Victorian Bills Explanatory Memoranda Victorian Bills Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
Land Tax (Amendment) Bill
As Sent Print
Victorian Legislation Parliamentary Documents
EXPLANATORY MEMORANDUM
General
This Bill makes amendments to the Land Tax Act 1958 to insert a new Part
into the Act which imposes land tax on certain easements over land from
1 July 2004. After a transitional period, the Bill provides that the value of the
taxable easements will be determined by the Valuer-General every second
year, and will be indexed in alternate years. Tax will be imposed on the
relevant easements at current land tax rates. The Bill inserts new definitions
and amends current definitions as necessary, and ensures that relevant
existing notice of assessment, objection, payment, additional tax, refund,
recovery, anti-avoidance and other general provisions apply to tax under the
new Part. It also allows for Orders in Council to be made exempting certain
easements or easement holders from the regime.
The Bill amends the Valuation of Land Act 1960 to insert provisions
regarding the valuation of the relevant easements for the purposes of the
Land Tax Act 1958, and to allow for objections to those valuations.
Clause Notes
PART 1--PRELIMINARY
Part 1 of the Bill outlines the purposes of the Bill and contains the
commencement provision.
Clause 1 outlines the purposes of the Bill, which are to--
· amend the Land Tax Act 1958 to provide for the
taxation of easements held by electricity transmission
companies; and
· make related amendments to the Valuation of Land
Act 1960.
Clause 2 provides that the Act comes into operation on the day after it
receives Royal Assent. However there is no tax liability under
the Act until 1 July 2004.
1
551164 BILL LA AS SENT 20/4/2004
PART 2--AMENDMENT OF THE LAND TAX ACT 1958
Part 2 of the Bill amends the Land Tax Act 1958, which is referred to as the
Principal Act. It inserts a new Part IIB into the Principal Act, together with
necessary definitions, for the purposes of imposing land tax on transmission
Victorian Legislation Parliamentary Documents
easements at current land tax rates. The Commissioner of State Revenue will
assess the tax based on easement holdings at a specific date, and issue notices
of assessment accordingly. Relevant existing provisions relating to
objections to tax assessments, recovery of tax and general administration are
amended as required to ensure they are applicable. To ensure consistency
with the land owner provisions in the Principal Act, Part 2 of the Bill inserts
provisions prohibiting the passing on of the tax to the owner of the land over
which a transmission easement runs, and ensures provisions giving rise to a
statutory first charge over land where tax remains unpaid do not apply.
Part 2 also contains provisions allowing certain transmission easements, or
transmission easement holders, to be exempted from tax by Order in Council.
Clause 3 states that, in Part 2 of the Bill, the Land Tax Act 1958 is called
the Principal Act.
Clause 4 amends section 3 of the Principal Act to make a number of
amendments necessary for the operation of the new Part IIB of
the Act. The clause--
· inserts the definitions of "transmission company",
"transmission easement" and "transmission easement
holder";
· amends the definitions of "taxable value" and
"taxpayer";
· inserts new section 3(1B) to ensure that, where relevant,
every reference to an owner of land in the Principal Act
now includes a transmission easement holder that holds
a transmission easement;
· inserts new section 3(1C) to clarify the circumstances
when a transmission easement holder holds a
transmission easement for the purposes the Principal
Act;
· amends section 3(2) to ensure that provision does not
apply to the land tax on transmission easements. This is
because section 3(2) refers to valuations of land by
municipal councils, whereas the Valuer-General will
value transmission easements.
2
Clause 5 inserts a new section 3B into the Principal Act.
