❓ The Treasurer addresses concerns regarding payroll tax assessments for employee-like contractors, clarifying the government's approach to compliance and offering a rebate scheme to address inconsistencies in back tax obligations due to misunderstandings of the 1982 law.
AnsweredQoN 369Legislative Assembly
QuestionView source ↗
I welcome the Treasurer’s announcement today about the Gallop Labor Government’s backflip on pursuing payroll tax assessments of employee-like contractors. (1) Given that when this matter was first raised at length by the Opposition more than nine months ago the Treasurer stated, “I do not and should not have the right or power to change the taxation assessment of an individual business or taxpayer”, on what basis have the Treasurer and Cabinet agreed not to pursue $5 million of payroll tax for which assessments have long been issued? (2) Will the Treasurer detail what role he and his ministerial staff played in formulating the agreement announced today not to pursue $5 million of assessed payroll taxes? Mr E.S. RIPPER
AnswerView source ↗
(1)-(2) This is an interesting issue because originally the Leader of the Opposition was reported on the front page of The West Australian as having alleged that the Government had instituted a new tax and was collecting that tax without legislative authority. It transpired that the tax collected dated from 1982, and that the relevant amendment had been introduced by the O’Connor Liberal Government. The Government has had an issue with the collection of tax dating from the 1982 amendment because it would appear that a number of companies have not been aware of the state of the law in this issue. Naturally, when those companies have been audited by the Office of State Revenue and the office has told them they are liable for the tax for this year and for the past five years, they have been more than a little perturbed. As the Leader of the Opposition would know, there have been allegations and suggestions that some companies will go under as a result of having to pay five or six years’ tax in one go having already bid for work on the basis of their wrong understanding of what was the tax law. Although wrong, it was their understanding at the time. We want to have a compliance strategy. The Office of State Revenue wants to have people pay the tax under the law as it stands. We want people to come forward and acknowledge that the arrangements they have are subject to the 1982 law. However, there is a difficulty if people know that when they come forward they may have five years of back tax to pay. Consequently, there is an incentive for some companies to hope that the auditors from the Office of State Revenue never arrive and, therefore, they will never have to pay back tax. As a compliance strategy, the Commissioner of State Revenue has made a decision within his power - not within mine - as the administrator of the tax legislation, that if employers who have contract arrangements with employee-like contractors and are subject to the 1982 law come forward before 30 June 2003, the commissioner will collect only three years back taxes rather than five years. However, after 30 June 2003, the commissioner will go back five years. Moreover, he will apply penalties to people who have not paid tax. This is a strategy to get people to come forward and to develop an understanding by industry of the nature of the 1982 law. The difficulty the Government faced when the commissioner made this decision was that a significant number of assessments from audit activity had already been issued and had gone back five years. Therefore, there was a group of people who had had assessments issued against them for five years’ back payment. There is no legal capacity for the commissioner to amend an assessment once it has been issued. That means that one group of people who have not yet been audited will have to pay back tax for three years and another group of people who have already been audited will have to pay back tax for five years. Therefore, the Department of Treasury and Finance prepared a recommendation for me, which I took as a submission to Cabinet, for a scheme by which we will in effect rebate that tax. They will still pay the tax, but we will rebate the payments for those employers who have already been assessed but have not yet paid their assessments and who are essentially in the same position as those people who are about to be audited or are about to come forward but will have only the three-year back payment obligation. I would prefer, naturally, that all people paid all the taxes that they owe under all the laws that apply to taxation in this State. However, it is pretty clear that there have been some misunderstandings about the nature of the payroll tax legislation as it applies to contractors. Some people think that this is a new interpretation by the Office of State Revenue. I do not agree with that point of view, but nevertheless there has been some difference of opinion. We need to get everyone who is subject to this 1982 law into the tax system in a proper way. This is not a perfect solution, but it is a pragmatic way of securing better compliance with our tax laws. The commissioner has made his independent decision about the audits and the people who are likely to come forward between now and the end of the financial year, and the Cabinet has made a corollary decision to ensure some equity in the overall arrangements.
