Northern Territory Explanatory Statements

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PAY-ROLL TAX AMENDMENT BILL 2007


2007

LEGISLATIVE ASSEMBLY OF THE
NORTHERN TERRITORY

TREASURER

PAY-ROLL TAX AMENDMENT BILL 2007
SERIAL NO. Serial 110

EXPLANATORY STATEMENT


GENERAL OUTLINE

This Bill seeks to amend the Pay-roll Tax Act and makes consequential amendments to the Pay-roll Tax Regulations. These changes made by the Bill take effect from 1 January 2008, the same date as the new Taxation Administration Act commences.

A key aim of the new Taxation Administration Act is to standardise practices for payroll tax and stamp duties, and to include them in one Act, in order to provide a simpler taxation administration framework for taxpayers, practitioners and administrators.

In that regard, the Pay-roll Tax Act is being amended to align it with the new Taxation Administration Act. Many administrative provisions previously provided for by the Pay-roll Tax Act are now regulated by the Taxation Administration Act, requiring the removal of those provisions from the Pay-roll tax Act.

Changes have also been made to the Pay-roll Tax Act to provide for consistent terminology with the Taxation Administration Act.

NOTES ON CLAUSES

Clause 1. Short title

This is a formal clause that provides for the citation of this Act. When passed, this Act may be referred to as the Pay-roll Tax Amendment Act 2007.

Clause 2. Commencement

This clause provides for the Pay-roll Tax Amendment Act 2007 to commence on 1 January 2008, the same date as the new Taxation Administration Act.

Clause 3. Act amended

This clause provides that the Pay-roll Tax Amendment Act 2007 amends the Pay-roll Tax Act.

Clause 4. New section 2A

This clause inserts a new section 2A which provides that the Pay-roll Tax Act and the Taxation Administration Act should be read as if they are one Act.

The insertion of this section aligns the Pay-roll Tax Act with the new Taxation Administration Act.

Clause 5. Amendment of section 3 (Interpretation)

This clause makes a number of amendments to section 3 of the Pay-roll Tax Act.

Subclause (1) removes the following definitions from section 3(1) of the Pay-roll Tax Act: "approved designated group employer", "approved member", "corresponding law", "interstate wages", "return period", "tax", and "the Commissioner".

Subclause (2) inserts the following definitions into section 3(1) of the Pay-roll Tax Act: "approved designated group employer", "associate", "corresponding pay-roll tax law", "interstate wages", “labour hire agent”, “related” and "return period".

These are all consequential amendments required to effect the new taxation administration arrangements and to accommodate other amendments made to the Pay-roll Tax Act.

Subclause (3) removes sections 3(5) and 3(6) of the Pay-roll Tax Act and replaces these with new sections 3(5), (6) and (7).

New sections 3(5) and 3(6) replicate the operation of the former section 3(5).

New section 3(7) provides that terms defined in the Taxation Administration Act have the same meaning when used in the Pay-roll Tax Act, unless another meaning is intended. This is required because the Pay-roll Tax Act and the Taxation Administration Act are now read together as one Act.

Clause 6. Repeal of Part II

This clause repeals Part II of the Pay-roll Tax Act, comprising sections 4A and 5. Section 4A contained the Commissioner’s authority to delegate powers and functions under the Pay-roll Tax Act. Section 5 regulated the confidentiality of information acquired by an officer.

Part II is no longer required, as section 14 of the Taxation Administration Act now provides for the Commissioner’s authority to delegate powers and functions under the taxation laws and Part 10 of the Taxation Administration Act regulates the confidentiality of information.

Clause 7. Amendment of section 6 (Pay-roll tax)

This clause replaces the term ‘corresponding law’ in section 6(3)(c) with ‘corresponding pay-roll tax law’. This is a consequential amendment arising from the changes in definitions made by clause 5.

Clause 8. Amendment of section 10A (Annual adjustments)

This clause substitutes sections 10A(2) and (3) of the Pay-roll Tax Act with new sections 10A(2) and (3). These sections replicate the operation of the former sections 10A(2) and (3), but have been changed to remove redundant references. In addition, the new section 10A(3) acknowledges that the administration of refunds now falls under the Taxation Administration Act.

Clause 9. Amendment of section 11 (Adjustment if employer ceases to pay taxable wages or joins group)

This clause substitutes section 11(2) of the Pay-roll Tax Act with a new section 11(2). The section has been amended to be consistent with the Taxation Administration Act (for example, the term ‘lodge’ is now consistently used in preference to ‘furnish’, when referring to the supply of returns) and to make it easier to read.

Clause 10. Amendment of section 11B (Arrangement for avoidance of tax by labour hire agents)

This clause replaces the definition of ‘client’ in section 11B(6) of the Pay-roll Tax Act with a new definition of ‘client’. This amendment simplifies that definition by replacing the references to various related parties with a reference to “associate”, which is a new definition inserted into the Pay-roll Tax Act by clause 5 (referring to the definition of “associate” in the new Stamp Duty Act).

