Wool Tax (No. 1) Regulations (Amendment)

Administered by Department of the Treasury

Legislation au F1996B00130 Regulations Not in force Legislative Instrument

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Wool Tax (No. 1) Regulations (Amendment) 1992 No. 206

EXPLANATORY STATEMENT

STATUTORY RULES 1992 No. 206

Issued by the Authority of the Treasurer

Wool Tax Acts (Nos 1-5) 1964

Wool Tax (Nos 1-5) Regulations (Amendment)

Wool tax is imposed by five separate Acts, the Wool Tax Acts (Nos 1-5) 1964 (the Acts). Each Act provides for a tax to be imposed on a particular taxable dealing with shorn wool produced in Australia. The transactions to which the Acts relate are sale by a wool broker, sale through a registered wool dealer or manufacturer, wool subjected to a process of manufacture or exported for sale. The need for five separate Acts arises from a Constitutional requirement that laws imposing taxes should deal with one subject of taxation only.

Section 6 of each Act provides that the Governor-General may make regulations for the purposes of the Act and to prescribe a rate of tax lower than the 15% maximum rate for shorn wool other than carpet wool and lower than the 6% maximum for carpet wool, but neither rate is to be less than 2.75%.

Paragraph 5 (1) (b) of each of the Acts allows the determination of a total rate of tax lower than the 15% maximum provided by the Acts for shorn wool other than carpet wool. In making regulations to prescribe such a lower rate, the Governor-General is required to consider recommendations about the rate of wool tax made to the Minister for Primary Industries and Energy (the Minister) by:

•       the Australian Wool Realisation Commission (AWRC);

•       the last annual or special general meeting of wool tax payers held pursuant to the Australian Wool Corporation Act 1991; and

•       the annual general meeting of the Wool Research and Development Corporation (WRDC).

Similarly, paragraph 5 (2) (b) of each of the Acts allows determination of a rate of tax for carpet wool lower than the 6% maximum provided for by the Acts. In making regulations to prescribe such a lower rate, the Governor-General is required in this case to consider recommendations about the rate of wool tax made to the Minister by:

•       the last annual or special general meeting of wool tax payers held pursuant to the Australian Wool Corporation Act 1991; and

•       the annual general meeting of the WRDC.

The Minister has now received these recommendations for wool tax on wool sold on and after 1 July 1992. The AWRC recommendation, which incorporates the views of the Wool Council of Australia, is for a rate of 7.5% for its component of the tax. The Australian Wool Corporation (AWC) and the WRDC have recommended rates of 4% and 0.5% respectively for wool promotion and AWC purposes, and for research and development. These component rates apply to shorn wool other than carpet wool and bring the total prescribed rate of wool tax for this category to 12%.

With respect to carpet wool, the rates recommended are 4% for wool promotion and AWC purposes and 0.5% for research and development - a total prescribed rate for carpet wool of 4.5%.

The Minister has accepted the recommended 0.5% rate for wool research and development but has decided that the recommended rate for wool promotion and AWC purposes, and that recommended by the AWRC, should both be varied to 3.5% and 8% respectively. In making the decision, the Minister considered that:

-        the outcomes of the AWC Annual General Meeting were ambiguous in that a formal motion for 4% received 49% support, whereas a formal motion to raise a specified amount ($104m - which at the time was equivalent to about 4%) received over 50% support;

-        industry forecasts of production and prices have changed since the Annual General Meeting, which means that the required funding for the AWC in 1992/93 can now be raised by a 3.5% tax; and

-        a decrease in the AWC component and a consequent increase in the AWRC component will enable a higher rebate to growers this year. Given the financial difficulties of growers, it is the Government's wish to provide as large a rebate as possible to relieve the effects of depressed industry conditions and increase confidence in the industry.

As a consequence of these decisions, from 1 July 1992 the prescribed rate of wool tax for shorn wool other than carpet wool will remain at 12%, but the prescribed rate for carpet wool will increase from 3% to 4%.

