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| Mr STIRLING (Treasurer): Madam Speaker, I move the bill be now read a second time. The bill seeks to put in place a package of revenue measures announced as part of 2005-06 and 2006-07 budgets by proposing amendments to the Taxation (Administration) Act, the Stamp Duty Act, Pay-roll Tax Act, First Home Owner Grant Act and Mineral Royalty Act. The key proposals involved increasing the payroll tax exemption threshold from $1m to $1.25m from 1 July 2006, abolishing stamp duty on unquoted marketable securities from 1 July 2006, abolishing stamp duty on rent paid for the grant and renewal of leases and franchises from 1 July 2006. I will now address the changes proposed in the bill in more detail. As part of the 2005-06 budget, this government announced an increase in the payroll tax exemption threshold from $1m to $1.25m. The bill honours this commitment and from 1 July 2006 the payroll tax exemption threshold will increase to $1.25m, the equal highest threshold in Australia. The estimated savings for tax payers of this threshold increase is approximately $3.6m for the 2006-07 financial year. As part of the Territory's commitment to national tax reform, we propose to abolish the application of stamp duty on the transfer of shares and units of corporations and trusts and securities that are not quoted on a recognised stock exchange. This change will take effect from 1 July 2006 and is expected to save tax payers about $600 000 in 2006-07. However, as has occurred in other states that have abolished this duty the land (inaudible) stamp duty provisions will continue to apply to certain transactions involving marketable securities. Also as a part of tax reform, the proposed amendments abolish stamp duty on rent paid for the grant and renewal of leases and franchises, with effect 1 July 2006. This abolition is expected to save taxpayers $1.4m in 2006-07. Notably, while stamp duty will be abolished on rent, it will be continue to payable at conveyance rates for certain lease and franchise transactions. These transactions include the conveyance of a lease or franchise and the grant of a lease where a premium or only nominal consideration is paid. The continued imposition of duty of conveyance rates for certain lease transactions is in line with the approach adopted by other states in their tax reform. The bill also deals with three important transitional matters in relation to abolishing lease duty. Firstly, it is proposed that no stamp duty refund will be made available on the portion of any lease or franchise that extends beyond 1 July 2006, irrespective of when the lease or franchise was entered into. This treatment recognises the administrative cost and complexity for both taxpayers and the government of making these refunds, and is consistent with other states that have already abolished lease duty. Accordingly, the changes proposed by the bill do not allow for such refund claims. Secondly, it is proposed that measures will be put in place to protect the revenue base by preventing the refund of duty on the cancellation of leases executed prior to 1 July 2006, where the lessee or an associate of the lessee continues to remain in control of a substantial part of the leased premises after the lease is cancelled. These measures are needed to prevent the use of contrived arrangements to obtain a refund of stamp duty. Lastly, from 1 July 2006, lessees will no longer be required to resubmit their lease for reassessment of stamp duty where the rent actually paid under the lease differs from that on which stamp duty has been paid. However, if a lessee has overpaid stamp duty in respect of a lease such as the estimated rent on which stamp duty has been assessed is greater than the rent actually paid, the lessee will still be able to seek a refund of the stamp duty overpaid. Greater detail of these changes and of all of the changes proposed in the bill is 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 2006. The First Home Owner Grant, Stamp Duty First Home Owner Concession and Stamp Duty Principal Place of Residence Rebate together provide significant assistance to Territorians wanting to buy their own home. However, two technical shortcomings of the legislation supporting these schemes have been identified, and it is proposed to rectify these. The first of these shortcomings enables some home buyers to obtain both the stamp duty first homeowner concession and stamp duty principal place of residence rebate at different times for the same home. This is not how the legislation is intended to operate, so the bill proposed to close this deficiency by amending the Stamp Duty Act with effect from the date the changes were announced, being 2 May 2006. The second shortcoming makes it technically possible for a person who already has a part-interest in a home to qualify for the First Home Owner Grant on the purchase of the remaining interest in their home. Again, this is an unintended outcome, and the bill proposes to close this loophole by amending the First Home Owner Grant Act with effect