State Revenue Office

Payroll Tax Harmonisation

State Revenue Office

Background

• Consistency gradually eroded since 1971

• Business faces higher compliance costs, in many cases with no benefit in terms of revenue for the community

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Harmonisation - background

• All states have been exploring opportunities

• NSW & Victoria harmonised on 1 July 2007

• Tasmania to join NSW/Vic on 1 July 2008

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Harmonisation is not …

• Aligned payroll tax rates

• Aligned payroll tax thresholds

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Harmonisation is …

Consistency in….

• what is taxable

• exemptions & rebates

• rules for grouping

• anti-avoidance provisions

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Harmonisation could be …

• One-stop shop payments

• Single return forms

• Single audits

• Consistent software

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Some of the main changes

• Motor vehicle and accommodation allowances

• Employee share acquisition schemes into the payroll tax net

• Exemption of not-for-profit charities

• Exemption of wages paid for maternity and adoption leave

• Grouping provisions

• Introduction of tracing provisions

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Allowances

Alignment of vehicle and accommodation allowances with FBT

– Claim the ATO’s large car rate

– Claim the lowest capital city rate for the lowest salary band

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Employee Share Acquisition Schemes

• Currently outside payroll tax net in Tasmania

• The grant of a share or option to an employee or director will constitute wages

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Exemptions

• Wages paid to employees of not-for-profit organisations having wholly charitable, benevolent, philanthropic or patriotic purposes, engaged exclusively in that kind of work, will be exempt

• Wages paid in respect of maternity or adoption leave will be exempt

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Grouping Provisions

• Test for grouping through the inter-use of employees is being expanded

• Expanded test will capture quasi-outsourcing arrangements

• Commissioner’s discretion to de-group will remain

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Tracing Provisions• Prevents the avoidance of payroll tax grouping

through the use of corporate structures

• Determines a ‘controlling interest’ by examining direct and indirect interests.

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Timetable

Draft new PTX legislation

Govt approval to proceed

Taxpayer education campaign

Parliamentary approval of new legislation

August 07

Sept - Nov 07

Jan - Jun 08

November 07

July 08 Harmonised model applies

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Education program

• Web Site updates

• Media Campaign

• Update of relevant SRO Publications

• Client mail outs and communications with peak bodies

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Useful links

• NSW legislation:

http://www.legislation.nsw.gov.au

• Victorian legislation:

http://www.legislation.vic.gov.au