Clause 11. Repeal of note for Part III

This clause repeals the note at the end of Part III of the Pay-roll Tax Act. The note previously directed readers to Part V of the Taxation (Administration) Act, relating to objections and appeals, as the Taxation (Administration) Act and the Pay-roll Tax Act were not read together as a single Act. The note is no longer required because the Taxation Administration Act and Pay-roll Tax Act are now read together as a single Act, making it clear that the objection and appeal provisions in Part 11 of the Taxation Administration Act apply.

Clause 12. Amendment of section 12 (Registration)

This clause makes a number of amendments to section 12 of the Pay-roll Tax Act.

Subclauses (1) and (2) make a minor amendment to sections 12(1) and 12(1B) by removing references to ‘in accordance with a form, and in a manner determined by the Commissioner’. This is because section 45 of the Taxation Administration Act makes it clear that returns, statements and applications required to be lodged with the Commissioner are required to be in a form approved by the Commissioner.

Subclause (3) removes section 12(2) from the Pay-roll Tax Act because it is an old transitional provision that is now redundant.

Clause 13. Repeal and substitution of sections 12A to 17

This clause replaces sections 12A to 17 of the Pay-roll Tax Act with new sections 13 and 14. These are consequential amendments arising from the introduction of the Taxation Administration Act.

The Taxation Administration Act now provides the general rules for returns and special tax return arrangements, requiring the removal of some of the former sections in the Pay-roll Tax Act that are now redundant.

New section 13 provides the administrative rules relating to returns and the payment of payroll tax that is specific to the Pay-roll Tax Act.

Section 13(1) replicates the operation of the former section 13(1) by providing that a registered employer or employer required to be registered must lodge a return and pay payroll tax within 21 days after the end of each return period (which is each calendar month unless a special tax return arrangement has been approved).

Section 13(2) replicates the operation of the former section 13(1AA) by providing that an approved designated group employer must lodge a return and pay payroll tax for all members of the group within 21 days after the end of each return period (which is each calendar month unless a special tax return arrangement has been approved).

Section 13(3) replicates the operation of the former section 12B by providing that if an approved designated group employer lodges a return and pays tax for all members of the group in accordance with section 13(2), a member of that group will be considered to have lodged a return and paid tax in accordance with section 13(1).

Section 13(4) replicates the operation of the former section 13(1A) by providing that the value of fringe benefits to be included in a return is to be calculated in accordance with the Pay-roll Tax Regulations.

Section 13(5) confirms that the requirements of section 13 to lodge a return or pay tax can be changed under the Taxation Administration Act, which sets out the general rules for special tax return arrangements.

New section 14 replicates the operation of the former section 15 by providing that the Commissioner may, by notice, require an employer or other person to lodge a return containing information specified in the notice. The section has been amended to be consistent with terminology used in the Taxation Administration Act and to make it easier to read.

Clause 14. Repeal and substitution of section 17B

This clause substitutes section 17B of the Pay-roll Tax Act with a new section 17B. The new section replicates the operation of the former section 17B and has been rewritten to use the defined term “related”.

Clause 15. Amendment of section 17D (Grouping of commonly controlled businesses)

This clause substitutes section 17D(4) of the Pay-roll Tax Act with a new section 17D(4). The new section replicates the operation of the former section 17D(4) and has been rewritten to use the defined term “related”.

Clause 16. Amendment of section 17J (Designated group employer)

This clause makes a number of amendments to section 17J of the Pay-roll Tax Act.

Subclause (1) replaces sections 17J(1) to (1C) of the Pay-roll Tax Act with new sections 17(1), (1A), and (1B). The new sections have the same operation as the former provisions and have been written to make them easier to read and to better align with the Taxation Administration Act. For example, it is unnecessary to refer to applications being in a form approved by the Commissioner, as this is regulated by the Taxation Administration Act.

New section 17J(1) provides that the Commissioner must designate a person to be the designated group employer for a group of employers, if the members of that group apply to the Commissioner.

New section 17J(1A) provides that the members of a group may nominate an amount to be deducted from their taxable wages for each return period for the purposes of calculating payroll tax. That amount is calculated in accordance with section 8 of the Pay-roll Tax Act, but cannot be greater than the “prescribed amount” in section 8(1).

New section 17J(1B) provides that where the members of a group do not select a member to be the group’s designated group employer, the Commissioner may choose a member of the group to be the designated group employer for the group.

It also provides that where the members of a group do not nominate an amount to be deducted from taxable wages for each return period (in accordance with new section 17J(1A)) that the Commissioner may nominate such an amount.

Subclause (2) substitutes section 17J(2)(b) of the Pay-roll Tax Act with a new section 17J(2)(b). The new section replicates the operation of the former section 17J(2)(b) and has been rewritten to make it easier to read and to align with the Taxation Administration Act.

