Payroll Tax Act 1971

Payroll tax was first imposed in Australia in July 1941. The Commonwealth introduced the Pay-roll Tax Act 1941 and the Pay-roll Tax Assessment Act 1941 as a way to raise money to pay for child endowment under the Child Endowment Act of 1941.

The Advisory Committee of the Labour Party described the Child Endowment Scheme as the 'first step towards the establishment of complete social services for the workers and their families'.

To help the states and territories to finance these services, and to give them greater flexibility in raising revenue, the Commonwealth transferred this tax to the states and territories in 1971.

The Queensland Pay-roll Tax Act 1971(the Act) took effect from 1 September 1971.

The Act is divided into 8 parts, and has 134 sections. It is supported by the Taxation Administration Act 2001 and Pay-roll Tax Regulation 1999.

During its almost 40 years of operation, the Act has been amended many times. Major amendments have included:

• the introduction of grouping provisions
• an exemption for charitable institutions
• an expanded definition of wages, including fringe benefits, certain termination payments and superannuation contributions
• a reduction in the payroll tax rate
• an increased exemption threshold.

The Act also offers payroll tax rebates for employers who hire long-term unemployed youth. and those involved with eligible Queensland film and television projects.

In 2008, the Pay-roll Tax (Harmonisation) Amendment Act 2008 was introduced. This amended the existing Act by harmonising certain aspects of the payroll tax systems of Queensland, New South Wales and Victoria.

The following article was published in The Canberra Times on 28 March 1941, under the heading '£13 Million Scheme Child Endowment'. It explains how the money raised through the Commonwealth Payroll Tax Act would be spent.

Consequential measures are the Payroll Tax Bill to raise £9,000,000 a year towards the cost of the scheme, and two taxation bills imposing the tax of 2 1/2 per cent, on all payrolls over £1,040.

Regulations will also be gazetted to cover administrative problems and eligibility for endowment, which cannot be dealt with in the main bills. 

Principal provisions of the Child Endowment Bill are:

• Endowment of 5/- a week will be paid for each child after the first in all families.
• Income tax deductions for children after the first wil be abolished so that taxpayers on higher incomes will be required to make direct contribution to the financing of the scheme.
• Payment will be made for all children maintained by private charitable institutions.
• British subjects may claim endowment after 12 months in Australia.
• Children born of aliens in Australia will be eligible for the bonus; together with those born abroad after their fathers become naturalised.
• Endowment will be paid for aborigines and half-castes living under conditions comparable with white Australians. 
• Payment will be continued until children reach the age of 16, irrespective of whether children begin work before this because of family necessity.
• Except in special cases, endowment will be paid to the woman in direct charge of the children, who will usually be the mother.
• Claims will be based upon responsibility for maintenance and not on natural relationship. Adopted and illegitimate children may be claimed for if otherwise eligible by those maintaining them.
• Endowment will not be regarded as income for taxation purposes. It is expected that the States will follow this Commonwealth practice.

Necessary administrative preparations are being carried out to have the scheme in operation by July 1.'

The following extracts are from an article published in The Canberra Times on 2 April 1941, under the heading 'Acrimonious Debate on Endowment'.

'After an acrimonius debate lasting three hours, the House of Representatives yesterday agreed to the bill to impose a payroll tax to finance the Child Endowment scheme.

The debate was marked by hostility to a minority group of U.A.P. members who, which supporting the endowment scheme, opposed the principle of a payroll tax.

Angry exchanges, catcalls and jeering interjections made it impossible on many occasions to follow the debate. One member said the country would be disgusted at the behaviour of members.

Support for the Government's proposal to raise £9,000,000 of the £13,000,000 necessary for financing the scheme by a tax of 2 1/2 per cent, on payrolls of more than £1040 a year, was expressed by the leader of the Opposition (Mr. Curtin).

"The Opposition is more concerned with making the payment to the mothers of Australia than it is with, a dispute as to whether the tax conforms to the principles of perfect equity," declared Mr. Curtin.

"We do not have to justify the tax," continued Mr Curtin. "We justify the establishment of a system of allowances' for children. The common sense of this situation is if we do not pass the taxation proposals there will be no child endowment scheme."

Mr. Beck said that the section of the community on incomes between £400 and £800 were already hardest hit by the war and would have their burden increased by the tax.

As the war progressed the services of women would be used more and more in increasingly important positions, said the Minister for Labour (Mr. Holt) yesterday replying to a women's deputation from Sydney.

The Minister informed the deputation, which sought an extension of benefits under the Child Endowment Scheme, that this plan was only a beginning, but even as it stood it was the most generous family endowment scheme in the world.