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· reduce the ad valorem conveyance stamp duty rate from 6 May 2008, based on the current formula, to a minimum rate of 1.5 per cent and a maximum rate of 4.95 per cent that applies at a property value of $525 000 or more;
· increase the maximum stamp duty benefit for first home buyers by setting the stamp duty-free property value threshold at $385 000, effective 6 May 2008;
· abolish nominal $20 stamp duty on deeds, other than deeds that relate to a trust;
· broaden the land base in relation to mining rights to include rights to explore for minerals, in particular, exploration licences and exploration retention licences under the Mining Act, and provide a stamp duty concession when such licences are conveyed pursuant to a farm-in agreement;
· ensure that the transfer of a mining tenement is a conveyance of the mining tenement that must be duly stamped before it is recorded in a mining register;
· enable the Commissioner of Territory Revenue to excuse a conveyee from the occupancy requirements of the stamp duty first home owner concession or principal place of residence rebate, where there are two or more conveyees and at least one will comply with the occupancy requirements; and
· effective 1 January 2008, rectify an oversight on the introduction of the Taxation Administration Act from 1 January 2008, such that a stamp duty exemption is only available on the conveyance of property from a trustee of a non-discretionary trust to a beneficiary of that trust, if no valuable consideration is given by the beneficiary for the conveyance.
The First Home Owner Grant Act is amended to:
· provide a premium interest rate, in addition to the market interest rate, of 8 per cent for a first home owner grant debt and allow the rate of interest that applies to such a debt to fluctuate from year to year in line with movements in market interest rates;
· increase the period in which to commence a prosecution of an offence against the First Home Owner Grant Act to five years from the date the alleged offence was committed; and
· ensure that it is an offence under the First Home Owner Grant Act in all circumstances where false or misleading information is provided and limit the defence in the Act for this offence to circumstances where the misleading aspect of the information is identified and corrected, to the extent the person can reasonably do so.
The Taxation Administration Act is amended to:
· clarify, effective 1 January 2008, that any member of a group under a taxation law is jointly and severally liable for the tax of any other group member; and
· clarify that revenue-related information can be provided to the Northern Territory Police, the Director of Public Prosecutions and other Territory law enforcement agencies.
A number of Territory laws are amended to update references in those laws to references contained in the Taxation Administration Act. For example, references to the Commissioner of Taxes have been updated to Commissioner of Territory Revenue.
NOTES ON CLAUSES
Part 1 – Formal provisions
Clause 1. Short title
This is a formal clause that provides for the citation of the Bill. When passed, the Bill may be cited as the Revenue Law Reform (Budget Initiatives) Act 2008.
Clause 2. Commencement
This clause provides for various sections of the Bill commencing at different times.
Subclause (1) provides that this Part, section 3 and section 12(1) (relating to the stamp duty exemption available on the conveyance of property to a beneficiary of a trust) and sections 18 and 19 (relating to the joint and several liability of a member of a group) commence on 1 January 2008.
Subclause (2) provides that section 7 (increasing the stamp duty first home owner concession) and sections 10 and 11(1) (reducing conveyance stamp duty rates) commence on 6 May 2008.
Subclause (3) provides that the Bill, other than those sections referred to in subclause (1) and (2), commences on 1 July 2008.
Part 2 – Amendment of Stamp Duty Act
Clause 3. Act amended
The Act being amended by this Part is the Stamp Duty Act.
Clause 4. Amendment of section 4 (Interpretation)
This clause inserts a definition for the term “farm-in agreement” and amends the definitions of “mining tenement” and “conveyance” in section 4(1) of the Stamp Duty Act.
Subclause (1) inserts a definition for the term “farm-in agreement”. The definition of “farm-in agreement” is used in new section 4(AB)(4) of the Stamp Duty Act, as provided for in clause 5 of this Bill.
Subclause (2) omits the definition of “mining tenement” and inserts a new definition for this term. The new definition extends the definition of “mining tenement” to include rights to explore for resources, including exploration licences and exploration retention licences under the Mining Act.
