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This is a Bill, not an Act. For current law, see the Acts databases.
New South Wales
Payroll Tax Bill 2007
Contents
Page
Part 1 Preliminary
1 Name of Act 2
2 Commencement 2
3 Definitions 2
4 Taxation Administration Act 1996 4
5 Act binds the Crown 4
Part 2 Imposition of payroll tax
Division 1 Imposition of tax
6 Imposition of payroll tax 5
7 Who is liable for payroll tax 5
8 Amount of payroll tax 5
9 When must payroll tax be paid 5
Payroll Tax Bill 2007
Contents
Page
Division 2 Taxable wages
10 What are taxable wages? 5
11 Wages not referable to services performed in a
particular month 7
Division 3 Other
12 Payroll tax paid under corresponding applied law 7
Part 3 Wages
Division 1 General concept of wages
13 What are wages? 8
Division 2 Fringe benefits
14 Wages include fringe benefits 8
15 Value of wages comprising fringe benefits 8
16 Employer election regarding taxable value of fringe
benefits 9
Division 3 Superannuation contributions
17 Wages include superannuation contributions 10
Division 4 Shares and options
18 Inclusion of grant of shares and options as wages 11
19 Choice of relevant day 11
20 Deemed choice of relevant day in special cases 12
21 Effect of rescission, cancellation of share or option 12
22 Grant of share pursuant to exercise of option 13
23 Value of shares and options 13
24 Inclusion of shares and options granted to directors
as wages 14
25 When services considered to have been performed 14
26 Place where wages are payable 15
Division 5 Termination payments
27 Definitions 15
28 Termination payments 16
Division 6 Allowances
29 Motor vehicle allowances 16
30 Accommodation allowances 17
Division 7 Contractor provisions
31 Definitions 18
Contents page 2
Payroll Tax Bill 2007
Contents
Page
32 What is a relevant contract? 18
33 Persons taken to be employers 20
34 Persons taken to be employees 21
35 Amounts under relevant contracts taken to be wages 21
36 Liability provisions 22
Division 8 Employment agents
37 Definitions 22
38 Persons taken to be employers 22
39 Persons taken to be employees 22
40 Amounts taken to be wages 22
41 Liability provisions 23
42 Agreement to reduce or avoid liability to payroll tax 23
Division 9 Other
43 Value of wages paid in kind 24
44 GST excluded from wages 24
45 Wages paid by group employers 25
46 Wages paid by or to third parties 25
47 Agreement etc to reduce or avoid liability to payroll tax 26
Part 4 Exemptions
Division 1 Non-profit organisations
48 Non-profit organisations 27
Division 2 Education and training
49 Schools and educational services and training 28
50 Community Development Employment Project 28
Division 3 Health care service providers
51 Health care service providers 28
52 Division not to limit other exemptions 28
Division 4 Maternity and adoption leave
53 Maternity and adoption leave 29
54 Administrative requirements for exemption 29
Division 5 Volunteer firefighters and emergency
service volunteers
55 Volunteer firefighters 30
56 Emergency service volunteers 30
57 Limitation of exemption 30
Contents page 3
Payroll Tax Bill 2007
Contents
Page
Division 6 Local government
58 Local and county councils 30
59 Local government business entities 30
60 Limitation on local government exemptions 31
Division 7 Other government and defence
61 State Governors 31
62 Defence personnel 31
63 War Graves Commission 32
Division 8 Foreign government representatives
and international agencies
64 Consular and non-diplomatic representatives 32
65 Trade Commissioners 32
66 Australian-American Fulbright Commission 32
Part 5 Grouping of employers
Division 1 Interpretation
67 Definitions 33
68 Grouping provisions to operate independently 33
Division 2 Business groups
69 Constitution of groups 33
70 Groups of corporations 33
71 Groups arising from the use of common employees 34
72 Groups of commonly controlled businesses 34
73 Groups arising from tracing of interests in corporations 36
74 Smaller groups subsumed by larger groups 38
Division 3 Business groups--tracing of interests
in corporations
75 Application 38
76 Direct interest 38
77 Indirect interest 39
78 Aggregation of interests 40
Division 4 Miscellaneous
79 Exclusion of persons from groups 41
80 Designated group employers 42
81 Joint and several liability 43
Part 6 Adjustments of tax
82 Determination of correct amount of payroll tax 44
Contents page 4
Payroll Tax Bill 2007
Contents
Page
83 Annual adjustment of payroll tax 44
84 Adjustment of payroll tax when employer changes
circumstances 45
85 Special provision where wages fluctuate 46
Part 7 Registration and returns
86 Registration 47
87 Returns 47
Part 8 Collection and recovery of tax
Division 1 Agents and trustees generally
88 Application 49
89 Agents and trustees are answerable 49
90 Returns by agent or trustee 49
91 Liability to pay tax 49
92 Indemnity for agent or trustee 50
Division 2 Special cases
93 Tax not paid during lifetime 50
94 Payment of tax by executors or administrators 50
95 Assessment if no probate within 6 months of death 51
96 Person in receipt or control of money for absentee 51
97 Agent for absentee principal winding-up business 52
98 Recovery of tax paid on behalf of another person 52
99 Liquidator to give notice 53
Part 9 General
100 Provisions specific to this jurisdiction 55
101 Regulations 55
102 Nature of proceedings for offences 55
103 Savings, transitional and other provisions 55
104 Repeal 55
105 Amendment of other Acts 56
106 Review of Act 56
Schedule 1 Calculation of payroll tax liability for
financial year commencing 1 July 2007
and subsequent financial years 57
Schedule 2 NSW specific provisions 64
Schedule 3 Savings, transitional and other provisions 73
Schedule 4 Amendment of Acts 77
Contents page 5
I certify that this public bill, which originated in the Legislative Assembly, has
finally passed the Legislative Council and the Legislative Assembly of New
South Wales.
Clerk of the Legislative Assembly.
Legislative Assembly,
Sydney, , 2007
New South Wales
Payroll Tax Bill 2007
Act No , 2007
An Act to provide for a tax on employers in respect of certain wages, to harmonise
payroll tax law with Victoria, to repeal the Pay-roll Tax Act 1971; and for other
purposes.
I have examined this bill and find it to correspond in all respects with the bill as
finally passed by both Houses.
Assistant Speaker of the Legislative Assembly.
Clause 1 Payroll Tax Bill 2007
Part 1 Preliminary
The Legislature of New South Wales enacts:
Part 1 Preliminary
1 Name of Act
This Act is the Payroll Tax Act 2007.
2 Commencement
This Act commences or is taken to have commenced on 1 July 2007.
3 Definitions
(1) In this Act:
agent includes:
(a) a person who, in this jurisdiction, for or on behalf of another
person outside this jurisdiction, holds or has the management or
control of the business of that other person, and
(b) a person who, by an order of the Chief Commissioner, is declared
to be an agent or the sole agent for any other person for the
purposes of this Act and on whom notice of that order has been
served.
Australia means the States of the Commonwealth and the Territories.
coastal waters of the State has the same meaning as in Part 10 of the
Interpretation Act 1987.
company includes all bodies and associations (corporate and
unincorporate) and partnerships.
corporation has the same meaning as in section 9 of the Corporations
Act 2001 of the Commonwealth.
corresponding law means a law in force in another State or a Territory
relating to the imposition upon employers of a tax on wages paid or
payable by them and the assessment and collection of that tax.
designated group employer means a member designated for a group in
accordance with section 80.
director of a company includes a member of the governing body of the
company.
employer means a person who pays or is liable to pay wages and
includes:
(a) the Crown in any of its capacities, and
(b) a person taken to be an employer by or under this Act, and
(c) a public, local or municipal body or authority constituted under
the law of the Commonwealth or of a State or Territory unless,
Page 2
Payroll Tax Bill 2007 Clause 3
Preliminary Part 1
being an authority constituted under the law of the
Commonwealth, it is immune from the operation of this Act.
employment agency contract has the meaning given in section 37.
employment agent has the meaning given in section 37.
exempt wages mean wages that are declared by or under this Act to be
exempt wages.
exercise a function includes perform a duty.
FBTA Act means the Fringe Benefits Tax Assessment Act 1986 of the
Commonwealth.
financial year means each year commencing on 1 July.
fringe benefit has the same meaning as in the FBTA Act but does not
include:
(a) a tax-exempt body entertainment fringe benefit within the
meaning of that Act, or
(b) anything that is prescribed by the regulations under this Act not
to be a fringe benefit for the purposes of this definition.
function includes a power, authority or duty.
group has the meaning given in section 67.
GST has the same meaning as it has in the A New Tax System (Goods
and Services Tax) Act 1999 of the Commonwealth except that it
includes notional GST of the kind for which payments may be made
under section 5 of the Intergovernmental Agreement Implementation
(GST) Act 2000 by a person that is a State entity within the meaning of
that Act.
interstate wages means wages that are taxable wages within the
meaning of a corresponding law.
ITAA means the Income Tax Assessment Act 1997 of the
Commonwealth.
liquidator means the person who, whether or not appointed as
liquidator, is the person required by law to carry out the winding-up of
a company.
month means the month of January, February, March, April, May, June,
July, August, September, October, November and December.
option means an option or right, whether actual, prospective or
contingent, of a person to acquire a share or to have a share transferred
or allotted to the person.
paid, in relation to wages, includes provided, conferred and assigned
and pay and payable have corresponding meanings.
payroll tax means tax imposed by section 6.
perform, in relation to services, includes render.
Page 3
Clause 4 Payroll Tax Bill 2007
Part 1 Preliminary
return period, in relation to an employer, means a period relating to
which that employer is required to lodge a return under this Act.
share means a share in a company and includes a stapled security within
the meaning of section 139GCD of the Income Tax Assessment Act
1936 of the Commonwealth.
superannuation contribution has the meaning given in section 17 (2).
taxable wages has the meaning given in section 10.
termination payment has the meaning given in section 27.
Territories means the Australian Capital Territory (including the Jervis
Bay Territory) and the Northern Territory.
this jurisdiction means New South Wales and the coastal waters of the
State.
voting share has the same meaning as in section 9 of the Corporations
Act 2001 of the Commonwealth.
wages has the meaning given in Part 3.
(2) Notes included in this Act do not form part of this Act.
4 Taxation Administration Act 1996
This Act is to be read together with the Taxation Administration Act
1996 which provides for the administration and enforcement of this Act
and other taxation laws.
5 Act binds the Crown
(1) This Act binds the Crown in right of this jurisdiction and, so far as the
legislative power of the Parliament permits, the Crown in all its other
capacities.
(2) Nothing in this Act makes the Crown in any of its capacities liable to be
prosecuted for an offence.
Page 4
Payroll Tax Bill 2007 Clause 6
Imposition of payroll tax Part 2
Part 2 Imposition of payroll tax
Division 1 Imposition of tax
6 Imposition of payroll tax
Payroll tax is imposed on all taxable wages.
7 Who is liable for payroll tax
The employer by whom taxable wages are paid or payable is liable to
pay payroll tax on the wages.
8 Amount of payroll tax
The amount of payroll tax payable by an employer is to be ascertained
in accordance with Schedules 1 and 2.
9 When must payroll tax be paid
(1) A person who is liable to pay payroll tax on taxable wages must pay the
tax:
(a) within 7 days after the end of the month in which those wages
were paid or payable, other than the month of June, and
(b) within 21 days after the end of the month of June in relation to
taxable wages paid or payable in the month of June.
(2) However, if the Chief Commissioner has reason to believe that a person
may leave Australia before any payroll tax becomes payable by the
person, the tax is payable on the day fixed by the Chief Commissioner
by notice served on the person.
Division 2 Taxable wages
10 What are taxable wages?
(1) For the purposes of this Act, taxable wages are wages, other than
exempt wages, that are paid or payable by an employer for services
performed and:
(a) are wages that are paid or payable in this jurisdiction, other than
wages so paid or payable for:
(i) services performed wholly in one other State or Territory,
or
(ii) services performed by a person wholly in another country
for a continuous period of more than 6 months beginning
on the day on which wages were first paid or payable to
that person for services so performed, or
Page 5
Clause 10 Payroll Tax Bill 2007
Part 2 Imposition of payroll tax
(b) are wages that are paid or payable outside this jurisdiction for
services performed wholly in this jurisdiction, or
(c) are wages that are paid or payable outside Australia for services
performed mainly in this jurisdiction.
(2) For the purposes of subsection (1) (a), wages that are payable to a
person by the person's employer, but have not been paid (not being
wages that under the terms of employment are payable in this
jurisdiction or in another State or a Territory) are taken:
(a) if those wages are payable in respect of services performed
wholly in this jurisdiction--to be wages payable to that person in
this jurisdiction, and
(b) if those wages are not payable in respect of services performed
wholly in this jurisdiction or wholly in one other State or
Territory and where the wages last paid or payable to that person
by that employer were included or are required to be included in
a return under this Act--to be wages payable to that person in this
jurisdiction, and
(c) if those wages are not taken by paragraph (a) or (b) or by any
provision in a corresponding law that corresponds to either of
those paragraphs to be wages payable to that person in this
jurisdiction or in another State or a Territory--to be wages
payable to that person by that employer at the place where that
person last performed any services for that employer before those
wages became payable.
(3) If, for the purpose of the payment of wages:
(a) an instrument is sent or given or an amount is transferred by an
employer to a person or a person's agent at a place in Australia, or
(b) an instruction is given by an employer for the crediting of an
amount to the account of a person or a person's agent at a place
in Australia,
those wages are taken to have been paid at that place and to have been
paid when the instrument was sent or given, the amount was transferred
or the account is credited in accordance with the instruction (as the case
may be).
(4) In determining the question whether services are performed wholly or
mainly in this jurisdiction or another State or a Territory, regard must be
had only to the services performed during the month in respect of which
the question arises.
(5) In this section:
instrument includes a cheque, bill of exchange, promissory note,
money order or a postal order issued by a post office.
Page 6
Payroll Tax Bill 2007 Clause 11
Imposition of payroll tax Part 2
11 Wages not referable to services performed in a particular month
For the purposes of this Act, wages that are not paid in respect of
services performed by an employee in a particular month are taxable
wages as if they were paid or payable in respect of services performed
during the month in which they were paid or became payable.
Division 3 Other
12 Payroll tax paid under corresponding applied law
(1) For the purposes of ascertaining the payroll tax payable under this Act
by an employer who during a return period pays taxable wages and
Commonwealth place wages, there is to be deducted from the amount
of payroll tax payable by the employer under this Act the amount of
payroll tax payable by the employer under the corresponding applied
law.
(2) In this section:
Commonwealth Act means the Commonwealth Places (Mirror Taxes)
Act 1998 of the Commonwealth.
Commonwealth place wages means wages that would be taxable wages
within the meaning of the corresponding applied law if the
corresponding applied law applied in relation to each place in this
jurisdiction that is a Commonwealth place.
corresponding applied law means the provisions of the Payroll Tax Act
2007 that would apply in relation to each place in this jurisdiction that
is a Commonwealth place, pursuant to section 6 (2) of the
Commonwealth Act, if those provisions were excluded provisions
within the meaning of section 6 (1) of the Commonwealth Act.
Page 7
Clause 13 Payroll Tax Bill 2007
Part 3 Wages
Part 3 Wages
Division 1 General concept of wages
13 What are wages?
(1) For the purposes of this Act, wages mean wages, remuneration, salary,
commission, bonuses or allowances paid or payable to an employee,
including:
(a) an amount paid or payable by way of remuneration to a person
holding an office under the Crown or in the service of the Crown,
and
(b) an amount paid or payable under any prescribed classes of
contracts to the extent to which that payment is attributable to
labour, and
(c) an amount paid or payable by a company by way of remuneration
to or in relation to a director of that company, and
(d) an amount paid or payable by way of commission to an insurance
or time-payment canvasser or collector, and
(e) an amount that is included as or taken to be wages by any other
provision of this Act.
(2) For the purposes of this Act, wages, remuneration, salary, commission,
bonuses or allowances are wages:
(a) whether paid or payable at piece work rates or otherwise, and
(b) whether paid or payable in cash or in kind.
Division 2 Fringe benefits
14 Wages include fringe benefits
(1) For the purposes of this Act, wages include a fringe benefit.
(2) Subsection (1) does not apply to benefits that are exempt benefits for the
purposes of the FBTA Act (other than deposits to the Superannuation
Holding Accounts Special Account within the meaning of the Small
Superannuation Accounts Act 1995 of the Commonwealth).
15 Value of wages comprising fringe benefits
(1) For the purposes of this Act, the value of wages comprising a fringe
benefit is to be determined in accordance with the formula:
1
TV × -----------------------------
-
1 FBT rate
where:
Page 8
Payroll Tax Bill 2007 Clause 16
Wages Part 3
TV is the value that would be the taxable value of the benefit as a fringe
benefit for the purposes of the FBTA Act.
