Parliamentary Debate for NSW Combatting Wage Theft Bill Continues
On 6 May 2021, the Tax Administration Amendment (Combating Wage Theft) Bill 2021 (NSW) (‘the Bill’) was introduced to the Legislative Council.
In his second reading speech, the Minister for Finance and Small Business Damien Tudehope ('the Minister') stated:
"Wage theft is a serious issue and deserves serious action to deter, penalise and send a clear message that employees deserve to be paid what they are properly due. This bill will not stop wage theft, nor will it criminalise this shameful activity. ... [rather] what we have here before us is the opportunity to support workers and put employers who do the wrong thing by their employees on notice."
The Bill intends to address wage theft by:
- introducing new measures to deter the underpayment of wages;
- increasing penalties under the Taxation Administration Act 1996 (NSW); and
- establishing a new offence for knowingly evading or attempting to evade tax.
As of 8 June 2021, the second reading debate is still ongoing and the Bill is awaiting further debate and deliberation in the Legislative Council.
Measures to deter the underpayment of wages
If assented, the Bill would introduce three measures to deter the underpayment of wages.
Firstly, the Bill would allow the Chief Commissioner of Revenue NSW to reassess payroll tax on unpaid wages. Currently, if wage underpayment is discovered five years after the initial assessment, Revenue NSW can only reassess payroll tax when it can established that the wage theft was deliberate. Under the proposed amendments of the Bill, reassessment could occur for a period of more than five years after the initial payroll tax assessment, regardless of whether or not the wage underpayment was deliberate or inadvertent.
According to the Bill's second reading speech, the amendment will:
“further encourage employers to pay their workers the correct wages and ensure that employers who underpay do not unfairly benefit from a lower payroll tax liability simply because the underpayment was not detected until five years after the initial tax assessment.”
Secondly, if passed, the Bill would allow tax officers to disclose information to:
- the Fair Work Ombudsman to assist the Ombudsman in performing its functions under the Fair Work Act 2009 (Cth); and
- the Secretary of the Department of Premier and Cabinet for the purpose of investigating breaches under the Long Service Leave Act 1995 (NSW).
Finally, the Bill also proposes amendments that would allow tax officers to publicly disclose certain information regarding an employer, where there had been underpayment of wages that resulted in changes to an employer’s liability to pay payroll tax under the Payroll Tax Act 2007 (NSW). Specifically, when the payroll tax had not been assessed or has been assessed at a lower amount than would otherwise have been, had the underpayment not occurred. In his second reading speech, the Minister stated:
"This power will be at the Chief Commissioner's discretion, but in accordance with ministerial guidelines that I issue that will provide guidance on the circumstances in which it may be appropriate to name a taxpayer. ... The ministerial guidelines will balance the need to discourage payroll tax avoidance through wage theft with the need to avoid tarnishing a taxpayer's reputation where it would be unnecessarily punitive."
The Bill also seeks increase current penalties and introduce higher penalties for second or subsequent offences for certain contraventions under the Taxation Administration Act 1996 (NSW). According to the Bill's second reading speech:
“The provisions provide for maximum penalties to be generally increased by 2.5 times, while penalties for more serious offences, such as providing false or misleading information, will be increased by five times.”
Currently, offences such as including false and misleading information (section 50), knowingly giving false or misleading information (section 55) and deliberately omitting information (section 56) attract a penalty of 100 penalty units. Under the Bill, the maximum penalty for these offences would be changed to 500 penalty units for the first offence and 1000 penalty units for a second or subsequent offence. A second or subsequent offence under sections 55 and 56 would also be amended to potentially attract up to 2 years imprisonment.
New offence for tax evasion
Finally, the Bill also proposes the introduction of a new offence of knowingly evading or attempting to evade tax which would attract a maximum penalty of 1,000 penalty units and/or 2 years imprisonment.
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Tax Administration Amendment (Combating Wage Theft) Bill 2021 (NSW) and explanatory materials available from TimeBase's LawOne service