Sub-clause (1) details the scheme for determining the value of a
transmission easement which is to be used for the purpose of
assessing tax. This is necessary because of the transitional
Victorian Legislation Parliamentary Documents
regime which applies until the valuations become aligned with
the 2 yearly valuation cycle currently used by municipal councils
to value land. For tax purposes, the value of a transmission
easement is to be determined as follows--
· for the period 1 July 2004 to 31 December 2004, the
value of a transmission easement is the value as at
1 January 2002, determined in accordance with
section 5B of the Valuation of Land Act 1960;
· for the 2005 and 2006 tax years, the value of a
transmission easement is the value as at 1 January 2004,
determined in accordance with section 5B of the
Valuation of Land Act 1960;
· for the 2007 tax year, the value of a transmission
easement is the value as at 1 January 2004, determined
in accordance with section 5B of the Valuation of
Land Act 1960 and multiplied by the prescribed
indexation factor applying to the land over which the
transmission easement runs;
· for the 2008 tax year, the value of a transmission
easement is the value as at 1 January 2006, determined
in accordance with section 5B of the Valuation of
Land Act 1960;
· for every tax year after 2008--
· if a valuation made under section 5B of the
Valuation of Land Act 1960 has been used for
assessing tax in the last tax year, the value of a
transmission easement is the value determined as
at the relevant easement valuation date
determined in a valuation made under section 5B
of the Valuation of Land Act 1960 multiplied
by the prescribed indexation factor applying to
the land over which the transmission easement
runs;
3
· if an actual valuation made under section 5B of
the Valuation of Land Act 1960 was not used
for assessing tax in the last tax year (i.e. an
indexed valuation was used), the value of the
transmission easement for tax purposes is the
Victorian Legislation Parliamentary Documents
value as at the relevant easement valuation date
determined in a valuation made under section 5B
of the Valuation of Land Act 1960.
Sub-clause (2) inserts definitions of "prescribed indexation
factor" and "relevant easement valuation date" which are
necessary for sub-clause (1) to operate.
Clause 6 inserts Part IIB into the Principal Act (new sections 13M-13T).
Section 13M imposes the tax. In the case of each transmission
easement holder that holds a transmission easement, there shall
be charged levied and collected by the Commissioner and paid
for the use of the State, a duty of land tax for every dollar of the
value of each transmission easement.
Section 13M(a) provides that, for the period 1 July 2004 to
31 December 2004, land tax on transmission easements shall be
charged to reflect the fact that the 2004 assessment of tax will not
be for a full year to 31 December.
Section 13M(b) provides that, for 2005 and every subsequent
year, land tax on transmission easements shall be charged at the
existing land tax rates for each year commencing midnight on
31 December.
Section 13N details the method of assessment of land tax on
transmission easements as follows--
· for the period from 1 July 2004 to 31 December 2004
tax shall be assessed, charged, levied and collected on
the value of all transmission easements held by the
transmission easement holder at midnight on 30 June
2004;
· for 2005 and every subsequent tax year, tax shall be
assessed charged, levied and collected on the value of
all transmission easements held by the transmission
easement holder at midnight on 31 December
immediately preceding the tax year. This ensures
consistency with section 8(1) of the Principal Act which
imposes land tax on all land owned at midnight on
31 December immediately preceding the tax year.
4
Section 13O(a) provides that every sum payable by a
transmission easement holder for tax under Part IIB is, when it
falls due, deemed to be a debt due to the State. This includes any
additional tax or penalty and such a provision is required for tax
collection purposes.
Victorian Legislation Parliamentary Documents
Section 13O(b) states that every sum payable by a transmission
easement holder for tax under Part IIB must immediately be
paid by the transmission easement holder to the Commissioner.
This ensures the tax is required to be paid on the due date
specified in the notice of assessment (subject only to an
arrangement under section 91 of the Principal Act allowing for
payment by instalments or extending the time to pay). This is
consistent with section 39 of the Principal Act.
Section 13P(1) allows for exemptions from land tax on
transmission easements. A transmission easement, or a
transmission easement holder, may be exempted from liability by
Order of the Governor in Council, on the recommendation of the
Treasurer. In recommending an exemption the Treasurer is
required to have regard to--
· the need to promote the economic development of
Victoria;
· the need to promote and not hinder the development of
energy infrastructure in Victoria;
· any other factor the Treasurer considers is appropriate.
These factors allow sufficient flexibility for a current, or possibly
future, transmission easement holder to be exempt from the land
tax on easements, if appropriate.
Section 13Q(1) and (2) prohibit a transmission easement holder
passing the tax to the owner of the land over which the easement
runs, or seeking reimbursement of the tax from that landowner.
Any such agreement is void, whether or not it was entered into
before, on or after the commencement of the section inserting the
provision. This section protects an owner of land encumbered by
the transmission easement from any unintended tax liability
under Part IIB.
Section 13R provides a scheme for the assessment and liability of
joint transmission easement holders which mirrors the scheme
under section 45 of the Principal Act for assessing joint owners
of land.
