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State Taxation Acts Amendment Bill
2015
Introduction Print
EXPLANATORY MEMORANDUM
General
The Bill amends the Duties Act 2000--
· to clarify definitions of "private company", "shares" and
"units" for the purposes of the definition of "listed company"
and "listed trust";
· to update references to Commonwealth legislation in relation to
Seniors Health Cards and private health insurance;
· to clarify the circumstances in which a person makes a relevant
acquisition in a landholder for the purposes of Part 2 of
Chapter 3;
· to exempt mobile plant and special purpose vehicles (type P)
from motor vehicle duty and to update definitions for the
purposes of the motor vehicle duty exemption for primary
producer vehicles;
· to set the rate for an additional duty chargeable in respect of
transfers of residential property to foreign purchasers.
The Bill amends the Land Tax Act 2005 to impose a surcharge on land
owned by absentee owners.
The Bill amends the Taxation Administration Act 1997--
· in relation to tax offsets and tax refunds; and
· to impose penalty tax on a person who fails to notify the
Commissioner that the person is an absentee owner.
The Bill also makes consequential amendments to the Back to Work
Act 2015.
581049 1 BILL LA INTRODUCTION 7/5/2015
Clause Notes
Part 1--Preliminary
Part 1 of the Bill outlines the purposes of the Bill and contains the
commencement provisions.
Clause 1 outlines the purposes of the Bill.
Clause 2 provides the commencement dates for the Bill.
The Act (except sections 4, 9, 11 and 13 and Division 2 of Part 2)
comes into operation on the day after the Act receives the Royal
Assent.
Section 4, which amends section 58(1)(a)(ii) of the Duties
Act 2000, operates retrospectively from 1 July 2011.
This amendment rectifies an incorrect reference in that section to
a section of the Social Security Act 1991 of the Commonwealth.
Section 58(1)(a)(ii) defines an eligible pensioner for the purposes
of the pensioner exemption and concession from duty to include
a person issued with a "Seniors Health Card" under that
Commonwealth Act. This amending provision is intended to be
made retrospective to 1 July 2011, which was the date the
incorrect legislative reference was inserted into the Duties Act
2000.
Section 9, which amends section 196(a) of the Duties Act 2000,
operates retrospectively from 1 April 2007. This amendment
rectifies an incorrect reference in section 196(a) to the National
Insurance Act 1953 of the Commonwealth. Section 196(a)
defines medical benefits insurance (private health insurance) for
the purposes of an exemption from insurance duty. The term
medical benefits insurance is currently defined by reference to
entities registered under the National Insurance Act 1953 of the
Commonwealth. However, that Act has been replaced by the
Private Health Insurance Act 2007 of the Commonwealth.
This amending provision is intended to be made retrospective to
1 April 2007, when the Private Health Insurance Act 2007 of the
Commonwealth commenced.
In each case, the law has been applied in accordance with its
intended operation to ensure that taxpayers were not
disadvantaged by the technical defects in the legislation.
The retrospective operation of these amendments will give legal
effect to the duty exemptions and/or concessions provided under
these provisions.
2
Sections 11 and 13 come into operation on 1 July 2015 to provide
a motor vehicle duty exemption for the registration or transfer of
registration of mobile plant and special purpose vehicles (type P),
as announced in the 2015-16 Budget.
Division 2 of Part 2 comes into operation on 1 July 2015 to give
effect to an additional rate of duty that is chargeable in respect of
transfers of residential property to foreign purchasers.
Part 2--Amendment of Duties Act 2000
Part 2 of the Bill amends the Duties Act 2000 to clarify definitions in relation
to private companies, shares and units, to update references to
Commonwealth legislation in relation to Seniors Health Cards and private
health insurance, to clarify the circumstances in which a person makes a
relevant acquisition in a landholder for the purposes of Part 2 of Chapter 3,
to exempt mobile plant and special purpose vehicles (type P) from motor
vehicle duty, to update definitions for the purposes of the motor vehicle duty
exemption for primary producer vehicles, to set the rate for an additional duty
that is chargeable in respect of transfers of residential property to foreign
purchasers and to make technical amendments.