(1) Given that when this matter was first raised at length by the Opposition more than nine months ago the Treasurer stated, “I do not and should not have the right or power to change the taxation assessment of an individual business or taxpayer”, on what basis have the Treasurer and Cabinet agreed not to pursue $5 million of payroll tax for which assessments have long been issued? (2) Will the Treasurer detail what role he and his ministerial staff played in formulating the agreement announced today not to pursue $5 million of assessed payroll taxes? Mr E.S. RIPPER replied: (1)-(2) This is an interesting issue because originally the Leader of the Opposition was reported on the front page of The West Australian as having alleged that the Government had instituted a new tax and was collecting that tax without legislative authority. It transpired that the tax collected dated from 1982, and that the relevant amendment had been introduced by the O’Connor Liberal Government. The Government has had an issue with the collection of tax dating from the 1982 amendment because it would appear that a number of companies have not been aware of the state of the law in this issue. Naturally, when those companies have been audited by the Office of State Revenue and the office has told them they are liable for the tax for this year and for the past five years, they have been more than a little perturbed. As the Leader of the Opposition would know, there have been allegations and suggestions that some companies will go under as a result of having to pay five or six years’ tax in one go having already bid for work on the basis of their wrong understanding of what was the tax law. Although wrong, it was their understanding at the time. We want to have a compliance strategy. The Office of State Revenue wants to have people pay the tax under the law as it stands. We want people to come forward and acknowledge that the arrangements they have are subject to the 1982 law. However, there is a difficulty if people know that when they come forward they may have five years of back tax to pay. Consequently, there is an incentive for some companies to hope that the auditors from the Office of State Revenue never arrive and, therefore, they will never have to pay back tax. As a compliance strategy, the Commissioner of State Revenue has made a decision within his power - not within mine - as the administrator of the tax legislation, that if employers who have contract arrangements with employee-like contractors and are subject to the 1982 law come forward before 30 June 2003, the commissioner will collect only three years back taxes rather than five years. However, after 30 June 2003, the commissioner will go back five years. Moreover, he will apply penalties to people who have not paid tax. This is a strategy to get people to come forward and to develop an understanding by industry of the nature of the 1982 law. The difficulty the Government faced when the commissioner made this decision was that a significant number of assessments from audit activity had already been issued and had gone back five years. Therefore, there was a group of people who had had assessments issued against them for five years’ back payment. There is no legal capacity for the commissioner to amend an assessment once it has been issued. That means that one group of people who have not yet been audited will have to pay back tax for three years and another group of people who have already been audited will have to pay back tax for five years. Therefore, the Department of Treasury and Finance prepared a recommendation for me, which I took as a submission to Cabinet, for a scheme by which we will in effect rebate that tax. They will still pay the tax, but we will rebate the payments for those employers who have already been assessed but have not yet paid their assessments and who are essentially in the same position as those people who are about to be audited or are about to come forward but will have only the three-year back payment obligation. I would prefer, naturally, that all people paid all the taxes that they owe under all the laws that apply to taxation in this State. However, it is pretty clear that there have been some misunderstandings about the nature of the payroll tax legislation as it applies to contractors. Some people think that this is a new interpretation by the Office of State Revenue. I do not agree with that point of view, but nevertheless there has been some difference of opinion. We need to get everyone who is subject to this 1982 law into the tax system in a proper way. This is not a perfect solution, but it is a pragmatic way of securing better compliance with our tax laws. The commissioner has made his independent decision about the audits and the people who are likely to come forward between now and the end of the financial year, and the Cabinet has made a corollary decision to ensure some equity in the overall arrangements.
