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| Mr Deputy Speaker, I move that the bill be now read a second time. This bill puts in place a package of revenue, savings and miscellaneous administrative measures as part of the government’s 2015-16 budget. The primary measures contained in this bill focus on strengthening the integrity of the Territory’s revenue legislation to ensure the Territory’s taxes and concessions operate efficiently, fairly and in the best interest of all Territorians. This is achieved by making a range of amendments to the Stamp Duty Act, Taxation Administration Act, First Home Owner Grant Act, Gaming Control Act and the Payroll Tax Act. I will turn to the first of those measures, which provides additional relief to seniors, pensioners and carers. Since 2012, this government has demonstrated its commitment to supporting Territorians with a diversity of housing choices. This commitment is seen through the introduction of the Real Housing for Growth initiative and reform of the Territory’s home incentive schemes to provide targeted assistance to Territory homebuyers. The changes in this bill build on this reform by increasing the senior, pensioner and carer stamp duty concession to provide greater tax relief to senior Territorians, pensioners and carer. From yesterday, the senior, pensioner and carer stamp duty concession will be increased from $8500 to $10 000. This will help make housing more affordable for Territorians most in need. It also reduces a barrier for senior Territorians downsizing or finding more appropriate homes at this stage in their lives. The bill also makes a minor amendment to the Territory’s home incentive scheme rules to improve their fairness and flexibility. The Territory has a diverse workforce, with many Territorians in industries which keep them from home on a regular basis, including fly-in fly-out and remote workers. These conditions can make it difficult for families to meet the current resident requirements for a first home owner grant, principal place of residence rebate or the senior, pensioner and carer concession. In order to better cater for these circumstance, the bill amends the resident requirements so that where property is purchased by co-owners only one owner will be required to live in the property. This simple reform reduces red tape and makes the Territory’s home incentive schemes fairer and more flexible, without compromising integrity. I now turn to the payroll tax measures contained in the bill. This government is committed to providing meaningful assistance to employers who take on apprentices and trainees. This recognises the valuable opportunities that apprenticeships and traineeships provide to young Territorians, and the importance of maintaining a skilled workforce in the Territory. A significant part of this assistance is the payroll tax exemption for wages paid to trainees or apprentices. This exemption was introduced to encourage businesses to employ apprentices and trainees, however, the way in which the exemption operates makes it inefficient and open to widespread misuse. One of the main problems with the current tax exemption is that it is available on enrolment rather than completion of the apprentice of training course. This means that the tax exemption is not results driven, and employers can obtain an annual payroll tax saving even where staff are in training programs year after year, without ever completing the course. The exemption is also untargeted and not focused on sectors where there are job opportunities or skill shortages. The payroll tax exemption also does not benefit small business. Many small businesses want to take on apprentices but the cost of training might be considered to outweigh the benefits to the employer. These small employers do not benefit from the payroll tax exemption since their wages are below the $1.5m payroll tax threshold. To address these inefficiencies and inequalities the bill abolishes the payroll tax exemption for apprentices and trainees, with the savings to be passed on to employers through direct assistance programs. Direct assistance programs such as the new Training for the Future program delivers assistance to all Territory businesses and not just those large employers who have a payroll tax liability. The Training for the Future program is also linked to course completion, ensuring that taxpayers’ money is directed to programs that deliver real results and cannot be exploited by those seeking to minimise their tax liabilities. This reform ensures the effective use of taxpayers’ money to provide real assistance to employers and continues to encourage apprenticeships and traineeships in the Territory. The bill also makes significant reforms to the charities exemption under the Payroll Tax Act. Currently, charitable entities can access a payroll tax exemption in recognition of the valuable work that they do in our communities. However, recent developments in interstate courts have widened the exemption beyond its intended scope. It now applies broadly, including to non-charitable work conducted by the not-for-profit sector. In particular, the exemption can be available for investment activities and the operation of commercial for-profit businesses which have no direct relationship to the charitable purpose of a charity. Several other court decisions have also allowed organisations that have not historically been regarded as charitable to receive the payroll tax exemption, including chambers of commerce, industry lobby groups, trade organisations and professional associations. These court decisions have widened the payroll tax charities exemption beyond its intended scope and it is now necessary to refocus the exemption to ensure it remains open only to appropriate charitable organisations and actual charity work. The bill makes two key amendments to the payroll tax charities exemption. Firstly, the exemption is removed for any commercial work or work performed in competition with the private sector. This will ensure that where a charity owns and operates a for-profit commercial business, that for-profit business will be subject to the same taxation rules as every other business conducting the same work. For example, where a charity owns and runs a for-profit hotel, that hotel should be taxed in the same way as other hotels in the Territory. This is consistent with the policy that businesses should be taxed according to the work they actually perform and that taxation should not distort the open market by providing an unfair advantage to one type of business over other similar businesses. In addition, these amendments also serve to address tax avoidance schemes that have been encountered where businesses use charities to artificially minimise their payroll tax liabilities without necessarily doing any actual charity work. Secondly, the bill ensures that bodies which promote trade, industry or commerce and professional associations cannot receive the charities exemption, regardless of whether or not those organisations might be called a charity under common law. This reform is necessary as common law definition of a charity is so wide that trade and commerce groups have been successful in receiving tax exemptions interstate even where they have large fee-paying membership bases. These reforms leverage off similar reforms interstate and contain safeguards to ensure that