The Land Tax Bill 2003 (the Bill) is the result of splitting the Rates and Land Tax Act 1926 (Rates and Land Tax Act) to separate the land tax provisions from those applying to rates.

The Bill makes no significant policy changes to the effect of the legislation. It includes provisions in relation to the imposition of land tax and its payment, and exemptions from liability to land tax. In line with the administration of other ACT tax legislation, this Bill will be administered under the Taxation Administration Act 1999 (Taxation Administration Act) unless otherwise indicated.

The Rates and Land Tax Act was originally Commonwealth legislation which began as an Ordinance in 1926. When land tax was introduced to commence on 1 January 1987, it was probably convenient to insert the new provisions into the Ordinance as both land tax and rates were administered from the same property database. With the introduction of self government, this Ordinance became the Rates and Land Tax Act 1926. The existing provisions are presented in an illogical format and are sometimes difficult to follow.

Splitting the Rates and Land Tax Act will provide two new streamlined Acts (the Land Tax Act 2003 and the Rates Act 2003) which reflect the current drafting practice and are consistent with other ACT legislation. The new Acts will be clear, logical and less complex. This Bill will incorporate and rationalise the land tax provisions of the Rates and Land Tax Act and will thus provide the basis to more easily address policy issues and implement any future amendments.

Another logical reason for splitting the Rates and Land Tax Act is the different policy basis for the two charges. Land tax is imposed on the basis of the use made of the property, or on an owner who is a corporation or trustee, while rates are imposed on property owners solely as a consequence of their ownership of a property.

This Bill will commence on 1 July 2004. The Rates and Land Tax Act will be repealed on 1 July 2004 by the Rates Bill 2003 so the commencement date for the Land Tax Act 2003 will also be 1 July 2004.

This Bill is revenue neutral and has no direct or indirect revenue implications.

Included in this statement is a Comparative Sections Table showing every section in the Rates and Land Tax Act with the appropriate corresponding provision in this Bill and/or the Taxation Administration Act, depending on which is relevant. For this reason, and because the policy behind the Land Tax Bill is unchanged, a
clause-by-clause description of the Bill serves no useful purpose.

The details of this Explanatory Statement will be a summary of each Part of the Bill with detailed descriptions of Clauses limited to transitional provisions. The intention and practical outcome of this Bill has been limited to modernising the language without changing the underlying legal position.

Details of the Bill are attached.

Part 1 Preliminary
Part 1 names the Act the Land Tax Act 2003 and gives the commencement date as 1 July 2004. It also provides that the dictionary contains definitions of important terms used in the Act and all notes in this legislation are explanatory and not part of the Act. The Criminal Code 2002 applies in relation to offences against this Act.

It is noted in Clause 1 that the Land Tax Act 2003 is a tax law under the Taxation Administration Act 1999 and is subject to its provisions about the administration and enforcement of tax laws generally.

Where provisions in the Taxation Administration Act have the same function as those in the Rates and Land Tax Act, they have been omitted from the new Land Tax Act. The Comparative Sections Table at pages 8 to 15 indicates where specific sections have been omitted and the “Taxation Administration Act 1999- Section ” column shows which sections take over the function of the omitted provisions.

In line with the administration of the Territory’s other tax laws, Parts 1 and 2 of the Taxation Administration Act apply in general and the following provisions will apply to the stated matters from the Rates and Land Tax Act:
• Part 3 (Assessment of tax liability) - assessment of land tax, the power to reassess and the issuing of a notice of assessment by the commissioner.
• Part 4 (Refunds of tax) - all refunds for overpayments.
• Part 5 (Interest and penalty tax) will apply except for section 25 (Interest in relation to tax defaults).
• Part 7 (Collection of taxes) - this introduces a minor change to current payment and recovery arrangements whereby payment is now to the commissioner instead of to the Territory. It should be noted that section 53 (Duties of agents, trustees etc) of the Taxation Administration Act imposes responsibilities on agents that did not previously apply under the Rates and Land Tax Act. Agents may now be required to fulfil undischarged obligations of a taxpayer where they have control over and manage the taxpayer’s property.
• Part 8 (Record keeping and general offences). In most cases the offences carry equivalent penalties and in the case of false or misleading information, the offence in the Taxation Administration Act carries higher, but appropriate, penalties.
• Part 9 (Tax officers, investigation and secrecy provisions). All investigative powers, including the power to seek further information, will apply, as will the provisions governing disclosure of information and those ensuring confidentiality of taxpayer information.
• Part 10 (Objections and appeals) increases existing rights with taxpayers now able to object to the actual assessment of land tax.
• Part 11 (Miscellaneous provisions) – particularly in relation to Division 11.3 (Payments), Division 11.4 (Notices and service of documents) and section 139 (Determination of amounts payable under tax laws). In line with other tax laws, the amounts and percentages used to work out land tax will now be determined by disallowable instrument. This removes the necessity to amend the Act to update the variable factors, while still allowing the Assembly to scrutinise any changes.