(2) Will the Treasurer detail what role he and his ministerial staff played in formulating the agreement announced today not to pursue $5 million of assessed payroll taxes? Mr E.S. RIPPER replied: (1)-(2) This is an interesting issue because originally the Leader of the Opposition was reported on the front page of The West Australian as having alleged that the Government had instituted a new tax and was collecting that tax without legislative authority. It transpired that the tax collected dated from 1982, and that the relevant amendment had been introduced by the O’Connor Liberal Government. The Government has had an issue with the collection of tax dating from the 1982 amendment because it would appear that a number of companies have not been aware of the state of the law in this issue. Naturally, when those companies have been audited by the Office of State Revenue and the office has told them they are liable for the tax for this year and for the past five years, they have been more than a little perturbed. As the Leader of the Opposition would know, there have been allegations and suggestions that some companies will go under as a result of having to pay five or six years’ tax in one go having already bid for work on the basis of their wrong understanding of what was the tax law. Although wrong, it was their understanding at the time. We want to have a compliance strategy. The Office of State Revenue wants to have people pay the tax under the law as it stands. We want people to come forward and acknowledge that the arrangements they have are subject to the 1982 law. However, there is a difficulty if people know that when they come forward they may have five years of back tax to pay. Consequently, there is an incentive for some companies to hope that the auditors from the Office of State Revenue never arrive and, therefore, they will never have to pay back tax. As a compliance strategy, the Commissioner of State Revenue has made a decision within his power - not within mine - as the administrator of the tax legislation, that if employers who have contract arrangements with employee-like contractors and are subject to the 1982 law come forward before 30 June 2003, the commissioner will collect only three years back taxes rather than five years. However, after 30 June 2003, the commissioner will go back five years. Moreover, he will apply penalties to people who have not paid tax. This is a strategy to get people to come forward and to develop an understanding by industry of the nature of the 1982 law. The difficulty the Government faced when the commissioner made this decision was that a significant number of assessments from audit activity had already been issued and had gone back five years. Therefore, there was a group of people who had had assessments issued against them for five years’ back payment. There is no legal capacity for the commissioner to amend an assessment once it has been issued. That means that one group of people who have not yet been audited will have to pay back tax for three years and another group of people who have already been audited will have to pay back tax for five years. Therefore, the Department of Treasury and Finance prepared a recommendation for me, which I took as a submission to Cabinet, for a scheme by which we will in effect rebate that tax. They will still pay the tax, but we will rebate the payments for those employers who have already been assessed but have not yet paid their assessments and who are essentially in the same position as those people who are about to be audited or are about to come forward but will have only the three-year back payment obligation. I would prefer, naturally, that all people paid all the taxes that they owe under all the laws that apply to taxation in this State. However, it is pretty clear that there have been some misunderstandings about the nature of the payroll tax legislation as it applies to contractors. Some people think that this is a new interpretation by the Office of State Revenue. I do not agree with that point of view, but nevertheless there has been some difference of opinion. We need to get everyone who is subject to this 1982 law into the tax system in a proper way. This is not a perfect solution, but it is a pragmatic way of securing better compliance with our tax laws. The commissioner has made his independent decision about the audits and the people who are likely to come forward between now and the end of the financial year, and the Cabinet has made a corollary decision to ensure some equity in the overall arrangements.
Mr E.S. RIPPER replied: (1)-(2) This is an interesting issue because originally the Leader of the Opposition was reported on the front page of The West Australian as having alleged that the Government had instituted a new tax and was collecting that tax without legislative authority. It transpired that the tax collected dated from 1982, and that the relevant amendment had been introduced by the O’Connor Liberal Government. The Government has had an issue with the collection of tax dating from the 1982 amendment because it would appear that a number of companies have not been aware of the state of the law in this issue. Naturally, when those companies have been audited by the Office of State Revenue and the office has told them they are liable for the tax for this year and for the past five years, they have been more than a little perturbed. As the Leader of the Opposition would know, there have been allegations and suggestions that some companies will go under as a result of having to pay five or six years’ tax in one go having already bid for work on the basis of their wrong understanding of what was the tax law. Although wrong, it was their understanding at the time. We want to have a compliance strategy. The Office of State Revenue wants to have people pay the tax under the law as it stands. We want people to come forward and acknowledge that the arrangements they have are subject to the 1982 law. However, there is a difficulty if people know that when they come forward they may have five years of back tax to pay. Consequently, there is an incentive for some companies to hope that the auditors from the Office of State Revenue never arrive and, therefore, they will never have to pay back tax. As a compliance strategy, the Commissioner of State Revenue has made a decision within his power - not within mine - as the administrator of the tax legislation, that if employers who have contract arrangements with employee-like contractors and are subject to the 1982 law come forward before 30 June 2003, the commissioner will collect only three years back taxes rather than five years. However, after 30 June 2003, the commissioner will go back five years. Moreover, he will apply penalties to people who have not paid tax. This is a strategy to get people to come forward and to develop an understanding by industry of the nature of the 1982 law. The difficulty the Government faced when the commissioner made this decision was that a significant number of assessments from audit activity had already been issued and had gone back five years. Therefore, there was a group of people who had had assessments issued against them for five years’ back payment. There is no legal capacity for the commissioner to amend an assessment once it has been issued. That means that one group of people who have not yet been audited will have to pay back tax for three years and another group of people who have already been audited will have to pay back tax for five years. Therefore, the Department of Treasury and Finance prepared a recommendation for me, which I took as a submission to Cabinet, for a scheme by which we will in effect rebate that tax. They will still pay the tax, but we will rebate the payments for those employers who have already been assessed but have not yet paid their assessments and who are essentially in the same position as those people who are about to be audited or are about to come forward but will have only the three-year back payment obligation. I would prefer, naturally, that all people paid all the taxes that they owe under all the laws that apply to taxation in this State. However, it is pretty clear that there have been some misunderstandings about the nature of the payroll tax legislation as it applies to contractors. Some people think that this is a new interpretation by the Office of State Revenue. I do not agree with that point of view, but nevertheless there has been some difference of opinion. We need to get everyone who is subject to this 1982 law into the tax system in a proper way. This is not a perfect solution, but it is a pragmatic way of securing better compliance with our tax laws. The commissioner has made his independent decision about the audits and the people who are likely to come forward between now and the end of the financial year, and the Cabinet has made a corollary decision to ensure some equity in the overall arrangements.
