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2016
THE LEGISLATIVE ASSEMBLY FOR
THE
AUSTRALIAN CAPITAL
TERRITORY
REVENUE LEGISLATION AMENDMENT
BILL 2016
EXPLANATORY STATEMENT
Presented By
Andrew Barr MLA
Treasurer
REVENUE LEGISLATION AMENDMENT BILL 2016
The Revenue Legislation Amendment Bill 2016 amends the following taxation
legislation:
• the Duties Act 1999 (Duties
Act);
• the Rates Act 2004 (Rates Act); and
• the
Taxation Administration Act 1999 (TAA).
The Revenue Legislation Amendment Bill 2016 amends various taxation Acts to
improve the Territory’s revenue collection system for taxpayers and
administrators. The amendments in the Bill:
• address risks to
revenue;
• improve the clarity and quality of tax legislation;
and
• simplify administrative processes.
This Bill makes minor amendments to section 16A of the Duties Act, which
sets out the timeframes for duty payment in relation to the purchase of an
‘off the plan’ residence. The amendments update and clarify the
language used.
This Bill repeals declared affordable house and land package provisions.
At the time of establishment of the ACT Government’s Affordable Housing
Action Plan in 2007, a declared affordable house and land package was determined
as one for which the combined contract price did not exceed $300,000.
The declaration was revoked in 2010 to simplify the process of levying
duty, and to avoid complexities of amending the instrument annually to reflect
indexation of the combined house and land contract threshold.
Recognised stock exchanges
This Bill also repeals section
252A of the Duties Act, which allows the Minister to declare a recognised stock
exchange by disallowable instrument.
The effect of declaring recognised
stock exchanges was limited to duty on unquoted marketable securities. However,
this form of duty ceased applying to transactions first executed on or after 1
July 2010. Since that time section 252A has had no practical effect.
Definition of ‘relevant date’
To work out rates
for a parcel of land, the unimproved value (UV) is required. Under
section 6 of the Rates Act the UV is assessed by reference to the relevant
date. In the dictionary to the Rates Act, relevant date is defined
for a parcel of land as ‘a date when a
determination of the unimproved
value of the parcel is or is to be made’.
While this definition is
rather ambiguous, in practice the relevant date is always the 1 January
immediately before the beginning of the financial year. However, only section 10
of the Rates Act pinpoints the 1 January date.
The ambiguity can lead to
disputes where owners argue for a UV determination to be made with reference to
a different date – such as the ‘prescribed date’, meaning the
date when a parcel of land becomes rateable.
This Bill removes the
references in the Rates Act to the concept of a
‘relevant date’. In place of a ‘relevant date’, the
Bill inserts clear references to a 1 January base date for
UV determinations.
Division 5.2 of the Rates Act applies to owners who intend to develop
land partly for residential and partly for commercial purposes, with rates
applying in an appropriate proportion.
The division makes numerous
references to the ‘intended’ development and use of a parcel. It is
very difficult administratively to measure an owner’s intention, leading
to uncertainty (especially when intentions change).
This Bill amends the
division to remove references to the owner’s intention. Under the amended
division, the owner of the eligible parcel must satisfy the Commissioner for ACT
Revenue (the Commissioner) that the parcel is entirely undeveloped, or
alternatively that development approval has been given in respect of the parcel,
and the owner’s intention is to start the development within two years of
making the application.
Division 5.2 will now cease applying to a parcel
of land if development has not started on the parcel, or if any development has
not materially affected the permitted use of the parcel, within two years after
the application.
Powers of valuers
The ACT Valuation Office (ACTVO) is part
of the ACT Revenue Office responsible for independently assessing land
valuations.
Under the Duties Act, the Commissioner may require
valuations to be conducted in several circumstances. For example, the
Commissioner may require a Crown lease to be valued if the Commissioner is not
satisfied with the unencumbered value determined by the granting body (section
22 (4)).
Under the Rates Act the Commissioner annually determines
unimproved values of parcels of land to work out their rates liability (part
2).
ACTVO valuers also have responsibilities under the Lands
Acquisition Act 1994 to determine the market value of interests in land, and
under the Planning and Development Act 2007 for the purposes of the Lease
Variation Charge.
To conduct valuations, ACTVO valuers regularly need to
enter and inspect properties. At present this is facilitated by a delegation of
section 83 of the Act from the Commissioner to valuers.
This Bill grants
authorised valuers a dedicated and narrower power of entry, modelled on section
83 of the TAA but separate from the power of entry granted to authorised
officers.
