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Wednesday, 5 October 1983
Page: 1358


Mr HURFORD (Minister for Housing and Construction and Acting Treasurer) -by leave-The Government considers that the prescribed payments system is a fundamentally sound system. However, it accepts that, in the light of experience , there is a need to refine certain of its administrative aspects so as to reduce paperwork burdens on some taxpayers and to facilitate taxpayer compliance with its requirements. To this end, the Government has decided to introduce legislation to amend the income tax law along the lines proposed in the report tabled in the Senate yesterday by the Senate Standing Committee on Finance and Government Operations. In reaching this decision, the Government was satisfied that the changes proposed would not put at risk the anti-evasion objectives of the system.

Taxpayers who, as payees, have been granted exemption from source deductions on the grounds of a good compliance record are to be taken out of the system in relation to prescribed payments they receive, provided that an appropriate declaration as to the holding of an exemption certificate is lodged with each payer once a year. For such payees with large numbers of different payers, it is proposed that the Commissioner of Taxation will, on application from a payee, be able to approve special arrangements under which quotation of an exemption certificate number on an invoice or statement would be acceptable as an alternative to the declaration. These changes will result in a very significant reduction in the paperwork burdens on the exempt payees concerned and also on the payers with whom they deal.

Modifications are to be made to the provisions under which a payee may submit his duly completed part of the monthly deduction form no earlier than seven days before the commencement of the month in which a payment is due. Specifically, the changes to be made in this area are as follows:

Firstly, the seven-day requirement is to be extended so that a payee may lodge a deduction form at any time in the month preceding the month of payment. Secondly, where a deduction form is properly lodged by a payee, it will remain valid until the month in which payment, or a first instalment of it, is made and where a part payment is made, the payer will be required to generate deduction forms in respect of subsequent instalments. Thirdly, where a payer gives a payee notice in writing that the payer will produce fully completed deduction forms on a monthly basis, the present requirement that the payee partially complete the form will be deemed to be met if the payee lodges with the payer one completed form to cover all prescribed payments from that payer in a year of income, unless the payees circumstances change before the end of the particular year in which case a further form will be required to cover payments for the remainder of the year.

These modifications will ensure that affected taxpayers can more readily accommodate the requirements of the system into their business operations. The changes to allow payers, at their convenience, to complete both parts of deduction forms will certainly be welcomed by those payers who operate computer- based business systems.

In addition to the above changes which were recommended by the Senate Standing Committee on Finance and Government Operations-all the recommendations in this statement have come from that Committee but were anticipated by the Government-a minor amendment will be made to the provisional tax self-assessment provisions to simplify the calculations which a taxpayer who wishes to vary a professional tax liability on account of prescribed payment income is required to make. The present requirement to identify estimated taxable net income, being prescribed payments, including such payments from which deductions have been, or will be, made, is to be altered to require the taxpayer to identify gross prescribed payment income from which deductions have been, or will be, made. These amendments clearly evidence the Government's willingness to refine the system to meet valid concerns about its operation. Amending legislation to give effect to these proposals will be introduced as soon as possible. The amendments will have effect from the date the legislation receives royal assent. The requirements of the law as presently enacted will remain in force until that time.

I take this opportunity to thank the Senate Committee for its valuable work in preparing the report. The Committee's recommendations are sound and workable. I am particularly pleased that this Committee, comprising representatives of the Liberal Party, the Australian Democrats and the Government, unanimously recommends the regulations for the system be not disallowed.