Wool Tax (No. 4) Regulations (Amendment)

Administered by Department of the Treasury

Legislation au F1996B00154 Regulations Not in force Legislative Instrument

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Wool Tax (No. 4) Regulations (Amendment) 1992 No. 209

EXPLANATORY STATEMENT

STATUTORY RULES 1992 No. 209

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. 4) Regulations (Amendment) 1992 No. 209 was enacted to address the need for adjusting the tax rates on shorn wool produced in Australia. This legislation amends the existing Wool Tax Acts (Nos 1-5) 1964, which impose a tax on various transactions involving Australian wool. The need for these amendments arises from the recommendations made by the Australian Wool Realisation Commission, the Australian Wool Corporation, and the Wool Research and Development Corporation, which were then considered by the Minister for Primary Industries and Energy. The primary objective of this amendment is to adjust the tax rates to better reflect the current industry conditions and to provide appropriate funding for wool promotion, research, and development while considering the financial difficulties faced by wool growers. The regulations were issued under the authority of the Treasurer, aligning with the policy objective of supporting the wool industry amidst challenging economic conditions.

Scope and Application

The Wool Tax (No. 4) Regulations (Amendment) 1992 No. 209 applies to the imposition of wool tax on shorn wool produced in Australia, affecting transactions such as the sale by a wool broker, sale through a registered wool dealer or manufacturer, wool subjected to a process of manufacture, or exported for sale. These Regulations amend the existing Wool Tax (Nos 1-5) Regulations 1964 to adjust the tax rates applicable from 1 July 1992. The scope of the Act is geographically limited to Australia, and it applies to all entities involved in the production and sale of shorn wool within the country. The prescribed rates of tax vary depending on the type of wool, with separate maximum rates of 15% for shorn wool other than carpet wool and 6% for carpet wool, though the minimum tax rate is set at 2.75%. The Minister for Primary Industries and Energy is responsible for considering recommendations from relevant bodies, including the Australian Wool Realisation Commission, the Australian Wool Corporation, and the Wool Research and Development Corporation, when setting these rates. The amendments to the Regulations are designed to reflect the Minister’s decisions on the tax rates based on the recommendations received.

Key Provisions

The main operative sections of the Wool Tax (No. 4) Regulations (Amendment) 1992 No. 209 include Regulation 1, which sets the commencement date for these Regulations, and Regulation 3, which amends the taxation period and rates for shorn wool other than carpet wool and for carpet wool. Specifically, Regulation 3(1) amends the taxation period to the financial year commencing on 1 July 1992 for shorn wool other than carpet wool, and Regulation 3(2) amends the taxation period to the financial year commencing on 1 July 1992 and changes the tax rate from 3% to 4% for carpet wool. The obligations and requirements imposed by these Regulations primarily concern the tax rate applicable to wool transactions from 1 July 1992 onwards. For shorn wool other than carpet wool, the tax rate remains at 12%, as decided by the Minister for Primary Industries and Energy, taking into account recommendations from relevant entities and considering the financial needs of the industry and the potential impact on growers. For carpet wool, the tax rate increases from 3% to 4%, reflecting a change in the taxation period and the need to adjust the rate to meet the funding requirements of the Australian Wool Corporation and the Wool Research and Development Corporation. In terms of breaches and penalties, the Regulations themselves do not explicitly state offences or penalties for non-compliance. However, it is implied that failure to adhere to the specified tax rates and periods could result in legal consequences. Typically, non-compliance with tax regulations in Australia can lead to penalties, which may include fines, interest on unpaid taxes, and potential legal action. The specific penalties would be determined under the relevant tax Acts, which are not detailed in these Regulations but would generally align with the penalties outlined in the Wool Tax Acts (Nos 1-5) 1964. The maximum penalties for non-compliance with tax laws in Australia can vary, but they may include substantial fines and, in some cases, imprisonment for serious or repeated offences.

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