Division 1--General
Clause 3 amends section 3(1) of the Duties Act 2000. Paragraph (a) inserts
new definitions of compliance plate, GVM and load for the
purposes of the definition of MRC, which is inserted by
paragraph (c).
Paragraph (b) amends the definition of motor vehicle to provide
that for the purposes of section 233 and new Schedule 1,
"motor vehicle" does not include "heavy trailer".
Paragraph (c) updates the definition of MRC. This definition is
required for the purposes of section 233 and new Schedule 1
(which is inserted by clause 12) and brings it in line with the
current definition of MRC in Road Safety (Vehicles) Regulations
2009.
Paragraph (d) substitutes the definition of private company to
clarify that a private company is a corporation that is not a listed
company. Note that listed company is defined in section 3(1) of
the Duties Act 2000.
Paragraph (e) substitutes the definition of shares. The purpose of
this amendment is to ensure that the landholder duty concession
for listed companies operates as intended.
3
Paragraph (f) substitutes the definition of unit. The purpose of
this amendment is to ensure that the landholder duty concession
for listed trusts operates as intended.
Paragraph (g) repeals the definition of National Schedule, which
is redundant.
Clause 4 amends section 58(1)(a)(ii) of the Duties Act 2000.
The amendment seeks to better align the eligibility criteria
for concessional treatment under the Duties Act 2000 with the
Social Security Act 1991 (SSA) of the Commonwealth by
clarifying that the holder of a Seniors Health Card within the
meaning of the SSA is an eligible pensioner for the purposes of
the duty exemption and concession for pensioners.
Clause 5 amends section 78(1)(b) of the Duties Act 2000 to clarify that,
for the purposes of Part 2 of Chapter 3, a person makes a relevant
acquisition if, after an interest referred to in section 78(1)(a) was
acquired, the person referred to in paragraph (a), an associated
person or any other person whose interest was aggregated with
the interest under paragraph (a)(ii), acquires a further interest in
the landholder.
Clause 6 rectifies an error in section 89B(5) of the Duties Act 2000 as it
incorrectly references subsection (3)(b) when it should reference
subsection(4)(b).
Clause 7 rectifies an error in section 89C(5) of the Duties Act 2000 as it
incorrectly references subsection (3)(b) when it should reference
subsection(4)(b).
Clause 8 clarifies the Commissioner's powers under section 89P of the
Duties Act 2000 to approve the capacity of a qualified investor
does not extend to approving the capacity of investors on behalf
of State, Territory or Commonwealth government agencies under
the law of an external Territory or country.
Clause 9 updates section 196(a) of the Duties Act 2000 to provide that
medical benefits insurance, being insurance effected by a contract
of insurance issued by a private health insurer within the meaning
of the Private Health Insurance Act 2007 of the Commonwealth
and that provides certain benefits, is exempt from insurance duty.
In effect, the provisions of the Private Health Insurance Act 2007
of the Commonwealth have replaced Part VI of the National
Health Act 1953 of the Commonwealth.
4
Clause 10 updates section 233 of the Duties Act 2000 to provide that
special work vehicles (rather than primary producer special
vehicles) and special purpose vehicles (type O) (rather than
Special Purpose Vehicles (type 2) as defined in Part 2 of the
National Schedule) are exempt from motor vehicle duty in certain
circumstances.
The definitions in section 233(5) have also been updated to
align with the definitions contained in Road Safety (Vehicles)
Regulations 2009.
Clause 11 inserts new sections 233AA and 233AB in the Duties Act 2000
to provide a duty exemption on an application for registration, or
transfer of registration, of mobile plant and special purpose
vehicles (type P) as defined in the new Schedule 1.
Clause 12 inserts a new Schedule 1 into the Duties Act 2000 to provide a
definition of special purpose vehicle (type O) for the purposes of
section 233(4).
Clause 2 of new Schedule 1 defines a number of other related
terms. This provides greater certainty to persons seeking to claim
this exemption by specifically defining a number of vehicles
types and characteristics that fall within this exemption and by
providing examples for other similar vehicles that may fall within
the exemption.