This will result in exploration licences and exploration retention licences being treated consistently with mineral leases, mineral claims, extractive mineral leases and extractive mineral permits for stamp duty purposes in relation to both direct conveyances and acquisitions in land-holding entities.
Subclause (3) omits part of the definition of “conveyance” and inserts two new paragraphs into this definition.
New paragraph (g) of the definition of “conveyance” replicates the omitted part of the definition.
New paragraph (h) of the definition of “conveyance” provides that an instrument, agreement, transaction or arrangement that would operate as a conveyance but for a statutory condition requiring Ministerial approval or registration is a conveyance.
As a result of this extended definition, the transfer of a mining interest or the agreement to transfer such an interest, is a conveyance of the mining interest that must be duly stamped before it is recorded in a mining register, even though this interest is not capable of being assigned or dealt with until the Mining Minister has approved it or it is registered. This treatment is consistent with that for conveyances of land, which must be duly stamped before being registered with the Land Titles Office, and accords with the various obligations for the stamping of a conveyance of dutiable property provided by the Stamp Duty Act.
Clause 5. Amendment of section 4AB (Dutiable value)
This clause inserts new section 4AB(4) into the Stamp Duty Act that provides for the concessionary treatment of the conveyance of an interest in an exploration licence or exploration retention licence under the Mining Act, pursuant to a farm-in agreement.
Provided the exploration has been carried out or the contribution to the cost of exploration has been made, this clause ensures that irrespective of the date of the conveyance, which is usually some time after the parties have entered into the farm-in agreement, the dutiable value of the interest in the exploration licence or exploration retention licence conveyed pursuant to a farm-in agreement will be the greater of:
· the unencumbered value of the interest calculated at the date the farm-in agreement is executed; and
· the consideration given for the interest, excluding the reasonable cost of the exploration work carried out after the farm-in agreement is entered into.
Clause 6. Amendment of section 9 (Time for lodgement of instrument etc.)
This clause removes section 9(3)(c)(iii) of the Stamp Duty Act and is a consequential amendment arising from the removal of nominal $20 stamp duty on deeds, other than where the deed relates to a trust. The relevant items of Schedule 2 to the Stamp Duty Act referred to in section 9(3)(c)(iii) are repealed by clause 12(5) of the Bill.
Clause 7. Amendment of section 88 (Interpretation)
This clause replaces paragraph (b) of the definition of “first home owner concession” in section 88(1) of the Stamp Duty Act with a new paragraph (b), to change the stamp duty first home owner concession from the first $350 000 of a property’s value to the first $385 000.
The increased stamp duty first home owner concession applies to conveyances entered into from 6 May 2008. It does not apply to arrangements to convey property that are made prior to 6 May 2008. Refer to new section 97A inserted into the Stamp Duty Act by clause 10 of this Bill for further information on how the increased first home owner concession will be applied.
Clause 8. Amendment of section 89 (First home owner concession)
Subclause (1) amends section 89(2) of the Stamp Duty Act to allow the Commissioner of Territory Revenue to excuse a conveyee from the occupancy requirements (see the definition of “period for occupancy” and “prescribed period” in section 88(1) of the Stamp Duty Act) of the stamp duty first home owner concession where there are two or more conveyees and at least one will comply with the occupancy requirements, provided there are special reasons to excuse a conveyee from the occupancy requirements.
This removes the requirement for an exempted conveyee to occupy the home at some point in the future. This is consistent with the intent of section 89 of the Stamp Duty Act and the way in which the First Home Owner Grant Act operates. Nonetheless, whether or not a conveyee intends to occupy the home as their principal place of residence in the future may be relevant to the Commissioner exercising the discretion to grant an exemption to the conveyee.
This amendment restores the position that existed before the new Stamp Duty Act commenced on 1 January 2008, which inadvertently changed the operation of this exemption.
Subclause (2) inserts a note at the end of section 89(3) of the Stamp Duty Act to clarify that section 89(3) does not apply to a conveyee who has been exempted from the occupancy requirement. Section 89(3) provides that a conveyee who does not comply with an occupancy requirement must notify the Commissioner of this failure.
