EXPLANATORY STATEMENT
STATUTORY RULES 1986 NO. 185
Issued by the Authority of the Minister for Primary Industry
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 (AWB).
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 9 of the Act provides that the Governor-General may make regulations for the purpose of section 5 of the Act. Sub-section 5(1) provides that the rate of tax shall be such rate, not exceeding $1.10 per tonne as prescribed from time to time. Sub-section 5(2) provides that regulations prescribing a rate of tax shall not be made except after consideration by the Governor-General of a report made to the Minister for Primary Industry by the Australian Wheatgrowers’ Federation. This organisation has recently changed its name to the Grains Council of Australia (GCA).
The currently prescribed rate of tax is 35 cents per tonne. This rate has been operative since 1 November 1985.
The Rural Industries Research Act 1985 provides that wheat tax monies are held in the Wheat Research Trust Fund and are used to finance wheat industry research approved by the Wheat Research Committees in each mainland State.
The Commonwealth Government also contributes money to the Wheat Research Trust Fund to cover research expenditure recommended by the Wheat Research Council and approved by the Minister. Section 7 of the Rural Industries Research Act 1985 provides that the Commonwealth contribution must equal 50% of the amounts paid out of the Research Fund provided that this amount does not exceed the aggregate of the net amounts paid into the Fund as wheat tax. In any one financial year the Commonwealth contribution is limited to 0.5% of the gross value of production (GVP) of wheat averaged over three years up to and including the year in which expenditure is to be matched.
The Australian Wheatgrowers’ Federation (now the GCA) has presented a submission to the Minister requesting that the rate of tax be increased by 5 cents per tonne to 40 cents per tonne.
The submission identifies two main reasons for increasing the wheat research tax. Firstly, to maintain the real value of the research effort; and secondly, to enable wheat research funding bodies to develop and maintain adequate
financial reserves so as to maintain and not impinge on new or continuing research activities. The GCA considers that, given the variability in grain production due to seasonal conditions, reserves should be maintained above 50% of average expenditure. The submission also recognises the importance of research in maintaining the competitiveness of Australian wheat on the world market.
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 GVP within the next five years. The increase in the prescribed rate of tax represents an increase from 0.22% to 0.26% of the industry’s estimated GVP for 1986/87.
The proposed regulations to increase the rate of tax to 40 cents per tonne are to apply from 1 September 1986.