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Wednesday, 2 April 1941

Senator LECKIE (Victoria) (Assistant Minister) . - I move -

That the bill be now read a second time.

The Government's proposals to pay family allowances in respect of children, and to provide for the greater part of the necessary finance by means of a tax on pay-rolls, are well known to honorable senators. This bill, which is an essential part of that scheme, is to define the scope of the proposed tax on pay-rolls and to provide the machinery for its administration. At this stage it is not necessary for me to justify the imposition of such a tax. My immediate concern is to make clear to honorable senators the proposed incidence of the tax and the conditions under which it will be levied and collected. The scheme is simple. It is a tax on the wages paid, and is payable by employers. Every employer is entitled to an exemption at the rate of £20 a week. The tax is payable monthly, and employers must make monthly returns to the commissioner. Every employer liable to pay this tax must register. The tax will be levied and paid on all wages paid or payable by any employer in respect of any period occurring after the 30th June, 1941. The tax is imposed under clause 12, honorable senators will notice that that clause refers to all wages. The term "wages" is denned in sub-clause 1 of clause 3 where the term " employer " is also defined. These two definitions will make it quite clear that all classes of employers will be liable for payment, of the tax in respect of all kinds of wages. It will be noticed that wages paid in respect of domestic service are not excepted from the general liability. As no distinction is ' made between the different kinds of wages, for the purpose of this legislation, it will be necessary for employers to add domestic wages, for instance, to business wages. The Government, however, proposes that the burden of the tax shall fall where it can be most easily borne, and, as I have said, has made provision in clause 14 foi1 a general exemption at the rate of £20 a week. This is intended to relieve the small employer from payment of the tax, and will have the effect of excluding from the taxable field, practically the whole of the pay-rolls for domestic service. I may state ' that if the exemption were not allowed to all employers, pay-rolls just above the exempted amount would be placed at a very serious disadvantage as compared with pay-rolls just below it. A few pounds would make all the difference between paying a considerable amount of tax and paying none at all. As it is, the tax on a pay-roll just above the exempted amount will be extremely light. The small employer is still further protected by the provisions of clause 16. Obviously, the pay-roll of any given employer is likely to fluctuate during the year. Sometimes it will be more than £20, and sometimes it will be less. Whenever it is more than £20 he will be liable to pay the tax. It may happen, therefore, in a good many instances that, at the end of the year, the employer will be found to have paid some tax although his pay-roll for the year was, on the average, less than £20 a week. As it is not intended that such pay-rolls shall feel the weight of the tax, provision has been made for the commissioner to refund or rebate the tax where, at the end of the financial year, it is found that the total of wages paid by an employer was £1,040 a year or less. It is desirable, however, that employers for part of a year only, should not gain an advantage under that provision over those who have been employers during the whole of the year. The amount- of £1,040 will therefore be reduced in the case of those who are employers for part of the year only. The amount allowable will vary accord-: ing to the time during which wages have been paid. Still another class of employer has been very sympathetically provided for. Because of the nature of some trades or businesses, the wages bill so fluctuates with different periods of the year, that almost the whole of the wages for the year are paid within a very short period. It is thus possible for an employer to take over such a business, at such a time that the wages bill for the year must be paid after he has taken over, or he may relinquish the business after having paid the greater part of the wages for that year. In either case, if the employer can satisfy the commissioner that his pay-roll for the year would not have amounted to £1,040 had he been in business during the whole of the year, he will be allowed the full benefit of the exemption of £1,040. Honorable senators will agree, I think, that the measure has been devised with the utmost consideration for the taxpayer. The specifically exempted classes of employers which ar« few are specified in clause 15. The exemption granted to diplomatic, consular and other representatives of other governments, and to certain trade representatives does not extend to wages paid by them in the course of any activities not connected with their official positions. The complete exemption of religious or public benevolent institutions and public hospitals is consistent with the provisions of other taxation acts, and is in accord with the treatment of those institutions under the New South Wales Act. As I have already stated, every employer who is liable to pay the tax will be required to register as an employer for the purposes of this legislation. A similar system of registration is already in operation under the Sales Tax Acts and has substantial advantages from the administrative point of view. Returns will be required monthly and the tax must be paid within the time allowed for lodgment of the return. . That is to say, the taxpayer will assess his own tax as he does for sales tax, and the Commissioner will provide the necessary check on his calculations by inspection and otherwise. Monthly returns have been adopted, not only because they make it easier for the department to collect the tax, but also because they make it easier for the employer to pay it. Registered employers will benefit also by the provisions mentioned in clause 19. Under clause 17 employers who pay or who are liable to pay wages at the rate of £20 a week must register, and, under clause 18, furnish monthly returns. The payment of wages at the rate of £20 a week, even if only for one short period in the year thus makes an employer liable for registration and the lodgment of returns so long as he continues to be an employer. However, in many cases, such an arrangement would be both irksome to the taxpayer and unprofitable to the department. It has been provided, therefore, that where the commissioner is of the opinion that no tax will be payable 'by an employer or, if paid, will be refunded when the annual adjustment is made, he may exempt the taxpayer from furnishing monthly returns. In such instances, he may require the employer to furnish an annual return of wages paid, which will enable him to satisfy himself that the exemption was properly allowable. Honorable senators will notice that the definition of " company" as used in the bill includes partnerships. Under (the bill a partnership will be an employer, and will be liable to pav tax. The provision serves two purposes : It simplifies the machinery provisions of the bill, and it ensures that a member of a partnership shall not be required to aggregate his share of the partnership pay-roll with any separate pay-roll for which he may be responsible. The provisions with which I have dealt contain the substance of the new scheme of taxation. The remaining provisions provide the machinery for administering the law and contain no departures from precedents established in other taxation measures. The department will be given all necessary powers to enable it to administer the law and the rights of the taxpayer will be preserved. The bill is an indication of the Government's determination to finance its scheme of family endowment, and of its solicitude for the taxpayers. It has been necessary for pro- pose new taxation, but under this bill the taxpayer will be treated as generously as the circumstances permit.

Sitting suspended from 6. IS la 8 p.m.

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