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1996
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
PAYMENT OF TAX RECEIPTS (VICTORIA) BILL 1996
EXPLANATORY MEMORANDUM
(Circulated by Authority of the Treasurer, the Hon Peter Costello, MP)
79487
PAYMENT OF TAX RECEIPTS (VICTORIA) BILL 1996
OUTLINE
This Bill appropriates monies for the payment to Victoria of an amount or amounts agreed to under the Deed for the Return of Certain Tax Payments executed by the Commonwealth and Victoria on 20 November 1996.
The Deed for the Return of Certain Tax Payments was negotiated so that the Commonwealth will pay Victoria an amount no greater than the windfall tax revenue that will accrue to the Commonwealth as a result of the settlement of a dispute over the pass-on of petroleum resource rent tax between Victorian gas utilities and their suppliers.
The appropriation is for the purposes of ¾
• authorising the Treasurer to discharge the Commonwealth’s liability under the Deed for the Return of Certain Tax Payments,
− this liability involves making one payment, of around $555 million to GASCOR, in recognition of the windfall tax gain accruing to the Commonwealth; and
− providing for the Treasurer to approve a further payment should the initial payment not occur on the scheduled payment date, reflecting interest accruing on the amount of windfall tax up to the actual settlement date.
Mechanisms have been incorporated in the Deed to protect future Commonwealth revenue should there be any change in the assessment of tax liable on the payment to the producers.
These windfall gains represent tax revenue the Commonwealth would not expect to receive other than through the settlement of the dispute. The dispute related to the ability of the producers to pass on the impact of Petroleum Resource Rent Tax to the producers as a consequence of long-term contracts entered into between the parties.
The dispute is to be settled through a simultaneous exchange of cheques. GASCOR will make a lump sum payment to Esso/BHP. Esso/BHP will remit to the Commonwealth tax on that payment and the Commonwealth will pay the windfall portion of that tax revenue to GASCOR.
FINANCIAL IMPACT STATEMENT
The net Budget impact of the settlement deed between the Commonwealth and Victoria, after the return of windfall tax, will be to reduce the Budget deficit in 1996–97 by around $70 million. This results from the fact that the settlement between GASCOR and the producers includes payments subject to tax but which are not considered to be part of the windfall amount.
NOTES ON CLAUSES
Clause 1: Short Title
Clause 1 is a formal provision specifying the short title of the Bill.
Clause 2: Commencement
The Bill will commence on the day it receives Royal Assent.
Clause 3: Interpretation
In this Act:
‘Deed’ is defined as the deed entitled Deed for the Return of Certain Tax Payments, executed by the Commonwealth and Victoria on 20 November 1996.
Clause 4:
This clause enables the Treasurer to authorise the payment of an amount necessary to discharge the liability of the Commonwealth under the Deed for the Return of Certain Tax Payments.
Clause 5:
Clause 5 appropriates the Consolidated Revenue Fund for payments made under the Bill.