Primary Industries (Excise) Levies Amendment Regulations 2000 (No. 6)

Primary Industries (Excise) Levies Amendment Regulations 2000 (No. 6) 2000 No. 345

EXPLANATORY STATEMENT

STATUTORY RULES 2000 No. 345

Issued by the Authority of the Minister for Agriculture, Fisheries and Forestry

Primary Industries Levies and Charges Collection Act 1991

Primary Industries (Excise) Levies Act 1999

Primary Industries (Customs) Charges Act 1999

Primary Industries Levies and Charges Collection Amendment Regulations 2000 (No. 5)

Primary Industries (Excise) Levies Amendment Regulations 2000 (No. 6)

Primary Industries (Customs) Charges Amendment Regulations 2000 (No. 2)

Section 30 of the Primary Industries Levies and Charges Collection Act 1991, Section 8 of the Primary Industries (Excise) Levies Act 1999 and Section 8 of the Primary Industries (Customs) Charges Act 1999 provide that the Governor-General may make regulations required or permitted to be prescribed or necessary or convenient to be prescribed for carrying out or giving effect to the Acts.

The purpose of the regulations is to impose and collect a levy and export charge on wool.

As part of the Government's decision to privatise the Australian Wool Research and Promotion Organisation (AWRAP) and establish the new Australian Wool Services Limited (AWS) as provided for in the Wool Services Privatisation Act 2000, the existing wool tax collection and dispersal mechanism is to be harmonised with other primary industry levy arrangements. This would require responsibility for the collection of the new wool levy and charge imposed by the Primary Industries (Excise) Levies Amendment Regulations 2000 (No. 6) and the Primary Industries (Customs) Charges Amendment Regulations 2000 (No. 2) to pass from the Australian Taxation Office to the Levies and Revenue Service (LRS) within Agriculture, Fisheries and Forestry - Australia (AFFA). LRS will recover its collection costs in accordance with the standard procedures applying to existing levies and charges;

The Primary Industries Levies and Charges Collection Amendment Regulations 2000 (No. 5) will allow for the collection of the levy and producer information from intermediaries identified in the regulations. The Primary Industries (Excise) Levies Amendment Regulations 2000 (No. 6) will provide for the imposition of the wool levy to the extent that the levy is a duty of excise, and sets the rate at which the wool levy will apply. The Primary Industries (Customs) Charges Amendment Regulations 2000 (No. 2) will provide for the imposition of the wool levy (as wool export charge) to the extent that the levy is a duty of customs, and sets the rate at the same applying to the wool excise levy.

The regulations will require individual producer details, such as their name, address and ABN, to be collected by intermediaries and passed onto LRS. This information would be used for the purpose of assisting the collection and auditing of the new wool levy. The recording of individual producer payment details is also of benefit to the allocation of voting rights for the purposes of levy polls which are required to be undertaken by the proposed designated research body (expected to be Australian Wool Innovation Limited - AWI, a subsidiary of AWS) every three years. As responsibility for the levy poll resides with the declared research body, the producer levy payment details would be passed to AWL The information would be able to be used for the establishment and maintenance of the AWS shareholder register (for 'Class A' shareholdings relating to the AWI subsidiary) and to determine voting rights in AWL

Other regulations are being made which provide regulations for other aspects of the privatisation process: the proposed Wool Services Privatisation (Eligible Woolgrowers) Regulations 2000 and the proposed Wool Services Privatisation (Miscellaneous Provisions) Regulations 2000.

The decision to convert from a wool tax to a wool levy followed Government consideration of the 1999 wool industry Future Directions Taskforce Report. The Taskforce was established in December 1998 to undertake a major inquiry into the future directions of the Australian wool industry. Whilst most of the recommendations of the Taskforce Report were focussed on individual farm businesses and what they can do to improve their profitability, there were recommendations for Government to consider, including the future of AWRAP and wool tax arrangements.

Part 4 of Schedule 27 of the Primary Industries (Excise) Levies Act 1999 and Part 4 of Schedule 14 of the Primary Industries (Customs) Charges Act 1999 provide that if the Minister has declared a specified body to be the designated body (or bodies) in relation to a particular product, then before the Governor-General makes a regulation in relation to the product, the Minister must take into consideration any relevant recommendation made to the Minister by the body (or bodies). There is no declaration in force declaring a designated body for the purposes of these Acts in relation to the existing wool tax. However, Section 51 of the Australian Wool Research and Promotion Act 1993 provides that the Minister may determine a recommendation on the rate of wool tax having regard to the results of the voluntary WoolPoll 2000 grower ballot. WoolPoll 2000 (held in March 2000) received votes representing the majority of the Australian wool production and the result showed a clear preference for a 2 per cent wool tax rate. In response to the WoolPoll 2000, the Government implemented an interim wool tax rate of 3 per cent from 1 July 2000, to cover the costs of privatisation. It is intended that the new wool levy and export charge be imposed at the same rate as the existing wool tax. Therefore, the rates of wool levy and export charge imposed on wool producers would be 3 per cent.

