australia, under the new nexus rules, payroll tax is to be paid to the jurisdiction where the employer is located. The new nexus rules also provide for the unlikely event both the employee and the employer are not based in a state or territory. Further details of the nexus rules are set out in the accompanying explanatory statement. Importantly, there is no change to the nexus applying where an employee provides a service wholly in one state or territory in a calendar month. This would be the case for the majority of employees. This nexus works well, and payroll tax will continue to be payable to the Territory for employees working in the Territory. I commend the bill to honourable members and I table a copy of the explanatory statement to accompany the bill. Debate adjourned. |