FBT rate is the rate of fringe benefits tax imposed by the FBTA Act that
applies when the liability to payroll tax under this Act arises.
(2) In this Act, a reference to taxable wages that were paid or payable by an
employer during a month is, in relation to taxable wages comprising
fringe benefits:
(a) a reference to the value of the fringe benefits paid or payable by
the employer during the month, or
(b) if an election by the employer is in force under section 16, a
reference to an amount calculated in accordance with that
section.
(3) In this Act, a reference to taxable wages that were paid or payable by an
employer during a year is, in relation to taxable wages comprising
fringe benefits, a reference to an amount calculated by adding together
the amounts under subsection (2) (a) or (b) (or subsection (2) (a)
and (b)) as the case requires, for the months of that year.
16 Employer election regarding taxable value of fringe benefits
(1) An employer who has paid or is liable to pay fringe benefits tax imposed
by the FBTA Act in respect of a period of not less than 15 months before
30 June in any year may elect to include as the value of the fringe
benefits paid or payable by the employer during the month concerned:
(a) in a return lodged in relation to each of the first 11 months
occurring after 30 June in that year--1/12 of the amount
determined in accordance with subsection (2) or that part of that
amount as, in accordance with section 10, comprises taxable
wages for the year of tax (within the meaning of the FBTA Act)
ending on 31 March preceding the commencement of the current
financial year, and
(b) in the return lodged in relation to the 12th month--the amount
determined in accordance with subsection (2) or that part of that
amount as, in accordance with section 10, comprises taxable
wages for the year of tax (within the meaning of the FBTA Act)
ending on 31 March preceding that month, less the total of the
amounts of fringe benefits included in the returns for each of the
preceding 11 months.
(2) The amount determined in accordance with this subsection is to be
determined in accordance with the formula:
1
AFBA × -----------------------------
-
1 FBT rate
Page 9
Clause 17 Payroll Tax Bill 2007
Part 3 Wages
where:
AFBA is the aggregate fringe benefits amount within the meaning of
section 136 of the FBTA Act.
FBT rate is the rate of fringe benefits tax imposed by the FBTA Act that
applies when the liability to payroll tax under this Act arises.
(3) An election under subsection (1) takes effect when it is notified to the
Chief Commissioner in the form approved by the Chief Commissioner.
(4) After an employer has made an election under subsection (1), the
employer must lodge returns containing amounts calculated in
accordance with the election unless the Chief Commissioner approves,
by notice in writing given to the employer, the termination of the
election and allows the employer to include the value referred to in
section 15 (2) (a).
(5) If an employer ceases to be liable to pay payroll tax, the value of taxable
wages comprising fringe benefits to be included in the employer's final
return is (irrespective of whether or not the employer has made an
election under subsection (1)) the value of the fringe benefits paid or
payable by the employer for the period commencing on and including
the preceding 1 July until the date on which the employer ceases to be
liable to payroll tax, less the value of the fringe benefits paid or payable
by the employer during that period on which payroll tax has been paid.
Division 3 Superannuation contributions
17 Wages include superannuation contributions
(1) For the purposes of this Act, wages include a superannuation
contribution.
(2) A superannuation contribution is a contribution paid or payable by an
employer in respect of an employee:
(a) to or as a superannuation fund within the meaning of the
Superannuation Industry (Supervision) Act 1993 of the
Commonwealth, or
(b) as a superannuation guarantee charge within the meaning of the
Superannuation Guarantee (Administration) Act 1992 of the
Commonwealth, or
(c) to or as any other form of superannuation, provident or retirement
fund or scheme including:
(i) the Superannuation Holding Accounts Special Account
within the meaning of the Small Superannuation Accounts
Act 1995 of the Commonwealth, and
Page 10
Payroll Tax Bill 2007 Clause 18
Wages Part 3
(ii) a retirement savings account within the meaning of the
Retirement Savings Accounts Act 1997 of the
Commonwealth, and
(iii) a wholly or partly unfunded fund or scheme.
(3) Setting aside any money or anything that is worth money as, or as part
of, a superannuation fund, superannuation guarantee charge or any
other form of superannuation, provident or retirement fund or scheme is
taken to be paying a superannuation contribution.
(4) Making a superannuation contribution of anything that is worth money
is taken to be paying a superannuation contribution of the amount equal
to its value, and its value is to be worked out in accordance with section
43 as if that section referred to the contribution instead of to wages.
(5) A superannuation, provident or retirement fund or scheme is unfunded
to the extent that money paid or payable by an employer in respect of an
employee covered by the fund or scheme is not paid or payable during
the employee's period of service with the employer.
(6) In this section:
employee includes any person to whom, by virtue of a paragraph of the
definition of wages in section 13 (1), an amount paid or payable in the
circumstances referred to in that paragraph constitutes wages.
Division 4 Shares and options
18 Inclusion of grant of shares and options as wages
(1) For the purposes of this Act, wages include the grant of a share or option
to an employee by an employer in respect of services performed by the
employee.
(2) Any such wages are taken, for the purpose of the imposition of payroll
tax, to be paid or payable on the relevant day.
(3) For the purposes of this Division, the relevant day is the day that the
employer elects in accordance with this Division to treat as the day on
which the wages are paid or payable.
(4) To avoid doubt, the grant of a share or option is valuable consideration
for the purposes of section 46.
19 Choice of relevant day
(1) The employer can elect to treat as the relevant day either the date on
which the share or option is granted to the employee or the vesting date.
Page 11
Clause 20 Payroll Tax Bill 2007
Part 3 Wages
(2) A share or option is granted to a person in the following circumstances:
(a) in the case of a share--if the person acquires the share (within the
meaning of section 139G of the Income Tax Assessment Act 1936
of the Commonwealth) or in the circumstances prescribed by the
regulations under this Act,
(b) in the case of an option--if the person acquires a right (within the
meaning of section 139G of the Income Tax Assessment Act 1936
of the Commonwealth) to the share to which the option relates or
in the circumstances prescribed by the regulations under this Act.
(3) The vesting date in respect of a share is the date on which the share vests
in the employee (that is, when 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).
(4) The vesting date in respect of an option is one of the following dates
(whichever happens first):
(a) the date on which the share to which the option relates is granted
to the employee,
(b) the date on which the employee exercises a right under the option
to have the share the subject of the option transferred to, allotted
to or vest in him or her.
20 Deemed choice of relevant day in special cases
(1) If an employer grants a share or an option to an employee and the value
of the grant of the share or option is not included in the taxable wages
of the employer for the financial year in which the share or option was
granted, the employer is taken to have elected to treat the wages
constituted by the grant of that share or option as being paid or payable
on the vesting date.
(2) If an employer grants a share or an option to an employee and the value
of the grant of the share or option is nil or, if the employer were to elect
to treat the date of grant as the relevant day, the wages constituted by
the grant would not be liable to payroll tax, the employer is taken to
have elected to treat the wages constituted by the grant of that share or
option as being paid or payable on the date on which the share or option
was granted.
21 Effect of rescission, cancellation of share or option
(1) If the grant of a share or option is withdrawn, cancelled or exchanged
before the vesting date for any valuable consideration (other than the
grant of other shares or options), the following provisions apply:
(a) the date of withdrawal, cancellation or exchange is taken to be the
vesting date of the share or option,
Page 12
Payroll Tax Bill 2007 Clause 22
Wages Part 3
(b) the market value of the share or option, on the vesting date, is
taken to be the amount of the valuable consideration (and,
accordingly, that amount is the amount paid or payable as wages
on that date).
(2) If an employer includes the value of a grant of a share or option in the
taxable wages of the employer for a financial year and the grant is
rescinded because the conditions attaching to the grant were not met, the
taxable wages of the employer, in the financial year in which the grant
is rescinded, are to be reduced by the value of the grant as previously
included in the taxable wages of the employer.
(3) Subsection (2) does not apply just because an employee fails to exercise
an option or to otherwise exercise his or her rights in respect of a share
or option.
22 Grant of share pursuant to exercise of option
The grant of the share by an employer does not constitute wages for the
purposes of this Act if the employer is required to grant the share as a
consequence of the exercise of an option by a person and:
(a) the grant of the option to the person constitutes wages for the
purposes of this Act, or
(b) the option was granted to the person before 1 July 2003.
23 Value of shares and options
(1) If the grant of a share or option constitutes wages under this Division,
the amount paid or payable as wages is taken, for the purposes of this
Act, to be the market value of the share or option (expressed in
Australian currency) on the relevant day, less the consideration (if any)
paid or given by the employee in respect of the share or option (other
than consideration in the form of services performed).
(2) The market value of a share or option on the relevant day is to be
determined in accordance with the Commonwealth income tax
provisions.
(3) For that purpose, the Commonwealth income tax provisions apply with
the following modifications, and any other necessary modifications:
(a) the market value of an option is to be determined as if it were a
right to acquire a share,
(b) a reference to a taxpayer is to be read as a reference to the
employee,
(c) a reference to the Commissioner of Taxation is to be read as a
reference to either that Commissioner or the Chief Commissioner
of State Revenue.
Page 13
Clause 24 Payroll Tax Bill 2007
Part 3 Wages
(4) Section 15 does not apply to the grant of a share or option that
constitutes wages, even if it constitutes a fringe benefit.
(5) In this section:
Commonwealth income tax provisions means the provisions of
Subdivision F of Division 13A of Part III of the Income Tax Assessment
Act 1936 of the Commonwealth.
24 Inclusion of shares and options granted to directors as wages
(1) For the purposes of this Act, wages include the grant of a share, or
option, by a company to a director of the company by way of
remuneration for the appointment or services of the director that would
be wages under this Division if the director were an employee of the
company.
(2) For that purpose, the other provisions of this Division apply in respect
of any such grant as if a reference to the employer were a reference to
the company and a reference to the employee were a reference to the
director of the company.
(3) In this section, a reference to a director of the company includes a
reference to the following:
(a) a person who, under a contract or other arrangement, is to be
appointed as a director of the company,
(b) a former director of the company.
(4) In the case of wages constituted by the grant of a share or option by a
company to a director of the company by way of remuneration for the
appointment of the director, but not for services performed:
(a) the grant of the share or option is taken, for the purposes of this
Act, to be paid or payable for services performed during the
month in which the relevant day occurs, and
(b) a reference in this Act to the place or places where services are
performed is a reference to the place or places where it may
reasonably be expected that the services of the director in respect
of the company will be performed.
25 When services considered to have been performed
For the purposes of this Act, if the grant of a share or an option
constitutes wages for the purposes of this Act, the services in respect of
which those wages are paid or payable are taken to have been performed
during the month in which the relevant day occurs.
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26 Place where wages are payable
(1) The wages constituted by the grant of the share or option are taken to be
paid or payable in this jurisdiction if the share is a share in a local
company or, in the case of an option, an option to acquire shares in a
local company.
(2) In any other case, the wages constituted by the grant of the share or
option are taken to be paid or payable outside this jurisdiction.
Note. If the wages concerned are taken to be payable outside this jurisdiction,
because the shares concerned are shares in a company that is not a local
company, the grant of the share or option may still be liable to payroll tax under
this Act if the grant is made for services performed or rendered wholly or mainly
in this jurisdiction (see section 10 (1) (b) and (c)).
(3) In this section:
local company means:
(a) a company incorporated or taken to be incorporated under the
Corporations Act 2001 of the Commonwealth that is taken to be
registered in this jurisdiction for the purposes of that Act, or
(b) any other body corporate that is incorporated under an Act of this
jurisdiction.
Division 5 Termination payments
27 Definitions
In this Division:
employment termination payment means:
(a) an employment termination payment within the meaning of
section 82-130 of the ITAA, or
(b) a payment that would be an employment termination payment
within the meaning of section 82-130 of the ITAA but for the fact
that it was received later than 12 months after the termination of
a person's employment, or
(c) a transitional termination payment within the meaning of section
82-10 of the Income Tax (Transitional Provisions) Act 1997 of
the Commonwealth.
termination payment means:
(a) a payment made in consequence of the retirement from, or
termination of, any office or employment of an employee, being:
(i) an unused annual leave payment, or
(ii) an unused long service leave payment, or
(iii) so much of an employment termination payment paid or
payable by an employer, whether or not paid to the
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Clause 28 Payroll Tax Bill 2007
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employee or to any other person or body, that would be
included in the assessable income of an employee under
Part 2-40 of the ITAA if the whole of the employment
termination payment had been paid to the employee, or
(b) an amount paid or payable by a company as a consequence of the
termination of the services or office of a director of the company,
whether or not paid to the director or to any other person or body,
that would be an employment termination payment if that amount
had been paid or payable as a consequence of termination of
employment, or
(c) an amount paid or payable by a person who is an employer under
a relevant contract (within the meaning of section 32) as a
consequence of the termination of the supply of the services of an
employee under the contract, whether or not paid to the employee
or to any other person, if the amount would be an employment
termination payment if that amount had been paid or payable as
a consequence of termination of employment.
unused annual leave payment has the same meaning as in
section 83-10 of the ITAA.
unused long service leave payment has the same meaning as in section
83-75 of the ITAA.
28 Termination payments
For the purposes of this Act, wages include a termination payment.
Division 6 Allowances
29 Motor vehicle allowances
(1) For the purposes of this Act, wages, in respect of a financial year, do not
include the exempt component of a motor vehicle allowance paid or
payable in respect of that year.
(2) Accordingly, if the total motor vehicle allowance paid or payable to an
employee in respect of a financial year does not exceed the exempt
component, the motor vehicle allowance is not wages for the purposes
of this Act.
(3) If the total motor vehicle allowance paid or payable to an employee in
respect of a financial year exceeds the exempt component (if any), only
that amount that exceeds the exempt component of the motor vehicle
allowance is included as wages for the purposes of this Act.
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(4) The exempt component of a motor vehicle allowance paid or payable in
respect of a financial year is calculated in accordance with the formula:
E = K×R
where:
E is the exempt component.
K is the number of business kilometres travelled during the financial
year.
R is the exempt rate.
(5) The number of business kilometres travelled during the financial year
("K") is to be determined in accordance with the continuous recording
method, or the averaging method, whichever method is selected and
used by the employer in accordance with Part 5 of Schedule 1.
(6) The Chief Commissioner, by order in writing, may approve the use, by
an employer or class of employer, of another method of determining the
number of business kilometres travelled during the financial year
(including the use of an estimate). If so, the number of business
kilometres travelled during the financial year is to be determined in
accordance with the method approved by the Chief Commissioner.
(7) For the purposes of this section, the exempt rate for the financial year
concerned is:
(a) the rate prescribed by the regulations under section 28-25 of the
ITAA for calculating a deduction for car expenses for a large car
using the "cents per kilometre method" in the financial year
immediately preceding the financial year in which the allowance
is paid or payable, or
(b) if no rate referred to in paragraph (a) is prescribed, the rate
prescribed by the regulations under this Act.
30 Accommodation allowances
(1) For the purposes of this Act, wages do not include an accommodation
allowance paid or payable to an employee in respect of a night's
absence from the person's usual place of residence that does not exceed
the exempt rate.
(2) If the accommodation allowance paid or payable to an employee in
respect of a night's absence from the person's usual place of residence
exceeds the exempt rate, wages include that allowance only to the extent
that it exceeds the exempt rate.
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(3) For the purposes of this section, the exempt rate for the financial year
concerned is:
(a) the total reasonable amount for daily travel allowance expenses
using the lowest capital city for the lowest salary band for the
financial year determined by the Commissioner of Taxation of
the Commonwealth, or
(b) if no determination referred to in paragraph (a) is in force, the rate
prescribed by the regulations.
Division 7 Contractor provisions
31 Definitions
In this Division:
contract includes an agreement, arrangement or undertaking, whether
formal or informal and whether express or implied.
relevant contract has the meaning given in section 32.
re-supply of goods acquired from a person includes:
(a) a supply to the person of goods in an altered form or condition,
and
(b) a supply to the person of goods in which the first-mentioned
goods have been incorporated.
services includes results (whether goods or services) of work
performed.
supply includes supply by way of sale, exchange, lease, hire or
hire-purchase, and in relation to services includes the providing,
granting or conferring of services.
32 What is a relevant contract?
(1) In this Division, a relevant contract in relation to a financial year is a
contract under which a person (the designated person) during that
financial year, in the course of a business carried on by the designated
person:
(a) supplies to another person services for or in relation to the
performance of work, or
(b) has supplied to the designated person the services of persons for
or in relation to the performance of work, or
(c) gives out goods to natural persons for work to be performed by
those persons in respect of those goods and for re-supply of the
goods to the designated person or, where the designated person is
a member of a group, to another member of that group.
