Wool Tax (No. 5) Regulations (Amendment)

Administered by Department of the Treasury

Legislation au F1996B00162 Regulations Not in force Legislative Instrument

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Wool Tax (No. 5) Regulations (Amendment) 1992 No. 210

EXPLANATORY STATEMENT

STATUTORY RULES 1992 No. 210

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. 5) Regulations (Amendment) 1992 No. 210, issued under the authority of the Treasurer, addresses the need for updating the tax rates on wool transactions as stipulated in the Wool Tax Acts (Nos 1-5) 1964. These Acts collectively impose a tax on specific dealings with shorn wool produced in Australia, including sales by brokers, registered dealers, manufacturers, and exports. Given the constitutional requirement for laws imposing taxes to focus on a single subject, five separate Acts were enacted. The present amendment responds to recommendations made by the Australian Wool Realisation Commission, the Australian Wool Corporation, and the Wool Research and Development Corporation concerning the appropriate tax rates. The Minister for Primary Industries and Energy has adjusted the recommended rates to balance funding needs and industry support, particularly aiming to provide greater relief to wool growers amidst economic challenges. These amendments are set to take effect from 1 July 1992, modifying the tax rates accordingly.

Scope and Application

The Wool Tax (No. 5) Regulations (Amendment) 1992 No. 210, issued by the authority of the Treasurer, pertains to the amendment of the regulations under the Wool Tax Acts (Nos 1-5) 1964. These Acts impose a tax on various dealings with shorn wool produced in Australia, specifically on sales by wool brokers, sales through registered wool dealers or manufacturers, and wool that undergoes manufacturing processes or is exported for sale. The amendment applies to all entities involved in these taxable dealings, ensuring compliance with the specified tax rates. Geographically, the application of these regulations extends across Australia, as they fall under the Commonwealth jurisdiction. The regulations do not specify exclusions or exemptions but allow for variations in tax rates through subordinate instruments based on recommendations from relevant industry bodies. The prescribed tax rates are subject to review and amendment as per the statutory framework, ensuring that the tax rates are reflective of industry needs and economic conditions.

Key Provisions

The Wool Tax (No. 5) Regulations (Amendment) 1992 No. 210 amends the existing Wool Tax Regulations to adjust the tax rates for different types of shorn wool. Regulation 1 (2) stipulates the commencement date of these Regulations as 1 July 1992. Regulation 2 provides for the amendment of these Regulations. Regulation 3 (1) changes the taxation period for shorn wool other than carpet wool to the financial year starting on 1 July 1992, and Regulation 3 (2) modifies the taxation period for carpet wool to the financial year starting on 1 July 1992 while also altering the tax rate from 3% to 4%. These Regulations impose specific obligations on parties dealing with shorn wool. They require that the prescribed rates of tax be applied to taxable dealings with wool from the specified commencement date. This includes sales by wool brokers, sales through registered wool dealers or manufacturers, wool subjected to a manufacturing process, and wool exported for sale. The Minister's decision to vary the recommended rates for wool promotion and AWC purposes, as well as the AWRC component, means that those involved in the wool industry must adjust their tax calculations accordingly. The new rates mean that the total prescribed rate for shorn wool other than carpet wool remains at 12%, while the rate for carpet wool increases to 4%. The Act provides for offences and penalties should the obligations and requirements of the Regulations be breached. The specific penalties are not detailed in the Explanatory Statement, but under the general Wool Tax Acts, non-compliance can lead to significant financial penalties and potential legal action. The precise penalties would depend on the nature and extent of the breach, but they could include fines and other civil or criminal consequences as stipulated by the relevant legislation. The amendments to the Regulations are significant for stakeholders in the wool industry. They must ensure compliance with the new rates to avoid potential penalties and legal repercussions. The changes reflect the Government's intention to provide a larger rebate to growers to alleviate the effects of depressed industry conditions and boost confidence within the sector. The decision to adjust the tax rates, particularly for carpet wool, is aimed at achieving a balance between industry funding needs and the financial relief required by growers.

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