(1)-(2) This is an interesting issue because originally the Leader of the Opposition was reported on the front page of The West Australian as having alleged that the Government had instituted a new tax and was collecting that tax without legislative authority. It transpired that the tax collected dated from 1982, and that the relevant amendment had been introduced by the O’Connor Liberal Government. The Government has had an issue with the collection of tax dating from the 1982 amendment because it would appear that a number of companies have not been aware of the state of the law in this issue. Naturally, when those companies have been audited by the Office of State Revenue and the office has told them they are liable for the tax for this year and for the past five years, they have been more than a little perturbed. As the Leader of the Opposition would know, there have been allegations and suggestions that some companies will go under as a result of having to pay five or six years’ tax in one go having already bid for work on the basis of their wrong understanding of what was the tax law. Although wrong, it was their understanding at the time. We want to have a compliance strategy. The Office of State Revenue wants to have people pay the tax under the law as it stands. We want people to come forward and acknowledge that the arrangements they have are subject to the 1982 law. However, there is a difficulty if people know that when they come forward they may have five years of back tax to pay. Consequently, there is an incentive for some companies to hope that the auditors from the Office of State Revenue never arrive and, therefore, they will never have to pay back tax. As a compliance strategy, the Commissioner of State Revenue has made a decision within his power - not within mine - as the administrator of the tax legislation, that if employers who have contract arrangements with employee-like contractors and are subject to the 1982 law come forward before 30 June 2003, the commissioner will collect only three years back taxes rather than five years. However, after 30 June 2003, the commissioner will go back five years. Moreover, he will apply penalties to people who have not paid tax. This is a strategy to get people to come forward and to develop an understanding by industry of the nature of the 1982 law. The difficulty the Government faced when the commissioner made this decision was that a significant number of assessments from audit activity had already been issued and had gone back five years. Therefore, there was a group of people who had had assessments issued against them for five years’ back payment. There is no legal capacity for the commissioner to amend an assessment once it has been issued. That means that one group of people who have not yet been audited will have to pay back tax for three years and another group of people who have already been audited will have to pay back tax for five years. Therefore, the Department of Treasury and Finance prepared a recommendation for me, which I took as a submission to Cabinet, for a scheme by which we will in effect rebate that tax. They will still pay the tax, but we will rebate the payments for those employers who have already been assessed but have not yet paid their assessments and who are essentially in the same position as those people who are about to be audited or are about to come forward but will have only the three-year back payment obligation. I would prefer, naturally, that all people paid all the taxes that they owe under all the laws that apply to taxation in this State. However, it is pretty clear that there have been some misunderstandings about the nature of the payroll tax legislation as it applies to contractors. Some people think that this is a new interpretation by the Office of State Revenue. I do not agree with that point of view, but nevertheless there has been some difference of opinion. We need to get everyone who is subject to this 1982 law into the tax system in a proper way. This is not a perfect solution, but it is a pragmatic way of securing better compliance with our tax laws. The commissioner has made his independent decision about the audits and the people who are likely to come forward between now and the end of the financial year, and the Cabinet has made a corollary decision to ensure some equity in the overall arrangements.
