State Revenue Legislation Amendment (Budget) Bill 2002

Explanatory note
This explanatory note relates to this Bill as introduced into Parliament.


This Bill is cognate with the Appropriation Bill 2002.




Overview of Bill



The objects of this Bill are:

(a) in relation to pay-roll tax:

(i) to exempt, on and from 1 July 2002, the wages of all apprentices in New South Wales from pay-roll tax, and
        (ii) to broaden the pay-roll tax base by removing, on and from 1 July 2002, the concessions for fringe benefits and eligible termination payments, and
(b) to abolish bookmaker’s turnover tax on and from 31 March 2002, and
(c) to reduce the Class 1 duty rate on premiums paid for general insurance from 10% to 5% on and from 1 August 2002.

Outline of provisions


Clause 1 sets out the name (also called the short title) of the proposed Act.

Clause 2 provides for the commencement of the proposed Act on various days in order to give effect to the measures described in the Overview.

Clause 3 is a formal provision giving effect to the amendment to the Apprenticeship and Traineeship Act 2001 set out in Schedule 1.

Clause 4 is a formal provision giving effect to the amendment to the Betting Tax Act 2001 set out in Schedule 2.

Clause 5 is a formal provision giving effect to the amendments to the Duties Act 1997 set out in Schedule 3.

Clause 6 is a formal provision giving effect to the amendments to the Pay-roll Tax Act 1971 set out in Schedule 4.

Clause 7 is a formal provision giving effect to the amendments to the Racing Administration Act 1998 set out in Schedule 5.

Clause 8 is a formal provision giving effect to the amendment to the Taxation Administration Act 1996 set out in Schedule 6.

Schedules 1–6
Pay-roll tax—wages of apprentices
Schedule 4 [4] exempts from pay-roll tax wages paid to an apprentice within the meaning of the Apprenticeship and Traineeship Act 2001. Schedule 4 [10] (proposed clause 12) applies the exemption to wages that are paid or payable for services performed or rendered on or after 1 July 2002. Schedule 4 [5] provides that the exemption ceases if an application made to the Commissioner for Vocational Training for the approval of the apprenticeship to which an apprenticeship contract applies is dismissed. Schedule 4 [6] makes a consequential amendment.

Schedule 1 makes a consequential amendment to the Apprenticeship and Traineeship Act 2001 , and Schedule 6 makes a consequential amendment to the Taxation Administration Act 1996, to enable relevant information to be exchanged between the Chief Commissioner of State Revenue and the Commissioner for Vocational Training as to the existence of an apprenticeship.

Pay-roll tax—fringe benefits and eligible termination payments
From 1 July 2002, the pay-roll tax base is to be broadened by removing the concessions for fringe benefits and eligible termination payments.

As to fringe benefits, Schedule 4 [3] substitutes section 9 of the Pay-roll Tax Act 1971 to provide that the value of taxable wages, comprising a fringe benefit, is to be determined on the basis of the grossed up, or tax inclusive, value of the fringe benefit rather than on the pre-grossed up value. Schedule 4 [7] and [8] make consequential amendments.

As to eligible termination payments, Schedule 4 [1] and [2] amend the definition of wages in the Pay-roll Tax Act 1971 to include as taxable wages eligible termination payments that would be included in the assessable income of an employee under Subdivision AA of Division 2 of Part III of the Income Tax Assessment Act 1936 of the Commonwealth if the whole of the eligible termination payment had been paid to the employee.

Pay-roll tax—savings and transitional provisions
Schedule 4 [10] includes transitional provisions that describe the application of the amendments made elsewhere in the Schedule. Schedule 4 [9] enables the making of regulations of a savings or transitional nature that may be found to be necessary or convenient as a consequence of the amendments.

Bookmaker’s turnover tax
Schedule 2 inserts section 5A into the Betting Tax Act 2001 to abolish race betting tax (horse, harness and greyhound racing) and sports betting tax on a bookmaker’s turnover on and from 31 March 2002.

Schedule 5 makes consequential amendments to the Racing Administration Act 1998. For example, the State bookmakers tax authority that is required to be held by a person in order to carry on business as a bookmaker is to be renamed the “State bookmakers authority”(Schedule 5 [1] and [9]) and the application fee for such an authority is removed (Schedule 5 [3] and [4]). The Chief Commissioner of State Revenue ceases to be a member of the Bookmakers Revision Committee (Schedule 5 [2]). New grounds are provided for the revocation of a State bookmakers authority (Schedule 5 [5] and [6]). Other requirements are imposed requiring the keeping of records by bookmakers of betting turnover details and the furnishing of returns (Schedule 5 [7]). Schedule 5 [8] enables the making of regulations of a savings or transitional nature that may be found to be necessary or convenient as a consequence of the amendments.

General insurance duty
Under section 233 of the Duties Act 1997, general insurance (being all New South Wales related insurance other than life insurance) is divided into 3 classes. Duty is charged at different rates on the amount of the premium paid for a contract of insurance depending on its class. The rates are 10% for Class 1 insurance, 5% for Class 2 insurance and 2.5% for Class 3 insurance. Schedule 3 [1] (substituted section 234) reduces the rate for Class 1 insurance from 10% to 5%. Consequently, Schedule 3 [1] (substituted section 233) combines Class 1 insurance and Class 2 insurance (for which the duty rates are now the same) and calls the resulting category of insurance “Type A insurance”. Class 3 insurance (for which the rate of duty is not changed) is called “Type B insurance”. Schedule 3 [2]–[5] make consequential amendments. Schedule 3 [7] provides that the amendments have effect only in relation to premiums paid on or after 4 June 2002 for contracts of insurance, and renewals, that take effect on or after 1 August 2002. Schedule 3 [6] enables the making of regulations of a savings or transitional nature that may be found to be necessary or convenient as a consequence of the amendments.

Note: If this Bill is not modified, these Explanatory Notes would reflect the Bill as passed in the House. If the Bill has been amended by Committee, these Explanatory Notes may not necessarily reflect the Bill as passed.

 

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