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Thursday, 2 June 1994
Page: 1187


Senator WATSON (12.39 p.m.) —In the course of this debate Senator Cook accused me of being wrong about the letters sent out by the tax office. I have a letter in my possession—I will read out the relevant provisions—indicating that there was no legislative authority for this particular clause. It says:

If you are a provisional taxpayer, an amount in respect of your Accumulated HEC Debt will be added to your provisional tax assessment. The amount will vary depending on your circumstances. The Tax Office will advise you of the amount.

This letter, of which the minister claims to be unaware, was issued by the tax office. I seek leave to incorporate the letter in Hansard.

  Leave granted.

  The letter read as follows—

AUSTRALIAN TAXATION OFFICE

May 1994

The Government is introducing some changes which will affect the way HECS clients repay their Accumulated HEC Debt from 1 July 1994. The changes will not affect the amount of the debt, only the way you have to pay it. The changes affect both salary and wage earners and people who are subject to provisional tax.

If you have an Accumulated HEC Debt and you earn salary or wages from an employer, you should complete a new Employment Declaration form (before 1 July 1994), advising that you have an Accumulated HEC Debt, and give the form to your employer.

From 1 July 1994, if you earn $509 or more per week (before tax is deducted), you will pay your anticipated HEC Assessment Debt by having extra tax deducted from your pay. If you earn less than $509 per week (before tax) no extra tax will be deducted but you should still complete the new Employment Declaration form. These forms will be available from your employer from early June.

If you do not complete a new Employment Declaration, your employer will be advised by the Tax Office to deduct tax from your pay at the maximum rate of 48.4%, regardless of your income.

We have sent schedules to all employers which tell them how much extra tax to deduct.

Example 1: If you earn $550 per week, your extra tax will be $16.50 per week.

Example 2: If you earn $900 per week, your extra tax will be $45.05 per week.

If you are a provisional taxpayer, an amount in respect of your Accumulated HEC Debt will be added to your provisional tax assessment. The amount will vary depending on your circumstances. The Tax Office will advise you of the amount.

If you have any questions about the new requirements, please contact your local tax office. A list of addresses and telephone numbers is on the back of this page.

Yours sincerely,

Michael Carmody