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Pay-roll Tax (Maternity and Adoption Leave
Exemption) Bill
Circulation Print
EXPLANATORY MEMORANDUM
General
This Bill makes amendments to the Pay-roll Tax Act 1971, to grant a new
exemption from pay-roll tax in respect of paid maternity leave and paid
adoption leave. From 1 January 2003, employers providing paid maternity or
adoption leave are entitled to an exemption from tax for any wages paid to an
employee, up to a maximum of 14 weeks maternity leave or adoption leave.
The maternity leave exemption is available in respect of leave provided to
female employees. The adoption leave exemption is available in respect of
leave provided to both female and male employees.
Clause Notes
Clause 1 outlines the purpose of the Bill and confirms that it applies to
paid maternity leave and paid adoption leave from 1 January
2003.
Clause 2 provides that the Act comes into operation on Royal Assent.
Clause 3 inserts after section 10A of the Pay-roll Tax Act 1971 a new
section 11.
Sub-section (1) provides that the exemption from pay-roll tax is
available for any wages paid or payable to an employee on or
after 1 January 2003 for--
· maternity leave; defined as leave given to a female
employee in connection with her pregnancy or the birth
of her child, excluding sick leave, recreation leave,
annual leave or similar leave; or
· adoption leave; defined as leave given to an employee
of either gender in connection with the adoption of his
or her child, excluding sick leave, recreation leave,
annual leave or similar leave.
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Sub-section (2) provides that the exemption is available whether
or not the leave is taken during or after the pregnancy or before
or after the adoption.
Sub-section (3) limits the exemption to wages paid or payable for
a maximum of 14 weeks maternity leave and 14 weeks adoption
leave.
Sub-section (4) clarifies the meaning of sub-section (3) by
explaining that the 14 week maximum is available on a pro rata
basis to full-time employees who take leave on less than full pay,
and that for part-time employees the period of 14 weeks leave is
limited to part-time rates of pay.
Sub-section (5) excludes from the exemption any fringe benefits
component of the wages paid or payable in respect of maternity
or adoption leave. This is to reduce the compliance burden on
employers claiming the exemption. If fringe benefits provided by
an employer were not excluded, employers would need to
apportion the value of taxable fringe benefits to calculate exempt
wages attributable to the period of leave.
Sub-section (6) requires an employer claiming the exemption for
wages paid in respect of maternity leave to obtain and keep--
· a medical certificate stating that the employee is or was
pregnant or stating that the employee has given birth
and the date of birth; or
· a statutory declaration by the employee to the same
effect.
Sub-section (7) requires an employer claiming the exemption for
wages paid in respect of adoption leave to obtain and keep a
statutory declaration by the employee stating that a child is in the
custody of the employee pending the making of an adoption
order, or that an adoption order has been made or recognised in
favour of the employee.
A note to sub-sections (6) and (7) refers to section 55 of the
Taxation Administration Act 1997. Section 55 requires that
these records be kept for at least 5 years, unless their earlier
destruction is authorised by the Commissioner of State Revenue.
Sub-section (8) confirms that an employer who has paid tax,
between 1 January 2003 and the day the Bill receives Royal
Assent, on wages which fall within the scope of this exemption is
entitled to a refund of the tax.
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