Clause 9. Amendment of section 90 (Principal place of residence rebate)
This clause amends sections 90(2) and 90(3) of the Stamp Duty Act, relating to the principal place of residence rebate, in the same manner that clause 8 of this Bill amends section 89 of the Stamp Duty Act, relating to the first home owner concession.
Clause 10. New sections 97A and 97B
This clause inserts new sections 97A and 97B into the Stamp Duty Act.
New section 97A outlines the transitional provisions for the changes made by this Bill to the ad valorem conveyance stamp duty rate and to the stamp duty first home owner concession.
New section 97A(1) provides that, unless the circumstances outlined in new section 97A(2) apply, the reduced conveyance stamp duty rates and the increased stamp duty first home owner concession will only apply to a conveyance first executed on or after 6 May 2008. The old rates and lower stamp duty first home owner concession continue to apply to a conveyance first executed before 6 May 2008.
New section 97A(2) is an anti-avoidance provision that ensures that the old conveyance stamp duty rates and lower stamp duty first home owner concession will continue to apply to a conveyance executed on or after 6 May 2008 where:
· it replaces a conveyance first executed before 6 May 2008 for the same or substantially similar property; or
· the conveyee entered into a contract or option, before 6 May 2008, to purchase the property or substantially similar property; or
· the conveyor had an option, granted before 6 May 2008, to require the conveyee to purchase the property or substantially similar property.
New section 97A(3) provides a definition for the term “relevant amendments” for the purpose of new section 97A.
New section 97B outlines the transitional provision for the changes made by this Bill under which rights to explore for resources, including exploration licences and exploration retention licences, became dutiable property.
New section 97B(1) ensures that a conveyance of exploration licences and exploration retention licences are not liable to stamp duty if:
· the conveyance was first executed before 1 July 2008; or
· the conveyance is made after 1 July 2008 but before 1 July 2009 in accordance with an agreement made before 1 July 2008 to convey the relevant property.
Through the operation of section 56M(2A)(a) of the Stamp Duty Act, new section 97B also ensures that an acquisition of a significant or further interest in a land-holding corporation or unit trust will not take into account the value of any exploration licences and exploration retention licences in determining the value of the land to which the corporation or trust is entitled if:
· the transfer of the interest occurs before 1 July 2008; or
· the transfer is made after 1 July 2008 but before 1 July 2009 pursuant to an agreement to transfer the interest entered into before 1 July 2008.
New section 97B recognises that:
· the conveyance of exploration licences and exploration retention licences may have commenced before the conveyance of this property became subject to stamp duty on 1 July 2008 but may not have been completed until after that date; and
· agreement to convey exploration licences and exploration retention licences may have been reached before 1 July 2008, the date from which the conveyance of this property became subject to stamp duty, but the conveyance may not occur until sometime after 1 July 2008. A 12-month period is being provided, to 30 June 2009, in which to complete the conveyance of exploration licences and exploration retention licences that were subject to an agreement reached before 1 July 2008.
New section 97B(2) defines the terms “relevant amendments” and “relevant property” for the purpose of new section 97B.
Clause 11. Amendment of Schedule 1
Subclause (1) amends:
· the formula for calculating conveyance stamp duty in clause 1(2)(a) of Schedule 1 to the Stamp Duty Act to effect the reduction in conveyance duty rates and the increased property value at which the maximum rate of duty applies.
· clause 1(2)(b) of Schedule 1 to the Stamp Duty Act so that the reduced maximum conveyance stamp duty rate of 4.95 per cent applies at a property value of more than $525 000, rather than $500 000 previously.
The reduced stamp duty rates apply to conveyances entered into from 6 May 2008. They do not apply to arrangements to convey property that are made prior to 6 May 2008. Refer to new section 97A inserted into the Stamp Duty Act by clause 10 of this Bill for further information on how the new and old rates will be applied.
Subclause (2) amends clause 2(1) of Schedule 1 to the Stamp Duty Act to remove nominal $20 stamp duty on deeds other than where the deed relates to a trust. That is, nominal $20 duty remains for deeds not chargeable with ad valorem duty that constitute a trust, vary a trust, deal with interests or entitlements under a trust or extinguish a trust.
