Northern Territory Second Reading Speeches

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PENALTY UNITS BILL 2009

Ms LAWRIE (Treasurer): Madam Speaker, I move that so much as standing orders be suspended as would prevent bills entitled Revenue Legislation Amendment Bill 2009 (Serial 43), and Penalty Units Bill 2009 (Serial 44):
      (a) being presented and read a first time together and one motion being put in regard to, respectively, the second reading, the committee’s report stage; and the third readings of the bill together; and

      (b) the consideration of the bills separately in the committee of the whole.
Mr ELFERINK (Port Darwin): Madam Speaker, I repeat what I said: the minister wishes to introduce two bills together, which are essentially going to be, I suspect, bills that will introduce taxation increases, or fees and charges increases, without having seen them. I do not know what is in them and by hearing the bills together, what the government is intending to do is not have the debate twice. What we are going to get, I suspect, out of this is the bills being rolled in together, and so we only get to debate out once the charges and fees that are being increased by this government.

While I understand why the government wants to do this, and on this occasion we will not resist it because of the length of speeches that apply to the passage of bills, it nevertheless behoves this government well to choose to stand up in here and explain why they are doing this. She introduces this motion for us to now debate the suspension of standing orders to enable them to do this, but she introduces the motion and sits down. There is no explanation at all attached to why the motion is being asked for in this House. I now have, and other members, had to second guess what the Treasurer is actually asking us to do.


I suspect what has happened here is that they want this motion up so that they can hear these two bills together, so that they do not have to debate out twice the charges and fees that they are increasing and levelling on Territorians. These will include fees such as the costs of the penalty units, as well as other fees and charges which will be incorporated into this legislation.


Madam Speaker, if they want me to stop standing up when they are trying to bring these procedural motions on and debating these procedural motions, then the best way to do it is to stand up, walk around to this side of the House, well in advance, and give notice of what is going on. This House (inaudible) have a trap in every corner so that we can sort of squeeze through this way, or squeeze through that way. If explanations are brought on in a timely fashion before we walk into this House, then you will find that this House will work a lot more smoothly.


I understand what the government is doing. I know that they do not want to talk about their increased fees and charges twice. I suspect there will be sufficient time, without having seen the bills, to deal with the fees and charges issued in one debate, which is why we will not be resisting this motion. But, my goodness gracious me, Madam Speaker, a little bit of communication goes a long way.


Dr BURNS (Leader of Government Business):
Madam Speaker, I thank the opposition for agreeing to treating these bills as cognate bills. It is quite standard practice within this House to treat bills as cognate bills, particularly when they are complementary, when they have a theme as these bills have in terms of budget measures. In no way is the government seeking to tether debate on these particular bills, and members will be free to get up and speak to these bills. There is no plan to tether debate. This is fairly normal practice where cognate bills come into this House. I commend the motion to the House.

Motion agreed to.
_____________________

Bills presented and read a first time.


Ms LAWRIE (Treasurer):
Madam Speaker, I move that the bills be now read a second time.

The Revenue Legislation Amendment Bill puts in place a package of revenue measures announced as part of the 2009-10 Budget. This bill proposes amendments to the
First Home Owner Grant Act, Stamp Duty Act, and Taxation Administration Act.

I will now address the changes proposed in the Revenue Legislation Amendment Bill in more detail. The key proposals of the bill include changes to landholder stamp duty to counter an avoidance scheme, and to address inequities existing in the current legislation by imposing landholder stamp duty on the takeover of companies and unit trusts that are listed on the Stock Exchange, including imposing stamp duty on mergers; changes to the stamp duty legislation so that a purchase can nominate a related person prior to settlement to receive property without double stamp duty consequences; and changes to the eligibility criteria of the First Home Owner Grant and Stamp Duty First Home Owner Concession so that these home incentives are subject to a value cap.


The stamp duty legislation has had landholder stamp duty provisions in place since 1988. These provisions generally provide for the same stamp duty outcome to occur whether a person acquires ownership of land directly or, in the alternative, indirectly by the transfer of shares in a landholding company or units in a landholding unit trust. This ensures that the direct and indirect transfer of land is treated consistently.


The bill introduces a number of changes from 6 May 2009 to landholder stamp duty addressing a number of inequities existing in the current legislation and to counter an avoidance scheme.


The changes to landholder stamp duty will result in the takeover of listed corporations and unit trusts being subject to landholder stamp duty where an interest of 90% or more is acquired. The threshold for all other unit trusts will be revised to be the same as for unlisted companies. That is, landholder stamp duty will apply where an interest of 50% or more is acquired, rather than the current level of 20% or more. These amendments are consistent with legislation existing in Western Australia.


The bill also imposes stamp duty on mergers, including the merger of listed entities. Generally, where one or more entities merge into a single entity, whether an existing entity or a new entity, duty is payable on the value of the dutiable property of the entities that merge into the new or existing entity. Where there is a merger, and the merging entities continue to exist, such as when BHP and Billiton merged, duty will be imposed on 50% of the dutiable property of each of the merging entities. Where the entities are listed entities, duty will be imposed on 50% of the entities’ landholdings, notwithstanding the normal 90% acquisition threshold.


The bill also addresses a stamp duty avoidance scheme that enables a person to obtain control over the landholding entity without obtaining any entitlement to the property of the entity on its winding-up. As such a person can take control of a landholding entity and gain indirect ownership of the land while avoiding paying landholder stamp duty. This avoidance scheme has already been used at least once in the Territory and if the legislation is not amended to close this loophole, it is possible that this practice could become more widespread, potentially costing the Territory significant lost revenue.