Details of the Primary Industries Levies and Charges Collection Amendment Regulations 2000 (No. 5) are at Attachment A; the Primary Industries (Excise) Levies Amendment Regulations 2000 (No. 6) are at Attachment B; and the Primary Industries (Customs) Charges Amendment Regulations 2000 (No. 2) are at Attachment C.

The regulations commence on the date on which Schedule 1 of the Wool Services Privatisation Act 2000 commences (expected to be 1 January 2001).

ATTACHMENT A

PRIMARY INDUSTRIES LEVIES AND CHARGES COLLECTION AMENDMENT REGULATIONS 2000 (No. 5)

Regulation 1 gives the name of the regulations as the Primary Industries Levies and Charges Collection Amendment Regulations 2000 (No. 5).

Regulation 2 provides for the regulations to commence at the same time as Schedule 1 to the Wool Services Privatisation Act 2000. That is, on a date to be fixed by Proclamation (expected to be 1 January 2001).

Regulation 3 states that Schedule 1 amends the Primary Industries Levies and Charges Collection Regulations 1991 as amended by the Primary Industries Levies and Charges Collection Amendment Regulations 2000 (No. 4).

Schedule 1        Amendment

Item 1 inserts a new Part 2 - Wool into Schedule 37.

PART 2       WOOL

Clause 2.1 provides that Part 2 applies to both leviable wool and chargeable wool.

Clause 2.2 provides definitions of charge, chargeable wool, deal, leviable wool, levy, sale value, shorn wool, wool and Wool Tax Acts. The definition of shorn wool provides that the levy and charge is applied to wool that has been obtained by shearing and has not been subjected to any process.

Clause 2.3 provides that the levy year for wool is a financial year.

Clause 2.4 prescribes for skirting, classing and baling operations to be excluded from the definition of process as provided in Subsection 4(1) of the Primary Industries Levies and Charges Collection Act 1991 (the 'Collection Act'). These operations are excluded because their performance does not substantially alter the physical state of the wool.

Clause 2.5 sets out who is a processor. It also provides that leviable or chargeable wool is the collection product to which the definition applies.

Clause 2.6 sets out who is a producer. It also provides that leviable or chargeable wool is the collection product to which the definition applies.

Clause 2.7 provides for processors and exporting agents to be liable to pay, on behalf of the producer, any levy or charge due for payment. Section 7 of the Collection Act places a liability on first purchasers (ie persons who buy wool from producers for purposes other than retail sale), selling agents (ie persons who sell wool on behalf of producers), buying agents (ie persons who buy wool from producers), processors (ie persons who process wool) and exporting agents (ie persons who export wool from Australia on behalf of producers) to be liable to collect and pay the levy or charge to the Commonwealth.

Clause 2.8 provides that for monthly returns, the levy or charge payable is due for payment either on the day when the return is lodged (if the return is lodged within the prescribed period of 28 days after the end of the month to which it relates) or on the last day of the prescribed period if the return is not lodged within the prescribed period.

Clause 2.9 prescribes those persons who are required to lodge a monthly return. First purchasers are included to capture wool sold to neighbours, cottage operators etc. This clause also specifies situations in which the prescribed persons are not required to lodge a monthly return (for annual returns see Clauses 2.18 through 2.21).

Clause 2.10 provides that a monthly return must be lodged within 28 days after the end of the month to which it relates.

Clause 2.11 provides that for annual returns, the levy payable is due for payment either on the day when the return is lodged (if the return is lodged within the prescribed period of on or before 28 August in the following levy year) or on the last day of the prescribed period if the return is not lodged within the prescribed period.

Clause 2.12 prescribes those people who are required to lodge an annual return. Exporting agents are not included as they are required to lodge monthly returns due to the nature of exporting industries, where many principals are, located outside Australia, making it essential to ensure timely collection of the charge. For the small producer or intermediary located in Australia, this is not such a risk management problem. Subclauses 2.12 (e) and (f) are included to provide for those producers who make small sales of wool direct to consumers or use wool in the production of other goods. Producers who make direct sales of leviable wool, on which the expected levy payable for the levy year is believed to be $500 or more, will be required to lodge monthly returns and payments.

Clause 2.13 provides that an annual return must be lodged on or before 28 August in the following levy year. For example, an annual return for the levy year ending 30 June 2001 must be lodged on or before 28 August 2001.

Clause 2.14 provides for those details to be included in the returns lodged by processors.

Clause 2.15 provides for those details to be included in the returns lodged by producers.

Clause 2.16 provides for those details to be included in the returns lodged by persons who export wool.

Clause 2.17 provides for those details to be included in the returns lodged by first purchasers, buying agents and selling agents.

Clause 2.18 provides that persons other than a person who exports wool may apply for an exemption from the requirement to lodge monthly returns if the expected levy payable for the levy year is believed to be less than $500. If an exemption is granted, annual returns are required to be lodged. Persons who export wool cannot apply for an exemption and therefore must lodge monthly returns as prescribed in Clause 2.9.