Clause 13 amends new Schedule 1 to the Duties Act 2000, which is
inserted by clause 12. Clause 13 will come into operation on
1 July 2015, which will be after clause 12 comes into operation
(clause 12 will come into operation on the day after the day this
Act receives the Royal Assent). Clause 13 inserts new
definitions for the purposes of new sections 233AA and 233AB
and also makes a number of related technical amendments.
Subclauses (1) and (2) make technical amendments to the
heading to Schedule 1 and the section reference. Subclause (3)
inserts into Schedule 1 definitions of mobile plant and special
purpose vehicle (type P) for the purposes of section 233AA and
section 233AB.
Subclause (4) inserts a definition of tractor into clause 2 of
Schedule 1 which provides that tractor has the same meaning as
in the Road Safety Act 1986 and substitutes the definition of
special purpose vehicle (type P) (which is a technical
amendment).
5
Division 2--Duty payable by foreign purchasers
Clause 14 inserts new definitions of controlling interest, foreign
corporation, foreign natural person, foreign purchaser, foreign
trust, land-related interest, potential voting power, residential
property, substantial interest and voting power into section 3(1)
of the Duties Act 2000 for the purposes of the additional duty
chargeable in respect of transfers of residential property to
foreign purchasers.
For the purposes of Chapter 2, a foreign purchaser is a foreign
natural person, foreign corporation or trustee of a foreign trust
who is the transferee of dutiable property. For the purposes of
Chapter 3, a foreign purchaser is a foreign natural person,
foreign corporation or trustee of a foreign trust who makes a
relevant acquisition in a landholder.
Residential property includes land in Victoria on which a
residential dwelling has been affixed that may lawfully be used
as a place of residence. Residential property also includes land
in Victoria on which a foreign purchaser intends to affix a
residential dwelling that may lawfully be used as a place of
residence.
Clause 15 inserts new sections 3A to 3E into Chapter 1 of the Duties Act
2000.
New section 3A sets out the circumstances in which a person will
be taken to have a controlling interest in a foreign corporation.
It provides that, for the purposes of the definition of foreign
corporation in section 3(1), a person (being a foreign natural
person, another foreign corporation or a person as trustee of a
foreign trust) has a controlling interest in the foreign corporation
if the person, whether alone or together with any associated
person or persons--
· is in a position to control more than 50% of the voting
power in the corporation; or
· is in a position to control more than 50% of the potential
voting power in the corporation; or
· has an interest in more than 50% of the issued shares in
the corporation; or
· is a person in respect of whom the Commissioner has
made a determination under section 3C.
6
New section 3B sets out the circumstances in which a person
will be taken to have a substantial interest in a foreign trust.
It provides that, for the purposes of the definition of foreign trust
in section 3(1), a person (being a foreign natural person, a foreign
corporation or a person as trustee of another foreign trust) has a
substantial interest in a trust estate, whether alone or together
with any associated person or persons, if--
· the person has a beneficial interest of more than 50% of
the capital of the estate of the foreign trust; or
· the Commissioner has made a determination under
section 3D in respect of the person.
In the case of a foreign discretionary trust, a person (being a
foreign natural person, a foreign corporation or a person that
holds a substantial interest as trustee of another foreign trust) or a
member of a class of person, is taken to have a beneficial interest
in the maximum percentage of the capital of the foreign trust
estate that the trustee is empowered to distribute to that person.
New section 3C provides that, for the purposes of
section 3A(1)(d), the Commissioner may determine that a person
has a controlling interest in a corporation if, in the
Commissioner's opinion, the person has the capacity to determine
or influence, directly or indirectly, the outcome of decisions
about the corporation's financial and operating policies, taking
into account the practical influence the person can exert in
addition to any rights the person can enforce and any practice or
behaviour affecting the corporation's financial or operating
polices (even if that practice or pattern of behaviour involves the
breach of an agreement or a breach of trust). New section 3C
applies regardless of any interest that any other person has in the
corporation.
