FIRST HOME OWNER GRANT AMENDMENT BILL 2009 Explanatory Statement

Northern Territory Explanatory Statements

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FIRST HOME OWNER GRANT AMENDMENT BILL 2009

2009

LEGISLATIVE ASSEMBLY OF THE
NORTHERN TERRITORY

TREASURER

FIRST HOME OWNER GRANT AMENDMENT BILL 2009
SERIAL NO. 30

EXPLANATORY STATEMENT

GENERAL OUTLINE

This Bill amends the First Home Owner Grant Act to give effect to the Commonwealth’s temporary First Home Owners Boost scheme (the Boost scheme).

On 14 October 2008, the Prime Minister announced a package of fiscal stimulus measures entitled the Economic Security Strategy. Part of that package is a temporary extension of the first home owner grant by the Boost scheme, which is aimed at providing a short-term stimulus to the housing industry.

The Boost scheme increases the existing grant of $7000 to $14 000 for the purchase of existing homes and to $21 000 for the building or purchase of a new home. The Boost scheme applies to contracts entered into between 14 October 2008 and 30 June 2009.

NOTES ON CLAUSES

Clause 1. Short title

This is a formal clause that provides for the citation of the Bill. When passed, the Bill may be cited as the First Home Owner Grant Amendment Act 2009.

Clause 2. Commencement

This clause provides that the Act commences when the Administrator’s assent to the Act is declared, other than sections 3, 4, 5 and 6 (which give effect to the increased grant), which will retrospectively commence from 14 October 2008. This is the date the Commonwealth announced the commencement of the Boost scheme.

Clause 3. Act amended

The Act being amended by this Bill is the First Home Owner Grant Act.

Clause 4. New section 3A

This clause inserts new section 3A into the Act immediately following section 3. This section acts to ‘signpost’ the additional definitions inserted in new Division 3A in Part 2 of the Act.

Clause 5. New Part 2, Division 3A

This clause inserts new Division 3A into Part 2 of the Act entitled “First Home Owner Boost Scheme”. This new Division provides the scheme and criteria for the $21 000 grant for the building or purchase of new homes.

New section 13A sets out that the purpose of new Division 3A is to provide for the matters relevant to temporarily extend the first home owner grant scheme to provide additional grants to first home buyers whose transactions meet certain criteria.

New section 13B inserts definitions for the purpose of new Division 3A. The terms defined by this section are “boost scheme amount”, “boost scheme period”, “declare”, “new home”, “off-the-plan contract”, “off-the-plan contract completion date”, “plan of subdivision”, “registered”, “special eligible transaction”, ”start” and “substantially renovated home.”

Together, these definitions set out what constitutes a new home and substantially renovated home for the purposes of eligibility for the $21 000 grant. They also define the relevant period in which contracts must be executed and building works commenced and completed, as well as the framework for the amount of the grant, including allowing the relevant scheme dates to be extended and the amount of the grant to be varied by regulation, should this be necessary.

New section 13C(1) defines the type of transactions that are eligible for the $21 000 grant provided under Division 3A. For the purpose of Division 3A, transactions that are eligible for the $21 000 grant are referred to as “special eligible transactions”, which are defined as the following transactions, provided that the commencement date of the transaction is within the Boost scheme period (14 October 2008 to 30 June 2009, unless extended by regulation):

· a contract to purchase a new home;
· a contract for the purchase of a substantially renovated home;
· a comprehensive building contract; or
· the building of a new home by an owner builder.

Section 13C(2) provides that subsection(1) is subject to new section 13D, which provides for the dates by which construction must commence and be completed in order for a transaction to be a special eligible transaction and therefore eligible for the $21 000 grant.

New section 13D(1) provides that an off-the-plan contract is not a special eligible transaction unless the contract states that it is to be completed before the off-the-plan contract completion date. Alternatively, if the contract does not state a completion date, it is a special eligible transaction if the contract is actually completed prior to the off-the-plan contract completion date. The off-the-plan contract completion date is 31 December 2010, unless extended by regulation.

New section 13D(2) provides that a comprehensive building contract is a special eligible transaction only if the building work commences within 26 weeks after the commencement date of the contract and either the contract states that it must be completed within 18 months of the building work starting or the work is actually completed within this period.