This is a strategy to get people to come forward and to develop an understanding by industry of the nature of the 1982 law. The difficulty the Government faced when the commissioner made this decision was that a significant number of assessments from audit activity had already been issued and had gone back five years. Therefore, there was a group of people who had had assessments issued against them for five years’ back payment. There is no legal capacity for the commissioner to amend an assessment once it has been issued. That means that one group of people who have not yet been audited will have to pay back tax for three years and another group of people who have already been audited will have to pay back tax for five years. Therefore, the Department of Treasury and Finance prepared a recommendation for me, which I took as a submission to Cabinet, for a scheme by which we will in effect rebate that tax. They will still pay the tax, but we will rebate the payments for those employers who have already been assessed but have not yet paid their assessments and who are essentially in the same position as those people who are about to be audited or are about to come forward but will have only the three-year back payment obligation. I would prefer, naturally, that all people paid all the taxes that they owe under all the laws that apply to taxation in this State. However, it is pretty clear that there have been some misunderstandings about the nature of the payroll tax legislation as it applies to contractors. Some people think that this is a new interpretation by the Office of State Revenue. I do not agree with that point of view, but nevertheless there has been some difference of opinion. We need to get everyone who is subject to this 1982 law into the tax system in a proper way. This is not a perfect solution, but it is a pragmatic way of securing better compliance with our tax laws. The commissioner has made his independent decision about the audits and the people who are likely to come forward between now and the end of the financial year, and the Cabinet has made a corollary decision to ensure some equity in the overall arrangements.
Therefore, the Department of Treasury and Finance prepared a recommendation for me, which I took as a submission to Cabinet, for a scheme by which we will in effect rebate that tax. They will still pay the tax, but we will rebate the payments for those employers who have already been assessed but have not yet paid their assessments and who are essentially in the same position as those people who are about to be audited or are about to come forward but will have only the three-year back payment obligation. I would prefer, naturally, that all people paid all the taxes that they owe under all the laws that apply to taxation in this State. However, it is pretty clear that there have been some misunderstandings about the nature of the payroll tax legislation as it applies to contractors. Some people think that this is a new interpretation by the Office of State Revenue. I do not agree with that point of view, but nevertheless there has been some difference of opinion. We need to get everyone who is subject to this 1982 law into the tax system in a proper way. This is not a perfect solution, but it is a pragmatic way of securing better compliance with our tax laws. The commissioner has made his independent decision about the audits and the people who are likely to come forward between now and the end of the financial year, and the Cabinet has made a corollary decision to ensure some equity in the overall arrangements.
(1) Given that when this matter was first raised at length by the Opposition more than nine months ago the Treasurer stated, “I do not and should not have the right or power to change the taxation assessment of an individual business or taxpayer”, on what basis have the Treasurer and Cabinet agreed not to pursue $5 million of payroll tax for which assessments have long been issued? (2) Will the Treasurer detail what role he and his ministerial staff played in formulating the agreement announced today not to pursue $5 million of assessed payroll taxes? Mr E.S. RIPPER replied: (1)-(2) This is an interesting issue because originally the Leader of the Opposition was reported on the front page of The West Australian as having alleged that the Government had instituted a new tax and was collecting that tax without legislative authority. It transpired that the tax collected dated from 1982, and that the relevant amendment had been introduced by the O’Connor Liberal Government. The Government has had an issue with the collection of tax dating from the 1982 amendment because it would appear that a number of companies have not been aware of the state of the law in this issue. Naturally, when those companies have been audited by the Office of State Revenue and the office has told them they are liable for the tax for this year and for the past five years, they have been more than a little perturbed. As the Leader of the Opposition would know, there have been allegations and suggestions that some companies will go under as a result of having to pay five or six years’ tax in one go having already bid for work on the basis of their wrong understanding of what was the tax law. Although wrong, it was their understanding at the time. We want to have a compliance strategy. The Office of State Revenue wants to have people pay the tax under the law as it stands. We want people to come forward and acknowledge that the arrangements they have are subject to the 1982 law. However, there is a difficulty if people know that when they come forward they may have five years of back tax to pay. Consequently, there is an incentive for some companies to hope that the auditors from the Office of State Revenue never arrive and, therefore, they will never have to pay back tax. As a compliance strategy, the Commissioner of State Revenue has made a decision within his power - not within mine - as the administrator of the tax legislation, that if employers who have contract arrangements with employee-like contractors and are subject to the 1982 law come forward before 30 June 2003, the commissioner will collect only three years back taxes rather than five years. However, after 30 June 2003, the commissioner will go back five years. Moreover, he will apply penalties to people who have not paid tax. This is a strategy to get people to come forward and to develop an understanding by industry of the nature of the 1982 law. The difficulty the Government faced when the commissioner made this decision was that a significant number of assessments from audit activity had already been issued and had gone back five years. Therefore, there was a group of people who had had assessments issued against them for five years’ back payment. There is no legal capacity for the commissioner to amend an assessment once it has been issued. That means that one group of people who have not yet been audited will have to pay back tax for three years and another group of people who have already been audited will have to pay back tax for five years. Therefore, the Department of Treasury and Finance prepared a recommendation for me, which I took as a submission to Cabinet, for a scheme by which we will in effect rebate that tax. They will still pay the tax, but we will rebate the payments for those employers who have already been assessed but have not yet paid their assessments and who are essentially in the same position as those people who are about to be audited or are about to come forward but will have only the three-year back payment obligation. I would prefer, naturally, that all people paid all the taxes that they owe under all the laws that apply to taxation in this State. However, it is pretty clear that there have been some misunderstandings about the nature of the payroll tax legislation as it applies to contractors. Some people think that this is a new interpretation by the Office of State Revenue. I do not agree with that point of view, but nevertheless there has been some difference of opinion. We need to get everyone who is subject to this 1982 law into the tax system in a proper way. This is not a perfect solution, but it is a pragmatic way of securing better compliance with our tax laws. The commissioner has made his independent decision about the audits and the people who are likely to come forward between now and the end of the financial year, and the Cabinet has made a corollary decision to ensure some equity in the overall arrangements.
