ACT Introduces Bill for Amendments to Certain Tax Exemptions and Concessions

The Revenue Legislation Amendment Bill 2021 (ACT) ("the Bill") was presented to the ACT Assembly by Treasurer Andrew Barr ("the Treasurer") on 31 March 2021. The Bill is described in its explanatory statement as being part of an ongoing series of Bills "to promote the effective and efficient administration and operation of the ACT tax system". The Bill is yet to pass.

The Bill proposes to amend the following ACT tax related legislation:

• Duties Act 1999 ("Duties Act")
• Land Tax Act 2004 ("Land Tax Act")
• Land Titles (Unit Titles) Act 1970 ("Unit Titles Act")
• Payroll Tax Act 2011 ("Payroll Tax Act")
• Planning and Development Act 2007 ("P&D Act)"
• Rates Act 2004 ("Rates Act")
• Taxation Administration Act 1999 ("Taxation Administration Act")
• Taxation Administration Regulation 2004 ("Taxation Administration Regulation")

The Bill seeks to make the following key amendments:

• removal of the current expiry date of 30 June 2021 for the affordable community housing land tax exemption;

• conveyance duty concessions for pensioners who have a disability, when purchasing residential shares in not-for-profit supportive housing properties; and

• the application of penalty tax provisions under the Taxation Administration Act to overdue and unpaid rates on land owned by corporations and trusts.

Amendments to the Land Tax Act

The Bill proposes amendments to the Land Tax Act by omitting the time limit of 30 June 2021 for affordable community housing land tax exemption (section 13A).

The Bill also seeks to amend the provisions regarding the exemptions from land tax, to exclude corporations and trusts in line with longstanding policy intent. Prior to the Land Tax Amendment Act 2018 (ACT), there was an explicit application of land tax to residential land owned by a corporation or trustee (see the then section 9 (1)(b) of the Land Tax Act). While some current exemptions already exclude corporations and trusts, other exemptions required conditions that corporations or trusts could not satisfy. This was particularly in regards to exemptions involving an owner being principally resident.

Amendments to the Duties Act

The proposed amendments to the Duties Act seek to provide conveyance duty concessions to pensioners who have a disability, when purchasing residential shares in not-for-profit supportive housing properties. The amendments seek to ensure that a person with a disability, who would have been exempt from conveyance duty if acquiring a property directly, is not subject to the duty (under part 3.4 of Duties Act) if they purchase by way of an indirect acquisitions of interests (for example, by using company title) in supportive housing.

The Bill also proposes amendments to the Duties Act to rectify an error in drafting, which resulted in the application of duty to acquisitions of interests in short-term and long-term commercial leases. Additionally, amendments made under the Duties (Commercial Leases) Amendment Act 2014 (ACT) remove the short-term and long-term commercial leases and subleases (separate to commercial leases with premium) from the application of duty.

Finally, the Bill seeks to amend the Duties Act to allow a 90 day period within which duty must be paid for the acquisition of an option to purchase land in the ACT, a Crown lease or declared sublease. The prescribed period is consistent with prescribed periods for dutiable transactions involving declarations of trust and grants of commercial leases with premium.

Amendments to the Taxation Administration Act

The Bill proposes to amend the Taxation Administration Act to include charges under "honest purchaser" protections, as under the Land Rent Act 2008 (ACT). This ensures that land rent charges do not have effect against a purchaser who obtained a certificate of charges at the time of purchase and was not notified of a liability.

The Bill also proposes amendments to clarify that certain debt recovery provisions, sections 56H and 56L, relate to charges over land for tax debts, operate separately. Section 56L is further proposed to be amended to distinguish the creation of a statutory charge from the registration of that charge under the Unit Titles Act.

This Bill proposes to update the Taxation Administration Act to include additional entities under the permitted disclosure arrangements to uphold the integrity of the tax system, law enforcement and other regulatory arrangements. Furthermore, the Bill seeks to allow for related disclosures as necessary to perform the function for which the initial disclosure is permitted. This will operate separately from the existing section 98 of the Taxation Administration Act, which provides for secondary disclosures for other legitimate purposes for the enforcement of a law or protection of the public revenue.

Other Amendments under the Bill

The Bill also proposes a range of minor and technical amendments to clarify and simplify tax administration, including:

• rectifying an error in drafting that applies duty to acquisitions of interests in short- and long-term commercial leases;
• clarifying when duty must be paid on the acquisition of an option over dutiable property;
• excluding corporations and trustees from exemptions on land tax involving an owner’s principal place of residence consistent with the longstanding application of land tax to holdings of land by trusts;
• requiring the payment of any deferred Lease Variation Charges ("LVC") prior to registering a unit plan to support compliance;
• aligning payroll tax annual reconciliation requirements with New South Wales;
• changing the annual requirement to provide valuation advice to the Treasurer for codified LVC determinations to a three-year requirement;
• making clear that a notice of assessment reflects the LVC tax liability of the lessee, and that an obligation to pay that liability arises when a variation of a Crown lease is executed;
• aligning reporting requirements for the Commissioner to provide information on Airport rates with processes for rates in general;
• clarifying application requirements for the operation of provisions allowing for a parcel of mixed-use land for development to have rating factors applied based on the intended proportion of residential and commercial development;
• allowing the Minister to determine an alternate time period for property owners to lodge objections for valuations, consequential to actions to improve transparency of valuation processes;
• including land rent charges under "honest purchaser" liability protections where a Certificate of tax and other charges is provided to a purchaser;
• improving the operation of debt recovery provisions relating to charges over land for tax debts by clarifying the separate operation of certain provisions, and confirming the creation of a statutory charge on "other" land; and
• updating and facilitating permitted disclosures under secrecy provisions for entities to uphold the integrity of the tax system and to uphold the integrity of law enforcement.

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Revenue Legislation Amendment Bill 2021 (ACT) and explanatory material available from TimeBase's LawOne Service.