Media release | Arbitrary taxation – a new paradigm for the taxpayer
8 June 2023
In a previous media release, Gadens identified that the Victorian Government’s State Budget’s payroll tax changes for schools upend established principles on which charities are taxed in this country.
As proposed legislation is progressing through Parliament and the Government is negotiating the discretionary terms on which the tax will be imposed, Biljana Apostolova, Gadens Partner comments that the proposed legislative framework for the tax continues to break down long-accepted principles of good taxation policy:
“The proposed payroll tax legislation will give the Minister for Education complete and arbitrary discretion at any time to declare which schools must pay tax and which will be exempt subject only to what the Minister considers appropriate.
“In other words, Victoria is embarking on an unprecedented tax policy based on arbitrary taxation at the hands of the Minister who will have the power to decide who to tax.
“The bargaining we are seeing play out around the school fee threshold the Minister will use to determine which schools will be taxed, further reinforces why what is proposed is inconsistent with good tax policy. The finer details of the proposed legislation show that the shrinking number of schools that may be caught by the tax should not be seen as a vindication. The scope of the exemption can be changed by the Minister from time to time and so any tax relief may be short lived.
“The changes to the legislation appear to have been made in haste and fail to align with the laws that govern school registration and government funding, which will create havoc both in administration and compliance.
“The critique of this tax measure is not about who are the winners and losers. It is long accepted that tax laws should be certain, clear and universal, with taxpayer rights a matter of legislative certainty rather than discretion on the part of executive government. The proposed legislation does not accord with those principles.”
Gadens is continuing to consider the impacts on our school and charity clients as a result of the proposed reforms. Please reach out to us if you want to be part of the discussion.