(2) Will the Treasurer detail what role he and his ministerial staff played in formulating the agreement announced today not to pursue $5 million of assessed payroll taxes? Mr E.S. RIPPER replied: (1)-(2) This is an interesting issue because originally the Leader of the Opposition was reported on the front page of The West Australian as having alleged that the Government had instituted a new tax and was collecting that tax without legislative authority. It transpired that the tax collected dated from 1982, and that the relevant amendment had been introduced by the O’Connor Liberal Government. The Government has had an issue with the collection of tax dating from the 1982 amendment because it would appear that a number of companies have not been aware of the state of the law in this issue. Naturally, when those companies have been audited by the Office of State Revenue and the office has told them they are liable for the tax for this year and for the past five years, they have been more than a little perturbed. As the Leader of the Opposition would know, there have been allegations and suggestions that some companies will go under as a result of having to pay five or six years’ tax in one go having already bid for work on the basis of their wrong understanding of what was the tax law. Although wrong, it was their understanding at the time. We want to have a compliance strategy. The Office of State Revenue wants to have people pay the tax under the law as it stands. We want people to come forward and acknowledge that the arrangements they have are subject to the 1982 law. However, there is a difficulty if people know that when they come forward they may have five years of back tax to pay. Consequently, there is an incentive for some companies to hope that the auditors from the Office of State Revenue never arrive and, therefore, they will never have to pay back tax. As a compliance strategy, the Commissioner of State Revenue has made a decision within his power - not within mine - as the administrator of the tax legislation, that if employers who have contract arrangements with employee-like contractors and are subject to the 1982 law come forward before 30 June 2003, the commissioner will collect only three years back taxes rather than five years. However, after 30 June 2003, the commissioner will go back five years. Moreover, he will apply penalties to people who have not paid tax. This is a strategy to get people to come forward and to develop an understanding by industry of the nature of the 1982 law. The difficulty the Government faced when the commissioner made this decision was that a significant number of assessments from audit activity had already been issued and had gone back five years. Therefore, there was a group of people who had had assessments issued against them for five years’ back payment. There is no legal capacity for the commissioner to amend an assessment once it has been issued. That means that one group of people who have not yet been audited will have to pay back tax for three years and another group of people who have already been audited will have to pay back tax for five years. Therefore, the Department of Treasury and Finance prepared a recommendation for me, which I took as a submission to Cabinet, for a scheme by which we will in effect rebate that tax. They will still pay the tax, but we will rebate the payments for those employers who have already been assessed but have not yet paid their assessments and who are essentially in the same position as those people who are about to be audited or are about to come forward but will have only the three-year back payment obligation. I would prefer, naturally, that all people paid all the taxes that they owe under all the laws that apply to taxation in this State. However, it is pretty clear that there have been some misunderstandings about the nature of the payroll tax legislation as it applies to contractors. Some people think that this is a new interpretation by the Office of State Revenue. I do not agree with that point of view, but nevertheless there has been some difference of opinion. We need to get everyone who is subject to this 1982 law into the tax system in a proper way. This is not a perfect solution, but it is a pragmatic way of securing better compliance with our tax laws. The commissioner has made his independent decision about the audits and the people who are likely to come forward between now and the end of the financial year, and the Cabinet has made a corollary decision to ensure some equity in the overall arrangements.