Subclause (3) removes clause 2(3) of Schedule 1 to the Stamp Duty Act as a consequence of the removal of nominal stamp duty on deeds. Clause 2(3) of Schedule 1 to the Stamp Duty Act is no longer required.
Clause 12. Amendment of Schedule 2
Subclause (1) amends item 6(b) of Schedule 2 to the Stamp Duty Act to ensure that the stamp duty exemption for the conveyance of property from a trustee of a non-discretionary trust to a beneficiary of that trust is only available if no valuable consideration is given by the beneficiary for the conveyance.
This amendment restores the application of the exemption to the position that existed before the new Stamp Duty Act commenced on 1 January 2008. The requirement that no valuable consideration be given for the property conveyed to the beneficiary was inadvertently omitted from the new Act. As it was never intended that the requirements for the exemption be changed, and to safeguard the revenue, this amendment will apply from 1 January 2008.
Subclause (2) amends item 9 of Schedule 2 to the Stamp Duty Act to ensure that the grant of a mining tenement falls within the operation of that item. Item 9 exempts the grant of specific property from stamp duty, unless the Commissioner of Territory Revenue is of the opinion that the grant is part of a wider transaction that is, in effect a transfer of the particular property.
This amendment makes it clear that the grant of all mining tenements, and not only exploration licences under the Mining Act, are exempt under item 9 of Schedule 2 to the Stamp Duty Act, provided the requirements under this item are satisfied.
Subclause (3) is a consequential amendment relating to subclause (4) below.
Subclause (4) amends item 12 of Schedule 2 to the Stamp Duty Act by inserting a new paragraph (c) to make it clear that item 12 does not apply to the grant of a mining tenement. Item 12 exempts from stamp duty the grant of interests in land from the Crown. The amendment made to item 9 of Schedule 2 to the Stamp Duty Act, by clause 12(2) of this Bill, ensures that item 9 applies to exempt the grant of mining tenements from stamp duty, if the requirements of that item are satisfied.
Subclause (5) omits items 24 to 28 of Schedule 2 to the Stamp Duty Act as the removal of nominal $20 stamp duty on deeds makes the stamp duty exemption for these items unnecessary.
Part 3 – Amendment of First Home Owner Grant Act
Clause 13. Act amended
The Act being amended by this Part is the First Home Owner Grant Act.
Clause 14. Amendment of section 3 (Definitions)
This clause inserts a new definition of “statutory interest rate” into section 3 of the First Home Owner Grant Act, by adopting the definition of this term in section 35 of the Taxation Administration Act.
Under section 35 of the Taxation Administration Act, the statutory interest rate is made up of the sum of the market interest rate and the premium interest rate.
The market interest rate is the interest rate prescribed by regulation as the market interest rate for the relevant financial year or, if no rate is prescribed by regulation, a specified rate assessed by the Reserve Bank of Australia for each financial year.
The premium interest rate is 8 per cent from 1 July 2008.
The interest rates applied to first home owner grant debts up to 30 June 2008 and then from 1 July 2008 is outlined in new section 52, inserted into the First Home Owner Grant Act by clause 17 of this Bill.
Clause 15. Amendment of section 41 (Power to recover amount paid in error etc.)
This clause amends section 41(12) of the First Home Owner Grant Act so that the interest rate applied to a first home owner grant debt varies for each financial year the debt remains unpaid. Prior to this amendment, the interest rate applied to a first home owner grant debt remained fixed for the whole period that the debt remained outstanding.
This amendment and that made by clause 14 will align the interest rate and the way in which interest is applied to a first home owner grant debt with that for stamp duty first home owner concession debts and principal place of residence rebate debts under the Taxation Administration Act.
Clause 16. Repeal and substitution of sections 42 and 43A
This clause repeals and substitutes sections 42 and 43A of the First Home Owner Grant Act.
New section 42 of the First Home Owner Grant Act better deals with circumstances in which a person makes materially false statements or provides materially misleading information in relation to a first home owner grant.
New section 42(1) makes it an offence in all circumstances that a person makes a materially misleading statement to a person carrying out functions in relation to the administration of the First Home Owner Grant Act. The fault element of the offence has been stated in accordance with current drafting practice.
