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Payroll tax process runs into early opposition

SOME groups invited to take part in the process to produce rules defining “employee-like” contractors for the WA Government’s new payroll tax regime have hit out at the Government’s insistence that the discussions be held confidentially.

The Office of State Revenue has demanded that all participants in the consultation treat discussions held as “in-camera”.

Members of the consultative committee will be allowed to discuss matters with the “taxation committee” of their organisation. Beyond that they will only be allowed to go public after the draft legislation has been introduced into Parliament.

A spokeswoman for acting Treasurer Nick Griffiths said it was standard practice for State Revenue to hold its consultations in-camera.

“The department has used this process over the years. It was in place during the time of the previous Government,” she said.

Master Builders Association director of housing Gavan Forster said the in-camera approach had been a big concern to the MBA and was part of the reason it was boycotting the consultative committee.

“It puts the organisation’s representative in a very awkward position because he or she can’t get the views of the members on how the discussions are going,” he said.

The MBA’s decision to boycott is also based on principle.

“We feel contracting is such a sacrosanct area that getting into discussions about making changes to it would undermine the principles builders believe in,” Mr Forster said.

Institute of Chartered Accountants in Australia regional manager WA Con Abbott said the institute would be fielding a representative but was concerned about the secrecy clause.

“If the Government wants broad community consultation, this is not the way to do it,” Mr Abbott said.

“In my view this is not conducive to open and accountable government.”

Taxation Institute WA chairman Graham Cotterill believes the consultations should be held in public but can see the benefit in keeping them secret from State Revenue’s point of view.

“The release of ideas brought up during the consultation to the media can make things hard to progress,” Mr Cotterill said.

“But my view is if we are trying to progress the rules I can’t see what harm public debate can have.”

The Government invited a total of 17 groups to take part in the consultation. As of last week, eight had accepted, including the Institute of Chartered Accountants in Australia, the Law Society of WA, the Housing Industry Association, the Taxation Institute, the Chamber of Minerals and Energy and WAFarmers.

Four declined – three of which did so because they felt the payroll tax changes had little to do with them.

The fourth, the Master Builders Association, had a philosophical objection to any plans to add contractors to the payroll tax net.

A spokesman for Treasurer Eric Ripper said the Government wanted to be as consultative as possible.

However, even though the employee-like contractor-defining consultation process has not started, the Government already has introduced the legislation.

The only test included in the legislation is the “results test”, drawn from the Federal income tax system.

Under that test, if an individual or entity is producing a result, supplying their tools of trade and liable for the cost of rectifying defective work, then they are deemed genuine contractors.

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