In line with current practice in operation within the Revenue Office, all provisions relating to the calculation and remission of interest will be retained in the Land Tax Act. Any change to the method of interest calculation would be a change in policy with revenue implications. The Taxation Administration Act section 25 (Interest in relation to tax defaults) does not apply.

Clause 40 (Working out amounts with fractions for the Act) continues the existing practice of rounding amounts to the nearest fraction of a cent with half a cent disregarded, and for average unimproved value, disregarding any fraction of a dollar. Taxation Administration Act section 123 (Adjustments of amounts) does not apply as it would change this practice.

Part 2 is subject to Part 4 (Unit subdivisions): that is, land tax on units or proposed unit subdivisions is also imposed under this Part. Definitions for Part 2 are in Clause 7.

The provisions in the Rates and Land Tax Act have been reworded in Clause 8 to clarify when something is rented. It states that a parcel of residential land is taken to be rented if it is rented on the first day of a quarter. Where a rental property is temporarily vacant on the first day of a quarter, it is deemed to be rented if it was rented at any time in the previous quarter. This is to ensure that a parcel continues to be liable to land tax while it is still available for rental and not vacant for either a whole quarter or a continuous period of 91 days. This Clause clearly states when an owner may give written notice to the commissioner that a parcel was not rented so that it is not deemed to be rented on the first day of a quarter. It also excludes a new owner of a parcel from this deeming provision as they are required under Clause 14 to advise the commissioner if residential land is rented.

Land tax continues to be imposed for a quarter on commercial parcels of land, rented residential parcels, and residential parcels owned by corporations or trustees using the same principles and appropriate rates as under the Rates and Land Tax Act. To remove the necessity to amend the Act to update the variable factors, and in line with other tax laws, the amounts and percentages used to work out land tax will now be determined by disallowable instrument under the Taxation Administration Act. The unimproved values determined under the Rates Act 2003 will be used to work out the average unimproved value used to impose land tax.

For land tax exemptions: Clause 10 (Land exempted from s 9 generally), Clause 11 (Land exempted from land tax), Clause 12 (Application for compassionate case exemption) and Clause 13 (Decision on compassionate application) are duplicated in effect from the Rates and Land Tax Act sections 22B (Exempt land) and 22BA (Application for exemption – compassionate cases). For further details see the Comparative Sections Table on pages 8 – 15.

The requirement for an owner to advise the commissioner if residential land is rented has been reworded but remains unchanged in effect from the Rates and Land Tax Act. The apportionment of floor area for multiple dwellings and ownership interest for those parcels partly owned by a corporation or trustee are equivalent to Rates and Land Tax Act provisions.

Part 2 stipulates that land tax is payable to the commissioner by the person who is the owner of the parcel of land, whether the amount became payable before or after the person became the owner, if those amounts have not been paid. The effect is unchanged from the Rates and Land Tax Act requirement that the unpaid land tax must be paid by the “owner for the time being”. The requirement in the Rates and Land Tax section 22EA to send notices to different owners is not needed as the debt is a charge on the land if it has been advised at conveyancing, and the current owner is responsible for payment of unpaid land tax.

This Part duplicates the previous provisions relating to the date for payment in the assessment notice and also how payments can be made without land tax falling into arrears. The payment dates and requirements are unchanged. Provisions for when a parcel is taxable for only part of a quarter are clarified but unchanged in effect.

Interest on overdue land tax is calculated monthly as explained in the example in Clause 19 (2) of the Bill and continues to operate in the same manner as under the Rates and Land Tax Act as any change to the method of interest calculation would represent a change in policy. The interest rate applying to a day is determined under section 26 of the Taxation Administration Act, and, if required, the Minister retains the power to determine different rates of interest for this purpose by disallowable instrument under the Taxation Administration Act.

Land tax payable in relation to a parcel continues to be a charge on the interest held by the owner of the parcel. This charge still takes priority over a sale, conveyance, transfer, mortgage, charge, lien, or encumbrance in relation to the parcel.

The provisions that give the commissioner the power to let or sell a parcel of land for nonpayment of land tax are reworded in Clauses 21, 22, 23, 24 and 25 but are unchanged in effect from those in the Rates and Land Tax Act sections 22F, 18, 19, 20 and 21.

Penalty tax is imposed under Division 5.2 of the Taxation Administration Act on a tax default for land tax in exactly the same manner as for other taxes. The levels of penalty tax in the Taxation Administration Act are adequate for a tax default, but it should be noted that they are lower than the maximum percentages imposed under the Rates and Land Tax Act.

Part 4 deals with the application of the Act to unit subdivisions and to certain proposed unit subdivisions.

For the calculation of land tax (and rates) on units, the Revenue Legislation Amendment Bill 2003 (No 3) recently substituted a new section 24A of the Rates and Land Tax Act. The provisions in this new section 24A have been duplicated in effect in this Bill.

