TERRITORY INSURANCE OFFICE AMENDMENT BILL 1998 Second Reading Speech

Northern Territory Second Reading Speeches

TERRITORY INSURANCE OFFICE AMENDMENT BILL 1998

(This an uncorrected proof of the daily report. It is made available under the condition that it is recognised as such.)

(This is an uncorrected proof of the daily report. It is made available on the condition that it is recognised as such.)

Bill presented and read a first time.

Mr REED (Treasurer): Madam Speaker, I move that the bill be now read a second time.

The purpose of this bill is to amend the Territory Insurance Office Act to provide for the equivalent of Commonwealth income tax and sales tax to be paid to the consolidated revenue account, in accordance with the Northern Territory tax equivalents regime. In March 1994, the Commonwealth, states and territories, signed a statement of policy intent on the taxation treatment of government trading enterprises. Under the agreement, the Commonwealth agreed to unequivocally exempt all state and territory trading enterprises from Commonwealth income tax and sales tax. In return, states and territories agreed to impose the equivalent of these taxes on their own trading enterprises.

The agreement was necessary because here was increasing uncertainty as to whether state and territory trading enterprises fell within the Commonwealth tax exemption provisions that existed at the time. The solution adopted has allowed the states and territories to keep control of this potentially large revenue source, but ensured that government- owned trading entities face no competitive advantage compared to the private sector as a result of being exempt from Commonwealth taxation.

Among other entities, this agreement applies to the Territory Insurance Office. In order to apply to the Northern Territory tax equivalent regime to the TIO, it is necessary to amend the section 28 of the Territory Insurance Office Act. While the act is currently drafted provides for TIO to pay the equivalent of income tax and sales tax to the Territory, it does not specify the means of calculating the TIO's liability, or the administration of its assessments and payments. With the development of a regime to fulfil these purposes, it is now appropriate that the TIO's taxation equivalent payments be administered by that regime. The bill is consistent with government policy in relation to competition reform and with the Territory's commitment under the statement of policy intent and national competition policy. I commend the bill to honourable members.

Debate adjourned.

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