Several of the state’s local mayors say they should not have to pay income tax on their council allowances.
Last week, Port Pirie Mayor Brenton Vanstone brought a motion to the Local Government Association’s (LGA) annual general meeting asking the LGA to lobby the Federal Government for council allowances and benefits to be exempt from income tax.
Vanstone told InDaily the allowance he receives is “not a wage, it’s a compensatory payment”.
“A federal tax imposition shouldn’t be there for some people who are involved in community service,” he said.
“We just want to be known as people who are putting a commitment to our community, but we don’t want to be taxed for it.”
Currently, councillors pay income tax on their allowances at the end of the financial year.
Local government allowances are set by the Remuneration Tribunal of South Australia.
Vanstone, who also works as a farmer, said around $12,000 was taken each year from his $49,000 mayoral allowance.
You might like
“I pay out more in wages and contract labour than what I earn as a mayor, and yet my income is taxable,” Vanstone said.
“I’m also assuming a risk component to my own business by not being there.
“I think I get half of every Saturday on the farm.
“The harvesting process is coming on now, and I don’t know what’s going on.”
Vanstone, whose council area is more than 1,700 square kilometres wide, said it was particularly unfair that income tax be paid on allowances by a rural councillors who suffer “the tyranny of travel”.
He also said it was wrong for the allowance to be considered like a salary, because councillors do not receive other benefits enjoyed by salaried workers, such as WorkCover and superannuation.
Vanstone acknowledged that he had not spoken with his constituents about whether they think his allowance should be tax-free, but said “I couldn’t see there’d be too much angst in the community against it”.
Onkaparinga mayor Lorraine Rosenberg agreed that the income received by councillors did not constitute a salary, but rather, a payment to compensate for the costs of doing the job.
“I have sought from the Australian Taxation Office a clarification of whether my allowance was an allowance or a salary, and it was (deemed to be) an allowance,” she told the LGA meeting.
“It’s not a salary.”
Stay informed, daily
Unley mayor Lachlan Clyne argued that allowances should be tax-free because serving as a councillor was a public service similar to serving in the Australian Defence Force.
Clyne is a former Lieutenant of the Australian Army.
“I personally think that this is a service that we give of ourselves and , as such, I think there is merit in it being tax-free,” he said.
The most strident opponent of the motion was long-serving West Torrens mayor John Trainer.
“I think it’s complete nonsense to talk about our allowances being exempt from income tax (because) they are, in effect, salaries,” he said.
Trainer told InDaily he believed the ATO should treat council allowances as salaries.
“I just couldn’t accept the idea that it not be taxable at all, because income is income, is income,” he said.
“I don’t think you’re making the same sacrifice as defence personnel are.
“In the main, there isn’t much to be compensated for in material goods, because material expenses like stationery, telephone bills, computer use, childcare expenses and other expenses that are run up the course of one’s duties are covered by the council anyway.
“What other expenses there may be are tax deductible.”
Port Pirie Council’s motion was amended by Salisbury Council to request that the LGA lobby the Federal Government for a review of taxation laws as applied to council member allowances, rather than request that those benefits become tax-free.
The amended motion was carried.
In the past, the LGA has lobbied to exempt the council allowances from income tax.
In March 2001, the Australian Local Government Association (ALGA) wrote to the assistant treasurer on behalf of the South Australian LGA, requesting a class ruling on the matter.
The ATO declined to offer a blanket ruling on the matter.
Subesquent requests have received similar responses from the ATO.
