State Taxation Acts Amendment Bill 2010

Introduction Print

EXPLANATORY MEMORANDUM

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BILL LA INTRODUCTION 4/5/2010

General

TheBill amends the Duties Act 2000 toprovide for the payment of duty in respect of dutiable transactions using an on-line duty payment system, to amend the dutiable value threshold for motor vehicle duty and to make amendments consequential to amendments to the First Home Owner Grant Act 2000.

TheBill amends the First Home Owner Grant Act 2000 to—

  • provide a first home bonus of $13000 for eligible transactions entered into on or after 1 July 2010 and before 1 July 2011;
  • provide a regional bonus of $6500 for eligible transactionsentered into on or after 1 July 2010 and before 1 July 2011.

TheLand Tax Act 2005 is amended to provide an exemption in relation to the construction of residential care facilities, supported residential services, residential services and retirement villages.

TheBill also amends the Payroll Tax Act 2007 to reduce the rate of payroll tax from 1 July 2010.

The Taxation Administration Act 1997 is amended to remove the power to authorise by regulation recipients of information obtained under or in relation to the administration of a taxation law.

The Business Franchise (Tobacco) Act 1974, the Debits Tax Act 1990 and the Financial Institutions Duty Act 1982are repealed and consequential amendments are made to other Acts.

Clause Notes

PART 1—PRELIMINARY

Part 1 of the Bill outlines the purposes of the Bill and contains the commencement provisions.

Clause 1outlines the purposes of the Bill.

Clause 2provides that Part 1, Division 1 of Part 2 which amends the Duties Act 2000 to provide for the on-line payment of duty and Parts 6, 7 and 8 of the Bill which amend the Taxation Administration Act 1997, repeal redundant Acts and make consequential amendments, come into operation on the day after the day on which the Bill receives the Royal Assent.

Divisions 2 and 3 of Part 2, which amend the Duties Act 2000 to adjust the dutiable value threshold for motor vehicle duty and make amendments consequential on the amendments to the First Home Owner Grant Act 2000, Part 3 which amends the First Home Owner Grant Act 2000 to extend and retarget the First Home Bonus and Regional Bonus and Part 5 which amends the Payroll Tax Act 2007 to reduce the payroll tax rate, all come into operation on 1 July 2010.

Part 4 amends the Land Tax Act 2005 to provide an exemption in relation to the construction of retirement villages, residential care facilities, supported residential services and residential services and will come into operation on 1 January 2011. Thecommencement date coincides with the start of the next assessment period for land tax.

PART 2—DUTIES ACT 2000

Part 2 of the Bill makes amendments to the Duties Act 2000 to provide for the payment of duty in respect of dutiable transactions using an on-line duty payment system, to amend the dutiable value threshold for motor vehicle duty and to make amendments to the eligible pensioner exemption or concessions contained in Division 5 of Part 5 of the Duties Act 2000 consequential to the amendments to the First Home Bonus and Regional Bonus set out in Part 3 of the Bill.

Clause 3inserts a new definition into section 3 of the Duties Act 2000—

on-line duty payment systemmeans a system for the electronic payment of duty authorised by the Commissioner under a taxation law.

Clause 4inserts a new subsection (3) in section 15 of the Duties Act 2000, which provides that a written instrument that effects a dutiable transaction or a written statement made in compliance with section 14 of the Duties Act 2000 is taken to be lodged with the Commissioner of State Revenue (the Commissioner) if the online system is used in respect of the dutiable transaction and it is determined that—

  • duty is payable on the dutiable transaction and the duty is paid in full; or
  • no duty is payable on the dutiable transaction.

Clause 5provides that section 30 of the Duties Act 2000, whichrelates to the interim payment of duty, does not apply in respect of a dutiable transaction if the duty is paid using the on-line duty payment system.

Clause 6repeals section 47(1)(d) of the Duties Act 2000, which provides that no duty is chargeable in respect of a transfer of property to the Western Metropolitan Market Trust. The Trust was abolished as a result of a recommendation by the Public Bodies Review Committee in February1990, and the exemption is no longer needed.

Clause 7inserts a new subsection (2) into section 255 to clarify that the Commissioner's duty to stamp an instrument under subsection (1) does not apply to an instrument if authentication of the payment of duty is provided in a manner approved by the Commissioner under the new section 255A.

Clause 8inserts a new section 255A which provides for the authentication of payment of duty using the on-line duty payment system. Itenables the Commissioner to authenticate that duty has been paid in any manner approved by the Commissioner and clarifies that if the Commissioner authenticates such a payment, the instrument that effects or evidences the dutiable transaction is taken to be duly stamped for the purposes of the Duties Act 2000. This will allow the Registrar of Titles to register the transfer of land in accordance with section 269 of the Duties Act 2000.

Clause 9substitutes references to $57009 in section 218(1) with references to the "luxury car tax threshold". A new subsection (5) is also inserted, which gives "luxury car tax threshold" the same meaning as it has in section 25-1 of the A New Tax System (Luxury Car Tax) Act 1999(Commonwealth) as if section 251(4) of that Act does not apply. These amendments align the duty threshold for charging a higher rate of duty on new or near new cars with the general Commonwealth luxury car tax threshold.