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Wages Part 3
(2) However, a relevant contract does not include a contract of service or
a contract under which a person (the designated person) during a
financial year in the course of a business carried on by the designated
person:
(a) is supplied with services for or in relation to the performance of
work that are ancillary to the supply of goods under the contract
by the person by whom the services are supplied or to the use of
goods which are the property of that person, or
(b) is supplied with services for or in relation to the performance of
work where:
(i) those services are of a kind not ordinarily required by the
designated person and are performed by a person who
ordinarily performs services of that kind to the public
generally, or
(ii) those services are of a kind ordinarily required by the
designated person for less than 180 days in a financial
year, or
(iii) those services are provided for a period that does not
exceed 90 days or for periods that, in the aggregate, do not
exceed 90 days in that financial year and are not services:
(A) provided by a person by whom similar services are
provided to the designated person, or
(B) for or in relation to the performance of work where
any of the persons who perform the work also
perform similar work for the designated person,
for periods that, in the aggregate, exceed 90 days in that
financial year, or
(iv) those services are supplied under a contract to which
subparagraphs (i)(iii) do not apply and the Chief
Commissioner is satisfied that those services are
performed by a person who ordinarily performs services of
that kind to the public generally in that financial year, or
(c) is supplied by a person (the contractor) with services for or in
relation to the performance of work under a contract to which
paragraphs (a) and (b) do not apply where the work to which the
services relate is performed:
(i) by two or more persons employed by, or who provide
services for, the contractor in the course of a business
carried on by the contractor, or
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Clause 33 Payroll Tax Bill 2007
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(ii) where the contractor is a partnership of two or more natural
persons, by one or more of the members of the partnership
and one or more persons employed by, or who provide
services for, the contractor in the course of a business
carried on by the contractor, or
(iii) where the contractor is a natural person, by the contractor
and one or more persons employed by, or who provide
services for, the contractor in the course of a business
carried on by the contractor,
unless the Chief Commissioner determines that the contract or
arrangement under which the services are so supplied was
entered into with an intention either directly or indirectly of
avoiding or evading the payment of tax by any person, or
(d) is supplied with:
(i) services ancillary to the conveyance of goods by means of
a vehicle provided by the person conveying them, or
(ii) services solely for or in relation to the procurement of
persons desiring to be insured by the designated person, or
(iii) services for or in relation to the door-to-door sale of goods
solely for domestic purposes on behalf of the designated
person,
unless the Chief Commissioner determines that the contract or
arrangement under which the services are so supplied was
entered into with an intention either directly or indirectly of
avoiding or evading the payment of tax by any person.
(3) For the purposes of this section, an employment agency contract under
which services are supplied by an employment agent, or a service
provider is procured by an employment agent, is not a relevant contract.
33 Persons taken to be employers
(1) For the purposes of this Act, a person:
(a) who during a financial year, under a relevant contract, supplies
services to another person, or
(b) to whom during a financial year, under a relevant contract, the
services of persons are supplied for or in relation to the
performance of work, or
(c) who during a financial year, under a relevant contract, gives out
goods to other persons,
is taken to be an employer in respect of that financial year.
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(2) If a contract is a relevant contract under both section 32 (1) (a) and (b):
(a) the person to whom, under the contract, the services of persons
are supplied for or in relation to the performance of work is taken
to be an employer, and
(b) despite subsection (1) (a), the person who under the contract
supplies the services is taken not to be an employer.
34 Persons taken to be employees
For the purposes of this Act, a person who during a financial year:
(a) performs work for or in relation to which services are supplied to
another person under a relevant contract, or
(b) being a natural person, under a relevant contract, re-supplies
goods to an employer,
is taken to be an employee in respect of that financial year.
35 Amounts under relevant contracts taken to be wages
(1) For the purposes of this Act, amounts paid or payable by an employer
during a financial year for or in relation to the performance of work
relating to a relevant contract or the re-supply of goods by an employee
under a relevant contract are taken to be wages paid or payable during
that financial year.
(2) If an amount referred to in subsection (1) is included in a larger amount
paid or payable by an employer under a relevant contract during a
financial year, that part of the larger amount which is not attributable to
the performance of work relating to the relevant contract or the
re-supply of goods by an employee under the relevant contract is as
determined by the Chief Commissioner.
(3) An amount paid or payable for or in relation to the performance of work
under a relevant contract is taken to include:
(a) any payment made by a person who is taken to be an employer
under a relevant contract in relation to a person who is taken to
be an employee under the relevant contract that would be a
superannuation contribution if made in relation to a person in the
capacity of an employee, and
(b) the value of any share or option (not otherwise included as wages
under this Act) provided or liable to be provided by a person who
is taken to be an employer under a relevant contract in relation to
a person who is taken to be an employee under the relevant
contract that would be included as wages under Division 4 if
provided to a person in the capacity of an employee.
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Clause 36 Payroll Tax Bill 2007
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36 Liability provisions
If, in respect of a payment for or in relation to the performance of work
that is taken to be wages under this Division, payroll tax is paid by a
person taken under this Division to be an employer:
(a) no other person is liable to payroll tax in respect of that payment,
and
(b) if another person is liable to make a payment for or in relation to
that work, that person is not liable to payroll tax in respect of that
payment unless it or the payment by the first-mentioned person is
made with an intention either directly or indirectly of avoiding or
evading the payment of tax whether by the first-mentioned
person or another person.
Division 8 Employment agents
37 Definitions
(1) For the purposes of this Act, an employment agency contract is a
contract, whether formal or informal and whether express or implied,
under which a person (an employment agent) procures the services of
another person (a service provider) for a client of the employment
agent.
(2) However, a contract is not an employment agency contract for the
purposes of this Act if it is, or results in the creation of, a contract of
employment between the service provider and the client.
(3) In this section:
contract includes agreement, arrangement and undertaking.
38 Persons taken to be employers
For the purposes of this Act, the employment agent under an
employment agency contract is taken to be an employer.
39 Persons taken to be employees
For the purposes of this Act, the person who performs work for or in
relation to which services are supplied to the client under an
employment agency contract is taken to be an employee of the
employment agent.
40 Amounts taken to be wages
(1) For the purposes of this Act, the following are taken to be wages paid or
payable by the employment agent under an employment agency
contract:
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Payroll Tax Bill 2007 Clause 41
Wages Part 3
(a) any amount paid or payable to or in relation to the service
provider in respect of the provision of services in connection with
the employment agency contract,
(b) the value of any benefit provided for or in relation to the
provision of services in connection with the employment agency
contract that would be a fringe benefit if provided to a person in
the capacity of an employee,
(c) any payment made in relation to the service provider that would
be a superannuation contribution if made in relation to a person
in the capacity of an employee.
(2) Subsection (1) does not apply to an employment agency contract to the
extent that an amount, benefit or payment referred to in that subsection
would be exempt from payroll tax under Part 4 (other than under
Division 4 or 5 of that Part, section 50 or clause 5 of Schedule 2) had
the service provider been paid by the client as an employee, if the client
has given a declaration to that effect, in the form approved by the Chief
Commissioner, to the employment agent.
41 Liability provisions
Subject to section 42, if an employment agent under an employment
agency contract:
(a) by arrangement procures the services of a service provider for a
client of the employment agent, and
(b) pays payroll tax in respect of an amount, benefit or payment that
is, under section 40, taken to be wages paid or payable by the
employment agent in respect of the provision of those services in
connection with that contract,
no other person (including any other person engaged to procure the
services of the service provider for the employment agent's client as
part of the arrangement) is liable to pay payroll tax in respect of wages
paid or payable for the procurement or performance of those services by
the service provider for the client.
42 Agreement to reduce or avoid liability to payroll tax
(1) If the effect of an employment agency contract is to reduce or avoid the
liability of any party to the contract to the assessment, imposition or
payment of payroll tax, the Chief Commissioner may:
(a) disregard the contract, and
(b) determine that any party to the contract is taken to be an employer
for the purposes of this Act, and
(c) determine that any payment made in respect of the contract is
taken to be wages for the purposes of this Act.
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Clause 43 Payroll Tax Bill 2007
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(2) If the Chief Commissioner makes a determination under subsection (1),
the Chief Commissioner must serve a notice of the determination on the
person taken to be an employer for the purposes of this Act.
(3) The notice must set out the facts on which the Chief Commissioner
relies and the reasons for the determination.
(4) This section has effect in relation to agreements, transactions and
arrangements made before, on or after the commencement of this
section.
Division 9 Other
43 Value of wages paid in kind
The value of wages (except fringe benefits and shares and options) that
are paid or payable in kind is the greater of:
(a) the value agreed or attributed to the wages in, or ascertainable for
the wages from, arrangements between the employer and the
employee, whichever is the greater, and
(b) if the regulations prescribe how the value of wages of that type is
to be determined--the value determined in accordance with the
regulations.
44 GST excluded from wages
(1) If a person is liable to pay GST on the supply to which wages paid or
payable to the person relate, the amount or value of those wages on
which payroll tax is payable is the amount or value of the wages paid or
payable to the person minus the relevant proportion of the amount of
GST payable by the person on the supply to which the wages relate.
(2) Subsection (1) does not apply in respect of the value of wages
comprising a fringe benefit.
(3) In this section:
consideration has the same meaning as in the A New Tax System
(Goods and Services Tax) Act 1999 of the Commonwealth.
relevant proportion, in relation to GST payable on a supply to which
wages relate, means the proportion that the amount or value of the
wages bears to the consideration for the supply to which the wages
relate.
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Payroll Tax Bill 2007 Clause 45
Wages Part 3
45 Wages paid by group employers
A reference in this Act 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
(1) If any of the following amounts of money or other valuable
consideration would, if paid or given or to be paid or given directly by
an employer to an employee, be or be included as wages paid or payable
by the employer to the employee for the purposes of this Act, they are
taken to be wages paid or payable by the employer to the employee:
(a) any money or other valuable consideration paid or given, or to be
paid or given, to an employee, for the employee's services as an
employee of an employer, by a person other than the employer,
(b) any money or other valuable consideration paid or given, or to be
paid or given, by an employer, for an employee's services as the
employee of the employer, to a person other than the employee,
(c) any money or other valuable consideration paid or given, or to be
paid or given, by a person other than an employer, for an
employee's services as an employee of the employer, to a person
other than the employee.
(2) If any of the following amounts of money or other valuable
consideration would, if paid or given or to be paid or given directly by
a company to a director of the company, be or be included as wages paid
or payable by the company to the director for the purposes of this Act,
they are taken to be wages paid or payable by the company to the
director:
(a) any money or other valuable consideration paid or given, or to be
paid or given, to a director of a company, by way of remuneration
for the appointment or services of the director to the company, by
a person other than the company,
(b) any money or other valuable consideration paid or given, or to be
paid or given, by a company, by way of remuneration for the
appointment or services of the director to the company, to a
person other than the director,
(c) any money or other valuable consideration paid or given, or to be
paid or given, by any person, by way of remuneration for the
appointment or services of a director to the company, to a person
other than the director.
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Clause 47 Payroll Tax Bill 2007
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(3) In this section, director of a company includes:
(a) a person who, under a contract or other arrangement, is to be
appointed as a director of the company, and
(b) a former director of the company.
47 Agreement etc to reduce or avoid liability to payroll tax
(1) If any person enters into any agreement, transaction or arrangement,
whether in writing or otherwise, under which a natural person performs,
for or on behalf of another person, services in respect of which any
payment is made to some other person related or connected to the
natural person performing the services and the effect of the agreement,
transaction or arrangement is to reduce or avoid the liability of any
person to the assessment, imposition or payment of payroll tax, the
Chief Commissioner may:
(a) disregard the agreement, transaction or arrangement, and
(b) determine that any party to the agreement, transaction or
arrangement is taken to be an employer for the purposes of this
Act, and
(c) determine that any payment made in respect of the agreement,
transaction or arrangement is taken to be wages for the purposes
of this Act.
(2) If the Chief Commissioner makes a determination under subsection (1),
the Chief Commissioner must serve a notice to that effect on the person
taken to be an employer for the purposes of this Act.
(3) The notice must set out the facts on which the Chief Commissioner
relies and the reasons for the determination.
(4) This section has effect in relation to agreements, transactions and
arrangements made before, on or after the commencement of this
section.
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Payroll Tax Bill 2007 Clause 48
Exemptions Part 4
Part 4 Exemptions
Division 1 Non-profit organisations
48 Non-profit organisations
(1) Subject to subsection (2), wages are exempt wages if they are paid or
payable by any of the following:
(a) a religious institution,
(b) a public benevolent institution (but not including an
instrumentality of the State),
(c) a non-profit organisation having wholly charitable, benevolent,
philanthropic or patriotic purposes (but not including a school, an
educational institution, an educational company or an
instrumentality of the State).
(2) The wages must be paid or payable:
(a) for work of a kind ordinarily performed in connection with the
religious, charitable, benevolent, philanthropic or patriotic
purposes of the institution or body, and
(b) to a person engaged exclusively in that kind of work.
(3) For the purposes of subsection (1) (c), an educational company is a
company:
(a) in which an educational institution has a controlling interest, and
(b) that provides, promotes or supports the educational services of
that institution.
(4) For the purposes of subsection (3), an educational institution has a
controlling interest in an educational company if:
(a) members of the board of management of the company who are
entitled to exercise a majority in voting power at meetings of the
board of management are accustomed or under an obligation,
whether formal or informal, to act in accordance with the
directions, instructions or wishes of the educational institution, or
(b) the educational institution may (whether directly or indirectly)
exercise, control the exercise of, or substantially influence the
exercise of, more than 50% of the voting power attached to
voting shares, or any class of voting shares, issued by the
company, or
(c) the educational institution has power to appoint more than 50%
of the members of the board of management of the company.
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(5) In this section:
educational institution means an entity that provides education above
secondary level.
Division 2 Education and training
49 Schools and educational services and training
Wages are exempt wages as provided for in Division 1 of Part 3 of
Schedule 2.
50 Community Development Employment Project
(1) Wages are exempt wages if they are paid or payable to an Aboriginal
person who is employed under an employment project.
(2) An employment project is an employment project under the
Community Development Employment Project funded by the
Department of Employment and Workplace Relations of the
Commonwealth or the Torres Strait Regional Authority.
Division 3 Health care service providers
51 Health care service providers
(1) Subject to subsection (2), wages paid or payable by a health care service
provider are exempt wages.
(2) The wages must be paid or payable:
(a) for work of a kind ordinarily performed in connection with the
conduct of a health care service provider, and
(b) to a person engaged exclusively in that kind of work.
(3) For the purposes of this section, health care service provider has the
meaning given in Division 2 of Part 3 of Schedule 2.
52 Division not to limit other exemptions
(1) Nothing in this Division limits the application of any other Division of
this Part.
(2) For example, if a health care service provider is also a non-profit
organisation, the exemption for non-profit organisations referred to in
section 48 may still apply.
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Payroll Tax Bill 2007 Clause 53
Exemptions Part 4
Division 4 Maternity and adoption leave
53 Maternity and adoption leave
(1) Wages are exempt wages if they are paid or payable to an employee in
respect of:
(a) maternity leave, being leave given to a female employee in
connection with her pregnancy or the birth of her child (other
than sick leave, recreation leave, annual leave or any similar
leave), or
(b) adoption leave, being leave given to an employee in connection
with the adoption of a child by him or her (other than sick leave,
recreation leave, annual leave or any similar leave).
(2) It is immaterial whether the leave is taken during or after the pregnancy
or before or after the adoption.
(3) The exemption is limited to wages paid or payable in respect of a
maximum of 14 weeks maternity leave in respect of any one pregnancy
and 14 weeks adoption leave in respect of any one adoption.
(4) For the avoidance of doubt, a reference in subsection (3) to a period of
14 weeks leave is a reference to:
(a) a period that is the equivalent of 14 weeks leave on full pay, in
the case of full-time employees who take leave on less than full
pay, or
(b) a period of 14 weeks leave at part-time rates of pay, in the case of
part-time employees.
(5) The exemption does not apply to any part of wages paid or payable in
respect of maternity or adoption leave that comprises fringe benefits.
54 Administrative requirements for exemption
(1) An employer wishing to claim an exemption under section 53 in respect
of maternity leave must obtain and keep a medical certificate in respect
of, or statutory declaration by, the employee:
(a) stating that the employee is or was pregnant, or
(b) stating that the employee has given birth and the date of birth.
(2) An employer wishing to claim an exemption under section 53 in respect
of adoption leave must obtain and keep a statutory declaration by the
employee stating:
(a) that a child has been placed in the custody of the employee
pending the making of an adoption order, or
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Clause 55 Payroll Tax Bill 2007
Part 4 Exemptions
(b) that an adoption order has been made or recognised in favour of
the employee.