Clause 2.19 specifies those details which must be included in an application for exemption from the requirement to lodge monthly returns.

Clause 2.20 provides that the Secretary of the Department of Agriculture, Fisheries and Forestry (the 'Secretary') must make a decision on the exemption application, and in doing so must take into consideration a number of issues, within 14 days after receiving the application, and advise the applicant of the decision in writing.

Clause 2.21 provides that the Secretary must decide whether to continue exemptions for monthly returns for the next levy year, after considering certain issues (such as whether or not levy for the previous levy year was paid on time), and advise the person of the decision in writing, within 14 days after receiving the return.

Clause 2.22 specifies the deadlines for lodgement of monthly returns if an exemption has been refused or not continued.

Clause 2.23 provides for details to be kept as records for processors in order to provide verification for the audit and compliance processes.

Clause 2.24 provides for details to be kept as records by producers in order to provide verification for the audit and compliance processes.

Clause 2.25 provides for details to be kept as records by persons who export wool in order to provide verification for the audit and compliance processes.

Clause 2.26 provides for details to be kept as records by first purchasers, buying agents and selling agents in order to provide verification for the audit and compliance processes.

Clause 2.27 provides for those personal details to be included in returns and kept as records. This information is intended to be used to assist IRS in its audit and compliance program, but will have the additional benefit of helping to maintain the shareholder register and to maintain wool levy poll voting lists.

Clause 2.28 provides for persons to apply to the Administrative Appeals Tribunal for a review of a decision by the Secretary to refuse to grant an exemption, or refuse to continue an exemption, from the requirement to lodge monthly returns.

ATTACHMENT B

PRIMARY INDUSTRIES (EXCISE) LEVIES AMENDMENT REGULATIONS 2000 (No. 6)

Regulation 1 gives the name of the regulations as the Primary Industries (Excise) Levies Amendment Regulations 2000 (No. 6).

Regulation 2 provides for the regulations to commence at the same time as Schedule 1 to the Wool Services Privatisation Act 2000. That is, on a date to be fixed by Proclamation (expected to be 1 January 2001).

Regulation 3 states that Schedule 1 amends the Primary Industries (Excise) Levies Regulations 1999 as amended by the Primary Industries (Excise) Levies Amendment Regulations 2000 (No. 5).

Schedule 1        Amendment

Item 1 inserts a new Part 2 - Wool into Schedule 27.

PART 2       WOOL

Clause 2.1 imposition of levy.

Subclause 2.1(1) provides for the imposition of the levy on wool produced in Australia if the producer either sells the wool or uses the wool in the production of other goods (eg. on-farm valueadding).

Subclause 2.1(2) specifies the situations in which the levy is not imposed.

The Wool Tax Acts are not being repealed, at this time, to enable future collection of outstanding wool tax payments following the introduction of the new wool levy. The five former wool taxes are being amalgamated into a single levy.

Clause 2.2 provides a definition of sale value and the methods used to calculate and verify it.

Subclause 2.2(2) provides for the calculation of the sale value of processed wool (2.2(1)(b)) for producers who process their own wool.

Subclause 2.2(3) provides for those accounting standards to be used to determine the value of the wool immediately before processing where Subclause 2.2(2)(c) applies.

Subclause 2.2(4) specifies that the sale value will be taken not to include handling, storage and transport costs.

Clause 2.3 provides that the rate of levy imposed on leviable wool is 3 per cent of the sale value of the wool.

Clause 2.4 provides that the levy is payable by the producer of the wool. The producer of the wool is taken to be the person who owns the wool immediately it is removed from the sheep or lamb.

ATTACHMENT C

PRIMARY INDUSTRIES (CUSTOMS) CHARGES AMENDMENT REGULATIONS 2000 (No. 2)

Regulation 1 gives the name of the regulations as the Primary Industries (Customs) Charges Amendment Regulations 2000 (No. 2).

Regulation 2 provides for the regulations to commence at the same time as Schedule 1 to the Wool Services Privatisation Act 2000. That is, on a date to be fixed by Proclamation (expected to be 1 January 2001).

Regulation 3 states. that Schedule 1 amends the Primary Industries (Customs) Charges Regulations 2000.

Schedule 1        Amendment

Item 1 inserts a new Schedule 14 after Schedule 13.

Schedule 14        Other Charges

PART 1       WOOL

Clause 1.1 imposition of charge.

Subclause 1.1(1) provides for the imposition of charge on wool produced in Australia when the wool is exported from Australia.

Subclause 1.1(2) specifies the situations when the charge is not imposed.

Clause 1.2 provides that the rate of charge imposed on wool is 3 per cent of the free-on-board value of the wool immediately before export.

Clause 1.3 provides that the charge imposed is payable by the producer of the wool. The producer is taken to be the person who exports the wool from Australia.