Subclause (3) substitutes section 17J(2A)(a) of the Pay-roll Tax Act with a new 17J(2A)(a). The new section replicates the operation of the former section 17J(2A)(a) and aligns with the operation of the Taxation Administration Act.

Clause 17. Amendment of section 17K (Annual adjustments)

This clause makes a number of amendments to section 17K of the Pay-roll Tax Act by replacing sections 17K(4A) to (8) of the Pay-roll Tax Act with new sections 17K(5) and (6).

The new sections replicate the operation of the former sections 17K(4A), (5) and (6), but have been changed to remove redundant references. In addition, the new section 17K(6) acknowledges that the administration of refunds now falls under the Taxation Administration Act.

The former section 17K(7) is no longer required, as the joint and several liability of group members is now provided for in section 58 of the Taxation Administration Act.

Similarly, the former section 17K(8) is no longer required, as there is no requirement for an application to be made for a refund of tax under the new section 17K(6).

Clause 18. Amendment of section 17L (Adjustment if group ceases to pay taxable wages or interstate wages)

This clause makes a number of amendments to section 17L of the Pay-roll Tax Act.

Subclause (1) substitutes section 17L(4) of the Pay-roll Tax Act with a new section 17L(4). The new section replicates the operation of the former section 17L(4), but has been amended to align with the operation of the Taxation Administration Act and to make it easier to read.

Subclause (2) amends section 17L(5) to remove a reference to section 17K(4A), as that section has been repealed by clause 17.

Subclause (3) removes section 17L(6), as the joint and several liability of group members is now provided for in section 58 of the Taxation Administration Act.

Clause 19. Repeal of note for Part IVA

This clause repeals the note at the end of Part IVA of the Pay-roll Tax Act. The note previously directed readers to Part V of the Taxation (Administration) Act, relating to objections and appeals, as the Taxation (Administration) Act and the Pay-roll Tax Act were not read together as a single Act. The note is no longer required because the Taxation Administration Act and Pay-roll Tax Act are now read together as a single Act, making it clear that the objection and appeal provisions in Part 11 of the Taxation Administration Act apply.

Clause 20. Repeal of Part V, VII and VIII

This clause repeals Parts V, VII and VIII of the Pay-roll Tax Act that have been made redundant by the Taxation Administration Act.

· Part V (sections 18 to 34) of the Pay-roll Tax Act contained provisions dealing with the collection and recovery of tax. Part 7 of the Taxation Administration Act now sets out provisions dealing with the payment and recovery of tax.

· Part VII (sections 37 to 43) of the Pay-roll Tax Act contained provisions dealing with penalty tax and offences. Part 8 of the Taxation Administration Act now sets out general offences for the taxation laws, including the Pay-roll Tax Act. Similarly, Part 5 of the Taxation Administration Act sets out the interest and penalty tax provisions.

· Part VIII (sections 44 to 57) of the Pay-roll Tax Act contained provisions dealing with taxation prosecutions. Part 13 of the Taxation Administration Act now regulates taxation prosecutions.

Clause 21. Amendment of section 58 (Public officers of companies and partnerships)

This clause amends section 58(2) of the Pay-roll Tax Act by removing the words ‘in writing’ because the Taxation Administration Act provides that a ‘notice’ means ‘written notice’.

Clause 22. Amendment of section 59 (Agents and trustees)

This clause amends section 59(1)(b), (c) and (f) of the Pay-roll Tax Act by replacing the word ‘furnish’ with the word ‘lodge’. The word ‘lodge’ is now used consistently throughout the Pay-roll Tax Act and the Taxation Administration Act when referring to the supply of returns.

Clause 23. Repeal of sections 60 to 62

This clause repeals sections 60, 61 and 62 of the Pay-roll Tax Act that have been made redundant by the new Taxation Administration Act.

Section 60 of the Pay-roll Tax Act previously regulated persons in receipt or control of money for another person that resided outside of Australia. Section 60 of the Taxation Administration Act provides general rules for the recovery of tax from third parties.

Section 61 of the Pay-roll Tax Act previously set out requirements pertaining to the preservation of books and accounts. Part 8 of the Taxation Administration Act now regulates record keeping.

Section 62 of the Pay-roll Tax Act previously regulated the powers of taxation officers to access books, documents and other papers. Part 9 of the Taxation Administration Act sets out the general investigatory powers of ‘authorised officers’.

Clause 24. Repeal and substitution of section 64

This clause substitutes section 64 of the Pay-roll Tax Act with a new section 64. The new section replicates the operation of the former section 64, but has been amended to make it easier to read and is in accordance with contemporary drafting style.

Clause 25. Amendment of Pay-roll Tax Regulations

This clause provides a schedule that amends the Pay-roll Tax Regulations. These are consequential amendments arising from amendments to the Pay-roll Tax Act and the introduction of the Taxation Administration Act. The amendments either remove regulations that duplicate provisions of the Taxation Administration Act (and are therefore unnecessary) or update legislative references.

 

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