The maximum penalty remains the same as that previously.
New section 42(2) makes it an offence in all circumstances that a person provides a materially misleading document to a person carrying out functions in relation to the administration of the First Home Owner Grant Act. The fault element of the offence has been stated in accordance with current drafting practice.
New section 42(3) ensures that the provision of a misleading statement or document includes where the statement or document omits relevant information as well as where it includes misinformation.
New section 42(4) provides a defence to the offence in new section 42(2) if, when giving the document, the person identifies the misleading aspect of the document and corrects it to the extent that the person can reasonably do so.
The previous offence provision for the making of a false statement has been replaced to better align the provision with the Criminal Code.
The new offence provision requires the Commissioner of Territory Revenue to prove beyond reasonable doubt the elements of the offence, including that the defendant was aware or recklessly indifferent to whether the statement or document is or may be misleading.
The new offence provision is similar to that which would apply for similar offences against the stamp duty first home owner concession and principal place of residence rebate under the Taxation Administration Act.
This clause also amends section 43A of the First Home Owner Grant Act to increase the time for commencing a prosecution for an offence against the Act from three years to five years.
This aligns with the time for commencing a prosecution for an offence relating to the stamp duty first home owner concession and principal place of residence rebate.
The new five-year time period in which to commence a prosecution for an offence against the First Home Owner Grant Act will only apply where the offence is alleged to have been committed on or after 1 July 2008. Where the offence is alleged to have been committed prior to 1 July 2008, the three-year time limit for commencing a prosecution will continue to apply.
Part 4 – Amendment of Taxation Administration Act
Clause 17. New section 52
This clause inserts new section 52 into the First Home Owner Grant Act. New section 52 outlines the transitional provision for the changes made by this Bill to the interest rate applied to a first home owner grant debt.
New section 52(1) provides that interest on a first home owner grant debt will be calculated up to 30 June 2008, at the interest rate prescribed by the First Home Owner Grant Act prior to the amendments made by clauses 14 and 15 of this Bill. Interest from 1 July 2008 will be calculated at the interest rate prescribed by the amendment made by clauses 14 and 15 of this Bill.
New section 52(2) defines the term “relevant amendment” for the purpose of new section 52.
Clause 18. Act amended
The Act being amended by this Part is the Taxation Administration Act.
Clause 19. Amendment of section 59 (Recovery from partnership and other groups)
This clause amends section 59(2) of the Taxation Administration Act by substituting the reference to “taxpayers” with “persons”. This is a technical amendment to clarify that any member of a group under a taxation law is jointly and severally liable for the tax of any other group member.
This amendment is necessary because a similar recovery provision existed in the Pay-roll Tax Act before it was removed and placed in the Taxation Administration Act from 1 January 2008. This change resulted in the operation of the recovery provision being less clear than when it was in the Pay-roll Tax Act. As this amendment clarifies the operation of the law that has been in the Taxation Administration Act since 1 January 2008 that allows the recovery of tax from any member of a group under a taxation law, and to safeguard the revenue, this amendment will apply from 1 January 2008.
Clause 20. Amendment of section 101 (Definitions)
This clause amends the definition of “law enforcement agency” in section 101 of the Taxation Administration Act by including specific references to a member of the Northern Territory Police Force, the Director of Public Prosecutions or any other Territory law enforcement agency. This amendment clarifies that the disclosure of confidential information gathered under a taxation law is permitted to the specified persons.
Part 5 – Consequential amendments
Clause 21. Amendment of other laws
This clause introduces a Schedule that makes minor consequential amendments to various Territory legislation to ensure that references within that legislation reflect the introduction of the Taxation Administration Act and consequential amendments to the Stamp Duty Act, Pay-roll Tax Act, First Home Owner Grant Act and subordinate legislation.
The most common changes include replacing references to the Taxation (Administration) Act with the Taxation Administration Act and replacing references to the “Commissioner of Taxes” with the “Commissioner of Territory Revenue”.
The Powers of Attorney Regulations are also amended, as a power of attorney is not required to be lodged with the Commissioner of Territory Revenue for stamping.
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