This will reinforce the independence of valuers by appointing
them under a separate process to revenue compliance officers. This approach is
broadly aligned with the powers of government valuers in other jurisdictions.
See, for example, section 74 of the Valuation of Land Act 1916
(NSW).
As a consequential amendment, authorised valuers will hold
separate identity cards to authorised officers. Also, obstructing or hindering
an authorised valuer (during an investigation into a taxpayer’s tax
liability) will attract increased penalty tax under section 34 in the same
manner as authorised officers.
Service of documents
The
Bill modernises drafting language in the TAA by replacing references to
‘serving’ a document with ‘giving’ a document under
several sections of the Act. This is supported by section 245 of the
Legislation Act 2001, which states part 19.5 of that Act (Service of
documents) applies to legislation regardless of the specific words used to
describe the service of documents.
Human rights
The
amendments to the TAA give authorised valuers the power to enter and inspect
property for valuation purposes. The amendments therefore engage the right to
privacy under section 12 (a) of the Human Rights Act 2004. Section 12 (a)
provides everyone has the right ‘not to have his or her privacy, family,
home or correspondence interfered with unlawfully or
arbitrarily’.
Section 28 of the Human Rights Act 2004
provides human rights are ‘subject only to reasonable limits set by
laws that can be demonstrably justified in a free and democratic society’.
In deciding whether a limit is reasonable, all relevant factors must be
considered including:
• the nature of the right
affected;
• the importance of the purpose of the
limitation;
• the nature and extent of the limitation;
• the
relationship between the limitation and its purpose; and
• any less
restrictive means reasonably available to achieve the purpose the limitation
seeks to achieve.
It is considered the new power of entry by valuers is a
reasonable limitation on the right to privacy. The provisions are based on
standard provisions relating to entering premises when consent is required. The
provisions are drafted to be consistent with the Human Rights Act 2004,
particularly the right to privacy.
Nature of right
affected
The power of entry under new division 9.2A of the TAA will
allow for lawful interference with a person’s real property. This could
affect a person’s privacy, family, home or correspondence and may be
exercised without consent in some circumstances.
The right to privacy
extends to arbitrary interference, even when authorised by law. Such
interference should be in accordance with the provisions, aims and objectives of
the Human Rights Act 2004 and be reasonable in the particular
circumstances.
Importance and purpose of the limitation
The
purpose of the limitation is to ensure compliance with particular Acts. Property
valuers need to personally inspect a property to complete a full and accurate
valuation based on their professional opinion and observations.
Without
an ACTVO valuer’s informed opinion, the Commissioner may not be able to
issue assessments for the correct amount of tax liability. Fairness and equity
is better achieved by ensuring all taxpayers pay the correct amounts of tax in
accordance with the law.
Nature and extent of the
limitation
Exercise of the new power is limited in the following
ways:
• It can only be exercised by appointed people.
• It
can only be exercised to conduct a valuation under certain
Acts.
• Entry cannot occur at an unreasonable time.
• The
power cannot be exercised in relation to residential or private business
premises unless the occupier acknowledges consent in
writing.
• Authorised valuers under division 9.2A cannot do some of the
things authorised officers can do under division 9.2, such as seize and remove
documents or inspect gaming machines.
• Authorised valuers can only
require the assistance they reasonably need to exercise their
power.
• If the occupier requests to see an authorised valuer’s
identity card, the authorised valuer must produce it or leave the
premises.
Relationship between limitation and purpose
There
is a rational connection between the power of entry and the issue it addresses:
the possibility that a property has not been correctly valued. An incorrect
value can lead to a shortfall in the amount of tax paid in relation to the
property.
While the power of entry engages the right to privacy, it
enables valuers to exercise their professional function of conducting valuations
for the Commissioner.
Less restrictive means
It is
considered there are no less restrictive means reasonably available to achieve
the purpose, as valuers need to be physically present at or inside properties to
inspect them.
As noted above, the power of entry is already narrowed in
several ways from the power available to authorised officers.
The amendments will commence on 1 September 2016.
Details of the Revenue Legislation Amendment Bill 2016
Part 1 Preliminary
Clause 1 Name of
Act
This clause provides the name of the Act is the Revenue
Legislation Amendment Act 2016.
Clause
2 Commencement
This clause provides the Act commences on 1 September
2016.
Clause 3 Legislation amended
This clause provides the
Act amends the following legislation:
• Duties Act 1999 (Duties
Act);
• Rates Act 2004 (Rates Act); and
• Taxation
Administration Act 1999 (TAA).
Clause 4 Legislation
repealed
This clause provides all instruments made under section 252A
of the Duties Act are repealed. Section 252A is repealed by another
amendment.