New section 3D provides that, for the purposes of
section 3B(1)(b), the Commissioner may determine that a
person has a substantial interest in a trust estate if, in the
Commissioner's opinion, the person has the capacity to determine
or influence the outcome of decisions about the administration
and conduct of the trust, taking into account the practical
influence the person can exert in addition to any rights the person
can enforce and any practice or behaviour affecting the trustee's
administration and conduct of the trust (even if that practice or
pattern of behaviour involves the breach of an agreement or a
breach of trust). New section 3D applies regardless of any
interests that any other person has in the trust estate.
7
New section 3E provides that the Treasurer may, in certain
circumstances, exempt a person who has a controlling interest in
a foreign corporation or a substantial interest in the trust estate of
a foreign trust. A person who has an exemption is taken not to
have the controlling interest or the substantial interest.
Clause 16 inserts new section 18A into Part 1 of Chapter 2 of the Duties
Act 2000 to provide that duty is payable when a foreign
purchaser forms an intention to change the use of dutiable
property transferred to one that is for a residential purpose within
the meaning of the definition of residential property.
New section 18A applies in respect of a dutiable transaction
where a land-related interest in property that is not residential
property is transferred to a foreign purchaser on or after 1 July
2015 and after the transfer, the foreign purchaser forms an
intention to affix a building on the property that is designed and
constructed solely or primarily for residential purposes or that
may lawfully be used as a place of residence.
Within 14 days after the foreign purchaser forms the intention,
the foreign purchaser must lodge with the Commissioner a
statement of the foreign purchaser's intention. In addition, the
foreign purchaser must, within 30 days after forming that
intention, pay duty at the rate of 3% of the dutiable value of the
land-related interest in the property at the time of the transfer.
For example, a foreign purchaser is transferred vacant land in
Victoria which the foreign purchaser intends to use for a
commercial purpose. Therefore, is it is not residential property.
The foreign purchaser pays duty on the transfer at the general rate
set out in section 28 of the Duties Act 2000. After the transfer,
the foreign purchaser forms an intention to affix a building on the
land which is primarily for residential purposes. At that point,
the foreign purchaser must lodge a statement with the
Commissioner of the foreign purchaser's intention and must pay
additional duty at the rate of 3% of the dutiable value of the land
at the time of the transfer (which is the rate set out in section 28A
of the Duties Act 2000).
Clause 17 inserts new section 19A into Part 1 of Chapter 2 of the Duties
Act 2000 to provide that a foreign purchaser is not entitled to a
concession from duty or a concessional rate of duty under Part 5
in respect of any duty determined in accordance with the rate set
out in section 18A or 28A. A foreign purchaser will receive the
concession in respect of the duty payable on a dutiable
transaction calculated at the general rate set out in section 28 of
the Duties Act 2000, however the concession will not apply for
8
the purposes of calculating the additional duty determined at the
rate set out in section 18A or 28A.
For example, a foreign purchaser is transferred residential
property valued at $500 000 which the foreign purchaser intends
to occupy as the foreign purchaser's principal place of residence.
The foreign purchaser is eligible for the principal place of
residence concession on the duty payable calculated at the
general rate set out in section 28. However the foreign purchaser
will not be entitled to the principal place of residence concession
on the additional duty payable calculated at the rate set out in
section 28A, being 3% of the dutiable value of the land of
$500 000.
Clause 18 inserts new section 21(4B) into Part 2 of Chapter 2 of the Duties
Act 2000 to provide that sections 21(3) and (4) do not apply
when determining the duty chargeable at the rate set out in
section 18A or 28A.
Sections 21(3) and (4) provide that the consideration for the
transfer of land does not include amounts paid or payable in
respect of the construction of a building or refurbishment of a lot.
The new section 21(4B) provides that section 21(3) and (4) will
not apply for the purposes of calculating the additional duty
chargeable at the rate set out in section 18A or 28A.