New section 13D(3) provides that the building of a new home by an owner builder will not constitute a special eligible transaction unless the building work is completed within 18 months of the building work starting.

New section 13D(4) provides the Commissioner of Territory Revenue with the power to allow a longer period for the starting or completing of building work or completing a contract, provided that the Commissioner considers that there are special reasons to do so.

Examples of where this may occur include where completion of the building works is delayed by natural disaster or fire or where an owner builder is hospitalised for a significant period of time due to ill health.

The Commissioner’s power to allow a longer period applies to a comprehensive home building contract and the building of a new home by an owner builder. It does not apply to an off-the-plan contract.

New sections 13D(5) and (6) are anti-avoidance provisions that ensure that a contract for the purchase of a new home, substantially renovated home or comprehensive building contract that replaces an earlier contract that was ineligible for the additional Boost grant, or follows an option that was granted before the Boost scheme commenced, is also not eligible for the Boost grant.

New section 13D(7) allows the Commissioner to accept that, even though a contract that was excluded from being a special eligible transaction under new sections 13D(5) or (6) because it replaced an ineligible contract or because the person had an option prior to the Boost scheme commencing, the contract is still a special eligible transaction. The Commissioner may make a written declaration to this effect where satisfied that the contract does not have the effect of circumventing limitations on, or requirements affecting, eligibility for or entitlement to an amount provided for in new section 13E.

New section 13D(8) provides that the Commissioner’s powers under new subsections (4) and (7) can be done so on application of the person or the Commissioner’s own initiative. The reference to exercising the powers at any time includes, for example, exercising the discretion to allow a longer time for completion of construction either prospectively or after the time set out in the legislation has passed.

New section 13E(1) provides that the value of the grant to be paid under Division 3A is the lesser of the amount of consideration actually paid for the eligible transaction or the Boost scheme amount ($21 000). This section is designed to ensure that persons who purchase a home for less than $21 000 only receive a grant for the amount of consideration actually paid. For example, this may be relevant for related party transactions where an applicant purchases a home for less than $21 000 or is gifted the home. This is consistent with the normal first home owner grant rules set out in section 18 of the Act.

New section 13E(2) clarifies that the $21 000 grant is a replacement for and not additional to the original $7000 grant or the new $14 000 grant provided by new section 18A.

Clause 6. New section 18A

This clause inserts new section 18A into the Act following existing section 18. This provides the legislative basis for the $14 000 Boost grant for contracts to purchase existing homes.

New section 18A(1) sets out that the purpose of new section 18A is to provide for the matters relevant to temporarily extend the first home owner grant scheme to provide additional grants to first home buyers who purchase existing homes.

New section 18A(2) is an anti-avoidance provision that ensures that a contract for the purchase of an existing home that replaces an earlier contract that was ineligible for the additional Boost grant, or follows an option that was granted before the Boost scheme commenced, is also not eligible for the Boost grant.

New section 18A(3) provides that contracts to purchase an existing home with a commencement date that is during the extended period (14 October 2008 to 30 June 2009, unless extended by regulation), the amount of the grant to be paid for the purchase of an existing home is the lesser of the amount of consideration actually paid for the transaction or $14 000. Similar to new section 13E, this clause is designed to ensure that a person who purchases a home for less than $14 000 only receives a grant for the amount of the consideration paid. This is consistent with the normal first home owner grant rules set out in section 18 of the Act.

New section 18A(4) allows the Commissioner to accept that, even though a contract that was excluded from being an eligible transaction under new section 18A(2) because it replaced an ineligible contract or because the person had an option prior to the Boost scheme commencing, the contract is still an eligible transaction. The Commissioner may make a written declaration to this effect where satisfied that the contract does not have the effect of circumventing limitations on, or requirements affecting, eligibility for or entitlement to an amount provided for in new section 18A(3).

New section 18A(5) clarifies that the $14 000 grant is a replacement for and not additional to the original $7000 grant.

New section 18A(6) defines the terms “declare”, “extended amount”, “extended period”, “home”, “new home”, “special eligible transaction” and “substantially renovated home”, which are relevant to the operation of new section 18A.

Clause 7. Further amendments

This clause introduces a Schedule to make minor amendments to the Act. The Schedule amends section 3 to remove a phrase that is redundant due to section 18 of the Interpretation Act and provides for amendments to sections 4 and 5(2) to give effect to the current drafting style.

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