Part 2 Duties Act 1999
Clause
5 Payment of duty—‘off the plan’ purchase
arrangements
Section 16A (1) (b)
Section 16A of the Duties
Act provides the time limits in which duty is payable for residential
off the plan arrangements.
This clause updates the word
‘assigned’ to ‘transferred’ to be consistent with the
language of the Duties Act as a whole. It also removes the reference to
transferring ‘part of’ an interest for logical
consistency.
Clauses 6 and 7
These clauses omit references
to declared affordable house and land packages in section 16A as a
consequence of another amendment.
Clause 8 Declaration of affordable
house and land packages
Section 16B
This clause repeals
section 16B, which provides for the declaration of affordable house and land
packages.
Clause 9 What is the dutiable value of dutiable
property?
Section 20 (2)
This clause omits a reference to
declared affordable house and land packages as a consequence of another
amendment.
Clause 10 Section 20 (3)
This clause updates
language as a consequence of the omission of references to declared affordable
house and land packages.
Clause 11 Section 20 (7), definition of
declared affordable house and land package
This clause omits a
reference to declared affordable house and land packages as a consequence of
another amendment.
Clause 12 Declaration of recognised stock
exchanges
Section 252A
This clause omits section 252A of
the Duties Act, which allows the Minister to declare recognised stock exchanges
by disallowable instrument. The section has had no practical effect since the
abolition of duty on unquoted marketable securities in 2010.
Clause
13 Dictionary, definition of recognised stock exchange
This
clause omits the definition of recognised stock exchange as
section 252A has been repealed by another amendment.
Part 3 Rates
Act 2004
Clauses 14 to 17
These clauses amend
references to ‘relevant date’ under the definition of
unimproved value in section 6 of the Rates Act. The term
‘relevant date’ is substituted with the term
base date.
Clause 18 Sections 9 and
10
This clause updates section 9 to amend references to the
‘relevant date’. Section 9 now requires the Commissioner for ACT
Revenue (the Commissioner) to determine the first unimproved value for a parcel
of land as at 1 January in the financial year preceding the one in which the
parcel became rateable.
This clause also updates section 10 to amend
references to the ‘relevant date’. Section 10 now requires the
Commissioner to redetermine the unimproved value for a parcel of land as at 1
January. The unimproved value as at 1 January in a year applies in relation to
the financial year immediately following that date.
Clauses 19 to
21
These clauses update section 11 to fix the date as at which a
redetermination for error may be made to be 1 January in a particular
year.
Clause 22 Redetermination—change of
circumstances
Section 11A (5) (a)
This clause updates
section 11A to remove references to the ‘relevant
date’.
Clause 23 Application by owner of eligible parcel of land
Section 31 (1)
This clause introduces a new requirement
into section 31 of the Rates Act, which provides when an owner of an eligible
parcel of land may apply for the parcel to be dealt with under division 5.2 of
the Act.
The amended section imposes a new requirement that, when an
owner of an eligible parcel makes an application:
• the parcel of
land is entirely undeveloped when the application is made; or
• the
owner has development approval to undertake commercial and residential
development on the parcel when the parcel is made, and intends to start the
development within two years of making the development
application.
Clause 24 New section 31 (3) (aa)
This clause
requires the owner to provide a copy of the development approval with an
application under section 31.
Clause 25 End of application of div
5.2
New section 36 (1) (aa)
This clause amends section 36
to provide division 5.2 also stops applying to a parcel if development has not
commenced within two years of the application being made on the parcel which the
development application relates.
The division also stops applying if
development has started, but the development has not materially affected the
ability to use the parcel for purposes permitted by the lease.
Clause
26 Section 36 (3)
This clause corrects an incorrect
cross-reference.
Clause 27 Dictionary, definition of relevant
date
This clause omits the definition of relevant
date from the dictionary as a consequence of other
amendments.
Part 4 Taxation Administration Act
1999
Clause 28 Increase in penalty tax for
concealment
Section 34 (c)
Section 34 increases the
penalty tax payable for a tax default to 90 per cent if, among other things, the
taxpayer hinders or obstructs an authorised officer exercising functions under
division 9.2 for the purposes of determining the taxpayer’s tax
liability.
This clause extends the application of section 34 (c) to
hindering or obstructing an authorised valuer under new division
9.2A.
Section 34 only applies in the context of a tax investigation, and
does not apply when the valuation has been undertaken for the purpose of a
non-tax law.
