Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon. P.J. Keating, M.P.)MAIN FEATURES
The main feature of the Bill is as follows:
Twice-monthly payment of tax instalment deductions (Clauses 3 to 5)
The Bill will give effect to the Government's 1989-90 Budget proposal to require certain employers (called "early remitters") to pay to the Commissioner of Taxation by the twenty-first day of a month the income tax which they deduct ("tax instalment deductions") from payments of salary or wages to their employees in the first 14 days of the month. Deductions from payments of salary or wages in the balance of the month are to be paid to the Commissioner no later than the seventh day of the next month.
The proposal will first apply to employers who made tax instalment deductions in excess of $5 million in relation to the financial year ended 30 June 1989. These employers will be required to remit the deductions on a twice-monthly basis, commencing with a payment on or before 21 June 1990 of the deductions made in the period 1-14 June 1990. Deductions in the balance of that month will be payable no later than 7 July 1990. Initially it was proposed, in the 1989-90 Budget, that the scheme would commence with the first instalment payable by 21 December 1989. The necessary legislation, however, lapsed when the Parliament was dissolved.
Employers who are members of a wholly-owned group of companies will also be required to pay the deductions to the Commissioner on this twice-monthly basis if the aggregate annual remittances of tax instalment deductions in relation to the financial year ended 30 June 1989 of all the companies in the group exceed $5 million.
Employers who, or companies in a wholly-owned group which, first make tax instalment deductions in excess of $5 million in the year ending 30 June 1990, or a later year, will also be required to remit on the above twice-monthly basis, commencing in the September following the end of the relevant financial year.
An employer who becomes liable to make twice-monthly remittances at any time will be required to continue remitting on that basis unless the Commissioner determines otherwise. Where there is an arrangement for the purpose of avoiding or defeating the proposed requirements, the Commissioner would be authorised to determine that an employer is to pay the tax instalment deductions on the twice-monthly basis.
A more detailed explanation of the provisions of the Bill is contained in the following notes.