from 2 May 2006. As you may be aware, the First Home Owner Grant Scheme and the Stamp Duty First Home Owner Concession have very similar eligibility criteria and are administered in tandem by the Commissioner of Tax. In order to improve the consistency of the administration of these schemes, the bill proposes three changes to these schemes in order to more closely align their administration and provide even more consistent outcomes. The bill proposes to extend the First Home Owner Grant objection and appeal period from 30 days after an applicant is notified of the commissioner's decision to 60 days after the decision is made. Further, it proposes to allow First Home Owner Grant applicants to appeal to the Taxation and Royalty Appeals Tribunal rather than to the local court. The effect of these changes is to align the objection and appeal rights of the First Home Owner Grant with those of the Stamp Duty First Home Owner Concession, and will allow an appeal in relation to both of these schemes to be heard at the same time. Secondly, the bill proposes to amend the First Home Owner Grant Act to clarify that a person is not excused from providing self-incriminating information under the First Home Owner Grant Act. The bill also proposes that such information can only be used for prosecutions and appeals under that act and the Taxation Administration Act, and not under any other act. This treatment is consistent with the rules that apply to applicants for the Stamp Duty First Home Owner Concession, and the Stamp Duty Principal Place of Residence Rebate. Thirdly, the bill proposes to allow the Commissioner of Taxes to communicate information gathered under the First Home Owner Grant Act to certain Australian government agencies. This provides for better administration of the First Home Owner Grant and is consistent with the commissioner's existing ability to communicate with interstate administrators of corresponding first home owner grant legislation and to communicate information obtained under the Territory's taxation legislation. Madam Speaker, the bill also proposes four other changes to the Territory's First Home Owner Grant Scheme and stamp duty home ownership concessions. The first of these proposes to extend the period in which an ineligible first home owner grant recipient is required to repay the grant from 14 days from receiving a payment notice to 30 days after a payment notice is issued. There is no corresponding change to the stamp duty concessions. The second proposed change will preserve a person's entitlement to the First Home Owner Grant and the Stamp Duty First Home Owner Concession if they have been ruled ineligible for this assistance only because they were under 18 years of age. Accordingly, it is proposed that both the grant and the concession will be available on the purchase of the subsequent home so long as they meet all of the other eligibility criteria. The third change proposed by the bill is to make the commencement date of an eligible transaction, such as a contract to buy a home, the time at which a first home owner grant applicant's eligibility is tested. A similar change is proposed for the Stamp Duty First Home Owner Concession, where eligibility is to be tested at the date on which the instrument effecting the conveyance is executed. The bill proposes that there will be an exception to this rule for the criteria that requires an applicant to be an Australian citizen or permanent resident and, in this case, an applicant's citizenship or residency status is to be assessed at the date of application, which may be made up to 12 months after an eligible transaction is completed. Fourthly, the bill proposes to align the Commissioner of Taxes discretion to extend the period in which an applicant for the First Home Owner Grant, the Stamp Duty First Home Owner Concession or the Stamp Duty Principal Place of Residence Rebate must commence occupancy of their home with the commissioner's discretion to reduce the period for which an applicant must reside in the home. This is a technical change that specifies that the discretion to extend the occupancy period will only be available where special reasons for doing so exist. Again, Madam Speaker, greater detail of these changes are set out in the explanatory statement that accompanies the bill. In addition to the increase in the payroll tax exemption threshold, the bill also proposes to amend the Payroll Tax Act to ensure that indirect payments made to company directors and other members of the governing body of a company are subject to payroll tax. This change will make the treatment of such payments the same as that for indirect payments made to an employee. The bill also proposes a number of changes to the Territory's land rich stamp duty provisions. As some members may be aware, the land rich stamp duty provisions were first introduced into legislation in 1988. The provisions were introduced to deal with techniques that had developed at the time to avoid payment of conveyance duty on acquisitions of interest in real estate. Instead of transferring land title