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| Ms LAWRIE (Treasurer): Madam Speaker, I move that the bill be now read a second time. As part of a national project to reduce payroll tax compliance costs for businesses, the government introduced amendments to the payroll tax legislation last year that harmonised the Territory’s legislation with the other state in eight key areas from the 1 July 2008. Consistent with government’s announcement at the time, this bill further harmonises the Territory’s payroll tax laws by putting in place a new payroll tax act that is almost identical to the payroll tax legislation in New South Wales, Victoria and Tasmania, and is consistent with payroll tax legislation in Queensland. South Australia has also announced that it will move to fully harmonise its payroll tax legislation from the 1 July 2009. The new payroll tax act streamlines administration for all businesses that operate in the Territory, and provides further red tape reductions for businesses that operate in more than one jurisdiction. This is particularly important for the Territory, as around 83% of its registered payroll tax employers also employ interstate. In addition to compliance costs savings, the new payroll tax act is expected to save Territory businesses a further $1.3m in payroll tax in 2009-10. Taken with the harmonisation measures introduced last year, this is a total tax reduction of $3m. The new payroll tax act introduces the following new major practises and policies. In relation to contractors, the new payroll tax act contains provisions to provide clear rules for the taxation of payments made to contractors that predominantly provide labour services. The current payroll tax legislation does not contain similar provisions but, instead, relies on the common law employment test to determine whether a worker is an employee. The common law employment test can be difficult for businesses to apply in order to accurately asses their liability when they engage contractors. The new provisions seek to provide a clear set of rules to aid employers in this respect. The introduction of these provisions has the benefit of being consistent with almost all jurisdictions in providing greater legislative guidance to employers that engage contractors. The introduction of these provisions does not expand the base of the common law employment test currently applied, such that any contractors these provisions apply to are already taxed within the payroll tax basis common law employee. The new payroll tax act also extends existing payroll tax exemption for wages paid by religious institutions and public benevolent institutions so that it is also available to non-profit organisations that have a sole or dominant purpose that is a charitable, benevolent, philanthropic or patriotic purpose. This is consistent with similar concessions in the income tax field. This exemption remains conditional on the wages being paid to a person who is exclusively engaged in work of a religious, charitable, benevolent, philanthropic or patriotic nature. In addition, the new payroll tax act introduces payroll tax exemptions for wages that are maternity or adoption leave for a maximum period of 14 weeks of wages, and for wages paid to employees participating in voluntary work for bushfires or emergency relief. The new payroll tax act also does not impose payroll tax on wages paid by an employment agent in certain circumstances where those wages would be exempt wages if paid directly by the client; that is, it allows and employment agent to treat wages paid to an employee as exempt when services are provided to an entity such as a charity that would normally be exempt from payroll tax. The new legislation is fairer because, otherwise, the exempt entity would bear the cost of the payroll tax when it is passed on by the employment agent. Other features of the new payroll tax act have not been covered as they are broadly similar to the operation of the current payroll tax legislation. Further details about the bill are set out in the accompanying explanatory statement. Madam Speaker, I commend the bill to honourable members and I table the explanatory statement to accompany the bill. Debate adjourned. |