Note. Section 53 of the Taxation Administration Act 1996 requires these
records to be kept for at least 5 years unless the Chief Commissioner authorises
earlier destruction.
Division 5 Volunteer firefighters and emergency service
volunteers
55 Volunteer firefighters
Subject to section 57, wages are exempt wages if they are paid or
payable to an employee in respect of any period when he or she was
taking part in bushfire fighting activities as a volunteer member of a
rural fire brigade under the Rural Fires Act 1997.
56 Emergency service volunteers
Subject to section 57, wages are exempt wages if they are paid or
payable to an employee in respect of any period when he or she was
engaging in emergency operations as a volunteer member of an
emergency services organisation under the State Emergency and Rescue
Management Act 1989.
57 Limitation of exemption
An exemption under this Division does not apply to wages paid or
payable as recreation leave, annual leave, long service leave or sick
leave.
Division 6 Local government
58 Local and county councils
Subject to section 60, wages are exempt wages if they are paid or
payable by a council or county council, within the meaning of the Local
Government Act 1993.
59 Local government business entities
(1) Subject to section 60, wages are exempt wages if they are paid or
payable:
(a) by a wholly-owned subsidiary (within the meaning of the
Corporations Act 2001 of the Commonwealth) of a council
(within the meaning of the Local Government Act 1993), and
(b) to a person for or in connection with an activity that is conducted
for the council under a written arrangement between the
subsidiary and the council.
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Payroll Tax Bill 2007 Clause 60
Exemptions Part 4
(2) The written arrangement referred to in subsection (1) (b) must include
a provision for the payment by the subsidiary to the council of an
amount approximately equivalent to the amount of tax that would be
payable by the subsidiary under this Act but for the exemption.
60 Limitation on local government exemptions
(1) An exemption under this Division does not apply to wages paid or
payable for or in connection with:
(a) any of the activities referred to in subsection (2), or
(b) the construction of any buildings or works, or the installation of
plant, machinery or equipment for use in any of the activities
referred to in subsection (2).
(2) Subsection (1) applies to the following activities:
(a) the supply of electricity or gas,
(b) water supply,
(c) sewerage,
(d) the conduct of:
(i) abattoirs,
(ii) public markets,
(iii) parking stations,
(iv) cemeteries or crematoria,
(v) hostels,
(vi) an activity prescribed by the regulations,
(e) an activity specified in Schedule 2.
Division 7 Other government and defence
61 State Governors
Wages paid or payable by the Governor of a State are exempt wages.
62 Defence personnel
Wages are exempt wages if they are paid or payable to an employee in
respect of any period when he or she was on leave from employment
because of being a member of:
(a) the Defence Force of the Commonwealth, or
(b) the armed forces of any part of the Commonwealth of Nations.
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63 War Graves Commission
Wages paid or payable by the Commonwealth War Graves Commission
are exempt wages.
Division 8 Foreign government representatives and
international agencies
64 Consular and non-diplomatic representatives
Wages paid or payable to members of his or her official staff by a
consular or other representative of any country in Australia (other than
a diplomatic representative) are exempt wages.
65 Trade Commissioners
Wages paid or payable to members of his or her official staff by a Trade
Commissioner representing any other part of the Commonwealth of
Nations in Australia are exempt wages.
66 Australian-American Fulbright Commission
Wages paid or payable by the Australian-American Fulbright
Commission are exempt wages.
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Division 1 Interpretation
67 Definitions
In this Part:
business includes:
(a) a profession or trade, and
(b) any other activity carried on for fee, gain or reward, and
(c) the activity of employing one or more persons who perform
duties in connection with another business, and
(d) the carrying on of a trust (including a dormant trust), and
(e) the activity of holding any money or property used for or in
connection with another business,
whether carried on by 1 person or 2 or more persons together.
group means a group constituted under this Part, but does not include
any member of the group in respect of whom a determination under
Division 4 is in force.
68 Grouping provisions to operate independently
The fact that a person is not a member of a group constituted under a
provision of this Part does not prevent that person from being a member
of a group constituted under another provision of this Part.
Division 2 Business groups
69 Constitution of groups
A group is constituted by all the persons or bodies forming a group that
is not a part of any larger group.
70 Groups of corporations
(1) Corporations constitute a group if they are related bodies corporate
within the meaning of the Corporations Act 2001 of the
Commonwealth.
(2) For the purpose of assessing whether corporations are related bodies
corporate under that Act, they are taken to carry on a business and not
to be trustee companies.
Note. Section 79 (Exclusion of persons from groups) allows the Chief
Commissioner, for payroll tax purposes, to exclude persons from a group in
certain circumstances but not in the case of corporations that are related bodies
corporate.
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71 Groups arising from the use of common employees
(1) If one or more employees of an employer perform duties for or in
connection with one or more businesses carried on by the employer and
one or more other persons, the employer and each of those other persons
constitute a group.
(2) If one or more employees of an employer are employed solely or mainly
to perform duties for or in connection with one or more businesses
carried on by one or more other persons, the employer and each of those
other persons constitute a group.
(3) If one or more employees of an employer perform duties for or in
connection with one or more businesses carried on by one 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 one or more of those
other persons in connection with that business or those businesses, the
employer and each of those other persons constitute a group.
(4) Subsection (3) applies to an agreement, arrangement or undertaking:
(a) whether the agreement, arrangement or undertaking is formal or
informal, express or implied, and
(b) whether or not the agreement, arrangement or undertaking
provides for duties to be performed by the employees or specifies
the duties to be performed by them.
Note. Section 79 (Exclusion of persons from groups) allows the Chief
Commissioner, for payroll tax purposes, to exclude persons from a group
constituted under this section in certain circumstances.
72 Groups of commonly controlled businesses
(1) If a person or set of persons has a controlling interest in each of 2
businesses, the persons who carry on those businesses constitute a
group.
Note. Section 79 (Exclusion of persons from groups) allows the Chief
Commissioner, for payroll tax purposes, to exclude persons from a group
constituted under this section in certain circumstances.
(2) For the purposes of this section, a person or set of persons has a
controlling interest in a business if:
(a) in the case of 1 person--the person is the sole owner (whether or
not as trustee) of the business, or
(b) in the case of a set of persons--the persons are together as
trustees the sole owners of the business, or
(c) in the case of a business carried on by a corporation:
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(i) the person or each of the set of persons is a director of the
corporation and the person or set of persons is entitled to
exercise more than 50% of the voting power at meetings of
the directors of the corporation, or
(ii) a director or set of directors of the corporation that is
entitled to exercise more than 50% of the voting power at
meetings of the directors of the corporation is under an
obligation, whether formal or informal, to act in
accordance with the direction, instructions or wishes of
that person or set of persons, or
(d) in the case of a business carried on by a body corporate or
unincorporate--that person or set of persons constitute more than
50% of the board of management (by whatever name called) of
the body or control the composition of that board, or
(e) in the case of a business carried on by a corporation that has a
share capital--that person or set of persons can, directly or
indirectly, exercise, control the exercise of, or substantially
influence the exercise of, more than 50% of the voting power
attached to the voting shares, or any class of voting shares, issued
by the corporation, or
(f) in the case of a business carried on by a partnership--that person
or set of persons:
(i) own (whether beneficially or not) more than 50% of the
capital of the partnership, or
(ii) is entitled (whether beneficially or not) to more than 50%
of the profits of the partnership, or
(g) in the case of a business carried on under a trust--the person or
set of persons (whether or not as a trustee of, or beneficiary under,
another trust) is the beneficiary in respect of more than 50% of
the value of the interests in the first-mentioned trust.
(3) If:
(a) 2 corporations are related bodies corporate within the meaning of
the Corporations Act 2001 of the Commonwealth, and
(b) 1 of the corporations has a controlling interest in a business,
the other corporation has a controlling interest in the business.
(4) If:
(a) a person or set of persons has a controlling interest in a business,
and
(b) a person or set of persons who carry on the business has a
controlling interest in another business,
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the person or set of persons referred to in paragraph (a) has a controlling
interest in that other business.
(5) If:
(a) a person or set of persons is the beneficiary of a trust in respect of
more than 50% of the value of the interests in the trust, and
(b) the trustee of the trust (whether alone or together with another
trustee or trustees) has a controlling interest in the business of
another trust,
the person or set of persons has a controlling interest in the business.
(6) A person who may benefit from a discretionary trust as a result of the
trustee or another person, or the trustee and another person, exercising
or failing to exercise a power or discretion, is taken, for the purposes of
this Part, to be a beneficiary in respect of more than 50% of the value of
the interests in the trust.
(7) If:
(a) a person or set of persons has a controlling interest in the business
of a trust, and
(b) the trustee of the trust (whether alone or together with another
trustee or trustees) has a controlling interest in the business of a
corporation,
the person or set of persons is taken to have a controlling interest in the
business of the corporation.
(8) If:
(a) a person or set of persons has a controlling interest in the business
of a trust, and
(b) the trustee of the trust (whether alone or together with another
trustee or trustees) has a controlling interest in the business of a
partnership,
the person or set of persons is taken to have a controlling interest in the
business of the partnership.
73 Groups arising from tracing of interests in corporations
(1) An entity and a corporation form part of a group if the entity has a
controlling interest in the corporation.
Note. Section 79 (Exclusion of persons from groups) allows the Chief
Commissioner, for payroll tax purposes, to exclude persons from a group
constituted under this section in certain circumstances.
(2) For the purposes of this section, an entity has a controlling interest in a
corporation if the corporation has share capital and:
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(a) the entity has a direct interest in the corporation and the value of
that direct interest exceeds 50%, or
(b) the entity has an indirect interest in the corporation and the value
of that indirect interest exceeds 50%, or
(c) the entity has an aggregate interest in the corporation and the
value of the aggregate interest exceeds 50%.
(3) Division 3 applies for the purposes of the interpretation of this section.
Note. Division 3 sets out the manner for determining whether an entity has a
direct interest, indirect interest or aggregate interest in a corporation, and the
value of such an interest.
(4) In this section:
associated person means a person who is associated with another
person in accordance with any of the following provisions:
(a) persons are associated persons if they are related persons,
(b) natural persons are associated persons if they are partners in a
partnership,
(c) private companies are associated persons if common
shareholders have a majority interest in each private company,
(d) trustees are associated persons if any person is a beneficiary
common to the trusts (not including a public unit trust scheme) of
which they are trustees,
(e) a private company and a trustee are associated persons if a related
body corporate of the company (within the meaning of the
Corporations Act 2001 of the Commonwealth) is a beneficiary of
the trust (not including a public unit trust scheme) of which the
trustee is a trustee.
domestic partner of a person means a person to whom the person is not
married but with whom the person is living as a couple on a genuine
domestic basis (irrespective of gender).
entity means:
(a) a person, or
(b) 2 or more persons who are associated persons (as defined in this
section).
private company means a company that is not limited by shares, or
whose shares are not quoted on the Australian Stock Exchange or any
exchange of the World Federation of Exchanges.
related person means a person who is related to another person in
accordance with any of the following provisions:
(a) natural persons are related persons if:
(i) one is the spouse or domestic partner of the other, or
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(ii) the relationship between them is that of parent and child,
brothers, sisters, or brother and sister,
(b) private companies are related persons if they are related bodies
corporate within the meaning of the Corporations Act 2001 of the
Commonwealth,
(c) a natural person and a private company are related persons if the
natural person is a majority shareholder or director of the
company or of another private company that is a related body
corporate of the company within the meaning of the
Corporations Act 2001 of the Commonwealth,
(d) a natural person and a trustee are related persons if the natural
person is a beneficiary of the trust (not being a public unit trust
scheme) of which the trustee is a trustee,
(e) a private company and a trustee are related persons if the
company, or a majority shareholder or director of the company,
is a beneficiary of the trust (not being a public unit trust scheme)
of which the trustee is a trustee.
(5) For the purposes of the definition of domestic partner in subsection (4),
in determining whether persons are domestic partners of each other, all
the circumstances of their relationship are to be taken into account,
including any one or more of the matters referred to in section 4 (2) of
the Property (Relationships) Act 1984 as may be relevant in a particular
case.
74 Smaller groups subsumed by larger groups
If a person is a member of 2 or more groups, the members of all the
groups together constitute a group.
Note. Section 79 (Exclusion of persons from groups) allows the Chief
Commissioner, for payroll tax purposes, to exclude persons from a group
constituted under this section in certain circumstances.
Division 3 Business groups--tracing of interests in
corporations
75 Application
This Division applies for the purposes of section 73 (Groups arising
from tracing of interests in corporations).
76 Direct interest
(1) An entity has a direct interest in a corporation if:
(a) in the case of an entity that is a person--the person can, directly
or indirectly, exercise, control the exercise of, or substantially
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influence the exercise of, the voting power attached to any voting
shares issued by the corporation, or
(b) in the case of an entity that is 2 or more persons who are
associated persons--each of the associated persons can, directly
or indirectly, exercise, control the exercise of, or substantially
influence the exercise of, the voting power attached to any voting
shares issued by the corporation.
(2) The value of the direct interest of the entity in the corporation is the
proportion (expressed as a percentage) of the voting power of all voting
shares issued by the corporation that:
(a) in the case of an entity that is a person--the person can directly
or indirectly exercise, control the exercise of, or substantially
influence the exercise of, as referred to in subsection (1), or
(b) in the case of an entity that is 2 or more persons who are
associated persons--the associated persons can, if acting
together, directly or indirectly exercise, control the exercise of, or
substantially influence the exercise of, as referred to in
subsection (1).
77 Indirect interest
(1) An entity has an indirect interest in a corporation if the corporation is
linked to another corporation (the directly controlled corporation) in
which the entity has a direct interest.
(2) A corporation is linked to a directly controlled corporation if the
corporation is part of a chain of corporations:
(a) that starts with the directly controlled corporation, and
(b) in which a link in the chain is formed if a corporation has a direct
interest in the next corporation in the chain.
(3) The following are examples of how subsections (1) and (2) work (the
examples are cumulative):
(a) corporation A (a directly controlled corporation) has a direct
interest in corporation B. Corporations A and B form part of a
chain of corporations, and corporation B is linked to corporation
A. Accordingly, an entity that has a direct interest in corporation
A also has an indirect interest in corporation B,
(b) corporation B also has a direct interest in corporation C. In this
case, corporations A, B and C form part of a chain of
corporations. Both corporations B and C are linked to corporation
A. The entity that has a direct interest in corporation A has an
indirect interest in both corporations B and C,
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(c) corporation B also has a direct interest in corporation D. There
are now 2 chains of corporations, one consisting of A, B and C,
and one consisting of A, B and D. Corporations B, C and D are
all linked to corporation A and an entity that has a direct interest
in corporation A would have an indirect interest in corporations
B, C and D. An entity that has a direct interest in corporation B
would have an indirect interest in corporations C and D.
However, an entity that has a direct interest in corporation C only
would not have an indirect interest in corporation D, as
corporation D is not linked to corporation C.
(4) The value of the indirect interest of an entity in a corporation (an
indirectly controlled corporation) that is linked to a directly controlled
corporation is calculated by multiplying together the following:
(a) the value of the direct interest of the entity in the directly
controlled corporation,
(b) the value of each direct interest that forms a link in the chain of
corporations by which the indirectly controlled corporation is
linked to the directly controlled corporation.
(5) The following are examples of how subsection (4) works (the examples
are cumulative):
(a) an entity has a direct interest (with a value of 80%) in corporation
A. Corporation A has a direct interest (with a value of 70%) in
corporation B. The value of the indirect interest of the entity in
corporation B is 80% × 70% (that is, 56%). Accordingly, in this
example the entity has a controlling interest (within the meaning
of section 73 (Groups arising from tracing of interests in
corporations)) in corporation B,
(b) corporation B also has a direct interest (with a value of 40%) in
corporation C. The value of the indirect interest of the entity in
corporation C is 80% × 70% × 40% (that is, 22.4%). Accordingly,
in this example the entity does not have a controlling interest in
corporation C.
(6) It is possible for an entity to have more than one indirect interest in a
corporation. This may occur if the corporation is linked to more than
one corporation in which the entity has a direct interest, or if the
corporation is linked to only one corporation in which the entity has a
direct interest but is linked through more than one chain of corporations.
In that case, the entity has an aggregate interest in the corporation (see
section 78 (Aggregation of interests)).
78 Aggregation of interests
(1) An entity has an aggregate interest in a corporation if:
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(a) the entity has a direct interest and one or more indirect interests
in the corporation, or
(b) the entity has more than one indirect interest in the corporation.
