EXPLANATORY STATEMENT
STATUTORY RULES 1986 NO. 189
ISSUED BY THE AUTHORITY OF THE TREASURER PAY-ROLL TAX (TERRITORIES) REGULATIONS
These regulations increase the level of exemption for pay-roll tax in the Australian Capital Territory (ACT) from $170,000 to $200,000 per annum, with effect from 1 July 1986. These regulations repeal the existing regulations, prescribe the higher annual exemption level and make correlative increases in the monthly and weekly exemption levels.
Introductory note
The Pay-roll Tax (Territories) Act 1971 imposes tax in the ACT, at a rate of 5%, on any wages paid or payable by an employer either -
• in the ACT, otherwise than in respect of services rendered wholly in a State or the Northern Territory; or
• outside the ACT for services rendered wholly in the ACT.
Under the provisions of the Pay-roll Tax (Territories) Assessment Act 1971 (the Act), pay-roll tax is normally payable on a monthly basis with the lodgment of monthly returns. However, the Commissioner of Taxation has a discretion to allow lodgment of returns and payments of tax to be made at less frequent intervals.
Sub-section 16(1A) of the Act requires an employer who is not a member of a group constituted pursuant to Part IVA of the Act to register and lodge pay-roll tax returns if, during any month, the employer pays or is liable to pay wages subject to ACT pay-roll tax and the Australia-wide wages payable in that month exceed a rate of $3,269.23 per week or such higher amount as is prescribed by regulation under the Act.
For the purposes of determining the amount of tax payable by an employer, other than a group member, during a full income year, section 14 of the Act authorises a deduction against the employer’s Australia-wide wages paid or payable during the income year equal to the amount (the annual exemption level) prescribed in the Act. The deduction is reduced by $2 for every $3 by which the Australia-wide wages exceed the exemption level.
In calculating the amount of the tax payable in respect of wages included in a return for a month or other period, sub-section 12(1) of the Act authorises a monthly deduction from those wages of an amount equal to the monthly equivalent of the annual exemption level (referred to as the ‘prescribed
amount’). As is the case with the annual exemption level, the prescribed amount is reduced by $2 for every $3 by which the wages included in the return exceed the prescribed amount. Where an employer (other than a group member) pays wages in the ACT and also in one or more States or the Northern Territory, no deduction is allowable unless the employer nominates to the Commissioner a monthly deduction amount which generally bears to the maximum monthly deduction the same proportion as the employer’s ACT wages bear to Australia-wide wages.
An employer, who is not a group member, is entitled to a refund or rebate of the whole of the pay-roll tax paid or payable by that employer over the course of a financial year if the total wages included in returns required to a furnished under the Act or corresponding State or Northern Territory laws do not exceed the annual exemption level.
A refund or rebate is also made if, over the course of a financial year, there has not been deducted in returns furnished by an employer under the Act or State or Northern Territory laws an amount equal to the annual exemption that would have been allowable if the total Australia-wide pay-roll was related to the ACT.
Comments on the regulations which give effect to the increase in the exemption level follow.
By regulation 1 the regulations may be cited as the Pay-roll Tax (Territories) Regulations.
By virtue of regulation 2, the regulations shall be deemed to have come into operation on 1 July 1986 thus ensuring that taxable wages included in returns lodged for July 1986 and subsequent months receive the benefit of the higher exemption levels. But for this regulation, the regulations would have come into operation on the day on which they were notified in the Gazette.
Regulation 3 is a drafting measure which enables the Pay-roll Tax (Territories) Assessment Act 1971 to be referred to in the Regulations as “the Act”.
Regulation 4 increases, from $14,166.67 to $16,666.67, the amount that is specified under sub-section 12(9) of the Act as the maximum amount that may be deducted per month from the Australia-wide wages that are payable by an employer other than a group member and are included in a monthly or other periodic pay-roll tax return. The increased amount is the monthly equivalent of the increased annual exemption level of $200,000 prescribed by regulation 5.
Regulation 5 increases from $170,000 to $200,000 the amount of the maximum annual deduction that may be made from the Australia-wide wages payable by an employer in the 1986-87 financial year and each subsequent financial year. Authority to prescribe that amount by regulation is contained in paragraph 14(4C)(a) of the Act.
Under sub-section 16(1A) of the Act an employer liable to pay ACT-related wages is required to register for pay-roll tax purposes where that employer is not a group member and total Australia-wide wages paid or payable during any month exceed a rate of $3,269.23 per week or such higher amount as is prescribed by regulation. Sub-regulation (6)(1) increases this rate to $3,846.15 per week which is the weekly equivalent of the increased annual exemption level of $200,000 (regulation 5). Sub-regulation 6(2) ensures that the increased weekly rate applies as from 1 July 1986.
Regulation 7, in conjunction with regulation 2, repeals the former regulations upon the commencement of these regulations as from 1 July 1986.