5
Section 13S(1) contains a presumption that certain types of
dispositions of transmission easements will not be effective for
the purposes of exempting the transmission easement holder from
tax where the transmission easement holder continues to use that
transmission easement. This ensures the tax cannot be avoided
Victorian Legislation Parliamentary Documents
by the disposition of easement holdings where a continued right
of use remains. Section 13S(2) provides the Commissioner with
a discretion to exempt the transmission easement holder from tax
under section 13S(1) if the Commissioner is satisfied that tax
should not be payable having regard to the nature of the easement
and any other relevant matters.
Section 13T(1) is an anti-avoidance provision intended to ensure
that, if a transmission company uses a transmission easement
held by a related body corporate, that easement is deemed to be a
transmission easement and the transmission company is deemed
to be a transmission easement holder. Section 13T(2) provides
the Commissioner with a discretion to exclude the transmission
company from liability under section 13T(1) if the Commissioner
is satisfied the transmission company should not be liable to pay
tax under the Part having regard to the nature of the transmission
easement and any other relevant matters. For clarity, section
13T(3) confirms that the term "related body corporate" has the
same meaning as in section 50 of the Corporations Act.
Section 13U(1) empowers the Commissioner to enter into an
agreement with a transmission easement holder in relation to the
payment of tax to be assessed, charged, levied and collected
under Part IIB of the Act.
Section 13U(2)(a) provides that an agreement under section
13U(1) may, despite anything to the contrary in the Act, permit
the payment of the tax to be by instalments within such time as is
set out in the agreement.
Section 13U(2)(b) provides that any such agreement must not be
for a period exceeding five years.
Section 13U(3) provides that nothing in clause 13 limits the
operation of section 91. Among other things, section 91 allows
the Commissioner to extend the time for payment of tax by such
period as he or she considers the circumstances warrant.
6
Clause 7 Sub-clause (1) inserts new section 15(2A) into the Principal Act,
allowing for forms to be prescribed for the purposes of the land
tax on easements. It is intended that a "Notice of Acquisition of
Easement" form will be prescribed and will be required to be
lodged every time a transmission easement is acquired.
Victorian Legislation Parliamentary Documents
Sub-clause (2) inserts new section 15(5) which defines the term
"acquired", in order to make it clear in what circumstances the
Notice of Acquisition of Easement will have to be lodged.
Clause 8 amends section 21(3) of the Principal Act to ensure that, where
an assessment of land tax on transmission easements is issued
to joint easement transmission holders, the Commissioner is
required to cause notice of the assessment to be served on each
of those persons or on a nominated person. This ensures
consistency with the service requirements for all joint land tax
notices of assessment.
Clause 9 provides the scheme for taxpayers to make objections to
assessments of land tax on transmission easements.
Sub-clause (1) amends section 24A(1) of the Principal Act to
ensure that section 24A(1) does not apply to objections to
assessments of land tax on transmission easements because new
section 24A(1AA) will apply.
Sub-clause (2) inserts section 24A(1AA) into the Principal Act.
Section 24A(1AA) provides that a taxpayer who is dissatisfied
with an assessment of land tax under Part IIB may give to the
Commissioner, within 60 days of service of the notice of
assessment, an objection in writing against the assessment
stating fully and in detail the grounds on which the taxpayer
relies. This confirms that a person assessed for land tax on
transmission easements has a right to lodge an objection to that
assessment with the Commissioner.
Sub-clause (3) confirms that the insertion of section 24A(1AA)
does not limit any additional applicable rights of objection to a
valuation that arise under Part III of the Valuation of Land Act
1960.
Sub-clause (4) amends section 24A(3A) of the Principal Act to
ensure that, where an objection relates to the valuation of a
transmission easement, the Commissioner shall not determine the
objection without consulting the Valuer-General.
Clause 10 inserts section 38A into the Principal Act. Section 38A provides
that Part IV of the Principal Act does not apply in respect of tax
imposed under Part IIB. This is because Part IV applies to land
owners only.
7
Clause 11 amends section 57 of the Principal Act by inserting the words
"Subject to this Act". Section 57 states that land tax is due
and payable on the date set out in the notice of assessment.
This amendment ensures section 57 does not limit the operation
of section 13U, which allows for agreements to be entered
Victorian Legislation Parliamentary Documents
containing alternative dates for payment of tax to be assessed
under Part IIB of the Act.