(2) The value of the aggregate interest of an entity in a corporation is the
sum of the following:
(a) the value of the direct interest (if any) of the entity in the
corporation,
(b) the value of each indirect interest of the entity in the corporation.
(3) For example:
(a) an entity has a direct interest (with a value of 40%) in corporation
B,
(b) the entity also has a direct interest (with a value of 25%) in
corporation A, which in turn has a direct interest (with a value of
60%) in corporation B. Accordingly, the entity also has an
indirect interest in corporation B with a value of 15% (that is,
25% × 60%),
(c) the value of the entity's aggregate interest in corporation B is the
sum of the direct interest (40%) and the indirect interest (15%),
which is 55%,
(d) accordingly, in this example, the entity has a controlling interest
in corporation B (within the meaning of section 73 (Groups
arising from tracing of interests in corporations)).
Division 4 Miscellaneous
79 Exclusion of persons from groups
(1) The Chief Commissioner may, by order in writing, determine that a
person who would, but for the determination, be a member of a group is
not a member of the group.
(2) The Chief Commissioner may only make such a determination if
satisfied, having regard to the nature and degree of ownership and
control of the businesses, the nature of the businesses and any other
matters the Chief Commissioner considers relevant, that a business
carried on by the person, is carried on independently of, and is not
connected with the carrying on of, a business carried on by any other
member of that group.
(3) The Chief Commissioner cannot exclude a person from a group if the
person is a body corporate that, by reason of section 50 of the
Corporations Act 2001 of the Commonwealth, is related to another
body corporate that is a member of that group.
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(4) This section extends to a group constituted by reason of section 74
(Smaller groups subsumed by larger groups).
(5) A determination can be expressed to take effect on a date that is earlier
than the date of the determination.
(6) The Chief Commissioner may by order in writing revoke a
determination that applies in respect of a person if satisfied that the
circumstances in which a determination may be made do not apply to
the person.
(7) The revocation of a determination can be expressed to take effect on a
date that is earlier than the date of the determination.
80 Designated group employers
(1) The members of a group may, with the approval of the Chief
Commissioner, designate a qualified member of the group to be the
designated group employer for the group for the purposes of this Act.
(2) A member of a group is a qualified member if the member:
(a) has paid during the preceding financial year wages that exceeded
$600,000, or
(b) is likely to pay during the current financial year wages that are
likely to exceed that amount.
(3) If none of the members of a group is a qualified member but the
members together:
(a) have paid during the preceding financial year wages that
exceeded $600,000, or
(b) are, in the opinion of the Chief Commissioner, likely to pay
during the current financial year wages that will exceed that
amount,
the members may, with the approval of the Chief Commissioner,
designate any member of the group to be the designated group employer
for the group for the purposes of this Act.
(4) If the members of a group do not designate a member as the designated
group employer within 7 days after the end of the month in which the
group is established, the Chief Commissioner may (but is not obliged
to) designate any member of the group as the designated group
employer.
(5) The designated group employer of a group stops being the designated
group employer from and including the earlier of the following days:
(a) the first day of a return period during which there is a change in
the membership of the group,
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(b) the first day of a return period during which the members of the
group revoke the designation.
(6) The designation of a designated group employer under subsection (1) or
(3) must be by notice in writing.
(7) Such a notice must:
(a) be executed by or on behalf of each member of the group, and
(b) be served on the Chief Commissioner.
81 Joint and several liability
(1) If a member of a group fails to pay an amount that the member is
required to pay under this Act in respect of any period, every member
of the group is liable jointly and severally to pay that amount to the
Chief Commissioner.
(2) If 2 or more persons are jointly or severally liable to pay an amount
under this section, the Chief Commissioner may recover the whole of
the amount from them, or any of them, or any one of them.
(3) If, under this section, 2 or more persons are jointly and severally liable
to pay an amount that is payable by any one of them, each person is also
jointly and severally liable to pay:
(a) any amount payable to the Chief Commissioner under this or any
other Act in relation to that amount, including any interest and
penalty tax, and
(b) any costs and expenses incurred in relation to the recovery of that
amount that the Chief Commissioner is entitled to recover from
any such person.
(4) A person who pays an amount in accordance with the liability imposed
by this section has such rights of contribution or indemnity from the
other person or persons as are just.
(5) This section applies whether or not the person was an employer during
the relevant period.
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82 Determination of correct amount of payroll tax
(1) For the purposes of this Part, the correct amount of payroll tax payable
by an employer in respect of a financial year is the amount determined
in accordance with Schedule 1 in respect of that financial year.
(2) This Part applies in respect of payroll tax paid or payable whether as a
group employer or as an individual employer.
(3) If an employer is liable for payroll tax both as an individual employer
and as a group employer (for different periods in the same financial
year) separate adjustments are to be made under this Part in respect of
any period as a group employer and any period as an individual
employer (and for that purpose separate determinations of the correct
amount of payroll tax payable by the employer are to be made).
(4) In this Part:
group employer means an employer who is a member of a group.
individual employer means an employer who is not a member of a
group.
83 Annual adjustment of payroll tax
(1) If the amount of payroll tax paid or payable by an employer when the
employer made the returns relating to a financial year is greater than the
correct amount of payroll tax payable by the employer in respect of the
financial year, the Chief Commissioner (on application by the
employer) is to refund to that employer an amount equal to the
difference.
(2) If the amount of payroll tax paid or payable by an employer when the
employer made the returns relating to a financial year is less than the
correct amount of payroll tax payable by the employer in respect of the
financial year, the employer must pay to the Chief Commissioner as
payroll tax an amount equal to the difference.
(3) Any amount payable by an employer under this section in respect of a
financial year must be paid within the period during which the employer
is required to lodge a return under this Act in respect of the return period
that is or includes the month of June in that financial year.
(4) The amount of any refund payable to an employer in respect of a
financial year under this section is to be reduced by the amount of any
other refund of payroll tax made in respect of that financial year to that
employer (whether under this section or otherwise) before the time of
the refund under this section.
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84 Adjustment of payroll tax when employer changes circumstances
(1) If an employer changes their circumstances during a financial year, the
employer must, if the amount of payroll tax paid or payable by the
employer when the employer made returns relating to the relevant
period prior to the change of circumstances is less than the correct
amount of payroll tax payable by the employer in respect of the
financial year, pay to the Chief Commissioner as payroll tax an amount
equal to the difference.
(2) A change of circumstances occurs when the employer:
(a) ceases to pay or be liable to pay taxable wages and interstate
wages, or
(b) becomes a group employer (following a period as an individual
employer), or
(c) ceases to be a group employer (and becomes an individual
employer).
(3) The relevant period prior to a change of circumstances is the period
prior to the change (during the financial year concerned and since any
prior change of circumstances) for which the employer paid or was
liable to pay taxable wages or interstate wages.
(4) In calculating for the purposes of this section the correct amount of
payroll tax payable by the employer, it is to be assumed that the wages
paid or payable by the employer during the relevant period are the only
wages paid or payable by the employer during the financial year
concerned.
(5) Any amount payable by an employer under this section in respect of a
relevant period must be paid within the period during which the
employer is required to lodge a return under this Act relating to that
relevant period or the last return under this Act relating to the relevant
period.
(6) Any payroll tax paid or payable by an employer under this section is to
be included as payroll tax paid or payable by the employer for the
purposes of the annual adjustment of payroll tax under this Part.
Note. If an employer ceases to be a group employer during a financial year an
adjustment will be made under this section. If later in that financial year the
employer ceases to pay wages there will be a further adjustment under this
section. The first adjustment will adjust payroll tax paid for the period as a group
employer against the correct amount of tax that should have been paid (based
on the assumption that the period as a group employer is the only period for
which the employer paid wages throughout the year). The second adjustment
will adjust payroll tax paid for the period as an individual employer against the
correct amount of tax that should have been paid (based on the assumption that
the period as an individual employer is the only period for which the employer
paid wages throughout the year). Any amount of payroll tax paid under this
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section is taken into account for the purposes of the annual adjustment of
payroll tax.
85 Special provision where wages fluctuate
If a person who did not pay and was not liable to pay taxable wages or
interstate wages for any part of a financial year satisfies the Chief
Commissioner that, by reason of the nature of the person's trade or
business, the taxable wages and interstate wages, if any, paid or payable
by the person fluctuate with different periods of the financial year, the
Chief Commissioner may determine that the person is to be treated for
the purposes of this Part:
(a) if the person has conducted that trade or business in Australia
during the whole of the financial year--as an employer who pays
or is liable to pay taxable wages throughout the financial year, or
(b) if the person has conducted that trade or business in Australia
during part only of the financial year--as an employer who pays
or is liable to pay taxable wages throughout that last-mentioned
part of the financial year.
Note. The effect of such a determination is that when the correct amount of
payroll tax is calculated (for the purposes of a tax adjustment provided for by
this Part) the employer may receive the benefit of the payroll tax threshold for
the period for which the employer is to be treated as paying wages, and not just
for the period for which the employer actually pays wages. Without such a
determination, an employer may only receive the benefit of a proportion of the
threshold amount that is equivalent to the proportion of the whole financial year
for which the employer actually pays wages.
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Part 7 Registration and returns
86 Registration
(1) An employer who is not already registered must apply for registration
as an employer under this Act if:
(a) during a month the employer pays or is liable to pay, anywhere,
wages of more than $11,538 per week that are wholly or partly
taxable wages, or
(b) the employer is a member of a group the members of which
together during a month pay or are liable to pay, anywhere, wages
of more than $11,538 per week that are wholly or partly taxable
wages.
(2) The application for registration is to be made to the Chief
Commissioner in a form and manner approved by the Chief
Commissioner within 7 days after the end of the month concerned.
(3) The Chief Commissioner is to register the applicant as an employer
under this Act.
(4) The Chief Commissioner may cancel the registration of a person as an
employer if satisfied that the person has ceased to pay or to have a
liability to pay wages as described in subsection (1).
(5) If the Chief Commissioner cancels the registration of a person as an
employer in any financial year and that person subsequently pays or is
liable to pay taxable wages during that financial year the person may,
despite the fact that the person is not required to apply for registration,
apply to the Chief Commissioner (in a form and manner approved by
the Chief Commissioner) for registration as an employer, and the Chief
Commissioner is then to register the person as an employer under this
Act.
87 Returns
(1) Every employer who is registered or required to apply for registration
as an employer under this Act must:
(a) within 7 days after the end of each month except June, lodge with
the Chief Commissioner a return relating to that month, and
(b) within 21 days after the end of June in each year, lodge with the
Chief Commissioner a return relating to that month and to the
adjustment of payroll tax paid or payable by the employer during
the financial year ending on the close of that month.
(2) The designated group employer for a group may, with the approval of
the Chief Commissioner, lodge a joint return for the purposes of this
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Clause 87 Payroll Tax Bill 2007
Part 7 Registration and returns
section covering specified members of the group (including the
designated group employer).
(3) If a joint return is lodged and the return would, if lodged by a single
employer, comply with this section, each of the employers covered by
the return is taken to have complied with this section.
Page 48
Payroll Tax Bill 2007 Clause 88
Collection and recovery of tax Part 8
Part 8 Collection and recovery of tax
Division 1 Agents and trustees generally
88 Application
(1) This Division applies to an agent of or trustee for an employer.
(2) Nothing in this Division limits or otherwise affects the application of
Part 5 to an agent or trustee, or 2 or more persons one or more of whom
is an agent or trustee.
89 Agents and trustees are answerable
An agent or trustee is answerable as the employer for the doing of all
things that are required to be done by or under this Act in respect of the
payment of any wages which are subject to payroll tax under this Act.
90 Returns by agent or trustee
(1) An agent or trustee must, in respect of the wages referred to in section
89, make the returns required under Part 7, but in a representative
capacity only, and each return must, except as otherwise provided by
this Act, be separate and distinct from any other.
(2) In the case of an executor or administrator, the returns must be the same
as far as practicable as the deceased person, if living, would have been
liable to make.
91 Liability to pay tax
(1) An agent or trustee is personally liable for tax on the wages referred to
in section 89 if:
(a) after the Chief Commissioner has required the agent or trustee to
make a return, or
(b) while the tax remains unpaid,
the agent or trustee, except with the written permission of the Chief
Commissioner, disposes of or parts with any fund or money which
comes to the agent or trustee from or out of which tax could legally be
paid.
(2) Otherwise than as provided in subsection (1), the agent or trustee is not
personally liable to pay the tax in a representative capacity.
(3) The agent or trustee must retain from time to time out of any money
which comes to the agent or trustee in a representative capacity enough
to pay the tax.
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Clause 92 Payroll Tax Bill 2007
Part 8 Collection and recovery of tax
(4) For the purpose of ensuring the payment of tax, the Chief Commissioner
has the same remedies against attachable property of any kind vested in
or under the control or management or in the possession of the agent or
trustee, as the Chief Commissioner has against the property of any other
person in respect of tax, and in as full and ample a manner.
92 Indemnity for agent or trustee
(1) An agent or trustee is indemnified for all payments that the agent or
trustee makes under this Act or in accordance with the requirements of
the Chief Commissioner.
(2) An agent or trustee who pays tax as agent or trustee may recover the
amount paid from the person on whose behalf it was paid, or deduct it
from any money in the agent's or trustee's hands belonging to that
person.
Division 2 Special cases
93 Tax not paid during lifetime
(1) This section applies if, whether intentionally or not, a person escapes
full payment of tax in his or her lifetime by reason of not having duly
made full, complete and accurate returns.
(2) The Chief Commissioner has the same powers and remedies against the
trustees of the estate of the person in respect of the liability to which the
person was subject as the Chief Commissioner would have had against
the person if the person were still living.
(3) The trustees must lodge the returns under this Act that the Chief
Commissioner requires.
(4) The trustees are subject to tax to the same extent as the deceased person
would be subject to tax if he or she were still living, but the Chief
Commissioner, in any circumstances the Chief Commissioner considers
appropriate, may remit tax payable by the trustees under this section by
any amount.
(5) The amount of any tax payable by the trustees is a charge on all the
deceased person's estate in their hands in priority to all other
encumbrances.
94 Payment of tax by executors or administrators
(1) If, at the time of an employer's death, he or she had not paid the whole
of the tax payable up to the date of death, the Chief Commissioner has
the same powers and remedies for the assessment and recovery of tax
from the executors and administrators as the Chief Commissioner
would have had against the employer, if the employer were alive.
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Payroll Tax Bill 2007 Clause 95
Collection and recovery of tax Part 8
(2) The executors or administrators must lodge any of the returns referred
to in Part 7 that have not been lodged by the deceased.
95 Assessment if no probate within 6 months of death
(1) If, in respect of the estate of any deceased employer, probate has not
been granted or letters of administration have not been taken out within
6 months after the death, the Chief Commissioner may make an
assessment under section 8 of the Taxation Administration Act 1996 of
the tax liability of the deceased under this Act.
(2) The Chief Commissioner must cause notice of the assessment to be
published twice in a daily newspaper circulating in the State or Territory
in which the deceased resided.
(3) Any person claiming an interest in the estate of the deceased may,
within 60 days after the first publication of notice of the assessment,
lodge an objection with the Chief Commissioner in accordance with
Division 1 of Part 10 of the Taxation Administration Act 1996.
(4) Subject to any amendment of the assessment by the Chief
Commissioner or by the Supreme Court, the assessment so made is
conclusive evidence of the indebtedness of the deceased to the Chief
Commissioner.
(5) However, if probate of the will or letters of administration of the estate
of the deceased is or are granted to a person after the assessment is first
published, that person may, within 60 days after the date of the grant,
lodge an objection in accordance with Division 1 of Part 10 of the
Taxation Administration Act 1996.
96 Person in receipt or control of money for absentee
(1) This section applies to a person (the controller) who has the receipt,
control or disposal of money belonging to a person resident out of
Australia (the principal) if the principal is liable to pay tax under this
Act.
(2) The controller must pay the tax payable by the principal at the time, or
within the period, specified by the Chief Commissioner.
(3) A controller who pays tax in accordance with subsection (2) may
recover the amount paid from the principal or deduct it from any money
in the controller's hands belonging to the principal.
(4) A controller must from time to time retain out of any money which
comes to the controller on behalf of the principal so much as is sufficient
to pay the tax which is or will become due by the principal.
(5) A controller is personally liable for the tax payable by the controller on
behalf of the principal if:
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Clause 97 Payroll Tax Bill 2007
Part 8 Collection and recovery of tax
(a) after the tax becomes payable, or
(b) after the Chief Commissioner has required the controller to pay
the tax,
the controller, except with the written permission of the Chief
Commissioner, disposes of or parts with any fund or money then in the
controller's possession, or which comes to the controller from or out of
which the tax could legally be paid.
(6) Otherwise than as provided in subsection (5), a controller is not
personally liable to pay the tax payable by the principal.
