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| Mr STIRLING (Treasurer): Madam Speaker, I move that the bill be now read a second time. The bill seeks to put in place a package of revenue measures announced as part of the 2007-08 Budget and the national tax reform measure announced as part of the 2005-06 Budget by proposing amendments to the Stamp Duty Act, the Taxation Administration Act and the First Home Owner Grant Act. I will now address the changes proposed in the bill in more detail. To further assist first home buyers to purchase a home, the government proposes to increase the stamp duty first home owner concession from the first $225 000 of a property’s value to the first $350 000 of a property’s value. This will result I the maximum concession increasing from $8016 to $15 312, almost doubling the stamp duty saving on the purchase of a first home. It is proposed that this change apply to instruments executed on or after 1 May 2007. Purchases secured prior to that date either by contract or option will not be eligible for the increased concession. This measure is expected to save Territory first home buyers $3.9m in 2007-08. As part of the Territory’s commitment to national tax reform that was announced in the 2005-06 Budget, stamp duty on hiring arrangements will be abolished from 1 July 2007. This is expected to save all Territorians about $5.3m in 2007-08. The way in which stamp duty on hiring arrangements is proposed to be abolished will mean that no stamp duty will be payable on amounts received after 30 June 2007 by those tax payer who pay hiring duty on a monthly returns basis. However, for all other taxpayers who have paid stamp duty upfront on an instrument subject to hiring duty, no refund will be available for amounts received after 30 June 2007 in respect of the unexpired term of the arrangement. This treatment is consistent with that of other states and territories that have already legislated for the abolition of stamp duty on hiring arrangements. Importantly, the old rules, such as the requirement to keep record and when a liability to pay hiring duty arises will continue to apply to hiring arrangements entered into before 1 July 2007. Greater detail of these changes and all changes proposed in the bill are set out in the Explanatory Statement accompanying the bill. I turn now to the other measures contained in the bill, which, unless otherwise indicated, are all proposed to commence from 1 July 2007. In addition to the abolition of stamp duty on hiring arrangements, the bill also proposes to remove two other stamp duties. The first of these is stamp duty on guarantees. Currently, certain types of guarantees are exempt from stamp duty, while others are subject to $20 nominal duty. Upon reviewing the position, there does not appear to be good policy reasons for this different treatment. Accordingly, all guarantees will be exempt from stamp duty to rectify this inconsistent treatment while also reducing compliance costs for business. The other stamp duty to be abolished is that applying to the grant of lease for no consideration or nominal consideration. Stamp duty on the grant of a lease for no or nominal consideration was originally imposed because of concerns that this could be used as a way to avoid stamp duty on what would ordinarily be a conveyance of property. However, after considering this position more closely, it is now believed that this risk is minimal, therefore it is proposed to remove stamp duty on the grant of such leases. The bill also proposes several measures to improve the integrity of the stamp duty legislation and to minimise the possibility of weaknesses in that legislation being exploited. The first of these changes proposes that anything physically fixed to land is considered to be land for the purposes of the landholder stamp duty provisions. The landholder stamp duty provisions seek to levy duty where a person obtains 50% or more of the interests in a company, or 20% or more of the interests in a trust that holds land in the Northern Territory that has a value of $500 000 or more. These provisions are aimed at ensuring stamp duty is paid where the ownership of land is transferred indirectly through changing the ownership of the landholding company or trust. Under the current landholder stamp duty laws, only land and fixtures to land are subject to stamp duty, but chattels are not. This is in contrast with direct conveyances, where many forms of property are subject to stamp duty. The current law that determines whether a structure is a fixture to land or a chattel is in some circumstances unclear and can lead to protracted and expensive valuation and legal disputes about the proper classification of buildings and other substantial structures on land. The amendments seek to remove the uncertainty in this area by ensuring that the landholder provisions will apply even if the item that is fixed to the land would not be considered to be a fixture through the application of the common law. The second measure proposes to insert the valuation principle that the unencumbered value of land for stamp duty purposes must be based on the full value and best use of the land. This change is proposed in response to practices to minimise landholder stamp duty that artificially apportion value that is properly attributable to land and buildings to other property that is not subject to stamp duty. Providing legislative guidance to valuers and the courts on how the unencumbered value of land is to be determined for stamp duty purposes should assist in addressing these minimisation practices. The last of these measures proposes to rectify an anomaly in the stamp duty legislation that brings to duty mining information for mines subject to the Mining Act that are conveyed, but not for other mines. The amendment will ensure that mining information relating to all mines will be taken into account when valuing a mine to assess the stamp duty payable on the conveyance of that mine. Madam Speaker, it is also proposed that, from 1 May 2007, the stamp duty corporate reconstruction exemption will not apply if the restructure is used to avoid or frustrate the recovery of stamp duty tax or royalties payable to the Territory. This exemption currently does not apply if a corporate reconstruction is undertaken to avoid or reduce the stamp duty that would otherwise be payable on a conveyance or transfer. However, the exemption cannot be denied if the reconstruction will result in the payment of other existing Territory tax debts, such as a payroll tax liability, being avoided. This bill proposes to correct this oversight. I turn now to three final measures proposed by the bill that relate to the Territory’s home ownership schemes. The first seeks to rectify an anomaly in the stamp duty legislation to ensure that a person who has previously owned a home interstate under a long-term lease cannot qualify for the stamp duty first homeowner concession for a subsequent home purchase. This change aligns the treatment of prior homeownership and the long-term Crown leases granted by the Northern Territory or the Australian government with such leases granted by other states or territories. It also aligns with the treatment of long-term leases under the First Home Owner Grant Act, on which the rules of the stamp duty first homeowner concession are based. The second measure proposes to amend the First Home Owner Grant Act to clarify that consideration must actually be paid to the purchase of a home prior to an applicant receiving the first home owner grant. It is not an issue for nearly all first home buyers, as they usually pay substantially more consideration than $7000. However, uncertainty could arise in transactions between related parties, such as parents and their children, about whether a home has been purchased or whether it has been provided as a gift. The amendment will ensure that the grant can only be paid when a home is purchased and not when it has gifted. The final measure proposes to amend the first homeowner grant to clarify that any overpayment of a first homeowner grant can be recovered. Under the current legislation, ineligible grant applicants are required to repay the grant. However, the legislation is being amended to clarify that an amount overpaid to an otherwise eligible recipient of the grant can be recovered. For example, it makes it clear that where a person has been paid $7000 but is only entitled to $5000, the $2000 overpaid can be recovered. Madam Speaker, I commend the bill to the honourable members and I table the explanatory statement to accompany the bill. Debate adjourned. |