LAND TAX AMENDMENT BILL 2002 Explanatory Notes

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LAND TAX AMENDMENT BILL 2002

1 Land Tax Amendment Bill 2002 LAND TAX AMENDMENT BILL 2002 EXPLANATORY NOTES GENERAL OUTLINE Policy Objectives To amend the Land Tax Act 1915 to implement measures announced in the 2002-2003 State Budget. Reasons for the Bill The 2002-2003 State Budget proposed that the Land Tax Act 1915 be amended for the 2002-2003 financial year and later years to _ remove the 15% general rebate for taxpayers who are companies, trustees and absentees; _ increase the exemption threshold for taxpayers who are companies, trustees and absentees from $100,000 to $150,000; _ adjust the section 9A reducing rebate for taxpayers who are companies and trustees to a maximum of 36% where taxable value is $150,000, and then reducing by 0.5% for every $1,000 of taxable value in excess of $150,000, cutting out when the taxable value reaches $215,000; _ extending the section 9A rebate to taxpayers who are absentees. The Bill implements these measures. Achievement of the Objectives The Land Tax Act 1915 provides two types of rebates of assessed tax, namely a general 15 % rebate under section 9AA of the Act, available to all taxpayers and a reducing rebate available under section 9A of the Act to taxpayers who are companies and trustees. The Bill alters the eligibility of some taxpayers for the rebates. The Act will be amended so that taxpayers who are companies, trustees and absentees will no longer be eligible for the general rebate. The Bill also amends the Act to extend the section 9A

2 Land Tax Amendment Bill 2002 rebate to taxpayers who are absentees and to alter the way in which the rebate is calculated. The Act also provides an exemption threshold for taxpayers who are companies, trustees and absentees. If the taxable value of land owned by these taxpayers is below the exemption threshold, the land is exempt from land tax. The Bill increases the threshold for these taxpayers from $100,000 to $150, 000. A beneficial consequential technical amendment will be made to the exemption threshold for absentees to align its operation with that applying to companies and trustees. The amendments made by the Bill will take effect for the 2002-2003 financial year and later years. Alternatives to the Bill The policy objectives can only be achieved by legislative enactment. Estimated Cost for Government Implementation There are no Government implementation costs. Consistency with Fundamental Legislative Principles Retrospective operation of amendments The amendments will commence retrospectively from 1 July 2002, initially applying to land owned as at midnight on 30 June 2002. As the assessments for the 2002-03 financial year will not be issued before enactment of the Bill and the measures were announced before the 2002- 2003 land tax returns are required to be lodged there are no fundamental legislative principle issues. Consultation Consultation on the amendments was not appropriate as the measures are a Budget initiative.

3 Land Tax Amendment Bill 2002 NOTES ON PROVISIONS Clause 1 cites the short title of the Bill. Clause 2 states the date on which the Bill is taken to have commenced. Clause 3 states that the Bill amends the Land Tax Act 1915 Clause 4 amends the Act to omit sections 9AA, 9A and 9AB and to insert a new section 9A which provides for rebates of assessed tax. Section 9AB is omitted as, due to the other amendments made by clause 4, it is no longer necessary. New section 9A(1), dealing with the 15% general rebate, replaces the omitted section 9AA and provides that taxpayers, other than "prescribed taxpayers" as defined, are entitled to a rebate of 15% of the tax assessed for a financial year. Prescribed taxpayers are defined in new section 9A(3). New section 9A(2), dealing with the reducing rebate, replaces the omitted section 9A(1) and provides a rebate of assessed tax for prescribed taxpayers and sets out how the rebate is to be calculated. This rebate is provided because under section 13(1) prescribed taxpayers benefit from an exemption threshold. Where that threshold is met or exceeded, the full amount of the taxpayer's taxable value is liable to land tax. The rebate alleviates the impact of being just over the exemption threshold. The amendment also extends this rebate to taxpayers who are absentees. Clause 5 amends section 13(1)(i)-(k) to increase the exemption threshold for taxpayers who are companies, trustees and absentees from $100, 000 to $150, 000. Clause 5(2) makes a technical amendment to section 13(1)(j) to replace a reference to unimproved value with taxable value to align the exemption threshold for absentees with that applying to companies and trustees and to ensure consistency with assessing practice. Clause 6 amends section 16 to ensure that a taxpayer who is a company, trustee or an absentee is not required to furnish a return where, due to the amendment to section 13, their land holding is exempt. Clause 7 amends section 62 by omitting subsections (1) and (2) as they are no longer necessary. The insertion of a new section 62(1) provides that the amendments made by the Bill apply to land tax levied for the financial year beginning 1 July 2002 and each later financial year.

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