from owner to owner, the land was acquired by a corporation or trust, set up primarily to hold the land and the shares in the corporation or units in the trust were transferred. The owners of the corporation or unit holders in the trust achieved the same ability to control the use of the land as they would have if they had purchased the land directly. However, by transferring interests in land indirectly through the transfer of shares or trust units, duty was reduced from up to 5.4% to only 0.6%. Changing business practices have resulted in the increased use of indirect holdings in land becoming a recognised method of investment in real estate rather than direct holdings. In addition, many large investors have become more sophisticated and deals more complex such that, across Australia, the land rich provisions are unable to apply to an increasing number of cases, leading to inequitable outcomes for similar transactions. In recent years, direct ownership of large commercial properties by only one entity has become less common. The values of the deals are large and investors are more aware of the need to diversify their risk. In this environment, unit trusts have emerged interstate as the preferred investment vehicle for indirect investment in such real estate. They enable a number of investors to pool their resources and share the benefits of high value properties without attracting stamp duty. Unit trusts are also more flexible than corporations, as there is no fixed number of units, so unit investors can be more easily accommodated. In response to these concerns and to pressure from the Commonwealth Grants Commission, New South Wales and Victoria have amended their stamp duty land rich provisions to bring their treatment of unit trusts more into line with that already applying in Queensland, Western Australia and South Australia. In addition, in December 2005, the Australian Capital Territory released a discussion paper proposing a number of changes to that territory's land rich stamp duty provisions to bring them broadly into line with the changes recently introduced in both New South Wales and Victoria. On consideration of these actual and proposed changes, as well as of the provisions operating in other states, this government proposes six changes to the Northern Territory's land rich stamp duty provisions. These changes are proposed to more closely align the Territory's land rich stamp duty provisions with those that apply in New South Wales and Victoria. All of these changes are contained in the bill and I will now outline them. First, the bill proposes that the provisions apply to acquisitions of interest in unit trusts of 20% or greater. This is a change from the current rules which only apply where interests of 50% or greater are acquired. Secondly, the bill proposes to extend the range of unit trusts to which the land rich stamp duty provisions will apply. These changes redefine what is considered to be a private unit trust that falls within the provisions. The proposed changes are very similar to those introduced in Victoria and New South Wales. However, unlike the changes introduced in those states it is not intended to introduce the concept of a wholesale unit trust scheme as these trusts do not appear to have significant interests in the Territory. A wholesale unit trust scheme is a trust used by certain types of large institutional investors and governments. In the event that such trusts do start to invest heavily in the Territory at some time in the future then it may be appropriate to review their stamp duty treatment at that time. Thirdly, the bill proposes to change the way that a corporation or a trust's holdings in other entities are dealt with. The land rich stamp duty provisions currently allow a land holding to be traced through subsidiaries. The manner in which these provisions operate has been exploited both in the Territory and elsewhere to avoid stamp duty. Accordingly, the bill proposes to tighten the tracing rules by allowing tracing through other entities down to a 20% interest. Further, the bill proposes that unlike the current provisions, where a corporation or unit trust will be treated as owning the whole of the land of the subsidiary, under the new rules the corporation or unit trust will be treated as being entitled to only that proportion of a subsidiary's property that they would receive on the winding-up of the subsidiary. This outcome is fairer then presently occurs as it more accurately reflects a corporation's or trust's interest in the land of other entities. Fourthly, the bill proposes a change to the land rich stamp duty provisions to prevent the avoidance of duty by listing a corporation or unit trust on a recognised financial market such as the Australian Stock Exchange. This change is similar to that undertaken by a number of other states. Fifthly, the bill proposes to align the time in which a land rich stamp duty statement is required to be lodged and any stamp duty paid with existing 60 day period that applies for other stamp duty conveyance documents. At present, a land