EXPLANATORY STATEMENT
STATUTORY RULES 1988 NO. 213
Issued by the Authority of the Minister for Primary Industries and Energy.
WHEAT TAX ACT 1957
WHEAT TAX REGULATIONS (AMENDMENT)
Section 4 of the Wheat Tax Act 1957 (the Act) imposes a tax on wheat delivered to the Australian Wheat Board.
The Wheat Tax Act 1979 and the Wheat Tax (Permit) Act 1984 provide that the rate of tax in force from time to time under the Act shall apply respectively to wheat sold by the AWB, but which has not been delivered to it, and to wheat sold for stockfeed purposes under a permit issued by the AWB.
Section 5 of the Act provides that the rate of tax shall not exceed $1.10 per tonne.
Subsection 5(2) of the Act provides that before making regulations for the purposes of Section 5 the Governor-General shall take into consideration a report made to the Minister by the prescribed growers’ organisation, the Grains Council of Australia (GCA).
Section 9 of the Act provides that the Governor-General may make regulations for the purpose of section 5.
The currently prescribed rate of tax operative since 1 October 1987 is 45 cents per tonne. The GCA has presented a submission to the Minister requesting that the rate of levy be increased by 20 cents to 65 cents per tonne commencing for the 1988-89 season.
The submission identifies three main reasons for increasing the wheat tax. First, to maintain the competitiveness of Australian wheat on the world market; second, to maintain the real value of monies available for research; and finally, to enable wheat research funding bodies to develop and sustain adequate financial reserves so as to maintain continuing research activities and address new research priorities.
The industry’s request to increase the tax accords with the Government’s objective of encouraging rural industries to increase their contribution for research to 0.5% of the industry’s gross value of production (GVP). The increase in the prescribed rate of tax represents an increase from 0.30% to 0.44% of the industry’s estimated GVP for 1988-89.
Section 7 of the Rural Industries Research Act 1985 (the Research Act) provides that wheat tax money be paid into the Wheat Research Trust Fund and subsection 9(2) of the Research Act provides that the Wheat Research Committee in each mainland State may approve the payment of money out of that Trust Fund for the purposes of research and development activities in respect of the wheat industry.
The Commonwealth Government contributes matching amounts to cover research expenditure recommended by the Wheat Research Council and approved by the Minister.
In any one financial year the Commonwealth contribution is limited to 0.5% of the GVP. Estimated Commonwealth expenditure for 1988-89 is $8.173 million. Increased funding to meet estimated Commonwealth matching obligations in 1988-89 resulting from the proposed increased tax was announced in May 1988 following the Industry Development Review.
The proposed Wheat Tax Regulations (Amendment) to increase the rate of tax to 65 cents per tonne is to apply from 1 October 1988.
The new rate of tax would also apply under the provisions of the Wheat Tax Act 1979, to wheat sold by the AWB but which had
not been delivered to it, and under the provisions of the Wheat Tax (Permit) Act 1984, to stockfeed wheat sold under permit.
Overview
The Wheat Tax Act 1957 was enacted to impose a tax on wheat delivered to the Australian Wheat Board, with the rate of tax not exceeding $1.10 per tonne as stipulated in section 5 of the Act. This legislation was introduced to provide a stable financial framework for the wheat industry, ensuring adequate funding for research and development. The Wheat Tax Regulations (Amendment) Statutory Rules 1988 No. 213, issued by the authority of the Minister for Primary Industries and Energy, seek to amend the rate of the wheat tax. This amendment aims to increase the tax rate from 45 cents to 65 cents per tonne, effective from 1 October 1988. The decision follows a submission from the Grains Council of Australia, which highlighted the need for increased funding to maintain the competitiveness of Australian wheat on the global market, sustain research activities, and support the development of financial reserves for ongoing research initiatives. The amendment aligns with the government's policy objective of encouraging rural industries to enhance their contribution to research, ultimately supporting the wheat industry's growth and innovation.
Scope and Application
The Wheat Tax Act 1957, as amended, applies to the imposition of a tax on wheat delivered to the Australian Wheat Board (AWB). The tax applies to both wheat that has been delivered to the AWB and wheat sold by the AWB but not delivered to it, as governed by the Wheat Tax Act 1979, and wheat sold for stockfeed purposes under a permit issued by the AWB, as outlined in the Wheat Tax (Permit) Act 1984. The tax rate is set at a maximum of $1.10 per tonne, although the currently operative rate is 45 cents per tonne, effective since 1 October 1987. The Act is administered at the Commonwealth level and applies across Australia. The Grains Council of Australia (GCA) is required to present a submission to the Minister regarding the rate of tax, with the Governor-General then making regulations based on this advice. The proposed Wheat Tax Regulations (Amendment) seeks to increase the tax rate to 65 cents per tonne, effective from 1 October 1988, to support industry contributions towards research and to maintain the competitiveness of Australian wheat on the global market. The increased tax revenue will be directed into the Wheat Research Trust Fund, with potential matching contributions from the Commonwealth Government to support wheat industry research and development activities.
Key Provisions
The Wheat Tax Act 1957, as amended by the Wheat Tax Regulations (Amendment) Statutory Rules 1988 No. 213, introduces changes to the tax imposed on wheat delivered to the Australian Wheat Board (AWB). Section 4 of the Act stipulates a tax on wheat delivered to the AWB, while Sections 1 and 2 of the Wheat Tax Act 1979 and Wheat Tax (Permit) Act 1984 respectively apply the same tax rate to wheat sold by the AWB without delivery and to wheat sold for stockfeed purposes under a permit. Section 5 of the Act mandates that the tax rate must not exceed $1.10 per tonne. The Governor-General has the authority under Section 9 of the Act to make regulations for the purpose of setting the tax rate, and Subsection 5(2) requires the Governor-General to consider a report from the Grains Council of Australia (GCA) before doing so.
The Wheat Tax Regulations (Amendment) Statutory Rules 1988 No. 213 propose an increase in the tax rate from 45 cents to 65 cents per tonne, effective from 1 October 1988. This amendment responds to a submission from the GCA, which argues for the increase to maintain the competitiveness of Australian wheat on the global market, preserve the real value of funds available for research, and ensure adequate financial reserves for ongoing and new research activities in the wheat industry. The GCA's recommendation aligns with the Government’s goal of boosting the rural industry's contribution to research, which would rise from 0.30% to 0.44% of the industry's gross value of production (GVP) for 1988-89.
Entities governed by the Wheat Tax Act 1957 and related acts, such as the AWB, are obligated to adhere to the amended tax rate. This means that any wheat delivered to the AWB, sold by the AWB without delivery, or sold for stockfeed purposes under a permit will be subject to the new tax rate. Additionally, the Wheat Research Trust Fund, established under Section 7 of the Rural Industries Research Act 1985, will receive the increased tax revenue, which will be available for research and development activities in the wheat industry, subject to approval by the Wheat Research Committee in each mainland State.
Non-compliance with the provisions of the Wheat Tax Act 1957 and the Wheat Tax Regulations (Amendment) Statutory Rules 1988 No. 213 could result in legal consequences. While the specific offences and penalties are not detailed in the explanatory statement, breaches of tax regulations in Australia generally can lead to significant civil and criminal penalties. The maximum penalties for tax-related offences can include substantial fines and, in severe cases, imprisonment. The precise penalties depend on the nature and severity of the breach, and it is crucial for entities to ensure full compliance with the updated tax regulations to avoid these consequences.