TIMBER WORKERS HIT BY STATE TAX BUNGLE

Hundreds of timber workers across the State have been hit by a three year old tax bill, in some cases amounting to thousands of dollars, as the result of a bungle by the State Government when it restructured the timber industry in 2003.

Gippsland MP Peter Hall has called on the State Government to ensure no individuals or contractors are out of pocket, after it was revealed that industry restructure payments were not tax free, contrary to advice provided by the State at the time.

"At the time of receiving these payments, these workers and contractors were advised that the payouts they would receive were to be free of tax, and the recipients have advised me that they signed documents to ensure tax exemption for these payouts," Mr
Hall told Parliament this week.

"But now things have progressed a little. In a letter dated 12 May 2006 the Department for Victorian Communities advised that the previous advice given was incorrect and at least part of that payment is now deemed as assessable income and group certificates to that effect have been issued to these people."

Mr Hall said he had details of one worker who accepted a payout of nearly $70,000.00 in May 2003.

"He now has a group certificate showing that he has an assessable amount of $38,444.00 from that payout. By law he has to submit an amended income tax statement for 2002-03 and faces a substantial tax bill payment. At a 30 percent tax rate, that could amount to more than $11,000.00."

Mr Hall said many timber workers had used money to pay debts and to pay off mortgages, and three years later, many did not have the money to pay a retrospective tax bill.

"The decisions to accept the payout figure were based on the advice given to them at the time -- that is, that there would be no tax payable on these payouts."

In all, the Department for Victorian Communities provided 350 individuals with almost $11 million in industry restructure payments under the workers assistance program. Under the contractors' assistance program, 37 contractors were assisted at an estimated cost of around $13 million.

Mr Hall said it was clear the advice by government three years ago was incorrect, and at least 400 or so timber workers, many in Gippsland, are out of a job and now out of pocket.

"In my view the Victorian government should be liable to pay any tax on those benefits, and I ask the minister as a matter of urgency to do the right thing and ensure that none of these displaced workers are any worse off because of this government's tax bungle."

Media contact: Peter Hall (03) 5174 7066 or 0427 747 066