Primary Industries and Energy Research and Development Corporations (Liability to Pay-roll Tax) Regulations 1995 No. 306
EXPLANATORY STATEMENT
STATUTORY RULES 1995 No. 306
Issued by the Authority of the Minister for Primary Industries and Energy
Primary Industries and Energy Research and Development Act 1989
Primary Industries and Energy Research and Development Corporations (Liability to Pay-roll Tax) Regulations
Section 8 of the Primary Industries and Energy Research and Development Act 1989 (the Act) provides for the making of regulations for the establishment of a Research and Development Corporation (R&D Corporation) in respect of a primary industry or class of primary industries.
To date, regulations have been made establishing the Cotton R&D Corporation, Dairy R&D Corporation, Energy R&D Corporation, Fisheries R&D Corporation, Forest and Wood Products R&D Corporation, Grains R&D Corporation, Grape and Wine R&D Corporation, Land and Water Resources R&D Corporation, Rural Industries R&D Corporation, Sugar R&D Corporation and Tobacco R&D Corporation.
Subsection 46(2) provides that an R&D Corporation is not liable to taxation under a law of a State or Territory, subject to subsection 46(3), which permits regulations to be made providing that subsection 46(2) does not apply in relation to a specified law of a State or Territory.
Subsection 1-49(1) of the Act provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
The new regulations provide-as follows:
Regulation 1 - the Regulations may be cited as the Primary Industries and Energy Research and Development Corporations (Liability to Pay-roll Tax) Regulations.
Regulation 2 - defines "Act" to mean Primary Industries and Energy Research and Development Act 1989.
Regulation 3 - provides that subsection 46(2) of the Act does not apply in relation to taxation under the pay-roll tax legislation of any of the States or the Northern Territory or the Australian Capital Territory. The effect of this regulation is to make the R&D Corporations liable to State and Territory pay-roll tax in those States and Territories in which they operate.
The Chairpersons of the Boards of the R&D Corporations were advised by the Minister for Primary Industries and Energy on 11 April 1995 of the proposal for the regulations. NO objection was received to the proposal to make regulations removing the exemption from pay-roll tax.
Most of the R&D Corporations are currently under the threshold for the payment of pay-roll tax, and so will not become liable to pay it even following the making of these regulations. The purpose in making blanket regulations to cover all R&D
Corporations established under the Act is so that a particular R&D Corporation will become liable to pay the tax once it goes over the threshold, without a regulation having to be made for each body.
The regulations commenced on gazettal.
Overview
The Primary Industries and Energy Research and Development Corporations (Liability to Pay-roll Tax) Regulations 1995, introduced under the Primary Industries and Energy Research and Development Act 1989, were enacted to address the issue of payroll tax liability for Research and Development Corporations (R&D Corporations) established in various primary industries. The Act was passed by the Australian Parliament to facilitate the creation of these corporations, with the aim of fostering research and development in the primary industries sector. However, there was a gap in the legislation concerning the tax obligations of these corporations. The regulations were formulated by the Minister for Primary Industries and Energy, and the policy objective was to ensure that R&D Corporations are subject to payroll tax in states and territories where they operate, while maintaining the broader goal of supporting innovation and development in primary industries.
Scope and Application
The Primary Industries and Energy Research and Development Corporations (Liability to Pay-roll Tax) Regulations 1995 establish the conditions under which Research and Development Corporations (R&D Corporations) established under the Primary Industries and Energy Research and Development Act 1989 are liable to pay-roll tax in the states and territories of Australia. These regulations apply to all R&D Corporations set up under the Act, which include entities such as the Cotton R&D Corporation, Dairy R&D Corporation, and others, thereby impacting various primary industries. While these corporations were initially exempt from pay-roll tax as per subsection 46(2) of the Act, these regulations modify that exemption by making the corporations liable to pay-roll tax under the relevant state or territory laws where they operate. This change is effective for all R&D Corporations without necessitating separate regulations for each entity, streamlining the process for when any corporation exceeds the tax threshold. The regulations commenced on the date of their gazettal and do not specify any exclusions or exemptions beyond the scope of the threshold for pay-roll tax.
Key Provisions
The Primary Industries and Energy Research and Development Corporations (Liability to Pay-roll Tax) Regulations 1995 (the Regulations) are designed to modify the tax liabilities of Research and Development Corporations (R&D Corporations) established under the Primary Industries and Energy Research and Development Act 1989 (the Act). The primary operative section, Regulation 3, specifies that the exemption from State and Territory payroll tax, as provided under section 46(2) of the Act, does not apply to the payroll tax legislation in any of the States, the Northern Territory, or the Australian Capital Territory. This effectively means that R&D Corporations are subject to payroll tax in the jurisdictions where they operate, regardless of their status under the Act.
The Regulations impose certain obligations on the R&D Corporations by removing their exemption from payroll tax. This means that when these Corporations' payrolls exceed the tax threshold in any State or Territory, they become liable to pay payroll tax in accordance with the respective State or Territory laws. This requirement is intended to ensure that the Corporations contribute to the revenue of the jurisdictions in which they operate, reflecting their economic activities and the use of local resources.
Breaching the provisions of the Regulations, such as failing to pay the required payroll tax when due, could lead to various consequences. Although the explanatory statement does not detail specific penalties, under general payroll tax laws, penalties can include fines, interest on unpaid taxes, and in severe cases, legal action against the Corporations or their officers. The exact penalties would depend on the specific payroll tax legislation of the relevant State or Territory.