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Thursday, 3 December 1959

Mr Nelson (NORTHERN TERRITORY, NORTHERN TERRITORY) n asked the Treasurer, upon notice -

1.   Has he considered the effect that the recent ruling of the Taxation Commissioner on board and lodging allowance for the pastoral industry will have on the zone allowance as it applies to employees of the industry in the Northern Territory?

2.   Has the allowable deduction for an employee's board and lodging been increased, as a result of the ruling, from £1 5s. to £4 16s. 8d. per week?

3.   Will an employee earning £16 per week now have to pay, after deducting the zone allowance £1 6s. 6d. a week in tax, whereas before July his weekly tax was only 16s.?

4.   In view of concern being expressed by employers as well as employees, will he take steps either to rescind the ruling or to increase the zone allowance so as to restore the tax liability of employees to its former level?

Mr Harold Holt - The answers to the honorable member's questions are as follows: -

1.   Yes.

2.   No.

3.   Yes.

4.   No.

By way of general explanation, the relevant provision of the Income Tax and Social Services Contribution Assessment Act pertaining to tax instalment deductions from earnings are subsections (4.) and (S.) of section 221c.

Sub-section (4.) provides that where, in addition to money wages, an employee is provided with board and quarters, his wages shall be deemed to be increased by an amount of £1 Ss. per week as representing the value of the board and quarters.

Sub-section (5.), however, requires that where the value of board and quarters is specified under the terms of an award, order or determination of an industrial tribunal, or under an industrial agreement, the value so specified shall be taken into account for the purpose of computing the tax instalment deductions.

The current award applying to employees in the pastoral industry in the Northern Territory specifies the value of keep (being board and quarters) as £4 16s. 8d. per week.

Prior to the current year 1959-60, a value of £1 5s. per week for board and quarters had been accepted for income tax purposes. Following an official review this year, it was decided that a value of £4 16s. 8d. per week, as specified in the award, should be adopted.

It might be borne in mind that under section 26 (e) of the Assessment Act the assessable income of the employee concerned includes the value to him of the board and quarters provided by his employer. If tax instalments were to be deducted at the scale of £1 5s. instead of £4 16s. 8d. per week, it would be found in most cases that the tax instalments would fall far short of the tax assessed and the employee would be required to pay the difference of tax after the issue of an assessment notice.

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