Details of the proposed amendments to the Regulations are as follows:

Regulation 1 provides for the commencement of these Regulations on 1 July 1992.

Regulation 2 provides for amendment of these Regulations.

Regulation 3 amends the taxation period to become the financial year commencing on 1 July 1992 for shorn wool other than carpet wool (subregulation 3 (1)), and

amends the taxation period to become the financial year commencing on 1 July 1992 and changes the 3% rate to 4% for carpet wool (subregulation 3 (2)).

 

Overview

The Wool Tax (No. 1) Regulations (Amendment) 1992 No. 206, issued under the authority of the Treasurer, serves to amend existing regulations pertaining to wool tax as established by the Wool Tax Acts (Nos 1-5) 1964. This legislative instrument addresses the need for adjustments in the tax rates for shorn wool and carpet wool, following recommendations from relevant industry bodies. The primary aim is to ensure that the tax rates reflect current industry needs and financial forecasts while providing adequate support to wool growers amid industry challenges. Parliament enacts these amendments to align the tax rates with the evolving economic landscape and the specific needs of the wool industry, ensuring that the regulatory framework remains effective and responsive to industry requirements.

Scope and Application

The Wool Tax (No. 1) Regulations (Amendment) 1992 No. 206, issued by the authority of the Treasurer, amends the existing Wool Tax (Nos 1-5) Regulations 1964. These regulations pertain to the taxation of specific transactions involving shorn wool produced in Australia, including sales by wool brokers, sales through registered wool dealers or manufacturers, and the export of wool for sale or subjection to manufacturing processes. The regulations are structured under five separate Acts, each corresponding to a distinct taxable dealing, in compliance with the Constitutional requirement that laws imposing taxes should address one subject of taxation only. The acts cover transactions involving shorn wool other than carpet wool and carpet wool separately. The amendments apply to transactions occurring from 1 July 1992, altering the taxation period to the financial year beginning on that date and adjusting the tax rate for carpet wool from 3% to 4%. The Governor-General has the authority to make further regulations under section 6 of each Act to prescribe tax rates lower than the maximum 15% for shorn wool and 6% for carpet wool, provided these rates do not fall below 2.75%. These amendments reflect the Minister's consideration of recommendations from the Australian Wool Realisation Commission, the Australian Wool Corporation, and the Wool Research and Development Corporation, with specific adjustments made to balance industry funding needs and grower rebates.

Key Provisions

The Wool Tax (No. 1) Regulations (Amendment) 1992 No. 206 is an amendment to the existing regulations under the Wool Tax Acts (Nos 1-5) 1964. The primary function of these Regulations is to alter the prescribed rates of tax for shorn wool other than carpet wool and for carpet wool, effective from 1 July 1992. Regulation 1 (subsection 1) specifies the commencement date of these Regulations, while Regulation 2 details the amendments to be made to the existing regulations. Regulation 3 is particularly significant as it adjusts the taxation period to the financial year beginning on 1 July 1992, and it modifies the tax rate for carpet wool from 3% to 4%. The obligations imposed by these Regulations on the parties involved include ensuring compliance with the new tax rates as outlined. Wool producers, brokers, dealers, manufacturers, and exporters must adhere to the updated tax rates when engaging in taxable dealings with shorn wool. These parties must also maintain accurate records and submit tax returns in accordance with the new rates specified by the Regulations. Additionally, the Minister for Primary Industries and Energy, who has the authority to make these amendments, must consider recommendations from relevant bodies such as the Australian Wool Realisation Commission, the Australian Wool Corporation, and the Wool Research and Development Corporation before determining the final tax rates. In terms of consequences for non-compliance, the Regulations do not explicitly detail specific penalties or offences for breach. However, under the overarching Wool Tax Acts (Nos 1-5) 1964, failure to comply with the tax provisions can result in civil and criminal penalties. These can include fines, imprisonment, or both, depending on the severity and intent of the breach. The exact penalties are not specified in the explanatory statement but are typically governed by the general tax laws and regulations in Australia, which can impose significant financial penalties and imprisonment terms for serious or repeated violations.

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