rich stamp duty statement needs to be lodged within three months of the relevant acquisition and duty does not need to be paid until 30 days after the assessment is issued. As a consequence of recent changes to the land rich stamp duty provisions that have made their operation clearer and more transparent, the generous three month and 30 day periods are no longer considered necessary. Lastly, the bill proposes to clarify the scope and the extension of the stamp duty land rich provisions so that it more consistently applies in circumstances where a direct conveyance of land would be exempt from duty under a law of the Territory, or where the conveyance would have been between parties to a marriage, the conveyance would have been exempt under the Australian government's Family Law Act. As would be expected the bill proposes appropriate transitional provisions in relation to land rich stamp duty provisions in order to ensure that there are no unintended outcomes under the proposed changes. I now turn to seven minor changes that are proposed for the Territory stamp duty legislation. I will endeavour to cover them briefly. First, the bill proposes to introduce an exemption from stamp duty on a motor vehicle certificate of registration that has been completed solely to correct an error on the issue or transfer of another vehicle certificate or registration. Second, the bill proposes to remove doubt on how part interests in property are to be valued for stamp duty purposes. The bill proposes to endorse the current practice by providing that the unencumbered value of the whole property will be determined and then apportioned according to the interest that is being conveyed. Third, the bill proposes to clarify that a surrender of dutiable property and similar transactions that have the effect of the surrender are considered to be a conveyance for stamp duty purposes. This amendment is necessary following the 2004 decision of the Supreme Court of Queensland. Prior to that decision it was considered that the definition of conveyance in the stamp duty legislation included a surrender. Fourth, the bill proposes to abolish the use of adhesive duty stamps. These stamps have historically been used to satisfy some stamp duty liabilities, but are now less relevant as they can only be used in very limited circumstances. The usage of similar stamps has already ceased in New South Wales, Western Australia, Queensland and the Australian Capital Territory. It is also proposed to provide a refund to the tax payer who has unused duty stamps so long as they apply for a refund before 1 July 2007. Fifth, the bill addresses a technical deficiency in the current legislation that may not permit stamp duty to be recovered on the sub-sale of conveyance of property once duty has been refunded or remitted on a transaction that does not proceed even though the property is subsequently sold. Under this proposal it will be possible to reinstate an assessment irrespective of when the refund or remission of stamp duty occurred. Sixth, the bill proposes to make it clear that tax and stamp duty assessments and decisions are not susceptible to court challenges where the relevant legislation already provides an objection and appeal process. This amendment has been made in response to recent court action undertaken through the Supreme Court of Queensland that was initiated at the same time as the objection being lodged under the stamp duty law for the same matter. Lastly, the bill proposes to remove a prohibition under the stamp duty legislation against recovering penalties that have been imposed on a person by the Commissioner of Taxes, where a person is also prosecuted under that legislation. It is proposed that this change will apply to any prosecutions commenced from 1 July 2006, irrespective of when an offence is committed. This treatment recognises that an offence may have been committed prior to 1 July 2006, but was not identified until after that date or that prosecution action was not commenced until after that date. Further, as a consequence of this, the offence provision relating to evasion and providing false and misleading information are to be amended so that the court will no longer be able to impose a penalty amount that is based on the amount of tax or duty evaded or attempted to be evaded. However, the court will still be able to impose directives of penalty generally applied for this type of offence. This change is made in recognition that such penalty should be imposed by the commissioner and that it would be unfair for both the commissioner and the court to impose the penalty in relation to the same subject matter. Madam Speaker, I turn now to the final measure proposed by the bill and that relates to the Mineral Royalty Act. The bill proposes changes to that act to allow for the alignment of the statutory position of the secretary under the Mineral Royalty Act with that of the Commissioner of Taxes, such that the commissioner will also become the mineral royalty secretary. Madam Speaker, I commend the bill to honourable members. Debate adjourned. |