For the calculation of land tax on certain proposed unit subdivisions, the provisions from the Rates and Land Tax Act have been replicated in this Bill. The percentage of the intended development to be used for commercial purposes will be contained in the Rates Act 2003 section 32 (2). If this percentage changes under the Rates Act 2003 and rates are reassessed, the land tax must also be reassessed.

The Minister’s powers to exempt an owner of a parcel of land from the payment of land tax, or to remit land tax payable to the owner, have been duplicated in effect in the Bill at Clauses 34 and 35 with an additional provision that the Minister may make guidelines (a disallowable instrument) for the exercise of both of these functions.

Clause 36 deals with the remission of interest where the commissioner is satisfied that it is fair and reasonable having regard to the circumstance which contributed to the delay in payment or any other relevant matter. Again, a provision has been introduced to allow the Minister to make guidelines (a disallowable instrument) for the exercise of this function.

Clause 37 applies where a person has overpaid land tax for a parcel of land because of an administrative error and interest is worked out at the market rate component determined under the Taxation Administration Act section 26 (Interest rate). Clause 37 is required to maintain current practice as section 111 (Interest payable on refunds) of the Taxation Administration Act only applies to a refund after a successful objection or review.

All objections and reviews previously under the Rates and Land Tax Act will now be under the Taxation Administration Act. This expands the objection and review rights for taxpayers as they may now object to the actual assessment of land tax, a right not previously available.

Clause 38 (Objections) of the Bill prescribes decisions for the Taxation Administration Act section 100 (Objection). This is necessary as they do not fall under the Taxation Administration Act section 100 (1) (a) which deals with objection to assessment. See Schedule 1 of the Rates Bill 2003 for the amendment to section 100 of the Taxation Administration Act.

Clause 39 (Review by AAT) applies to a determination by the commissioner of an objection to a decision in Clause 38. This is prescribed for the Taxation Administration Act section 107 (Right of appeal to tribunal). See Schedule 1 of the Rates Bill 2003 for the amendment to section 107 of the Taxation Administration Act.

Clause 40 (Working out amounts with fractions for Act) applies in all cases where an amount worked out contains a fraction of a cent. The amount must be rounded to the nearest cent, with half a cent being disregarded. If an amount is part of the average unimproved value of a parcel of land any fraction of a dollar must be disregarded. This retains current Revenue Office practices and the Taxation Administration Act section 123 (Adjustments of amounts) does not apply.

Clause 41 (Certificate of land tax and other charges) and Clause 42 (Statement of amounts payable and payments made) are duplicated in effect from the Rates and Land Tax Act. The certificate and the statement may both include amounts under the Rates Act 2003.

Clause 43 (Determination of fees) and 44 (Regulation-making power) are duplicated in effect from the Rates and Land Tax Act.

Clause 45 (Meaning of repealed Act for pt 7) states that the repealed Act means the Rates and Land Tax Act 1926 (repealed). [This was repealed by the Rates Act 2003.]

Clause 46 (Special provision for period to 30 June 1987) is a transitional provision to ensure that the repealed Act section 22D continues to apply to the parcel of land.

Clause 47 (Meaning of assessment). For this Act assessment of land tax includes an assessment of land tax made under the repealed Act.

Clause 48 (Land tax payable under repealed Act). Land tax is taken to be payable under this Act if it was payable under the repealed Act and was not paid immediately before 1 July 2004.

Clause 49 (Land to which repealed Act, pt 4A applied). If the repealed Act Part 4A applied to a parcel of land the parcel is taken to be a qualifying parcel of land for Division 4.2 of this Act.

Clause 50 (Right to object if no objection lodged) protects an owner’s rights to lodge an objection to a decision made immediately before 1 July 2004 so that the time allowed to lodge objections under the repealed Acts is also allowed under the new Act.

Clause 51 (Objections lodged under repealed Act) protects an owner’s objection and AAT review rights where an objection has been lodged but not decided immediately before 1 July 2004.

Clause 52 (Applications for review if no application lodged) protects an owner’s AAT review rights where an objection decision has been made and the time for applying for a review of the decision has not ended immediately before 1 July 2004.

Clause 53 (Application for review if application lodged) protects an applicant’s right for review where an application has been lodged with the AAT but not decided immediately before 1 July 2004.

Clause 54 (Notice of land tax in arrears). A declaration under the repealed Act section 17 (2) in relation to land tax is taken to be a declaration under this Act section 21.

Clause 55 (Statement under s 42). A reference in section 42 to an amount payable includes an amount payable under the repealed Act.

Clause 56 (Modification of pt 7’s operation) allows the Executive to make regulations to modify the operation of this Part for any matter is not or is not adequately dealt with, in the Executive’s opinion, in this Part.

Clause 57 (Expiry of pt 7). This part expires on 1 July 2005.

Inserts dictionary.