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Budget Paper No.2 Fiscal and Economic Outlook 2008-2009



Budget Paper No.2 Fiscal and Economic Outlook 2008-2009

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Tabled paper 1293


Tabled papers for 10th Assembly 2005 - 2008; Tabled papers; ParliamentNT




Tabled By Delia Lawrie


Made available by the Legislative Assembly of the Northern Territory under Standing Order 240. Where copyright subsists with a third party it remains with the original owner and permission may be required to reuse the material.




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73 concessionary taxed components of the benchmark tax base, such as a specific activity or class of taxpayer; and a benchmark tax rate to apply to the concessionary taxed components of the tax base. The establishment of a tax benchmark provides a basis against which each tax concession can be evaluated. The aim of the benchmark is to determine which concessions are tax expenditures as opposed to structural elements of the tax. By definition, tax expenditures are those tax concessions not included as part of the tax benchmark. Payroll Tax 2008-09 2009-10 2010-11 2011-12 Tax Expenditure ($M) 124.7 131.3 136.0 143.3 The benchmark tax base for payroll tax is assumed to be all wages, salaries and supplements paid in the Northern Territory, as defined in the Pay-roll Tax Act. The benchmark tax rate is assumed to be the payroll tax rate that will apply in 2008-09, being 5.9 per cent. Tax expenditure in relation to many payroll tax concessions is difficult to estimate, as data is not generally collected in relation to employers that do not have a payroll tax liability. Accordingly, the estimated tax expenditure reported above has been derived by using high level Australian Taxation Office data about wages paid by employers in the Territory and comparing this to wages information reported by employers registered for payroll tax in the Territory. The difference between these two sets of data provides a reasonable estimate of wages that are not subject to payroll tax in the Territory because of payroll tax concessions provided in the legislation. The estimated tax expenditure reported above mainly comprises the following exemptions. The first $1.25 million of an employers wages are exempt from payroll tax in the Territory. Accordingly, employers with wages less than this amount are not required to pay tax, and employers with wages that exceed this amount only pay tax on the excess. At the payroll tax rate of 5.9 per cent, the $1.25 million exemption reduces an employers annual payroll tax liability by up to $73 750. An exemption applies for wages that are paid or payable to: apprentices within the meaning of the Northern Territory Employment and Training Authority Act; employees receiving wages funded under the Community Development Employment Projects program (this exemption will remain but will have less impact over time with the phasing-out of CDEP in the Territory); or graduates of approved tertiary institutions employed under trainee arrangements approved by the Commissioner of Territory Revenue. Small Business Exemption Apprentices, Graduates and Others