MS TIERNEY (Western Victoria—Minister for Training and Skills, Minister for Higher Education) (18:42): I move:
That the second-reading speech be incorporated into Hansard.
Motion agreed to.
Ms TIERNEY: I move:
That the bill be now read a second time.
Incorporated speech as follows:
This Bill gives effect to Budget measures that will deliver important support to business and communities and help to kickstart Victoria’s economic recovery from the coronavirus (COVID-19) pandemic. This Bill also makes a number of improvements to Victoria’s taxation and valuation laws to support their effective operation.
Budget initiatives
In the 2019–20 Budget, the Andrews Government introduced a land transfer duty concession for commercial and industrial property transactions in regional Victoria to provide support to regional businesses and encourage businesses to locate in regional areas. The concession applied to contracts entered into on and after 1 July 2019 as a 10 per cent reduction in the duty otherwise payable, increasing by 10 percentage points each year to provide a full 50 per cent concession from 1 July 2023.
As part of the 2020–21 Budget, this Bill applies the full 50 per cent concession to contracts entered into on or after 1 January 2021, for eligible commercial and industrial properties across regional Victoria, promoting opportunities for businesses to expand, recover from the effects of the coronavirus (COVID-19) pandemic and invest in regional Victoria. This measure is estimated to provide $39.7 million of additional duty relief over the budget and forward estimates period.
This Bill will also provide a land tax exemption for certain not for profit clubs as announced in the 2020–21 Budget. Victorian clubs are currently eligible for a concessional rate of land tax on land they own and solely occupy, if the club is not carried on for the profit or gain of individual members, and is carried on exclusively to provide for members’ social, cultural, recreational, literary or educational interests, or for the promotion or control of horse, pony or harness racing in Victoria. As the existing concession caps the land tax rate at 0.357 per cent, in practice it only provides a benefit for land holdings of a reasonably high value, with many clubs receiving no benefit.
This Bill will replace the concession with an exemption for all eligible not for profit clubs other than those engaged in the promotion or control of horse, pony or harness racing. The current concessional rate will continue to be available to those racing clubs. The new exemption will support the social activities of Victorian clubs and place them on the same footing as not for profit sporting and outdoor recreational and cultural clubs that currently receive a full exemption. This measure is estimated to cost approximately $6.4 million over the budget and forward estimates period.
Other amendments
This Bill amends the Environment Protection Act 1970 and the Environment Protection Amendment Act 2018 to increase the metropolitan municipal and industrial landfill levies and the landfill levies for hazardous wastes classified as Category C and D wastes to $125.90 per tonne by 2022–23, with proportionate increases to the rural municipal and industrial landfill levy rates. Changes will be phased in over two years from 1 July 2021, following a one year deferral from the original commencement date, to minimise economic impacts for businesses and households recovering from the coronavirus (COVID-19) pandemic. Victoria’s landfill levy rates are currently amongst the lowest in Australia and these changes will align our rates more closely with those in South Australia and New South Wales. The changes are estimated to increase municipal and industrial landfill levy revenue by approximately $533 million and prescribed industrial waste landfill levies revenue by approximately $98 million over the forward estimates period. The additional revenue will be used to support recycling reforms outlined in Recycling Victoria: A new economy, the Victorian Government’s 10-year circular economy policy and action plan, providing incentives for Victorians to increase resource recovery, reduce the diversion of waste to landfill and encourage investment in new technologies.
This Bill also increases the rate of duty charged on the sale of sheep and goats and their carcases incrementally over three years. Livestock duty collected from sheep and goat sales is paid into the Sheep and Goat Compensation Fund, established under the Livestock Disease Control Act 1994 and within the Minister for Agriculture’s portfolio, where it is used to support programs and projects that benefit the sheep and goat industry in Victoria. Funding rounds for such programs and projects are held annually. The current rate of duty of 12 cents per head has not changed since 1999. This Bill increases the rate to 19 cents per head on 1 January 2021, then 27 cents on 1 January 2022, and to 35 cents per head on 1 January 2023. The increase will raise additional revenue for programs and projects to benefit sheep and goat producers, and will also provide potential to fund the ongoing subsidisation of electronic ear tags for sheep and goats, which provides Victorian producers with a first-class traceability system and protects market access. The measure is estimated to raise over $6.1 million over the budget and forward estimates period. The amendment in this Bill to the pig duty provision will see no changes for industry participants and is administrative in nature only.
The Bill also makes several amendments to taxation and valuation laws to improve their operation. These amendments close loopholes, correct anomalies and ensure that Victorian taxation laws can be administered efficiently and effectively.
This Bill amends the partnership provisions in the Duties Act 2000 to address an anomaly in situations involving multiple layered partnerships, where one partnership holds an interest in another partnership. These provisions were introduced in 2018 and are important to ensure that acquisitions of partnership interests are liable to duty, in alignment with other jurisdictions. The amendment provides for a full ‘look through’ to the assets of the other partnership for the purpose of determining liabilities for land transfer duty or landholder duty, as originally intended.