the amendments do not affect traditional charities which have a sole or dominant purpose of the relief of poverty, advancement of education or the advancement of religion. The bill also provides the Commissioner of Territory Revenue with flexibility in administering the new exemption to ensure it is appropriately targeted to professional associations and organisations that promote trade, industry or commerce without affecting other charities that really benefit the community. I now turn to the reforms to the Gaming Control Act, which help to equalise the playing field when it comes to gambling taxation and ensure that casinos are giving back to the community and by supporting gambling amelioration programs through contributions to the Community Benefit Fund. Currently, pubs and local hotels are required to pay a levy of 10% of profits received from gaming machines into the Community Benefit Fund. Levies paid into the Community Benefit Fund are reinvested into the community through community grants and research into the social and economic impact gambling has on individuals, families and the community. Until now the Territory’s casinos have not been required to contribute to the community benefit fund. However, government believes casinos should contribute to the community in the same way that other for profit gaming venues do, and as such this bill expands the community benefit levy to apply to gaming machines in casinos from 1 July 2015. This ensures casinos make appropriate contributions to the community and provide support for problem gamblers. The bill complements this casino tax reform with a minor amendment to the Gaming Control Act to allow licence fees to be imposed on Territory casinos in addition to any payments required under the casino operators agreements. This ensures that licence fees can be created under the existing legislation; no new fees are being implemented at this time. I now turn to the key amendments to the Stamp Duty Act. The government is committed to reducing the cost of living for Territorians. This bill delivers on that commitment by abolishing stamp duty on life insurance from 1 July 2015. Stamp duty on life insurance is an inefficient tax that increases the cost of taking out life insurance. Removing this duty burden will serve to reduce the cost of living for Territorians, and help make these insurance policies more affordable. As a result of the abolition of life insurance duty, the bill makes a consequential amendment to clarify the tax treatment of life insurance riders. Life insurance riders are policies that are packaged with life insurance and provide additional cover for further specified events and contingencies such as accident, trauma, illness or income protection policies. The new definition of a life insurance rider sets out clear rules for when a policy will be a taxable rider policy and when it will be an exempt life insurance policy. This clarifies the law surrounding life insurance policies and ensures that insurers lodge correct tax returns for bundled products. Finally, government is continuing to deliver on its promise to cut red tape and make the job of doing business easier for all Territorians. To achieve this the bill provides a number of minor reform measures which will reduce red tape, improve transparency in the Territory’s revenue laws, and ensure those laws are operating as intended. The bill ensures that the Territory’s Payroll Tax Act remains harmonised with other Australian jurisdictions by amending the act’s relevant contract provisions to remove the exclusions for insurance sellers and door-to-door salespersons from 1 July 2015. These exclusions are not utilised in the Territory and were only inserted for harmonisation purposes. As the provisions are outdated and are being removed interstate, it is appropriate to also remove these provisions in the Territory. The bill also amends the owner-driver relevant contract exclusion in response to a recent New South Wales court decision which identified technical deficiencies in the wording of the provision. These amendments ensure the Territory’s owner-driver exemption continues to be harmonised with the equivalent legislation interstate where similar amendments have been made. As the owner-driver exclusion is generally not relied upon by Territory taxpayers, these amendments will have little practical application, but they are necessary as part of the Territory’s commitment that its payroll tax legislation is harmonised nationally. Minor amendments are also made to the Stamp Duty Act to rectify the number of irregularities in the legislation which have arisen from time to time. Currently there is an exemption from stamp duty on gifts of motor vehicles between parents and children, but an anomaly in its wording means the exemption does not extend to the gifts of motor vehicles between parents and step-children. The bill fixes this issue by clarifying that the exemption includes step-children. The bill also clarifies the mandatory residential building insurance, or fidelity certificates, taken out under the Building Act are not subject to stamp duty. This resolves and unintended interaction between the two acts to ensure the duty is not paid on these mandatory policies. The bill also introduces a new stamp duty exemption for the creation of trusts for sale, or trusts for partition, under the law of the Property Act. This removes a barrier to use these trusts where there is a relationship breakdown between co-owners of properties. Similarly, the bill also establishes a pro-rata stamp duty exemption if property held under a trust for sale is transferred from the trustee to one of the original owners. This ensures that each owner’s original share of the property is recognised for stamp duty purposes if they re-acquire part of all of the property under trust. The bill also clarifies an anti-avoidance provision in the Stamp Duty Act to ensure it relates only to cases of actual duty avoidance rather than more broadly as currently drafted. The provision in question is intended to prevent stamp duty avoidance schemes that artificially reduce the value of land; for example, by using below market leases. However, the current wording of the provision means it can also unintentionally apply to legitimate commercial arrangements. To prevent this, the bill refocuses the avoidance provision to ensure it only targets duty avoidance schemes and not legitimate commercial agreements. The bill also makes minor amendments to the definition of ‘health insurance’ to ensure that overseas students and temporary visa health insurance contracts are covered by the health insurance stamp duty exemption, as intended. The bill also makes minor amendments to the Taxation Administration Act to clarify the provisions which allow the Commissioner for Territory Revenue to obtain a valuation of a property for the purposes of assessing Territory taxes. The bill removes ambiguous wording, clarifies the types of costs the commissioner may recover from a taxpayer in matters involving valuations of property and provides that the commissioner can rely on valuations prepared from any source, not just one prepared for tax purposes. These amendments are minor and clarify ambiguities that have arisen in recent taxation disputes. Mr Deputy Speaker, I commend the bill to honourable members and table a copy of the associated explanatory statement. |