The proposed anti-avoidance amendments do not jeopardise ordinary business transactions because there are no commercial reasons for framing a transaction in this manner other than to avoid stamp duty.


The bill also allows a listed unit trust to ‘top hat’ a new parent entity without landholder stamp duty consequences from 1 July 2009. This means that restructuring property trusts and stapled securities by imposing a new head trust can occur without stamp duty consequences. This treatment aligns the Northern Territory with other jurisdictions and allows the exchange of stapled securities to be more competitive.


Often a person enters into an agreement to purchase property and later decides - or gets legal or accounting advice - that the transfer of the property should go to a related person, such as the person’s family company. In these circumstances, provided the purchaser and the transferee are related and no consideration passes, the bill allows the original purchaser to be substituted with a related person without double duty consequences. This ensures that taxpayers are treated fairly, and also reduces red tape for taxpayers and compliance costs for government.


In relation to the first homeowner grant and stamp duty first homeowner concession, the bill limits eligibility to these incentives to situations where the home being purchased has a value at $750 000 or less. The $750 000 value cap is about 1.7 times the median house price in Darwin for the December quarter 2008 and is consistent with the first home owner grant caps in New South Wales and Western Australia. A first home owner grant cap also applies in Queensland.


Where vacant land is purchased for the purposes of building a first home, it is proposed that the eligibility for the stamp duty first homeowner concession be limited to situations where the value of land is no more than $385 000. This is the current concession level.


These measures will improve the targeting of home owner assistance and are proposed to commence following the expiry of the Commonwealth’s First Home Owner Boost Scheme, which is expected to be 30 June 2009.


I now address the other measures in the bill which, unless otherwise indicated, commence on 1 July 2009. The bill also includes a number of stamp duty exemptions for individuals, business and non-profit organisations.


First, the bill exempts non-motorised trailers and caravans from motor vehicle registration stamp duty. This will provide savings to Territorians purchasing a caravan or trailer weighing no more than 4.5 tonnes. The measure also ensures that Territory trailer and caravan dealers maintain competitiveness with other jurisdictions which provide similar stamp duty exemptions.


Second, the bill extends existing stamp duty exemptions for public benevolent institutions, religious institutions, public hospitals and schools so that the exemptions are also available to organisations with a sole or dominant purpose that is benevolent, charitable, philanthropic or patriotic. The measure provides stamp duty savings to the non-profit organisations in respect of lease, conveyance and motor vehicle registration stamp duty. The exemption in relation to lease and conveyance duty will remain conditional on the property not being used for commercial or profit making activities, or in competition with other business. Similar exemptions are provided in other jurisdictions and under the harmonised payroll tax legislation.


Third, the bill exempts first home saver accounts from life insurance duty with retrospective effect from 1 October 2008. This aligns with the commencement date of the Commonwealth first home saver account scheme.


Fourth, the bill exempts leases in retirement villages from stamp duty that would otherwise be imposed on the upfront premiums, to reduce cost to pensioners and seniors. The bill also removes the stamp duty exemption for residential leases as this exemption is now redundant following the abolition of stamp duty on rent for leases.


The bill will also reduce red tape for taxpayers and conveyances as it removes the requirement to lodge cancelled agreements, unless a sub-sale of the property has occurred. This removes the technical requirement to lodge a cancelled agreement and for the Commissioner of Territory Revenue to remit the duty payable under that agreement.


The final change in the Revenue Legislation Amendment Bill is a technical amendment to the
Taxation Administration Act clarifying that a statutory charge can be placed on land subject to a pre-existing 1 January 2008 landholder transaction. This measure is consistent with the intention of our act and in the manner in which the legislation operated prior to 1 January 2008.

I now turn to the Penalty Units Bill. The
Penalty Units Act allows for monetary penalties for offences to be expressed in penalty units. Expressing penalties in penalty units allows for across the board adjustment of financial penalties. This ensures that there is a simple way of maintaining the real value of penalties. Penalties cease to have a significant deterrent or punishment effect if inflation is not accounted for. The act does not currently set out a process for changing the value of a penalty unit so that it maintains real value. This means that the value can only be changed by new legislation that changes the value.

In 2002, legislation changed the value of a penalty unit from $100, as set out in 1999, to $110. The consumer price index, the CPI for Darwin, was used as the basis for determining the change in the value of the money and therefore the applicable value of a penalty unit. The value of a penalty unit has not been reviewed since then.


The first purpose of this bill is to increase the value of one penalty unit from $110 to $130. This figure is based on the CPI for 2002 and 2008. The Commonwealth and other Australian states and territories, except for South Australia, use penalty units. These are periodically adjusted. The value of one penalty unit ranges between states and territories from $50 to $120.


The Penalty Units Bill additionally allows for a review of the value of a penalty unit in accordance with a CPI calculation to be applied at the start of each financial year. Tasmania and Victoria also provide a legislative mechanism for automatic annual review. The review mechanism will take effect from 1 July 2010 and will only result in changes to the value of a penalty unit if the value yielded by the CPI calculation was equal to, or greater than, a $1 increase to the penalty unit value since its previous review.


The Administrator may then prescribe that amount as the new penalty unit value by regulation to take effect from a time after the notification of the regulation in the
Gazette. It would be expected that the regulation would identify a date sufficiently in the future to ensure that adequate notice is given to law enforcement agencies responsible for penalties. The bill provides that where the value of a penalty unit is increased by regulation that the increase does not apply to penalties for offences committed prior to the regulation taking effect.

Based on advice from Parliamentary Counsel, the Penalty Units Bill provides for the repeal of the current
Penalties Act and replacement by a new act.

Madam Speaker, I commend the bills to the honourable members and table the explanatory statements to accompany the bills.


Debate adjourned.


 


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