This Bill amends the definition of ‘dutiable property’ in the Duties Act 2000 to clarify that security and other interests in fixtures are not considered ‘dutiable property’. Dutiable property is defined to exclude certain interests that are less than a normal ownership interest, including security interests such as mortgages. In 2019, the Duties Act 2000 was amended to support the collection of duty on fixtures acquired separately from the underlying land. However, the existing exclusion of security interests from dutiable property did not extend to dutiable property consisting of an interest in fixtures. The amendment addresses this unintended consequence, and confirms that a security interest in a fixture is treated consistently with a security interest in other forms of dutiable property and is not made inadvertently liable to duty.
This Bill expands the duty exemption available for certain equity release products. These products enable existing homeowners (usually older Australians) to obtain a financial benefit by trading equity in their home for a lump sum payment or income stream. Currently, the duty exemption is only available for products offered by a limited set of permitted providers including financial institutions and bodies regulated by the Australian Prudential Regulation Authority. The amendment will allow the Commissioner of State Revenue (Commissioner) to approve additional providers for the purposes of the exemption in accordance with guidelines issued by the Treasurer. The guidelines will ensure consumer protection principles are a focus when assessing the suitability of additional providers offering equity release products and that the interests of elderly Victorians are protected.
The 2019–20 Budget introduced a concessional rate of motor vehicle duty for electric, hybrid or low-emission diesel or petrol passenger vehicles classified as ‘green cars’ under Commonwealth standards. This Bill amends the legislated definition of green car in the Duties Act 2000 to ensure that low-emission vehicles with carbon dioxide emissions of exactly 120 grams per kilometre are included in the definition as was originally intended.
This Bill amends the Duties Act 2000 and First Home Owner Grant Act 2000 to reconcile various provisions between the first home buyer duty concession and exemption and the First Home Owner Grant (FHOG). The Bill amends the duty provisions to extend the residence requirement in respect of vacant land transactions, such that the first home buyer must begin occupying the property as their principal place of residence within 12 months from the earlier of the date they are lawfully able to reside at the property (i.e. when the occupancy permit is issued) or 24 months after the land transfer, whichever occurs first. The Bill also amends the first home buyer duty concession and exemption provisions to prevent a co applicant from accessing duty relief a second time after having been party to an earlier application, consistent with the FHOG. The Bill also gives the Commissioner the power to vary the residence requirement for a FHOG applicant. Currently, the residence requirement cannot be varied unless the applicant has made a notification to the Commissioner within 14 days after the period allowed for compliance (i.e. 24 months after the completion of the transaction). However, in many cases, there may be exceptional and compelling circumstances that impact on a person’s ability to make this notification, such as major health or personal safety issues. The amendment will ensure fair outcomes can be reached for applicants in these circumstances to enable them to retain the FHOG, consistent with the discretion available under the first home buyer duty provisions.
The Bill also amends the FHOG definition of ‘new home’ to a home that has never been sold and never been occupied. The amendment closes a loophole where a home can be claimed as new despite having been occupied (potentially for years) prior to sale. This change is consistent with the FHOG requirements in other jurisdictions and will strengthen the targeting of the FHOG to genuinely new homes in order to promote new dwelling construction.
In the 2019–20 Budget, the Government reformed the corporate reconstruction duty exemption to encourage economically efficient corporate structures and promote business efficiency. As part of the reforms, a special exemption was introduced to ensure that concessional duty (at a rate of 10 per cent of the duty otherwise payable) was only charged once on an arrangement involving multiple corporate reconstruction transactions, with subsequent reconstruction transactions under the same arrangement being exempt. However, the existing exemption does not cover arrangements that involve both a reconstruction and consolidation, exposing them to a double duty outcome. This Bill extends the exemption to cover arrangements that involve both corporate reconstruction and consolidation transactions, removing an impediment to groups undertaking such restructures to enable greater business efficiency. The Bill also clarifies eligibility for the corporate consolidation exemption to consolidated groups under the Income Tax Assessment Act 1997 (Cth), ensuring that corporate groups only receive relief from duty if they have taken concrete steps towards consolidation for Commonwealth tax purposes.
This Bill amends the wagering and betting tax provisions in the Gambling Regulation Act 2003 to address minor issues identified in the administration of the tax, since its commencement on 1 January 2019. These issues relate to the treatment of the GST, the calculation of ‘free bets’, the treatment of bets in foreign currency and the provisions for grouping wagering and betting operators. These amendments will align aspects of the Victorian wagering and betting tax regime with the corresponding tax legislation in other jurisdictions. Other than the changes to grouping provisions, the Bill applies the changes from the inception of the tax on 1 January 2019, being clarifications to the law that are consistent with existing administrative practices.