Mr E.S. RIPPER replied: (1)-(2) This is an interesting issue because originally the Leader of the Opposition was reported on the front page of The West Australian as having alleged that the Government had instituted a new tax and was collecting that tax without legislative authority. It transpired that the tax collected dated from 1982, and that the relevant amendment had been introduced by the O’Connor Liberal Government. The Government has had an issue with the collection of tax dating from the 1982 amendment because it would appear that a number of companies have not been aware of the state of the law in this issue. Naturally, when those companies have been audited by the Office of State Revenue and the office has told them they are liable for the tax for this year and for the past five years, they have been more than a little perturbed. As the Leader of the Opposition would know, there have been allegations and suggestions that some companies will go under as a result of having to pay five or six years’ tax in one go having already bid for work on the basis of their wrong understanding of what was the tax law. Although wrong, it was their understanding at the time. We want to have a compliance strategy. The Office of State Revenue wants to have people pay the tax under the law as it stands. We want people to come forward and acknowledge that the arrangements they have are subject to the 1982 law. However, there is a difficulty if people know that when they come forward they may have five years of back tax to pay. Consequently, there is an incentive for some companies to hope that the auditors from the Office of State Revenue never arrive and, therefore, they will never have to pay back tax. As a compliance strategy, the Commissioner of State Revenue has made a decision within his power - not within mine - as the administrator of the tax legislation, that if employers who have contract arrangements with employee-like contractors and are subject to the 1982 law come forward before 30 June 2003, the commissioner will collect only three years back taxes rather than five years. However, after 30 June 2003, the commissioner will go back five years. Moreover, he will apply penalties to people who have not paid tax. This is a strategy to get people to come forward and to develop an understanding by industry of the nature of the 1982 law. The difficulty the Government faced when the commissioner made this decision was that a significant number of assessments from audit activity had already been issued and had gone back five years. Therefore, there was a group of people who had had assessments issued against them for five years’ back payment. There is no legal capacity for the commissioner to amend an assessment once it has been issued. That means that one group of people who have not yet been audited will have to pay back tax for three years and another group of people who have already been audited will have to pay back tax for five years. Therefore, the Department of Treasury and Finance prepared a recommendation for me, which I took as a submission to Cabinet, for a scheme by which we will in effect rebate that tax. They will still pay the tax, but we will rebate the payments for those employers who have already been assessed but have not yet paid their assessments and who are essentially in the same position as those people who are about to be audited or are about to come forward but will have only the three-year back payment obligation. I would prefer, naturally, that all people paid all the taxes that they owe under all the laws that apply to taxation in this State. However, it is pretty clear that there have been some misunderstandings about the nature of the payroll tax legislation as it applies to contractors. Some people think that this is a new interpretation by the Office of State Revenue. I do not agree with that point of view, but nevertheless there has been some difference of opinion. We need to get everyone who is subject to this 1982 law into the tax system in a proper way. This is not a perfect solution, but it is a pragmatic way of securing better compliance with our tax laws. The commissioner has made his independent decision about the audits and the people who are likely to come forward between now and the end of the financial year, and the Cabinet has made a corollary decision to ensure some equity in the overall arrangements.