Clause 29 Orders to comply with
requirements
Section 71 (4)
This clause amends section
71 (4) to reflect current drafting practice and changes ‘serve a
copy’ to ‘give a copy’. This is supported by the
interpretations of these terms under section 245 of the Legislation Act
2001.
Clause 30 Powers of entry and inspection
Section
83 (1) (c)
This clause corrects an incorrect reference to ‘tax
officer’ in section 83. The rest of the section refers to an
‘authorised officer’.
Clause 31 Section 83
(4)
New definition of identity card
This is a
technical amendment that removes the definition of identity card from the
dictionary and inserts it into section 83 (4) as a defined term for that
section. This is the only section that is relevant to the definition.
Clause 32 New division 9.2A
This clause inserts a new
division into the TAA relating to authorised valuers. In comparison to the
existing division 9.2, for authorised officers, division 9.2A uses updated
drafting language and model provisions which are compatible with the Human
Rights Act 2004.
Section 90A Definitions—div
9.2A
This section defines terms for division
9.2A.
Importantly, it defines an occupier of premises as
including a person believed on reasonable grounds to be an occupier, and a
person apparently in charge of the premises.
Section 90B Appointment
of authorised valuers
This section empowers the Commissioner to
appoint a person as an authorised valuer for the TAA.
Section
90C Authorised valuers—functions
This section outlines the
functions of authorised valuers.
The main function of authorised valuers
is to conduct a valuation for the purposes of one or more of the following Acts:
the Duties Act, the Rates Act, the Lands Acquisition Act 1994 and the
Planning and Development Act 2007. Valuers can also exercise other
functions given to them by law.
Section 90D Authorised
valuers—identity cards
This section requires the Commissioner
to issue identity cards to authorised valuers.
Section 90E Power to
enter premises
This section gives authorised valuers the power to
enter premises at reasonable times to conduct valuations under the Duties Act,
the Rates Act, the Lands Acquisition Act 1994 or the Planning and
Development Act 2007. This extends to entering land around or part of
premises to ask for consent to entry, and the ability to enter premises without
payment of an entry fee. Entry into a part of premises used only for residential
or private business purposes is not authorised unless consent is given in
accordance with section 90G.
Section 90F Production of identity
card
This section requires an authorised valuer to produce an
identity card when asked by the occupier.
Section 90G Consent to entry
This section outlines how an authorised valuer can seek the
occupier’s consent to entry. If the authorised valuer complies with
subsection (1), and the occupier gives consent, the valuer must ask the occupier
to sign an acknowledgement of consent containing the content required by
subsection (2). Subsection (4) provides for the effect of an acknowledgement of
consent in any court proceedings.
Section 90H General powers on entry
into premises
An authorised valuer who enters premises may do one or
more of these things:
• inspect or examine the premises or anything
at the premises;
• take measurements;
• take photographs,
films, or audio, video or other recordings;
• require the occupier, or
anyone at the premises, to produce documents or anything else reasonably needed
to exercise a function under this division;
• require the occupier, or
anyone at the premises, to give the authorised valuer copies of documents
produced that are reasonably needed to exercise a function under division 9.2A;
and
• require the occupier, or anyone at the premises, to give the
authorised valuer reasonable assistance to exercise a function under division
9.2A.
It is an offence under subsection (2) if a person does not take
reasonable steps to comply with any of these requirements.
As noted
above, section 90H grants a narrower set of powers to authorised valuers than
the set available to authorised officers under section 83 of the TAA. Unlike
authorised officers, authorised valuers are not able to seize and remove
documents, inspect gaming machines, or require information or answers from any
person on the premises unless it would reasonably assist the
valuer.
Clause 33 Dictionary, new definitions
This clause
inserts new definitions into the dictionary in light of new division 9.2A.
Clause 34 Dictionary, definition of identity
card
This a technical amendment removing the definition of
identity card from the dictionary. The definition is now included
as part of section 83, as per the amendments made by Clause 31.
Clause 35 Dictionary, new definition of
occupier
This clause inserts a new definition into the TAA of
occupier. This term is defined under new section 90A
(Clause 32) as including a person believed on reasonable grounds to be an
occupier, and a person apparently in charge of the premises.
Clause
36 Dictionary, definition of tax officer, new paragraph (a), new
subparagraph (iia)
This clause ensures that the definition
of tax officer includes an authorised valuer.
One of the
purposes of this amendment is to clarify authorised valuers are also bound by
the secrecy provisions under division 9.4 of the TAA.
Clause
37 Further amendments, mentions of served on
This clause
updates language in line with current drafting practice, by substituting the
term ‘served on’ with ‘given to’ under the TAA.