This Bill abolishes special land tax, a one-off tax imposed when land ceases to be exempt from land tax in certain circumstances, such as land that ceases to be used as a golf course or as a rooming house. Special land tax was introduced in 1973 to discourage land speculators from claiming spurious land tax exemptions while waiting for land to increase in value. However, changes to the tax and planning framework over the last five decades mean special land tax is no longer fit for its original purpose. As it presently applies, special land tax often falls inequitably on less wealthy owners such as rooming house operators and not for profit sporting organisations, rather than speculators as originally intended. The tax is also a strong disincentive to redeveloping land for a more efficient purpose. Abolishing this inefficient tax will simplify the law and encourage more efficient use of land, with only a modest loss of revenue.
This Bill amends the principal place of residence (PPR) provisions in the Land Tax Act 2005 to clarify the basis of their operation, improve equity in their application and address inconsistencies or omissions. A key change in these amendments is to introduce consistent restrictions on deriving any income from PPR land when the owner is not actively residing at the land but an exemption still applies (e.g. while the owner is temporarily absent). This change supports the principle that an owner producing income from a property should not generally benefit from a PPR exemption. In addition, the Bill provides for land tax to be apportioned where separate residences on PPR land are being used to derive income from the provision of accommodation. This extends the existing provision that apportions land tax when the separate residence is leased for residential purposes. This amendment ensures that self contained separate residences are liable for partial land tax whenever they are used to derive income—whether this is rental income from a residential lease of the residence, or income from other forms of residential accommodation, including short-term accommodation. These changes will apply from the 2021 land tax year, although for owners who are temporarily absent from their PPR, the change to income restrictions will not be implemented until 2022 to provide owners with a transition period.
This Bill amends the Land Tax Act 2005 to clarify the inclusion of unpaid interest and penalty tax in the amount of a first charge imposed on land. Unpaid land tax is secured by a first ranking statutory charge against the land in order to allow recovery from current and subsequent landowners. Purchasers can protect themselves by obtaining a clearance certificate from the State Revenue Office (SRO), which if obtained, limits their liability to the amount set out on the certificate. This amendment clarifies that interest and penalty tax on unpaid land tax are included in the amount of the charge, and also clarifies that interest and penalty tax on unpaid land tax are recoverable from a mortgagee, lessee or occupier where the owner has defaulted in the payment of land tax.
The Bill also repeals the existing clearance certificate provisions from the Land Tax Act 2005 and establishes a framework for the issue of a single property clearance certificate under the Taxation Administration Act 1997 (TAA). In addition to land tax, several other laws administered by the Commissioner secure unpaid debts by attaching them to the land as a first charge. This is a robust method for protecting the revenue. However, only the Land Tax Act 2005 provides for the issue of clearance certificates to purchasers and vendors. The amendment provides for the issue of a single clearance certificate that will continue to include information on outstanding land tax amounts. In addition, the provisions will authorise the inclusion of information in the certificate about other amounts that are recoverable by the SRO as a charge on the land, thereby ensuring vendors and purchasers are fully aware of the liabilities that affect the land. The certificate will continue to be subject to the strict taxpayer secrecy provisions of the TAA, ensuring consistent and comprehensive protection for any taxpayer information disclosed through the certificate.
This Bill amends the TAA to enable the Commissioner to specify which documents fall within the legislative definition of ‘return’. Currently, the TAA gives the Commissioner discretion to extend the time for lodgement of a return; however, the TAA defines ‘return’ broadly to include almost any return, statement, certificate, application, report or other record that may be lodged with the Commissioner under a taxation law. Taxpayers may seek to use this broad definition to seek extensions of time under the TAA for certain applications, despite those applications having strict statutory time limits for lodgement under the taxation laws. This undermines the intent of setting strict timeframes for lodgement and may lead to revenue leakage. This Bill therefore provides the Commissioner with power to publish a statement on the SRO website to specify which documents fall within the definition of ‘return’, ensuring the general discretion to extend time only applies to documents that have expressly been stated to be returns.
This Bill amends the Valuation of Land Act 1960 to provide councils with the ability when requesting a supplementary valuation to nominate a date from which it can apply a supplementary valuation for the purpose of adjusting any rates or Fire Services Property Levy (FSPL) payable for the land within that financial year. Councils may request supplementary valuations from the Valuer General to reflect changes in the condition of a property. Currently, rate or levy amounts can only be adjusted by reference to the supplementary valuation from the day after the valuation is returned to the council. Councils are not permitted to make retrospective adjustments except in the case of error. The amendment will give councils the option to nominate a day from which to apply the valuation for the purposes of calculating adjustments to rates or FSPL. However, the nominated day must fall within the current financial year, and be no earlier than the day on which the relevant circumstances that gave rise to the supplementary valuation occurred. This amendment is a sensible reform that will give individual councils control over whether to retrospectively apply a supplementary valuation for adjustment purposes. General and supplementary valuations for previous years will not be affected, nor will any previous assessments of rates, FSPL or land tax based on those valuations.
This Bill ensures Victoria is in a strong position to rebuild and grow its economy with support for businesses to survive and to keep Victorians in jobs, backed by an effective taxation system.
I commend the Bill to the house.