Clause 10makes consequential amendments to section 60A of the Duties Act 2000, which requires eligible pensioners to elect to receive either a duty exemption or concession or the First Home Bonus or Regional Bonus (or both), to take into account the changes to the First Home Bonus and Regional Bonus made under Part 3 of this Bill.

PART 3—FIRST HOME OWNER GRANT ACT 2000

Part 3 of the Bill makes amendments to the First Home Owner Grant Act 2000 to extend and retarget the First Home Bonus and Regional Bonus payments.

Clause 11Subclause (1) amends the reference in sections 18(2AA) and 18(2B) of the First Home Owner Grant Act 2000 from (4) to(4A).

Subclause (2) inserts a new section 18(2AB) to provide for $13000 (known as the First Home Bonus) to be paid in addition to the First Home Owner Grant of $7000 if the consideration for the eligible transaction does not exceed $600000 and the following apply—

  • the eligible transaction commences on or after 1 July 2010 and before 1 July 2011; and
  • the eligible transaction is for new residential premises or is an eligible transaction referred to in section 13(1)(b) or 13(1)(c) of the First Home Owner Grant. Theeligible transaction referred to in section 13(1)(b) isa comprehensive home building contract made after 1July 2000 by the owner, or a person who will become the owner of the land, and the eligible transaction referred to in section 13(1)(c) is the building of a home by an owner builder if building commences after 1 July 2000.

Subclause (3) inserts a new section 18(2C) to provide for $6500 (known as the Regional Bonus) to be paid in addition to the First Home Owner Grant and the First Home Bonus if the consideration for the eligible transaction does not exceed $600000 and the following apply—

  • the eligible transaction commences on or after 1 July 2010 and before 1 July 2011;
  • the eligible transaction is for a new residential premises or is an eligible transaction referred to in section 13(1)(b) or 13(1)(c) of the First Home Owner Grant 2000; and
  • the land on which the premises or home is, or will be, situated is located in regional Victoria.

Subclause (4) amends section 18(3) to include the new sections 18(2AB) and 18(2C). This ensures that the First Home Bonus and the Regional Bonus are only payable to the extent that they do not exceed the consideration for the transaction.

Subclause (5) inserts new section 18(4B) to ensure that the First Home Bonus and the Regional Bonus are not available if the Commissioner is satisfied that the contract that formed the basis of the eligible transaction replaces a contract made before 1 July 2010.

Subclause (6) amends section 18(5) and (6) to include the new sections 18(2AB) and 18(2C). This amendment ensures that a person who elects to receive the duty exemption or concession for first home owners under the Duties Act 2000 is not also entitled to receive the First Home Bonus or the Regional Bonus (or both).

PART 4—LAND TAX ACT 2005

Part 4 of the Bill makes amendments to the Land Tax Act 2005.

Clause 12inserts a new section 78A to provide an exemption for land from land tax if a residential care facility, a supported residential service, a residential service or a retirement village is being constructed on that land.

Section 78A(2) provides that the exemption under the new section 78A(1) is available until the earlier of the date that construction is completed, or the expiry of 2 land tax years following the date of commencement of construction.

Section 78A(3) provides that for the purposes of section 78A, the date of commencement of construction is—

  • if the building permit for the construction of a residential care facility, supported residential service, residential service, or retirement village on the land was issued on or before 31 December 2010 and construction is not completed at that date—31 December 2010; or
  • in any other case—the date of issue of the building permit for the construction of the residential care facility, supported residential service, residential service or retirement village on the land.

Section 78A(4) provides that for the purposes of section 78A the date of completion of construction is—

  • where a building permit states that an occupancy permit is required, the date of the issue of the occupancy permit under the Building Act 1993; or
  • in any other case, the date of issue of the certificate of final inspection under that Act.

Section 78A(5) clarifies that if a building permit for the construction of a residential care facility, supported residential service, residential service or retirement village lapses before the completion of the construction or the expiry of 2 tax years following the date of commencement of construction, and a subsequent building permit is issued in respect of that construction, the date of issue of the building permit referred to in subsection (3) is the date of issue of the first building permit. This will ensure that the issue of a subsequent building permit where the first building permit lapses does not trigger a second period of exemption under subsection 78A(2).

Section 78A(6) provides that to obtain this exemption from land, the owner of the land must apply to the Commissioner for the exemption and give the Commissioner any information requested for the purpose of enabling the Commissioner to determine whether the land is exempt under section 78A.

Section 78A(7) provides that if the Commissioner is satisfied that only a part of land is being used for the construction of a residential care facility, supported residential service, residential service or retirement village—

  • land tax is assessable on the remaining part of the land, unless another exemption applies to that part; and
  • section 22 applies,if necessary, to the land.

Section 78A(8) clarifies that—

residential care facility and supported residential service have the same meaning as in section 76;

residential service has the same meaning as in section 76A; and

retirement village has the same meaning as in section 78.

PART 5—PAYROLL TAX ACT 2007

Part 5 of the Bill amends the rate of payroll tax under the Payroll Tax Act 2007.