(7) A controller is indemnified for all payments which the controller makes
under this Act or in accordance with the requirements of the Chief
Commissioner.
97 Agent for absentee principal winding-up business
(1) If an agent for an absentee principal has been required by the principal
to wind-up the principal's business, the agent must notify the Chief
Commissioner of the intention to wind-up the business before taking
any steps to wind it up.
Maximum penalty: 5 penalty units.
(2) After receiving notice under subsection (1), the Chief Commissioner
may notify the agent in writing of:
(a) the amount (if any) of payroll tax for which the principal is liable,
and
(b) the date (at least 21 days after the notice is given) by which the
tax must be paid.
(3) An agent who is given notice under subsection (2) must:
(a) set aside an amount out of the assets of the principal's business
that is sufficient to pay the tax, and
(b) pay the tax to the Chief Commissioner by the date specified in the
notice.
Maximum penalty: 5 penalty units.
(4) If an agent contravenes this section, the agent is personally liable for
any tax that becomes payable in respect of the principal's business.
98 Recovery of tax paid on behalf of another person
A person who, under the provisions of this Act, pays any tax for or on
behalf of another person is entitled to recover the amount so paid from
the other person as a debt, together with the costs of recovery, or to
retain or deduct that amount out of any money in the person's hands
belonging or payable to the other person.
Page 52
Payroll Tax Bill 2007 Clause 99
Collection and recovery of tax Part 8
99 Liquidator to give notice
(1) Within 14 days after becoming liquidator of a company that has been an
employer registered or required to be registered under this Act, the
liquidator must give the Chief Commissioner notice in writing of the
liquidator's appointment.
(2) As soon as practicable after receiving the notice, the Chief
Commissioner must notify the liquidator of the amount that appears to
the Chief Commissioner to be sufficient to provide for any tax which is
or will become payable by the company.
(3) The liquidator:
(a) must not without leave of the Chief Commissioner part with any
of the assets of the company until the liquidator has been so
notified, and
(b) must set aside out of the assets available for the payment of the
tax, assets to the value of the amount so notified, or the whole of
the assets so available if they are of less than that value, and
(c) is, to the extent of the value of the assets which the liquidator is
so required to set aside, liable as trustee to pay the tax.
(4) A liquidator must not fail:
(a) to comply with this section, or
(b) as trustee duly to pay the tax for which the liquidator is liable
under subsection (3).
Maximum penalty: 50 penalty units.
(5) If a liquidator commits an offence against subsection (4), the liquidator
is personally liable to pay the tax, to the extent of the value of the assets
of which the liquidator has taken possession and which are, or were at
any time, available to the liquidator for the payment of the tax.
(6) If more than one person is appointed as liquidator or required by law to
carry out the winding-up of a company:
(a) the obligations and liabilities attaching to a liquidator under this
section attach to each of those persons, and
(b) if any one of those persons has paid the tax due in respect of the
company being wound-up, the others are each liable to pay that
person that person's equal share of the amount of the tax so paid.
(7) Despite anything in this section, all costs, charges and expenses that, in
the Chief Commissioner's opinion, have been properly incurred by a
liquidator in the winding-up of a company, including the remuneration
of the liquidator, may be paid out of the assets of the company in priority
to any tax payable in respect of the company.
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Clause 99 Payroll Tax Bill 2007
Part 8 Collection and recovery of tax
(8) Nothing in this section:
(a) limits the liability of a liquidator under section 91, or
(b) affects any of the provisions of the Corporations Act 2001 of the
Commonwealth.
Page 54
Payroll Tax Bill 2007 Clause 100
General Part 9
Part 9 General
100 Provisions specific to this jurisdiction
Schedule 2, which contains provisions that are applicable only to this
jurisdiction, has effect.
101 Regulations
(1) The Governor may make regulations, not inconsistent with this Act, for
or with respect to any matter that by this Act is required or permitted to
be prescribed or that is necessary or convenient to be prescribed for
carrying out or giving effect to this Act.
(2) In particular, the Governor may make regulations for or with respect to
the following:
(a) the manner of making any application to the Chief Commissioner
under this Act,
(b) the evidence that the Chief Commissioner may require for the
purpose of determining whether or not:
(i) an employer was an employer for part only of a financial
year, or
(ii) a person was a member of a group at any time or during
any period,
(c) the signing of returns, applications, notices, statements or forms
by or on behalf of employers and deeming any return,
application, notice, statement or form signed on behalf of an
employer to have been signed by the employer,
(d) the authentication of any certificate, notice or other document
issued for the purpose of this Act or any regulation.
(3) A regulation may create an offence punishable by a penalty not
exceeding 20 penalty units.
102 Nature of proceedings for offences
Proceedings for an offence under this Act or the regulations may be
dealt with summarily before a Local Court.
103 Savings, transitional and other provisions
Schedule 3 has effect.
104 Repeal
The Pay-roll Tax Act 1971 is repealed.
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Clause 105 Payroll Tax Bill 2007
Part 9 General
105 Amendment of other Acts
The Acts specified in Schedule 4 are amended as set out in that
Schedule.
106 Review of Act
(1) The Minister is to review this Act to determine whether the policy
objectives of the Act remain valid and whether the terms of the Act
remain appropriate for securing those objectives.
(2) The review is to be undertaken as soon as possible after the period of 5
years from the date of assent to this Act.
(3) A report on the outcome of the review is to be tabled in each House of
Parliament within 12 months after the end of the period of 5 years.
Page 56
Payroll Tax Bill 2007
Calculation of payroll tax liability for financial year commencing 1 July 2007 Schedule 1
and subsequent financial years
Schedule 1 Calculation of payroll tax liability for
financial year commencing 1 July 2007
and subsequent financial years
(Sections 8, 82)
Part 1 Interpretation
1 Definitions
In this Schedule:
financial year means the financial year commencing on 1 July 2007 or
on 1 July in any subsequent financial year.
R is 6%.
relevant financial year means the financial year to which the
calculation of the relevant payroll tax relates.
TA or threshold amount is $600,000.
Part 2 Employers who are not members of a group
2 Application of Part
This Part applies only to an employer who is not a member of a group.
3 Definitions
In this Part:
C is the number of days in the relevant financial year in respect of which
the employer paid or was liable to pay taxable wages or interstate wages
(otherwise than as a member of a group).
IW represents the total interstate wages paid or payable by the employer
concerned (otherwise than as a member of a group) during the relevant
financial year.
TW represents the total taxable wages paid or payable by the employer
concerned (otherwise than as a member of a group) during the relevant
financial year.
Page 57
Payroll Tax Bill 2007
Schedule 1 Calculation of payroll tax liability for financial year commencing 1 July 2007
and subsequent financial years
4 Payroll of employer not more than threshold
An employer is not liable to pay payroll tax for a financial year if the
total taxable wages and interstate wages paid or payable by the
employer (otherwise than as a member of a group) during that year is
not more than the employer's threshold amount, being the amount
calculated in accordance with the following formula:
C-
TA × --------
365
5 Payroll of employer over threshold
If the total taxable wages and interstate wages paid or payable by an
employer (otherwise than as a member of a group) during a financial
year is more than the employer's threshold amount, the employer is
liable to pay as payroll tax for that year the amount of dollars calculated
in accordance with the following formula:
TW - C-
TW ----------------------- × TA × -------- ×R
TW + IW 365
Part 3 Groups with a designated group employer
6 Application of Part
This Part applies only to an employer who is a member of a group for
which there is a designated group employer.
7 Definitions
In this Part:
C is the number of days in the relevant financial year in respect of which
at least one member of the group paid or was liable to pay (as a member
of the group) taxable wages or interstate wages.
GIW represents the total interstate wages paid or payable by the group
concerned during the relevant financial year.
GTW represents the total taxable wages paid or payable by the group
concerned during the relevant financial year.
TW represents the total taxable wages paid or payable by the employer
concerned (as a member of the group) during the relevant financial year.
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Payroll Tax Bill 2007
Calculation of payroll tax liability for financial year commencing 1 July 2007 Schedule 1
and subsequent financial years
8 Payroll of group not more than threshold
None of the members of a group is liable to pay payroll tax for the
financial year if the total taxable wages and interstate wages paid or
payable by the group during that year is not more than the group
threshold amount, being the amount calculated in accordance with the
following formula:
C-
TA × --------
365
9 Payroll of group over threshold
(1) If the total taxable wages and interstate wages paid or payable by a
group during the financial year is more than the group threshold
amount, payroll tax is payable as provided by subclauses (2) and (3).
(2) The designated group employer for the group is liable to pay as payroll
tax for the financial year the amount of dollars calculated in accordance
with the following formula:
GTW - C-
TW -------------------------------- × TA × -------- ×R
GTW + GIW 365
(3) Each member of the group (other than that designated group employer)
is liable to pay as payroll tax for the financial year the amount of dollars
calculated in accordance with the following formula:
TW × R
Part 4 Groups with no designated group employer
10 Application of Part
This Part applies only to an employer who is a member of a group for
which there is no designated group employer.
11 Definitions
In this Part:
TW represents the total taxable wages paid or payable by the employer
concerned (as a member of the group) during the relevant financial year.
12 Calculation of payroll tax
Each member of the group is liable to pay as payroll tax for the financial
year the amount of dollars calculated in accordance with the following
formula:
TW × R
Page 59
Payroll Tax Bill 2007
Schedule 1 Calculation of payroll tax liability for financial year commencing 1 July 2007
and subsequent financial years
Part 5 Motor vehicle allowances
13 Continuous recording method
If an employer selects the continuous recording method for the purposes
of determining the number of business kilometres travelled during the
financial year, the following details are required to be recorded by the
employer:
(a) the odometer readings at the beginning and end of each business
journey undertaken by the person during a financial year by
means of a motor vehicle provided or maintained by the person,
(b) the specific purpose for which each such business journey was
taken,
(c) the distance travelled by the person during the financial year in
the course of all such business journeys (which is taken to be the
number of business kilometres travelled during the financial
year), calculated on the basis of the odometer readings referred to
in paragraph (a).
14 Averaging method
(1) If an employer selects the averaging method for the purposes of
determining the number of business kilometres travelled during the
financial year, the following details are required to be recorded by the
employer:
(a) the odometer readings at the beginning and end of each business
journey undertaken by the person during the relevant 12-week
period by means of a motor vehicle provided or maintained by the
person,
Note. Clause 15 defines the relevant 12-week period.
(b) the specific purpose for which each such business journey was
taken,
(c) the distance travelled by the person during the relevant 12-week
period in the course of all such business journeys, calculated on
the basis of the odometer readings referred to in paragraph (a),
(d) the odometer readings at the beginning and end of the relevant
12-week period for each motor vehicle provided or maintained by
the person for the purpose of undertaking business journeys,
(e) the distance travelled by each such vehicle during the relevant
12-week period, calculated on the basis of the odometer readings
referred to in paragraph (d),
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Payroll Tax Bill 2007
Calculation of payroll tax liability for financial year commencing 1 July 2007 Schedule 1
and subsequent financial years
(f) the distance travelled by the person in the course of business
journeys undertaken by means of each such vehicle during the
relevant 12-week period, calculated as a percentage of the
distance travelled by that vehicle during that period (the relevant
percentage),
(g) the odometer readings at the beginning and end of the financial
year for each vehicle provided or maintained by the person for the
purpose of undertaking business journeys,
(h) the distance travelled by each such vehicle during the financial
year, calculated on the basis of the odometer readings referred to
in paragraph (g),
(i) the distance travelled by the person in the course of business
journeys undertaken by means of each such vehicle during the
financial year (which is taken to be the number of business
kilometres travelled during the financial year), calculated on the
basis that the percentage of that distance that was travelled by the
person in the course of business journeys undertaken by means of
each such vehicle during the financial year is the same as the
relevant percentage.
(2) For the next succeeding 4 financial years after the first financial year in
which odometer details are recorded in accordance with subclause (1),
an employer is not required to calculate the relevant percentage, or
record the details referred to in subclause (1) (a)(f), for the person but
is required to record the other details referred to in that subclause.
(3) Accordingly, for the next succeeding 4 financial years after the first
financial year in which odometer details are recorded in accordance
with subclause (1), the number of business kilometres travelled during
the financial year is to be calculated (as referred to in subclause (1) (i))
on the basis of the relevant percentage calculated for the first financial
year.
(4) Despite subclauses (2) and (3), an employer is required to calculate the
relevant percentage for a financial year, and record the details referred
to in subclause (1) (a)(f), if:
(a) the Chief Commissioner serves a notice on the employer before
the commencement of a financial year during that period
directing the employer to keep the details referred to in subclause
(1) (a)(f) for that financial year, or
(b) the employer wishes to use the recording method referred to in
this clause for one or more additional motor vehicles used by the
person in any financial year or for any other reason.
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Schedule 1 Calculation of payroll tax liability for financial year commencing 1 July 2007
and subsequent financial years
(5) In a situation referred to in subclause (4), the new record for the
financial year replaces the relevant percentage details previously
recorded and subclauses (2) and (3) apply in relation to the new record
for the financial year as if it were the first financial year in which
odometer details were recorded.
(6) An employer who has adopted and employed the method of recording
referred to in subclauses (2) and (3) for a person for 4 successive
financial years must, in the next succeeding financial year, make a fresh
recording of all the details specified in subclause (1) if the employer
intends to continue to use the same method of recording for the person.
Subclauses (2) and (3) then apply in relation to the new record for the
financial year as if it were the first financial year in which odometer
details were recorded.
(7) If the odometer of a motor vehicle is replaced or recalibrated during any
period for which its readings are relevant for the purposes of this clause,
the odometer readings immediately before and after the replacement or
recalibration are to be recorded.
15 Meaning of relevant 12-week period
(1) In clause 14, relevant 12-week period means a continuous period of at
least 12 weeks, selected by the employer, throughout which a motor
vehicle is provided or maintained by a person. If the motor vehicle is
provided or maintained for less than 12 weeks, the period must be the
entire period for which the motor vehicle is provided or maintained.
(2) The period may overlap the start or end of the financial year, so long as
it includes part of the year.
(3) If the averaging method is used for 2 or more motor vehicles for the
same financial year, the odometer readings for those motor vehicles
must cover periods that are concurrent.
16 Replacing one motor vehicle with another motor vehicle
(1) For the purposes of using the averaging method, an employer may
nominate one motor vehicle as having replaced another motor vehicle
with effect from a day specified in the nomination.
(2) After the nomination takes effect, the replacement motor vehicle is
treated as the original motor vehicle, and the original motor vehicle is
treated as a different motor vehicle. An employer need not repeat for the
replacement vehicle the steps already taken for the original motor
vehicle.
(3) An employer must record the nomination in writing in the financial year
in which the nomination takes effect.
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Calculation of payroll tax liability for financial year commencing 1 July 2007 Schedule 1
and subsequent financial years
(4) However, the Chief Commissioner may allow an employer to record the
nomination at a later time.
17 Changing method of recording
(1) An employer may change from using the averaging method to using the
continuous recording method with effect from the beginning of a
financial year if the employer complies with clause 13 in respect of the
financial year.
(2) An employer may change from using the continuous recording method
to using the averaging method with effect from the beginning of a
financial year if the employer complies with clause 14 in respect of the
financial year.
18 Definition
In this Part:
business journey means:
(a) a journey undertaken in a motor vehicle by a person otherwise
than in the application of the vehicle to a private use, being an
application that, if the person is paid a motor vehicle allowance
for that use, results in the provision of a fringe benefit (within the
meaning of the FBTA Act) by the employer, or
(b) a journey undertaken in a motor vehicle by a person in the course
of producing assessable income of the person (within the
meaning of the Income Tax Assessment Act 1936 of the
Commonwealth).
Page 63
Payroll Tax Bill 2007
Schedule 2 NSW specific provisions
Schedule 2 NSW specific provisions
(Sections 8, 100)
Part 1 Introduction
1 Introduction to Schedule
This Schedule sets out provisions that apply only in this jurisdiction.
Part 2 Calculation of payroll tax
2 Calculation by reference to return period
The amount of payroll tax that an employer is required to pay in relation
to a return of wages in respect of a financial year or a part of a financial
year is a proportion (equivalent to the ratio of the number of days to
which the return relates to the number of days in the financial year) of
the payroll tax that would be payable by the employer for the whole of
that year.
3 Amount payable for whole of financial year
For the purposes of this Part, the payroll tax that would be payable by
an employer for the whole of a financial year is to be ascertained on the
basis of the following assumptions:
(a) the assumption that the employer pays or is liable to pay taxable
wages for the whole of the financial year,
(b) the assumption that the total amount of taxable wages paid or
payable by the employer during the financial year is a multiple
(equivalent to the ratio of the number of days in the financial year
to the number of days to which the return relates) of the taxable
wages paid or payable by the employer during the period to
which the return relates.
