Commonwealth Numbered Regulations - Explanatory Statements

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WOOL TAX (NO. 5) REGULATIONS (AMENDMENT) 1992 NO. 210

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)).