Clause 12 inserts section 66(5) into the Principal Act. This new sub-section
has the effect of protecting landowners by ensuring that the
statutory first charge ordinarily arising in respect of unpaid land
tax does not apply to the land over which a transmission
easement runs in respect of unpaid land tax assessed under
Part IIB.
Clause 13 inserts section 69(2) into the Principal Act. This new sub-section
has the effect of protecting landowners and other persons by
ensuring that the Commissioner is not able to recover unpaid land
tax assessed under Part IIB from a mortgagee, lessee or occupier
of the land over which the transmission easement runs.
Clause 14 amends the Second Schedule to the Principal Act by--
· inserting clause 4A into that Schedule. Clause 4A
contains the tax rates that will be applied to land tax on
transmission easements for the period 1 July 2004 to
31 December 2004. These rates reflect the fact that, for
the 2004 year, tax assessments under Part IIB are not for
the full calendar year;
· amending clause 5 of that Schedule to ensure the tax
rates currently specified in clause 5 will also apply to
the land tax on transmission easements.
PART 3--AMENDMENT OF VALUATION OF LAND ACT
1960
Part 3 of the Bill inserts provisions into the Valuation of Land Act 1960
regarding valuation of transmission easements, which are necessary as a
result of the changes to the Land Tax Act 1958.
Clause 15 inserts, amongst other things, definitions of "Commissioner",
"transmission easement" and "transmission easement holder" into
section 2(1) of that Act. These definitions are necessary for the
operation of the new easement valuation provisions.
8
Clause 16 inserts new section 5B into the Act which provides for the
valuation of transmission easements.
Sub-clause (1) contains the general valuation principle that, for
the purposes of Part IIB of the Land Tax Act 1958, the value of
Victorian Legislation Parliamentary Documents
a transmission easement is the amount by which the transmission
easement decreases the site value of the land encumbered by the
transmission easement. This amount is the difference between
(a) the sum which would have been the site value of the land
encumbered by the transmission easement if the land were not so
encumbered, and (b) the site value of the land as so encumbered.
Sub-clause (2) contains the valuation regime that will apply to
the valuation of transmission easements for land tax purposes,
taking into account the transitional structure of the tax under
Part IIB of the Land Tax Act 1958. Under this regime the
Valuer-General must, at the request of the Commissioner of State
Revenue, make and give to the Commissioner--
· on or before 1 July 2004, a valuation of transmission
easements that determines the value of transmission
easements as at 1 January 2002;
· on or before 31 December 2004 a valuation of
transmission easements that determines the value of
transmission easements as at 1 January 2004;
· thereafter on or before 31 December in the second year
following the last valuation, a valuation of transmission
easements that determines the value of transmission
easements as at the date fixed under section 7(2) of the
Valuation of Land Act 1960 in that year.
Sub-clause (3) provides that these valuation provisions do not
apply to transmission easements or transmission easement
holders exempted under section 13P of the Land Tax Act 1958.
Clause 17 repeals the definition of "Commissioner" from section 14 of the
Act because it is now being inserted into section 2(1). It also
inserts a definition of "relevant taxpayer", which is defined to
mean a transmission easement holder within the meaning of the
Land Tax Act 1958. This definition is required for the amended
objection provisions in the Act.
Clause 18 inserts new section 15(4) into the Act to ensure that the current
section 15 does not apply in respect of valuations of transmission
easements, because a new section 15A will apply instead.
9
Clause 19 inserts new section 15A which requires the Commissioner to give
to a transmission easement holder liable for tax under Part IIB of
the Land Tax Act 1958, a notice of valuation that (a) shows the
aggregate value assessed in respect of transmission easements,
and (b) states the date as at which the aggregate value was
Victorian Legislation Parliamentary Documents
assessed.
Clause 20 inserts new section 16(6) into the Act to ensure that the current
objection provisions relating to valuations of land do not apply to
valuations of transmission easements.
Clause 21 inserts new section 17A into the Act, which contains the
objection provisions applicable to valuations of transmission
easements. Under these provisions the transmission easement
holder may lodge a written objection to a valuation made for the
Commissioner with the Commissioner, on any of the grounds set
out in that section. Current section 18 of the Act ensures any
such objection must be lodged within two months after a notice
of assessment has been issued based on that valuation.
Objections are then determined in accordance with the current
procedure.
10