Part 3 Exemptions
Division 1 Education and training
4 Schools and colleges
Wages are exempt wages if they are paid or payable by a school or
college (other than a technical school or a technical college) that:
(a) provides education at or below, but not above, the secondary
level of education, and
Page 64
Payroll Tax Bill 2007
NSW specific provisions Schedule 2
(b) is carried on by a body corporate, society or association otherwise
than for the purpose of profit or gain to the individual members
of the body corporate, society or association and is not carried on
by or on behalf of the State of New South Wales.
5 Apprentices and trainees--exemption and rebate
(1) Apprentice/trainee wages that are paid or payable before 1 July 2008 are
exempt wages.
(2) An employer by whom apprentice/trainee wages are paid or payable on
or after 1 July 2008 is entitled to a rebate of payroll tax paid in respect
of those wages.
(3) The amount of the rebate in respect of apprentice/trainee wages paid or
payable in a particular period is the amount of the reduction in payroll
tax payable by the employer that would result if the wages paid or
payable by the employer in that period were reduced by the amount of
those apprentice/trainee wages.
(4) A rebate to which an employer is entitled under this clause is payable:
(a) by refunding the amount of the rebate out of payroll tax paid by
the employer, or
(b) by allowing the amount of the rebate as an offset against payroll
tax payable by the employer.
(5) Wages are apprentice/trainee wages if the wages are paid or payable to:
(a) an apprentice within the meaning of the Apprenticeship and
Traineeship Act 2001, or
(b) a trainee within the meaning of the Apprenticeship and
Traineeship Act 2001, other than a trainee who was an employee
of the employer within the period of 3 months before
commencing employment as a trainee, or
(c) a person employed in accordance with a group apprenticeship
scheme or a group traineeship scheme approved for the time
being by the Director-General of the Department of Education
and Training (other than a person employed as referred to in
clause 6).
(6) The regulations may make provision for or with respect to the payment
of a rebate provided for by this clause, including provision for or with
respect to any of the following:
(a) the time for payment of the rebate,
(b) the method of payment of the rebate,
(c) providing for an exemption from any requirement to lodge a
return in respect of apprentice/trainee wages.
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Schedule 2 NSW specific provisions
(7) An approval in force for the purposes of section 10 (1) (m) of the
Pay-roll Tax Act 1971 immediately before the commencement of this
clause lapses on that commencement and has no operation for the
purposes of this clause.
6 Exemption for non-profit group apprenticeship and traineeship schemes
(1) Wages are exempt wages if they are paid or payable to an employee who
is employed:
(a) by a non-profit organisation that is approved by the
Director-General of the Department of Education and Training
for the purposes of this clause, and
(b) in accordance with a group apprenticeship scheme or a group
traineeship scheme approved for the time being by the
Director-General of the Department of Education and Training.
(2) An approval in force for the purposes of section 10 (1) (m) of the
Pay-roll Tax Act 1971 immediately before the commencement of this
clause lapses on that commencement and has no operation for the
purposes of this clause.
Division 2 Health care service providers
7 What is a health care service provider?
For the purposes of Division 3 of Part 4 of this Act, a health care service
provider is:
(a) a public hospital, or
(b) a hospital that is carried on by a society or association otherwise
than for the purposes of profit or gain to the individual members
of the society or association.
8 Crown employees--public hospitals and area health services
Wages paid or payable by the Crown in respect of staff employed in
connection with a public hospital or an area health service are exempt
wages if the wages are paid or payable:
(a) for work of a kind ordinarily performed in connection with the
conduct of public hospitals or of the area health service
concerned, and
(b) to a person engaged exclusively in that kind of work.
9 Home Care Service
Wages paid or payable by the Crown in respect of staff employed under
Chapter 1A of the Public Sector Employment and Management Act
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2002 in the Government Service to enable the Home Care Service to
exercise its functions are exempt wages if the wages are paid or payable:
(a) for work of a kind ordinarily performed in connection with the
conduct of the Home Care Service, and
(b) to a person engaged exclusively in that kind of work.
10 Ambulance Service
Wages paid or payable by the Crown in respect of staff of the NSW
Health Service comprising the Ambulance Service of NSW are exempt
wages if the wages are paid or payable:
(a) for work of a kind ordinarily performed in connection with the
provision of the services provided by the Director-General of the
Department of Health under Chapter 5A (Ambulance services) of
the Health Services Act 1997, and
(b) to a person engaged exclusively in that kind of work.
Division 3 Local government
11 Limitation on local government exemptions
For the purposes of section 60 (2) (e), the following activities are
specified:
(a) the supply of liquefied petroleum gas or hydraulic power and the
supply and installation of associated fittings and appliances and
of pipes and apparatus,
(b) the operation of a transport service,
(c) the supply of building materials,
(d) the operation of a coal mine and the supply and distribution of
coal.
Division 4 Other exemptions
12 Continuation of certain exemptions--religious institutions, public
benevolent institutions, non-profit and charitable organisations
(1) Wages are exempt wages for the purposes of this Act if they are paid or
payable by:
(a) a religious institution, to a person in respect of time when the
person engaged in religious work of the religious institution,
being a religious institution in existence immediately before the
repeal of the Pay-roll Tax Act 1971, or
(b) a public benevolent institution (other than an instrumentality of
the State), to a person in respect of time when the person is
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engaged in work of a public benevolent nature, being a public
benevolent institution in existence immediately before the repeal
of the Pay-roll Tax Act 1971, or
(c) by a non-profit organisation (other than a school or college,
statutory body or an instrumentality of the State) having as one of
its objects a charitable, benevolent, philanthropic or patriotic
purpose, to a person in respect of time when the person is
engaged in charitable, benevolent, philanthropic or patriotic
work of the non-profit organisation, being a non-profit
organisation in existence immediately before the repeal of the
Pay-roll Tax Act 1971, or
(d) by an organisation (other than a school or college, statutory body
or an instrumentality of the State) that:
(i) was, immediately before the repeal of the Charitable
Collections Act 1934, a charity within the meaning of that
Act and registered or exempted from registration under
that Act, and
(ii) has not, since the repeal of that Act, altered its constitution
in so far as its constitution relates to its charitable objects,
to a person in respect of time when the person is engaged in the
charitable work of the organisation, or
(e) by a society or an institution (other than a school or college,
statutory body or an instrumentality of the State) which:
(i) is, in the opinion of the Chief Commissioner, a charitable
society or institution, and
(ii) was immediately before the repeal of the Pay-roll Tax Act
1971 approved by the Chief Commissioner for the
purposes of section 10 (1) (k) of that Act,
to a person in respect of time when the person is engaged in the
charitable work of the society or institution.
(2) Wages are exempt under subclause (1) (c) or (e) only if the organisation,
society or institution concerned has not, since the repeal of the Pay-roll
Tax Act 1971, altered its constitution in so far as its constitution relates
to its charitable, benevolent, philanthropic or patriotic purposes.
13 Exemption for joint government water savings projects
Wages are exempt wages if they are paid or payable by a joint
government enterprise that has the function of allocating funds for water
savings projects.
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Part 4 Government bodies--special provisions
14 Application of Act to certain Divisions of the Government Service
(1) This clause applies in relation to any Division of the Government
Service specified in Part 1 or 2 of Schedule 1 to the Public Sector
Employment and Management Act 2002 in which staff are employed
under Chapter 1A of that Act to enable a statutory corporation to
exercise its functions.
(2) For the purposes of this Act, each Division of the Government Service
to which this clause applies is taken to be a separate employer with
respect to the matters specified in subclause (3). If the Division
concerned comprises separate branches each of which is assigned to a
different statutory corporation, each such branch of the Division is
taken to be a separate employer with respect to the matters specified in
subclause (3) in so far as they relate to that branch.
(3) The matters that are specified for the purposes of subclause (2) are as
follows:
(a) the wages paid or payable to the staff of the Division or branch of
the Division,
(b) any fees or other remuneration paid or payable to the members of
the board or other governing body of the statutory corporation to
which the staff of the Division (or branch of the Division) are
assigned,
(c) any amount paid or payable under a relevant contract (within the
meaning of Division 7 of Part 3) entered into by the statutory
corporation concerned,
(d) if any staff are also employed in a Division of the Government
Service specified in Part 3 of Schedule 1 to the Public Sector
Employment and Management Act 2002 in connection with the
statutory corporation concerned--the wages paid or payable to
the staff of that Division.
15 Grouping of government departments
The persons, groups of persons and bodies specified for the time being
in Column 1 of Schedule 3 to the Public Finance and Audit Act 1983
together constitute a group constituted under Part 5 (Grouping of
employers) of this Act.
16 Grouping of State owned corporations
For the purposes of Part 5 (Grouping of employers) of this Act, a
statutory State owned corporation (within the meaning of the State
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Owned Corporations Act 1989) is not a member of the same group as
another statutory State owned corporation because of section 72.
Part 5 Recovery of payroll tax from principal
contractors
17 Liability of principal contractor for payroll tax payable in respect of
employees of subcontractor
(1) This Part applies if:
(a) a person (referred to in this Part as the principal contractor) has
entered into a contract for the carrying out of work by another
person (referred to in this Part as the subcontractor), and
(b) employees of that subcontractor (referred to in this Part as the
relevant employees) are engaged in carrying out the work, and
(c) the work is carried out in connection with a business undertaking
of the principal contractor.
(2) If, at the end of the period of 60 days after the end of a financial year,
any payroll tax payable by the subcontractor in respect of wages paid or
payable to the relevant employees during the financial year for work
done in connection with the contract has not been paid, the principal
contractor is jointly and severally liable with the subcontractor for the
payment of the payroll tax.
(3) Section 45 of the Taxation Administration Act 1996 (subsection (3)
excepted) applies to an amount payable under this clause.
Note. Section 44 of the Taxation Administration Act 1996 provides that the
amount of tax payable may be recovered by the Chief Commissioner as a debt
to the Chief Commissioner. Section 45 of the Taxation Administration Act 1996
provides that if parties are jointly and severally liable for the payment of an
amount under a taxation law, the Chief Commissioner may recover the amount
payable from any of the parties. It also provides for the recovery of interest,
penalty tax and costs from the parties who are jointly and severally liable for the
payment of the tax.
18 Written statement relieves principal contractor of liability
(1) The principal contractor is not liable under this Part for the payment of
any payroll tax payable in respect of wages paid or payable to the
relevant employees during a period if the principal contractor has been
given a written statement by the subcontractor in respect of that period.
(2) The written statement is a statement comprising the following
statements:
(a) a statement by the subcontractor that the subcontractor is
registered as an employer under this Act or is not required to be
registered under this Act (whichever is applicable),
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(b) a statement by the subcontractor that all payroll tax payable by
the subcontractor in respect of wages paid or payable to the
relevant employees during any period of the contract for work
done in connection with the contract has been paid,
(c) a statement by the subcontractor as to whether the subcontractor
is also a principal contractor in connection with that work,
(d) if the subcontractor is also a principal contractor in connection
with that work, a statement by the subcontractor as to whether the
subcontractor has been given a written statement under this
clause in the capacity of principal contractor in connection with
that work.
(3) The written statement may include any statement made by the
subcontractor for the purposes of section 127 of the Industrial Relations
Act 1996 or a similar provision under any other Act.
(4) The written statement is to be in a form approved by the Chief
Commissioner.
(5) The subcontractor must keep a record of a written statement given to a
principal contractor under this clause.
Note. Section 53 of the Taxation Administration Act 1996 requires the record to
be kept for not less than 5 years after it was made.
(6) The principal contractor may withhold any payment due to the
subcontractor under the contract until the subcontractor gives a written
statement under this clause for any period up to the date of the
statement. Any penalty for late payment under the contract does not
apply to any payment withheld under this subclause.
(7) The written statement is not effective to relieve the principal contractor
of liability under this Part if the principal contractor had, when given the
statement, reason to believe it was false.
(8) A subcontractor who gives the principal contractor a written statement
knowing it to be false is guilty of an offence.
Maximum penalty: 100 penalty units.
19 Right of recovery
The principal contractor is entitled to recover from the subcontractor as
a debt in a court of competent jurisdiction any payment made by the
principal contractor as a consequence of a liability arising under this
Part.
20 Application of Part
(1) This Part does not apply in relation to a contract if the subcontractor is
in receivership or in the course of being wound up or, in the case of an
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individual, is bankrupt and if payments made under the contract are
made to the receiver, liquidator or trustee in bankruptcy.
(2) To avoid doubt, this Part extends to a principal contractor who is the
owner or occupier of a building for the carrying out of work in
connection with the building so long as the building is owned or
occupied by the principal contractor in connection with a business
undertaking of the principal contractor.
Part 6 Miscellaneous
21 Exemption from lodging returns
(1) If the Chief Commissioner is of the opinion that tax will not be payable
by an employer, or, if paid, would be refunded, the Chief Commissioner
may issue a certificate to that employer exempting the employer from
lodging monthly returns in accordance with section 87 and any
employer to whom such a certificate is issued may refrain from lodging
monthly returns but must, unless the contrary is expressed in the
certificate, lodge a return relating to each financial year within 21 days
after the close of that financial year.
(2) A certificate issued under this clause may be either unconditional or
subject to such conditions as are prescribed by the regulations or as the
Chief Commissioner thinks fit.
(3) The Chief Commissioner may, at any time, by notice in writing, revoke
any certificate issued under this clause.
(4) The issue of a certificate under this clause does not exempt an employer
from the payment of any payroll tax, despite the fact that it may have
the effect of postponing the time for payment of any payroll tax.
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Savings, transitional and other provisions Schedule 3
Schedule 3 Savings, transitional and other
provisions
(Section 103)
Part 1 General
1 Regulations
(1) The regulations may contain provisions of a savings or transitional
nature consequent on the enactment of the following Acts:
this Act
(2) Any such provision may, if the regulations so provide, take effect from
the date of assent to the Act concerned or a later date.
(3) To the extent to which any such provision takes effect from a date that
is earlier than the date of its publication in the Gazette, the provision
does not operate so as:
(a) to affect, in a manner prejudicial to any person (other than the
State or an authority of the State), the rights of that person
existing before the date of its publication, or
(b) to impose liabilities on any person (other than the State or an
authority of the State) in respect of anything done or omitted to
be done before the date of its publication.
Part 2 Provisions consequent on enactment of this
Act
2 Definition
In this Part:
old Act means the Pay-roll Tax Act 1971 as in force immediately before
its repeal.
3 Application of this Act and old Act
(1) This Act applies to payroll tax on taxable wages that are paid or payable
on or after 1 July 2007.
(2) Despite its repeal, the old Act continues to apply to payroll tax on
taxable wages (within the meaning of the old Act) paid or payable
before 1 July 2007.
(3) The Taxation Administration Act 1996, as in force immediately before
1 July 2007, continues to apply on an after that day in respect of any
matter to which the old Act continues to apply on and after that day.
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Schedule 3 Savings, transitional and other provisions
4 Exclusion of redundancy and long service contributions as wages
The old Act applies to payroll tax on taxable wages (within the meaning
of the old Act) paid or payable before 1 July 2007 as if section 3AG of
the old Act had never been enacted.
5 Fringe benefits
An election by an employer under section 13A (2) of the old Act that
was in force immediately before 1 July 2007 remains in force on and
after that date for the purposes of this Act as if it were an election made
by the employer under section 16 (1) of this Act.
6 Superannuation contributions relating to pre-1 July 1996 service
(1) Despite anything in section 11 or 17, wages do not include a
superannuation contribution paid or payable in respect of services
performed by an employee before 1 July 1996.
(2) A superannuation contribution that is alleged by an employer to be paid
in respect of services performed by an employee before 1 July 1996
must be evidenced to the satisfaction of the Chief Commissioner in the
employer's records for payroll tax purposes.
(3) In particular, the employer's records must show the manner of
calculation of the contribution and any actuarial basis for it.
(4) For the purposes of subclause (3) and of any assessment of payroll tax
to which that subclause is material, the certificate of a fellow or
accredited member of the Institute of Actuaries of Australia to the effect
that the actuarial basis on which an amount is calculated is justified is
evidence and, in the absence of evidence to the contrary, proof of that
fact.
(5) If records are not kept as required by this clause, the Chief
Commissioner is entitled to assume that a payment of money by an
employer as a superannuation contribution on or after 1 July 1996 is an
amount payable in respect of services performed by an employee on or
after that day.