For example, a foreign purchaser purchases an apartment "off the
plan" for a contract price of $500 000. The foreign purchaser is
entitled under section 21(3) to deduct an amount of $200 000 for
the cost of construction of the off the plan apartment. The duty
payable on the transfer of the apartment is calculated at the rate
set out in section 28 on $300 000. The additional duty payable
by the foreign purchaser will be calculated at the rate set out in
section 28A, being 3% of the dutiable value of the apartment of
$500 000.
Clause 19 inserts new section 27(2) into Part 2 of Chapter 2 of the Duties
Act 2000 to provide that section 27(1) does not apply when
determining the duty chargeable at the rate set out in section 18A
or 28A.
Section 27(1) provides that in determining the duty to be paid on
any dutiable transaction that gives effect to a partition or division
of any estate in land, the Commissioner must deduct from the
value of that estate the value of the beneficial interest in that
estate held prior to the transaction by the transferee.
Clause 20 inserts new section 28A into Part 3 of Chapter 2 of the Duties
Act 2000, which provides that a dutiable transaction under which
a land-related interest in residential property is transferred to a
9
foreign purchaser will, in addition to duty chargeable at the rate
set out in section 28, also be chargeable with duty at the rate of
3% of the dutiable value of the land-related interest in residential
property.
Clause 21 inserts new section 32V(4B) into Part 4A of Chapter 2 of the
Duties Act 2000, to provide that sections 32V(3) and (4), which
deal with "off the plan" sub-sale transactions, do not apply when
determining the duty chargeable at the rate set out in section 18A
or 28A.
Clause 22 inserts new section 70(2) into Part 1 of Chapter 3 of the Duties
Act 2000 to provide that where a foreign purchaser makes a
relevant acquisition of an interest in a landholder that holds a
land-related interest in residential property, additional duty is
chargeable at the same rate as for a dutiable transaction under
which a land-related interest in residential property is transferred
to a foreign purchaser under Chapter 2, being the rate set out in
section 28A.
Clause 23 inserts new section 87(3) into Part 2 of Chapter 3 of the Duties
Act 2000 to provide that the concessional rate of duty on a
relevant acquisition in a public landholder does not apply when
determining the duty chargeable at the rate set out in section 28A.
Clause 24 inserts a new clause 32 in Schedule 2 of the Duties Act 2000 to
provide transitional arrangements for the assessment of additional
duty on foreign purchasers. This provision is intended to ensure
that foreign purchasers who enter into a dutiable transaction or a
relevant acquisition of an interest in a landholder that holds
residential property before 1 July 2015, will not be subject to
additional duty at the rate set out in section 28A.
Part 3--Amendment of Land Tax Act 2005
Part 3 of the Bill amends the Land Tax Act 2005 to give effect to a new rate
of land tax for absentee land owners as announced in the 2015-16 Budget.
This Part inserts new definitions in relation to absentee owners, inserts new
provisions which detail how land tax will be calculated for absentee land
owners and provides new land tax rate schedules.
Clause 25 inserts new definitions of absentee beneficiary, absentee
corporation, absentee owner, absentee person, absentee trust,
Australian citizen or resident, natural person absentee and
specified beneficiary into section 3(1) of the Land Tax Act 2005
for the purposes of the new absentee owner surcharge rate.
10
An absentee owner is a natural person absentee, an absentee
corporation or a trustee of an absentee trust that is the owner of
land.
A natural person absentee excludes an Australian citizen or
resident but includes a natural person who does not ordinarily
reside in Australia and who--
· was absent from Australia on 31 December of the year
prior to the tax year; or
· was absent from Australia for a period of 6 months in
total in the year prior to the tax year.
An absentee corporation includes a corporation incorporated
outside Australia and a corporation in which an absentee person
has an absentee controlling interest.
An absentee trust is--
· a fixed trust in which an absentee beneficiary has a
beneficial interest in the land;
· a unit trust scheme in which an absentee beneficiary is a
unit holder; or
· a discretionary trust in which an absentee beneficiary is
a specified beneficiary.
An absentee beneficiary of a trust includes--
· an absentee natural person, an absentee corporation or a
trustee of an absentee trust that has a beneficial interest
in the land subject to a fixed trust;
· an absentee natural person, an absentee corporation or a
trustee of an absentee trust that is a unit holder in a unit
trust scheme;
· an absentee natural person, an absentee corporation or a
trustee of an absentee trust that is a specified beneficiary
of a discretionary trust.