Clause 13Subclause (1) amends clause 1 of Schedule 1 to reflect a reduction in the payroll tax rate from 1 July 2010 from 4·95% to4·90%.

Subclause (2) amends clause 2 of Schedule 2 to reflect a reduction in the payroll taxrate from 1 July 2010 from 4·95% to4·90%.

PART 6—TAXATION ADMINISTRATION ACT 1997

Part 6 of the Bill makes amendments to the Taxation Administration Act 1997 in respect of permitted disclosures by particular persons of information obtained under or in relation to the administration of a taxation law.

Clause 14amends section 92(1)(e) of the Taxation Administration Act 1997 to repeal the subparagraph allowing the disclosure of information obtained under or in relation to the administration of a taxation law to prescribed persons. This amendment is intended to put beyond doubt that extending the scope of authorised disclosures is a matter for legislation and is the preferred approach of the Office of the Victorian Privacy Commissioner.

PART 7—REPEAL OF REDUNDANT ACTS AND CONSEQUENTIAL AMENDMENTS

Part 7 of the Bill provides for the repeal of the Financial Institutions Duty Act 1982, the Debits Tax Act 1990 and the Business Franchise (Tobacco) Act 1974 and for consequential amendments arising from the repeal of those Acts. TheFinancial Institutions Duty Act 1982, the Debits Tax Act 1990 and the Business Franchise (Tobacco) Act 1974 are being repealed because the various taxes, duties and fees imposed by those Acts have been abolished and they no longer have any practical effect. While the fee imposed under the Business Franchise (Petroleum) Act 1979 has also been abolished, that Act is not being repealed by this Bill. This is because it establishes the Better Roads Victoria Trust, which continues to fund the construction and maintenance of roads in Victoria and necessitates the retention of that Act.

Clause 15repeals the Financial Institutions Duty Act 1982.

Clause 16repeals the Debits Tax Act 1990.

Clause 17repeals the Business Franchise (Tobacco) Act 1974.

Clause 18repeals section 166 of the Credit Act 1984 as section 166 refers to a liability incurred by a credit provider under the Financial Institutions Duty Act 1982.

Clause 19Subclause (1) repeals section 4(b) and (c) of the Taxation Administration Act 1997. Section 4 lists the laws that are taxation laws for the purposes of the Taxation Administration Act 1997. By virtue of their repeal, the Debits Tax Act 1990 and the Financial Institutions Duty Act 1982 are redundant for the purposes of this definition.

Subclause (2) repeals section 96(1)(b) and (c) of the Taxation Administration Act 1997 which provide for objection rights with regard to certain decisions made by the Commissioner under the Debits Tax Act 1990 and theFinancial Institutions Duty Act 1982. These rights are no longer required.

Subclause (3) repeals section 96(3) and (4) of the Taxation Administration Act 1997 which provide objection rights under the Financial Institutions Duty Act 1982 that are no longer required.

Clause 20Subclause (1) amends the definition of objection in section 3(1) of the Taxation (Interest on Overpayments) Act 1986 to remove the reference to the Business Franchise (Tobacco) Act 1974 as it will be redundant. As a result of this amendment the definition of objection in section 3(1) of the Taxation (Interest on Overpayments) Act 1986 will only apply to objections under section 24A of the Land Tax Act 1958. Although the Land Tax Act 1958 has been repealed, it is necessary to retain the reference to that Act because the Commissioner continues to make decisions on objections under section 24A of the Land Tax Act 1958in relation to which interest may need to be paid under the Taxation (Interest on Overpayments) Act 1986.

Subclause (2) amends the definition of relevant Act in section 5(2) of the Taxation (Interest on Overpayments) Act 1986 to replace the reference to theBusiness Franchise Acts with a reference to the Business Franchise (Petroleum Products) Act 1997 only, as the reference to the Business Franchise (Tobacco) Act 1974will be redundant.

Subclause (3) repeals paragraph (a) of the definition of secrecy provisions in section 5(2) of the Taxation (Interest on Overpayments) Act 1986 as it refers to the Business Franchise (Tobacco) Act 1974 which will berepealed.

Clause 21Subclause (1) amends paragraph (a) of the definition of taxing Act in clause 2 of Part 1 of Schedule 1 to the Victorian Civil and Administrative Tribunal Act 1998 to replace the reference to theBusiness Franchise Acts with a reference to the Business Franchise (Petroleum Products) Act 1997 only, as the reference to the Business Franchise (Tobacco) Act 1974will be redundant.

Subclause (2) repeals paragraphs (b) and (c) of the definition of taxing Act in clause 2 of Part 1 of Schedule 1 to the Victorian Civil and Administrative Tribunal Act 1998 as these refer to the Debits Tax Act 1990 and theFinancial Institutions Duty Act 1982, which will be redundant.

PART 8—REPEAL OF AMENDING ACT

Clause 22provides for the automatic repeal of this Act on 1 January 2012. The repeal of this Act does not affect in any way the operation of the amendments and repeals made by the Act (see section 15(1) of the Interpretation of Legislation Act 1984).

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