Payroll Tax Changes Hit Canberra Families And Businesses

Even with the government’s announcement on the 24th of June that it will extend the commencement date of the Payroll Tax Amendment Bill to the 1st of October 2014, there is still widespread confusion in the ACT market. Shadow Treasurer Brendan Smyth has called on the government to give greater certainty to affected businesses and workers.

“I continue to receive an overwhelming number of representations from ACT businesses and workers, with some alerting that client organisations will be proactively withholding 6.85 percent for the payroll tax changes come the 1st of July,” Mr Smyth said today.

“Contracts for the 2014-15 financial year have been finalised and have not factored in the 6.85 percent increase in cost to account for this legislative change. The government did not give prior warning that this was happening until the ACT Budget announcement earlier this month.

“It is unreasonable to expect businesses and contractors to renegotiate contractual arrangements. This is not how good business is conducted.

“Desperate to raise more money to pay for their spending, the government saw a $40 million opportunity to tax the contracting sector and rushed in without proper consultations and due diligence.

“So now, contract workers are faced with working at a financial loss and possible contractual penalties due to not being able to adequately carry out their obligations. This is a high handed way to implement tax policy and an unnecessary double hit to businesses and workers.

“Since announcing these changes, the phase in for this initiative has been the source of considerable disruption in the ACT market. The opposition is concerned that this will drive away vital in demand skills interstate.

“At a time when the economy is slowing down, the government should be initiating measures to give ACT families and businesses certainty and peace of mind. Not a $40 million tax that will leave them short changed and penalised,” Mr Smyth concluded.