7 Superannuation payments not readily related to particular employees
For the purposes of an assessment of payroll tax, the Chief
Commissioner may determine:
(a) whether, and the extent to which, any monetary or non-monetary
contribution paid or payable by an employer to a superannuation,
provident or retirement fund or scheme that is not identified by
the employer as paid or payable in respect of a particular
employee (and whether or not purporting to be so paid or payable
on any actuarial basis) is to be regarded as a superannuation
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contribution paid or payable in respect of a particular employee,
and
(b) the portion of any monetary or non-monetary contribution paid
by an employer as a superannuation contribution to a wholly or
partly unfunded fund or scheme, being money paid in respect of
an employee (or that is to be regarded under paragraph (a) to have
been so paid) who performed services to the employer on or after,
as well as before, 1 July 1997, that is to be regarded as having
been paid in respect of services performed before that date.
8 Employment agents
A declaration under section 3C (4) (a) of the old Act that was in force
immediately before 1 July 2007 remains in force on and after that day
for the purposes of this Act as if it were a declaration made under
section 40 (2) of this Act.
9 Designated group employer
The designation of an employer as a designated group employer that
had effect under the old Act immediately before its repeal has effect as
the designation of a designated group employer under this Act.
10 Return lodgment exemption
A certificate in force or deemed to be in force under section 14
(Exemption from furnishing returns) of the old Act immediately before
its repeal is taken to be an approval under Division 2 (Approval of
special tax return arrangements) of Part 6 of the Taxation
Administration Act 1996, and for that purpose is taken to be in terms
appropriate to give it the same effect as it had as a certificate under that
section of the old Act.
11 Redundancy and long service contributions excluded from wages
A contribution to a redundancy benefit scheme or portable long service
leave fund that was paid or payable after 30 June 2006 and that would
(but for this clause) have constituted wages under the old Act because
of the operation of section 3AG of that Act is taken not to have
constituted wages for the purposes of the old Act.
12 Registration of employers
An employer who was registered under section 12 of the old Act
immediately before 1 July 2007 is taken, on and after that day, to be
registered under section 86 of this Act.
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Schedule 3 Savings, transitional and other provisions
13 Agreements to reduce or avoid payroll tax
Sections 42 and 47 extend to an agreement, transaction or arrangement
entered into before the commencement of those sections.
14 Recovery of payroll tax from principal contractors
Part 5 of Schedule 2 extends to contracts entered into before the
commencement of that Part.
15 General saving
Any act, matter or thing that had effect under or for the purposes of a
provision of the old Act, or a provision of another Act repealed by this
Act, immediately before the repeal of the provision continues to have
effect under or for the purposes of the corresponding provision of this
Act, subject to any other provision of this Part or the regulations under
this Part.
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Schedule 4 Amendment of Acts
(Section 105)
4.1 Employment Protection Act 1982 No 122
Section 5 Grouping provisions
Omit "section 16H of the Pay-roll Tax Act 1971" from section 5 (1) (b).
Insert instead "section 79 (Exclusion of persons from groups) of the Payroll
Tax Act 2007".
4.2 Regional Development Act 2004 No 58
[1] Section 4 Definitions
Omit the definitions of group and pay-roll tax from section 4 (1).
Insert instead:
group means a group within the meaning of the Payroll Tax Act
2007.
payroll tax means payroll tax payable under the Payroll Tax Act
2007, excluding additional tax and penal tax imposed by or under
that Act.
[2] Sections 6 and 8
Omit "pay-roll tax" wherever occurring. Insert instead "payroll tax".
[3] Section 14 Disclosure of information
Omit "Pay-roll Tax Act 1971". Insert instead "Payroll Tax Act 2007".
4.3 Taxation Administration Act 1996 No 97
[1] Section 4 Meaning of "taxation laws"
Omit "Pay-roll Tax Act 1971". Insert instead "Payroll Tax Act 2007".
[2] Part 10A Business groups
Omit the Part.
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Schedule 4 Amendment of Acts
4.4 Transport Administration Act 1988 No 109
Section 88ZD
Omit the section. Insert instead:
88ZD Rail authorities and ARTC not grouped for payroll tax purposes
For the purposes of the Payroll Tax Act 2007, a rail authority and
ARTC do not constitute a group merely because of an
arrangement entered into for the purposes of Division 5.
4.5 Workers Compensation Act 1987 No 70
[1] Section 175D Grouping of employers
Omit the definition of group from section 175D (1).
Insert instead:
group means a group constituted under Division 2B, but does not
include any member of the group in respect of whom a
determination under section 175E is in force.
[2] Section 175D (2) (b)
Omit "section 106J of the Taxation Administration Act 1996".
Insert instead "section 175Q".
[3] Section 175F Grounds for excluding employers from group
Omit section 175F (1) (a) and (b). Insert instead:
(a) an employer who would, but for the determination, be a
member of a group arising under section 175N (Primary
groups arising from the use of common employees),
(b) an employer that carries on a business as trustee of a trust
and would, but for the determination, be a member of a
group arising under section 175O (Primary groups of
commonly controlled businesses),
[4] Section 175F (2)
Omit the subsection. Insert instead:
(2) In the case of an employer referred to in subsection (1) (b), the
determination may be made only if the Authority is satisfied that
the employer would, but for the determination, be a member of a
group with a person who carries on another business because of
the application of one (but not more than one) of the following
grouping principles:
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(a) the exclusive ownership grouping principle (section 175O
(2) (a) and (b)),
(b) the corporate grouping principle (section 175O (2) (c) and
(d) and (3)),
(c) the common beneficiary grouping principle (section 175O
(2) (e) and (f) and (5)(8)).
[5] Part 7, Division 2B
Insert after Division 2A of Part 7:
Division 2B Constitution of employer groups
175K Definitions
In this Division:
business means:
(a) a profession or trade, or
(b) any other activity carried on for fee or reward, or
(c) the activity of employing persons to perform duties in
connection with another business, or
(d) the carrying on of a trust,
whether carried on by 1 person or 2 or more persons together.
primary group means a primary group constituted under section
175M, 175N, 175O, 175P, 175Q or 175R.
175L Membership of groups
A group is constituted by all the persons or bodies forming a
primary group that is not a part of any larger primary group.
175M Primary groups of corporations
(1) Corporations constitute a primary group if they are related
corporations within the meaning of the Corporations Act 2001 of
the Commonwealth.
(2) For the purpose of assessing whether corporations are related
under that Act, they are taken to carry on a business and not to be
trustee companies.
175N Primary groups arising from the use of common employees
(1) If 2 persons have an agreement under which an employee of 1 of
them works solely or mainly in connection with a business
carried on by:
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(a) the other, or
(b) both of them,
then the 2 persons constitute a primary group.
(2) In this section:
agreement means an agreement, arrangement or undertaking,
whether formal or informal, whether express or implied, and
whether or not the agreement, arrangement or undertaking
includes provisions in respect of the supply of goods or services.
person includes a set of persons.
Note. Section 175E allows the Authority to exclude persons from a
group constituted under this section in certain circumstances.
175O Primary groups of commonly controlled businesses
(1) If a person or set of persons has a controlling interest in each of 2
businesses, the persons who carry on those businesses constitute
a primary group.
Note. Section 175E allows the Authority to exclude persons from a
group constituted under this section in certain circumstances.
(2) For the purposes of this section, a person or set of persons has a
controlling interest in a business if:
(a) in the case of 1 person--the person is the sole owner
(whether or not as trustee) of the business, or
(b) in the case of a set of persons--the persons are together the
exclusive owners (whether or not as trustees) of the
business, or
(c) in the case of a business carried on by a corporation:
(i) the person or each of the set of persons is a director
of the corporation and the person or set of persons is
entitled to exercise more than 50% of the voting
power at meetings of the directors of the
corporation, or
(ii) a director or set of directors of the corporation that
is entitled to exercise more than 50% of the voting
power at meetings of the corporation is under an
obligation, whether formal or informal, to act in
accordance with the direction, instructions or
wishes of that person or set of persons, or
(d) in the case of a business carried on by a corporation that
has a share capital--that person or set of persons can,
directly or indirectly, exercise, control the exercise of, or
substantially influence the exercise of, more than 50% of
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the voting power attached to the voting shares issued by
the corporation, or
(e) in the case of a business carried on by a partnership--that
person or set of persons:
(i) own (whether beneficially or not) more than 50% of
the capital of the partnership, or
(ii) is entitled (whether beneficially or not) to more than
50% of the profits of the partnership, or
(f) in the case of a business carried on under a trust--the
person or set of persons (whether or not as a trustee or
trustees of another trust) is the beneficiary in respect of
more than 50% of the value of the interests in the
first-mentioned trust.
(3) If:
(a) 2 corporations are related to each other within the meaning
of the Corporations Act 2001 of the Commonwealth, and
(b) 1 of the corporations has a controlling interest in a
business,
the other corporation has a controlling interest in the business.
(4) If:
(a) a person or set of persons has a controlling interest in a
business, and
(b) a person or set of persons who carry on the business has a
controlling interest in another business,
the person or set of persons referred to in paragraph (a) has a
controlling interest in that other business.
(5) If:
(a) a person or set of persons is the beneficiary of a trust in
respect of more than 50% of the value of the interests in the
trust, and
(b) the trustee of the trust (whether alone or together with
another trustee or trustees) has a controlling interest in a
business of the trust,
the person or set of persons has a controlling interest in the
business.
(6) A person who may benefit from a discretionary trust as a result of
the trustee or another person, or the trustee and another person,
exercising or failing to exercise a power or discretion, is taken,
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Schedule 4 Amendment of Acts
for the purposes of subsection (5), to be a beneficiary in respect
of more than 50% of the value of the interests in the trust.
(7) If:
(a) a person or set of persons has a controlling interest in the
business of a trust, and
(b) the trustee of the trust (whether alone or together with
another trustee or trustees) has a controlling interest in the
business of a corporation,
the person or set of persons is taken to have a controlling interest
in the business of the corporation.
(8) If:
(a) a person or set of persons has a controlling interest in the
business of a trust, and
(b) the trustee of the trust (whether alone or together with
another trustee or trustees) has a controlling interest in the
business of a partnership,
the person or set of persons is taken to have a controlling interest
in the business of the partnership.
(9) Subsection (1) does not apply in relation to a person or set of
persons that has a controlling interest in 2 businesses if:
(a) in the case of 1 person--the businesses are wholly owned
by the person, whether as trustee or otherwise, or
(b) in the case of a set of persons--the businesses are wholly
owned by the persons as trustees.
(10) A statutory State owned corporation (within the meaning of the
State Owned Corporations Act 1989) is not a member of the same
group as another statutory State owned corporation because of
this section.
175P Primary groups arising from tracing of interests in corporations
(1) An entity and a corporation form part of a primary group if the
entity has a controlling interest in the corporation.
(2) For the purposes of this section, an entity has a controlling
interest in a corporation if the corporation has share capital and:
(a) the entity has a direct interest in the corporation and the
value of that direct interest exceeds 50%, or
(b) the entity has an indirect interest in the corporation and the
value of that indirect interest exceeds 50%, or
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(c) the entity has an aggregate interest in the corporation and
the value of the aggregate interest exceeds 50%.
(3) Schedule 2 has effect.
Note. Schedule 2 sets out the manner for determining whether an entity
has a direct interest, indirect interest or aggregate interest in a
corporation, and the value of such an interest.
(4) In this section:
associated person has the meaning given by the Duties Act 1997.
entity means:
(a) a person, or
(b) a group of associated persons.
175Q Grouping of government departments
The persons, groups of persons and bodies specified for the time
being in Column 1 of Schedule 3 to the Public Finance and Audit
Act 1983 together constitute a primary group.
175R Smaller primary groups subsumed by larger groups
If a person is a member of 2 or more primary groups, the
members of all the groups together constitute a primary group.
175S Grouping provisions to operate independently
The fact that a person is not a member of a primary group
constituted under a provision of this Division does not prevent
that person from being a member of a primary group constituted
under another provision of this Division.
[6] Schedule 2
Insert after Schedule 1:
Schedule 2 Employer groups--tracing of
interests in corporations
(Section 175P)
1 Application
This Schedule applies for the purposes of section 175P.
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2 Direct interest
(1) An entity has a direct interest in a corporation if:
(a) in the case of an entity that is a person--the person can,
directly or indirectly, exercise, control the exercise of, or
substantially influence the exercise of, the voting power
attached to any voting shares issued by the corporation, or
(b) in the case of an entity that is a group of associated
persons--each of the associated persons can, directly or
indirectly, exercise, control the exercise of, or
substantially influence the exercise of, the voting power
attached to any voting shares issued by the corporation.
(2) The value of the direct interest of the entity in the corporation is
the proportion (expressed as a percentage) of the voting power of
all voting shares issued by the corporation that:
(a) in the case of an entity that is a person--the person can
directly or indirectly exercise, control the exercise of, or
substantially influence the exercise of, as referred to in
subclause (1), or
(b) in the case of an entity that is a group of associated
persons--the associated persons can, if acting together,
directly or indirectly exercise, control the exercise of, or
substantially influence the exercise of, as referred to in
subclause (1).
3 Indirect interest
(1) An entity has an indirect interest in a corporation if the
corporation is linked to another corporation (the directly
controlled corporation) in which the entity has a direct interest.
(2) A corporation is linked to a directly controlled corporation if the
corporation is part of a chain of corporations:
(a) that starts with the directly controlled corporation, and
(b) in which a link in the chain is formed if a corporation has
a direct interest in the next corporation in the chain.
(3) The following are examples of how subclauses (1) and (2) work
(the examples are cumulative):
(a) Example 1
Corporation A (a directly controlled corporation) has a
direct interest in corporation B. Corporations A and B form
part of a chain of corporations, and corporation B is linked
to corporation A. Accordingly, an entity that has a direct
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interest in corporation A also has an indirect interest in
corporation B.
(b) Example 2
Corporation B also has a direct interest in corporation C. In
this case, corporations A, B and C form part of a chain of
corporations. Both corporations B and C are linked to
corporation A. The entity that has a direct interest in
corporation A has an indirect interest in both corporations
B and C.
(c) Example 3
Corporation B also has a direct interest in corporation D.
There are now 2 chains of corporations, one consisting of
A, B and C, and one consisting of A, B and D.
Corporations B, C and D are all linked to corporation A
and an entity that has a direct interest in corporation A
would have an indirect interest in corporations B, C and D.
An entity that has a direct interest in corporation B would
have an indirect interest in corporations C and D.
However, an entity that has a direct interest in corporation
C only would not have an indirect interest in corporation
D, as corporation D is not linked to corporation C.
(4) The value of the indirect interest of an entity in a corporation (an
indirectly controlled corporation) that is linked to a directly
controlled corporation is calculated by multiplying together the
following:
(a) the value of the direct interest of the entity in the directly
controlled corporation,
(b) the value of each direct interest that forms a link in the
chain of corporations by which the indirectly controlled
corporation is linked to the directly controlled corporation.
(5) The following are examples of how subclause (4) works (the
examples are cumulative):
(a) Example 1
An entity has a direct interest (with a value of 80%) in
corporation A. Corporation A has a direct interest (with a
value of 70%) in corporation B. The value of the indirect
interest of the entity in corporation B is 80% × 70% (that
is, 56%). Accordingly, in this example the entity has a
controlling interest (within the meaning of section 175P) in
corporation B.
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(b) Example 2
Corporation B also has a direct interest (with a value of
40%) in corporation C. The value of the indirect interest of
the entity in corporation C is 80% × 70% × 40% (that is,
22.4%). Accordingly, in this example the entity does not
have a controlling interest in corporation C.
(6) It is possible for an entity to have more than one indirect interest
in a corporation. This may occur if the corporation is linked to
more than one corporation in which the entity has a direct
interest, or if the corporation is linked to only one corporation in
which the entity has a direct interest but is linked through more
than one chain of corporations. In that case, the entity has an
aggregate interest in the corporation (see clause 4).
4 Aggregation of interests
(1) An entity has an aggregate interest in a corporation if:
(a) the entity has a direct interest and one or more indirect
interests in the corporation, or
(b) the entity has more than one indirect interest in the
corporation.
(2) The value of the aggregate interest of an entity in a corporation is
the sum of the following:
(a) the value of the direct interest (if any) of the entity in the
corporation,
(b) the value of each indirect interest of the entity in the
corporation.
(3) For example:
An entity has a direct interest (with a value of 40%) in
corporation B.
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The entity also has a direct interest (with a value of 25%) in
corporation A, which in turn has a direct interest (with a value of
60%) in corporation B. Accordingly, the entity also has an
indirect interest in corporation B with a value of 15% (that is,
25% × 60%).
The value of the entity's aggregate interest in corporation B is the
sum of the direct interest (40%) and the indirect interest (15%),
which is 55%.
Accordingly, in this example, the entity has a controlling interest
in corporation B (within the meaning of section 175P).
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