TAXATION (ADMINISTRATION) AMENDMENT BILL 1998 Second Reading Speech

Northern Territory Second Reading Speeches

TAXATION (ADMINISTRATION) AMENDMENT BILL 1998

(This an uncorrected proof of the daily report. It is made available under the condition that it is recognised as such.)

Bill presented and read a first time.

Mr REED (Treasurer): Madam Speaker, I move that the bill now be read a second time.

The purpose of this bill is to amend the Taxation Administration Act to: address a stamp duty avoidance scheme relating to the registration of certain motor vehicles; clarify the basis by which duty is calculated on the issue of a motor vehicle certificate of registration on a new vehicle; clarify that the act does not prevent a person who has the primary tax liability from recovering tax from another person; make consequential amendments to replace references to the now-repealed New South Wales Stamp Duties Act 1920; revise the act’s penalty regime to make it more relevant to current values; and extend the power of disclosure to officers carrying out functions under the Mineral Royalty Act and the Petroleum Act.

The amendments will address a current avoidance scheme relating to the registration of certain motor vehicles. Under the scheme, duty on the registration of certain vehicles is being avoided through the use of exemptions provided in the legislation of other states, territories and the Commonwealth. Typically, operators first register their vehicles in the jurisdiction where an exemption is provided and subsequently transfer the registration into the Territory. The subsequent transfer enables the operator to take advantage of a current exemption under the Taxation (Administration) Act which allows for the re-registration of vehicles in the Territory free from stamp duty.

The amendment will enable particular vehicle registrations to be prescribed in the regulations. This will ensure that the exemption does not apply to the subsequent transfer from a prescribed registration to a Territory registration. Other jurisdictions have introduced similar legislation to counter the same avoidance scheme.

The bill will also amend the basis by which duty is calculated on the issue of a motor vehicle certificate of registration on a new vehicle. The existing legislation requires the list price of a new vehicle to be used for the purposes of calculating stamp duty. However, the concept of list price has become inappropriate as manufacturers no longer adopt it for pricing.

In keeping with current practice, the amendments adopt a purchase price approach to the extent that the transaction is at arm’s length. The purchase price will include add-ons such as trade-in allowances and accessories fitted to the car at the time of purchase. Any trade discount need not be added back to the dutiable value. Furthermore, where the transferee is exempt from sales tax, it will also be excluded from the value used to calculate the stamp duty. Where the transaction is not at arm’s length, stamp duty will be calculated on the market value of the vehicle at the time the transaction is entered into, or the time application is made for registration, whichever is the greater amount.

The amendments also seek to clarify that the liability of a taxpayer cannot be abrogated by the taxation status of its customer. Under the existing provisions, the act imposes a debt on a taxpayer’s customer for the recovery of the taxpayer’s liability for tax. This has created doubt as to the liability of the taxpayer where its customer is a Commonwealth agency, because such agencies are constitutionally protected from taxation.

Consequential amendments have also been inserted to ensure that the stamp duty liability imposed on securities clearing house regulated transfers is maintained. Currently, the Taxation (Administration) Act refers to the New South Wales Stamps Duties Act 1920 to levy the liability of SCH regulated transfers. However, that act was repealed and replaced by the New South Wales Duties Act 1997 on 1 July 1998. The amendment will ensure that the stamp duty liability continues to be imposed on SCH regulated transfers by referring to the new Duties Act 1997.

The amendments will also modernise the penalty regime under the Taxation (Administration) ActThis will ensure that the regime reflects a deterrent more relevant to current values. The maximum penalty limits for offences under the act are to increase by the introduction of a 3-tiered regime comprising of a general maximum penalty of up to $5000, a serious maximum penalty of up to $10 000, and a very serious maximum penalty of imprisonment.

The amendments also seek to empower the Commissioner of Taxes, or a person authorised by him, to disclose information or produce documents to a person who, in pursuance of employment by the Territory, performs functions under the Mineral Royalty Act and the Petroleum Act insofar as the latter act relates to the payment of a royalty. The bill also seeks to allow certain information relating to the Fuel Subsidies Act or another prescribed act to be exchanged between the Commissioner of Taxes (or any person authorised by him) and commissioners (or persons authorised by them) situated in other jurisdictions.

I commend the bill to honourable members.

Debate adjourned.

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