Premier & Cabinet

Type:
Department of Premier and Cabinet Circular
Identifier:
C1990-04
Status:
Archived

C1990-04 Chief Executive Service/Senior Executive Service - Taxation Matters

Detailed Outline

The attention of Chief Executives is drawn to the following taxation matters relevant to Chief Executive and Senior Executive remuneration.

1. FBT CALCULATION AND DEDUCTIONS

As the end of the FBT year (31 March 1990) approaches, could you initiate an internal check to ensure that all FBT calculations are accurate and consistent with policy and that correct deductions have been made from individual remuneration packages for all expenses incurred to date. As you are aware, the FBT rate will reduce to 47% from 1 April 1990.

2. EXPENSE PAYMENT FRINGE BENEFITS

It has come to attention that some executives may not fully appreciate that where an employee has certain private expenses paid for or reimbursed by the employer as part of a salary sacrifice arrangement, the expense is not treated as incurred by the employee. The employer has paid the expense and has therefore incurred it. Consequently, the employee has no entitlement to a taxation deduction for any such expense.

3. SALES TAX RULING ON EXECUTIVE VEHICLES

As indicated in Circular 89-28, further clarification had been sought from the Taxation Office on the possible application of sales tax on executive vehicles. The attached advice has been received confirming, that sales tax does not apply.

It would be appreciated if you could bring this advice to the attention of relevant officers within your agency.

R. G. Humphry,
Director General.

Australian Taxation Office

SYDNEY SOUTH

22/AD2/900 735 011

Mr R G Humphry
Director General
Premiers Department
State Office Block
Macquarie Street
SYDNEY NSW 2000

Dear Mr Humphry,

SALES TAX : MOTOR VEHICLES FOR STATE GOVERNMENT EXECUTIVES

Reference is made to your letter dated 19 October 1989 wherein you sought to clarify your letter advice previously provided to the Remuneration Planning Corporation on behalf of the New South Wales Government.

Clarification was sought on the liability for sales tax on motor vehicles in the following circumstances:-

'(1) Where a vehicle is provided to the employee to drive to and from work, but which must be driven to work everyday and made available for use as a 'pool car.'

(2) Where a vehicle is provided to the employee as a private use vehicle i.e. a vehicle not required to be made available for use as a pool car, and not required to be driven to and from work each day.'

Under these circumstances the motor vehicles will be exempt from sales tax under item 74 of the First Schedule to the Sales Tax (Exemptions and Classifications) Act.

In accordance with this decision, goods such as the above vehicles for use and not for sale by the Government or its individual agencies may he purchased exempt from sales tax by furnishing the vendor with a certificate of conditional exemption, a sample of which is enclosed.

Advice was also sought whether the sales tax liability would be different for statutory authorities not subsidised by Government through consolidated revenue. Where the charters of these authorities depend upon an Act of Parliament which reflects government policy and is accountable to the State Government it as considered that the control exercised by the Government is sufficient to satisfy the terms of item 74.

Where the expenditure of the authorities are not met directly from consolidated revenue or appropriations by Parliament this does not mean that the expenditure of the authorities is not borne by the State Government. It is not a requirement that the expenditure of an authority be met directly from consolidated revenue for exemption under item 74 to apply. As a general proposition the expenditure test of item 74 will be regarded as being satisfied where expenditure is funded by compulsory exactions, the amounts and rates of which are set by law.

Sometimes the relevant Acts require these kinds of authorities to make certain investments. The end result is that the income derived from investments together with the contributions from employers is viewed as government funds to be used in ways determined under the relevant Acts. Further, the instance where an arrangement made by a Government to finance the cost of running a project out of the project is tantamount to the expenditure being borne by the Government. Accordingly, the above authorities would be exempt as they are State Owned Corporations. This office should be advised of any intention towards privatisation in order that the exemption may be reviewed.

Should you have any further queries concerning specific sales tax matters, please do not hesitate to contact this office.

Yours faithfully,
E. V. Killesteyn.

DEPUTY COMMISSIONER OF TAXATION

Encl

'Sales Tax (Exemptions and Classifications) Act

To the Commissioner of Taxation and the Commonwealth of Australia.

I hereby certify that these goods are for use of .... (name of exempt body) .... and are not for resale. Exemption is accordingly claimed under item 74 in the First Schedule to the Sales Tax (Exemptions and Classifications) Act.

Signature

Status of signatory

Date

Overview

Compliance

Not Mandatory

AR Details

Date Issued
Jun 13, 1990
Review Date
Jun 13, 2024
Replaces
Replaced By

Contacts

Contact
Contact us
Phone
02 9228 5555
Publishing Entity
Department of Premier and Cabinet
Issuing Entity
Department of Premier and Cabinet