(1)-(2) This is an interesting issue because originally the Leader of the Opposition was reported on the front page of The West Australian as having alleged that the Government had instituted a new tax and was collecting that tax without legislative authority. It transpired that the tax collected dated from 1982, and that the relevant amendment had been introduced by the O’Connor Liberal Government. The Government has had an issue with the collection of tax dating from the 1982 amendment because it would appear that a number of companies have not been aware of the state of the law in this issue. Naturally, when those companies have been audited by the Office of State Revenue and the office has told them they are liable for the tax for this year and for the past five years, they have been more than a little perturbed. As the Leader of the Opposition would know, there have been allegations and suggestions that some companies will go under as a result of having to pay five or six years’ tax in one go having already bid for work on the basis of their wrong understanding of what was the tax law. Although wrong, it was their understanding at the time. We want to have a compliance strategy. The Office of State Revenue wants to have people pay the tax under the law as it stands. We want people to come forward and acknowledge that the arrangements they have are subject to the 1982 law. However, there is a difficulty if people know that when they come forward they may have five years of back tax to pay. Consequently, there is an incentive for some companies to hope that the auditors from the Office of State Revenue never arrive and, therefore, they will never have to pay back tax. As a compliance strategy, the Commissioner of State Revenue has made a decision within his power - not within mine - as the administrator of the tax legislation, that if employers who have contract arrangements with employee-like contractors and are subject to the 1982 law come forward before 30 June 2003, the commissioner will collect only three years back taxes rather than five years. However, after 30 June 2003, the commissioner will go back five years. Moreover, he will apply penalties to people who have not paid tax. This is a strategy to get people to come forward and to develop an understanding by industry of the nature of the 1982 law. The difficulty the Government faced when the commissioner made this decision was that a significant number of assessments from audit activity had already been issued and had gone back five years. Therefore, there was a group of people who had had assessments issued against them for five years’ back payment. There is no legal capacity for the commissioner to amend an assessment once it has been issued. That means that one group of people who have not yet been audited will have to pay back tax for three years and another group of people who have already been audited will have to pay back tax for five years. Therefore, the Department of Treasury and Finance prepared a recommendation for me, which I took as a submission to Cabinet, for a scheme by which we will in effect rebate that tax. They will still pay the tax, but we will rebate the payments for those employers who have already been assessed but have not yet paid their assessments and who are essentially in the same position as those people who are about to be audited or are about to come forward but will have only the three-year back payment obligation. I would prefer, naturally, that all people paid all the taxes that they owe under all the laws that apply to taxation in this State. However, it is pretty clear that there have been some misunderstandings about the nature of the payroll tax legislation as it applies to contractors. Some people think that this is a new interpretation by the Office of State Revenue. I do not agree with that point of view, but nevertheless there has been some difference of opinion. We need to get everyone who is subject to this 1982 law into the tax system in a proper way. This is not a perfect solution, but it is a pragmatic way of securing better compliance with our tax laws. The commissioner has made his independent decision about the audits and the people who are likely to come forward between now and the end of the financial year, and the Cabinet has made a corollary decision to ensure some equity in the overall arrangements.
This is a strategy to get people to come forward and to develop an understanding by industry of the nature of the 1982 law. The difficulty the Government faced when the commissioner made this decision was that a significant number of assessments from audit activity had already been issued and had gone back five years. Therefore, there was a group of people who had had assessments issued against them for five years’ back payment. There is no legal capacity for the commissioner to amend an assessment once it has been issued. That means that one group of people who have not yet been audited will have to pay back tax for three years and another group of people who have already been audited will have to pay back tax for five years. Therefore, the Department of Treasury and Finance prepared a recommendation for me, which I took as a submission to Cabinet, for a scheme by which we will in effect rebate that tax. They will still pay the tax, but we will rebate the payments for those employers who have already been assessed but have not yet paid their assessments and who are essentially in the same position as those people who are about to be audited or are about to come forward but will have only the three-year back payment obligation. I would prefer, naturally, that all people paid all the taxes that they owe under all the laws that apply to taxation in this State. However, it is pretty clear that there have been some misunderstandings about the nature of the payroll tax legislation as it applies to contractors. Some people think that this is a new interpretation by the Office of State Revenue. I do not agree with that point of view, but nevertheless there has been some difference of opinion. We need to get everyone who is subject to this 1982 law into the tax system in a proper way. This is not a perfect solution, but it is a pragmatic way of securing better compliance with our tax laws. The commissioner has made his independent decision about the audits and the people who are likely to come forward between now and the end of the financial year, and the Cabinet has made a corollary decision to ensure some equity in the overall arrangements.
Therefore, the Department of Treasury and Finance prepared a recommendation for me, which I took as a submission to Cabinet, for a scheme by which we will in effect rebate that tax. They will still pay the tax, but we will rebate the payments for those employers who have already been assessed but have not yet paid their assessments and who are essentially in the same position as those people who are about to be audited or are about to come forward but will have only the three-year back payment obligation. I would prefer, naturally, that all people paid all the taxes that they owe under all the laws that apply to taxation in this State. However, it is pretty clear that there have been some misunderstandings about the nature of the payroll tax legislation as it applies to contractors. Some people think that this is a new interpretation by the Office of State Revenue. I do not agree with that point of view, but nevertheless there has been some difference of opinion. We need to get everyone who is subject to this 1982 law into the tax system in a proper way. This is not a perfect solution, but it is a pragmatic way of securing better compliance with our tax laws. The commissioner has made his independent decision about the audits and the people who are likely to come forward between now and the end of the financial year, and the Cabinet has made a corollary decision to ensure some equity in the overall arrangements.
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