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Friday, 18 September 1942

Mr CHIFLEY (Macquarie) (Treasurer) . - by leave - I move -

That the bill be now read a second time.

The pay-roll tax legislation is a comparatively recent addition to the statute law of the Commonwealth. It has been in operation for little more than one year. During that time, its operation has been closely watched with a view to determining whether any improvements are possible by way of simplifying the procedure to be followed by taxpayers, and also in the direction of relieving administrative problems. The law has, in general, operated very satisfactorily, and there is no intention to depart from the general principles upon which the pay-roll tax is based. It has been found possible, however, to devise means of alleviating difficulties encountered by certain taxpayers in the furnishing of their returns, and that is the principal purpose of this bill. As the law stands at present, every person who pays wages at a rate in excess of £20 a week is required to register as an employer for the purposes of the Pay-roll Tax Assessment Act, and to furnish monthly returns of wages paid. From the wages specified in each monthly return, an exemption calculated at the rate of £20 a week is deductible. Persons who are employers for a full year, and who pay less than £1,040 in wages during the year, are entitled at the end of the year to a refund or credit of any tax paid by them during the year, i.e., the tax in respect of months in which they paid wages at a rate in excess of £20 a week. Experience has shown that the calculation of the statutory exemption on a weekly basis does not operate evenly over the whole field of taxpayers. There is no difficulty in those cases where the monthly pay-roll regularly exceeds £20 a week. In those cases the deduction at the rate of £20 a week is regularly taken, and in the course of a year, the total exemption so allowed would be slightly over £1,040. The position is different, however, in those cases in which the pay-roll falls below an amount calculated at the rate of £20 a week in one or more months during the year. In such cases, the exemption for each month is limited to the amount of the wages paid, and the total general exemption obtained during the year is consequently less than £1,040. The amount of exemption so lost by employers with fluctuating pay-rolls, as compared with employers with regular pay-rolls, is substantial. For example, seasonal employers may pay out more than £1,040 in wages in the course of two or three months. Under the present law, the exemption obtained by such employers might fall as low as £200. Anomalies of this kind will be removed by clause 5 of the bill which is designed to ensure that in any case in which a person is in business throughout the year, and fails, because of fluctuating pay-roll, to obtain the benefit of the general exemption to the amount of £1,040 during the year, he shall get it at the end of the year, and a refund or rebate will be granted to him accordingly. If he is not in business for the full year, the amount of the exemption will be proportionately less. A further proposal concerning the general exemption is that contained in clause 3 of the bill, which is designed to simplify the work of preparing returns by fixing the amount of deduction to be claimed in respect of each monthly return. Under the present law, the monthly deduction is calculated at the rate of £20 a week. Obviously, it would be easier for both the taxpayer and the department if the same amount were deductible each month. The effect of the amendment proposed in this regard is to split the annual exemption of £1,040 into twelve equal parts and to allow it in the form of a deduction of £86 13s. 4d. in respect of each monthly return. Where the monthly deduction of £86 13s. 4d. is in excess of the wages paid in any month, the excess is to be carried forward as an extra deduction to be made from the wages of the next month. This system of carrying forward excess deductions will obviate adjustments at the end of the year, and will enable taxpayers to enjoy the full benefit of the exemption as early as possible.

The Government has also given close consideration to the difficulties encountered by some taxpayers in complying with the requirements of section 18 of the existing law, viz., to furnish a return for each month within seven days' after the end of that month. In the vast majority of cases, these requirements place no undue burden upon taxpayers. It is not proposed, therefore, to relax the requirements of the law regarding lodgment of returns insofar as the majority of taxpayers are concerned. It is acknowledged, however, that there are certain kinds of employers to whom the ordinary procedure does not apply satisfactorily. These include persons who conduct their businesses in such remote districts that they actually cannot lodge a return within seven days. There are also seasonal employers who, in the off-season, pay no wages but, under the existing law, are, nevertheless, required to continue lodging returns for each month if their annual pay-roll exceeds £1,040. Furthermore, there are employers who barely come within the scope of the tax, and whose monthly liability is so small as to be barely worth paying or collecting. In these and other cases, the existing law causes unnecessary irritation to taxpayers, as well as embarrassment to the administration, in view of the economic waste involved in handling returns which involve little or no gain to the revenue. With a view to removing such causes oi complaint, it i3 proposed in clause 6 ot the bill to authorize the commissioner to deal with such cases on their merits. Where he is satisfied that it is unduly burdensome to require an employer to furnish returns by the due date specified in the law, he may allow further time tor lodgment of the returns. Where the commissioner is of opinion that the furnishing of monthly returns is unduly burdensome, he may accept returns based on some longer period. This relaxation of the ordinary requirements of the law will not be widely applied, but will be confined to individual cases in which the circumstances warrant such relief, and in which it is clear that the revenue will not suffer by means of the granting of the relief. I have outlined the principal features of the bill. There are three other matters of less importance. Clause 4 is designed to implement the decision given by the previous Government, and confirmed by the present Government, that the pay-roll tax shall not apply to payments made to employees who are on active service with the fighting forces. Pay-roll tax has not been collected on these payments and allowances, and clause 4 of the bill gives legal authority for the exemption.. The two remaining matters consist of a drafting amendment in clause 7, and a provision in clause 8 for the reference to the Land Tax Valuation Board of applications by taxpayers for relief from .payment of pay-roll tax on the ground of hardship. This amendment conforms with an amendment of the Income Tax Assessment Act which has already been placed before the House. It is designed to facilitate the handling of those relief applications. The bill imposes no new liabilities or obligations upon taxpayers. It is designed simply to remove inequity and undue burdens upon taxpayers. In these circumstances I am confident that it will meet with the unqualified approval of honorable members generally.

Debate (on motion by Mr. Fadden) adjourned.

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