Clause 26 inserts new sections 3A and 3B into Part 1 of the Land Tax Act
2005. New section 3A provides that, for the purposes of land tax,
an absentee person holds an absentee controlling interest in a
corporation if--
· the absentee person, or that person acting together with
another absentee person, can control the composition of
the board of the corporation; or
11
· the absentee person, or that person acting together with
another absentee person, is in a position to cast or
control the casting of more than 50% of the maximum
number of votes that might be cast at a general meeting
of the corporation; or
· the absentee person holds, or that person acting together
with another absentee person hold, more than 50% of
the issued share capital of a corporation.
New section 3B provides that the Treasurer may, in certain
circumstances, exempt an absentee person who holds an absentee
controlling interest. A person who has an exemption is taken not
to hold the absentee controlling interest.
Clause 27 amends section 18 of the Land Tax Act 2005 to insert a
reference to new Division 2AB to provide that the holders of
beneficial interests in certain absentee trusts are deemed owners
of land.
Clause 28 inserts a note to the foot of section 31 of the Land Tax Act 2005
that refers to the applicable rates of special land tax under
sections 35(1A) and 35(2).
Clause 29 substitutes the note at the foot of section 35 of the Land Tax Act
2005. The new note adds to the existing note references to the
general absentee owner land tax surcharge rates set out in new
Part 4 of Schedule 1 and to the general absentee owner land tax
surcharge rates for absentee trusts set out in new Part 5 of
Schedule 1.
It also inserts a new provision after section 35(1) of the Land
Tax Act 2005 that specifies the rate of special land tax for an
absentee owner as being 5.5% of the taxable value of the land.
It then amends section 35(2) to clarify that in any other case, the
rate of special land tax is 5%.
Clause 30 inserts a note to the foot of section 38(1) of the Land Tax Act
2005 that specifies that joint owners of taxable land include
absentee owners who own land jointly and absentee owners who
own land jointly with owners who are not absentee owners.
It also inserts--
· new section 38(2A) which provides that joint
ownership, comprising entirely of absentee owners, is to
be assessed at the general absentee surcharge rates set
out in Part 4 of Schedule 1; and
12
· new section (2B) which provides that all other joint
ownerships (i.e. those comprising entirely of non-
absentee owners or comprising of absentee and non-
absentee owners) are not assessed at the general
absentee surcharge rates. The absentee surcharge rates
are applied to the separate assessment of the absentee
owner's individual interest in the jointly owned land
under section 38(3).
In addition, it amends section 38(4)(b) in relation to the variable
E in the formula to ensure that the appropriate deduction can be
calculated in respect of a joint owner who is an absentee owner
assessed under section 38(3) on their individual interest of jointly
owned land in the case where new subsection (2B) applies.
Example
Alex and Anna (an absentee owner) jointly own taxable land with
a taxable value of $600 000. For the 2016 tax year the joint
ownership would be assessed under section 38(2) and (2B) at the
general tax rate for $975.
Alex would be separately assessed under section 38(3) on his
interest in the jointly owned land ($300 000) at the general rate
for $475. He would be entitled to a deduction to prevent double
taxation which is the lesser of--
A x B (50% x $975) = $487.50; and
C/D x E (300 000/300 000* x $475) = $475.
* Assuming Alex does not own any other land.
Alex therefore has no land tax liability under section 38(3).
Anna would be separately assessed under section 38(3) on her
interest in the jointly owned land ($300 000) at the absentee
surcharge rate for $1975. She would be entitled to a deduction to
prevent double taxation which is the lesser of--
A x B (50% x $975) = $487.50; and
C/D x E (300 000/300 000* x $475) = $475.
* Assuming Anna does not own any other land.
Anna has a further land tax liability under section 38(3) of $1500
($1975 - $475). This equates to the absentee surcharge of 0·5%
on her interest in the jointly owned land of $300 000.
Clause 31 amends section 39(1)(a) of the Land Tax Act 2005 to insert a
reference to section 38(2A) and section 38(2B) as a consequence
of the insertion of new sections 38(2A) and 38(2B) by clause 30.
13
Clause 32 inserts a new Division 2AB in Part 3 of the Land Tax Act 2005
(new sections 46IA to 46IF). This new Division sets out how--
· a trustee of an absentee trust is assessed;
· a trustee of an absentee trust that is a unit trust scheme
or a discretionary trust is assessed if a nominated PPR
beneficiary is in force under section 46H; and
· a trustee and a beneficiary or a unitholder is assessed
where--
· a notice under section 46B for an absentee trust
that is a fixed trust is in force;
· a notice under section 46C for an absentee trust
that is a unit trust scheme is in force; and
· a notice under section 46F for an absentee trust
that is a discretionary trust is in force.
New section 46IA provides that a trustee of an absentee trust that
is a fixed trust or a unit trust scheme is assessed at the absentee
surcharge rate on the proportion of the trust land that is held for
an absentee beneficiary. A trustee of an absentee trust that is a
discretionary trust is assessed at the absentee surcharge rate on
the entire land held under the trust.
The new Division further provides as follows--
· Under new section 46IB, if a notice under section 46B
is in force for a fixed trust that is an absentee trust,
where all the beneficiaries are absentee beneficiaries,
the trustee is assessed at the absentee surcharge rate
under new Part 4 of Schedule 1 on all the land. If only
some of the beneficiaries are absentee beneficiaries, the
trustee is assessed at the general rate under Part 1 of
Schedule 1 plus an additional amount of 0·5% on the
proportion of the trust land held for the absentee
beneficiaries. New section 46IB also provides for the
appropriate deduction amounts to prevent double
taxation on the assessment of tax on the beneficiaries of
the trust.
· Under new section 46IC, if a notice under section 46C
is in force for a unit trust scheme that is an absentee
trust, where all the unitholders are absentee
beneficiaries, the trustee is assessed at the absentee
surcharge rate under new Part 4 of Schedule 1 on all the
land. If only some of the unitholders are absentee
14
beneficiaries, the trustee is assessed at the general rate
under Part 1 of Schedule 1 plus an additional amount of
0·5% on the proportion of the trust land held for the
absentee beneficiaries. New section 46IC also provides
for the appropriate deduction amounts to prevent double
taxation on the assessment of tax on the unitholders of
the trust.
· Under new section 46ID, if a notice under section 46B
or 46C is in force and the respective beneficiary or unit
holder is the trustee of another trust (sub-trust), the
trustee of the sub-trust is taken to be the owner of the
trust land to the extent of their proportionate beneficial
interest of the land or proportionate unit holding in the
unit trust scheme. New section 46ID sets out the
amount to be deducted to prevent double taxation and
ensure that the appropriate deduction applies to a trustee
of the sub-trust that is an absentee trust and a trustee of
a sub-trust that is not an absentee trust accordingly.
· Under new section 46IE, if under a nomination under
section 46F is in force for a discretionary trust that is an
absentee trust, the trustee is assessed at the general
absentee surcharge rate under new Part 4 of Schedule 1
in respect of the pre-2006 land. Any post-2006 land is
assessed at the absentee surcharge rate for trusts under
new Part 5 of Schedule 1. Where the nominated
beneficiary is a beneficiary absentee, they are assessed
at the absentee surcharge rate under new Part 4 of
Schedule 1 with the appropriate deduction to prevent
double taxation. Where the nominated beneficiary is
not an absentee owner, they are assessed at the general
rate under Part 1 of Schedule 1 with the appropriate
deduction to prevent double taxation.
Clause 33 inserts a new Division heading entitled "Division 2AC--
Miscellaneous trust land provisions" before section 46J of the
Land Tax Act 2005.
Clause 34 amends section 46J of the Land Tax Act 2005 to insert
"under Division 2A or 2AB" as a consequence of the insertion
of Division 2AB by clause 32.
Clause 35 inserts new Division 3A (new section 50A) in Part 3 of the Land
Tax Act 2005 to ensure that where a land tax group comprises at
least one absentee corporation, the tax assessed for the group
includes an additional amount of 0·5% in respect of the land
owned by the absentee corporations.
15
Clause 36 repeals the definition of specified beneficiary in section 64(1) of
the Land Tax Act 2005. That definition is being inserted into
section 3(1) by clause 25.
Clause 37 inserts a new section 104B into the Land Tax Act 2005 which
sets out the notification requirements for a person who is an
absentee owner on 31 December every year to notify the
Commissioner in writing before 15 January in the following year.
The new section also states that a person who ceases to be an
absentee owner in the 2016 tax year or any year after the 2016
tax year must lodge a written notice with the Commissioner
before 15 January in the following year.
Clause 38 inserts new Parts 4 and 5 into Schedule 1 of the Land Tax Act
2005 to establish the general absentee owner surcharge rates of
land tax and the surcharge rates of land tax for absentee trusts.
Part 4--Amendment of Taxation Administration Act 1997
Division 1--Refunds and offsets
Clause 39 substitutes section 20 and inserts new section 20A of the
Taxation Administration Act 1997 to extend the circumstances
in which the Commissioner may offset a refund payable under
Part 4 of the Taxation Administration Act 1997. Section 20
currently provides for an offset to be made against an existing
liability to the State arising under, or by reason of, the taxation
law or another Act of which the Commissioner has the general
administration.
The effect of the substituted provision is to enable the
Commissioner, with the consent of the taxpayer, to offset a
refund against a future liability. This can only be done where
the taxpayer consents in writing and the future liability arises
within 60 days after the day on which refund becomes payable.
If the taxpayer withdraws consent, the Commissioner must
refund the taxpayer the overpaid amount.
The Commissioner must refund the taxpayer any part of an
overpaid amount that is not applied against an existing or future
liability.
This does not apply in respect of a refund of a contribution paid
under Part B of the Planning and Environment Act 1987.
Clause 40 inserts a new section 115(4) of Taxation Administration Act
1997. The purpose of this new provision is to ensure that a
refund resulting from an objection, review or appeal under
section 115 of that Act may now be offset against an existing or a
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future liability of the taxpayer in the same circumstances as
provided under new section 20A (which is inserted by clause 39).
Clause 41 replaces section 116 of the Taxation Administration Act 1997.
New section 116 re-establishes that interest is payable on a
refund following an objection, review or repeal. The purpose of
new section 116 is to provide for the payment of interest to
taxpayers following an objection, review or appeal given the
Commissioner's ability to offset a refund against a future liability
under new section 20A. New section 116 provides that any
interest payable may be allocated with the refund amount to
offset an existing or future liability under the refund provisions
contained in Part 4 of the Taxation Administration Act 1997.
Clause 42 inserts transitional provisions in Schedule 1 of the Taxation
Administration Act 1997. The effect of these provisions is that
the amended provisions relating to offsets will apply to a refund
payable on an objection lodged under Part 9 of the Taxation
Administration Act 1997 or a refund application made under
Part 4 of that Act after the commencement of this Act. Prior to
this date, the current provisions will continue to apply.
Clause 43 amends the Back to Work Act 2015 to provide that liabilities
arising under that Act are not subject to the amended offset
provisions provided in Part 4 of this Bill.
Division 2--Absentee owner land tax surcharge
Clause 44 extends the definition of notification default under the Taxation
Administration Act 1997 to include the failure to notify the
Commissioner of their status as an absentee owner in accordance
with section 104B of the Land Tax Act 2005.
Clause 45 amends section 30(2A) of the Taxation Administration Act
1997 to provide that a person's failure to notify the Commissioner
of circumstances that result in their being an absentee owner in
accordance with new section 104B of the Land Tax Act 2005
will be a notification default for the purposes of the penalty
provisions in Part 5 of the Taxation Administration Act 1997.
Part 5--Repeal of amending Act
Clause 46 repeals this Act as of 1 July 2017, but does not affect the
continuing operation of the amendments made by it.
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