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STATE TAXATION AND ACCIDENT COMPENSATION ACTS AMENDMENT BILL 2007

      State Taxation and Accident
   Compensation Acts Amendment Bill
                  2007

                        Introduction Print

              EXPLANATORY MEMORANDUM


                                 General
The Bill amends the Congestion Levy Act 2005 to provide--
         ·   an exemption for parking spaces owned by consulates, consular
             officers and consular employees, and their family members;
         ·   an indemnity which applies between owners and operators of
             public car parks; and
         ·   an ability for owners of private car parks to pass through the
             full cost of the congestion levy to car park users, including any
             GST payable by the owner on the amount of the levy received
             from the user.
The Land Tax Act 2005 is amended to--
         ·   clarify the land tax liability of land held by personal
             representatives of deceased estates during the period of
             administration of that estate;
         ·   extend the principal place of residence exemption to land that
             is used and occupied as a principal place of residence by a
             person holding a right to reside on the land granted under a
             will;
         ·   increase the period of the principal place of residence
             exemption for deceased estates;
         ·   provide for the use of valuations of land based on occupancy
             on the land for assessing land tax;
         ·   make miscellaneous amendments to the trust provisions.


561091                               1     BILL LA INTRODUCTION 31/10/2007

 


 

The Accident Compensation Act 1985 is amended to increase the scope for the Victorian Workcover Authority to provide appropriate benefits to catastrophically injured workers. 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 that the proposed Act comes into operation on the day after the day on which it receives the Royal Assent. PART 2--CONGESTION LEVY ACT 2005 Part 2 of the Bill makes amendments to the Congestion Levy Act 2005. Clause 3 inserts definitions of domestic partner, relative and spouse for the purpose of the consulates exemption in clause 4 of the Bill. It also inserts a definition of GST for the purpose of the GST pass-through provision in clause 6. Subclause (2) provides for the circumstances to be taken into account in determining whether persons are domestic partners of each other, by reference to section 275(2) of the Property Law Act 1958. Clause 4 inserts a new congestion levy exemption for parking spaces owned by consular posts, consular officers and consular employees. An exemption will also apply to parking spaces owned by relatives of a consular officer or a consular employee if they reside together in the same household. The new exemption is required to meet obligations arising under the Vienna Convention on Consular Relations 1963, and the terms consular post, consular officer and consular employee are defined by reference to that Convention. Clause 5 provides for an indemnity to apply between owners and operators of public car parks. Under section 9(2) of the Congestion Levy Act 2005, owners and operators of public car parks are jointly and severally liable for payment of the levy. There is currently no provision allocating responsibility for payment of the levy to one party or the other in the event that they cannot reach agreement between themselves. This clause will ensure that the party who has the ability to set fees for the car park under relevant contractual arrangements indemnifies the other for the 2

 


 

full amount of the levy. The purpose is to encourage owners and operators of public car parks to pass on the full cost of the levy to car park users through increased parking fees, which is consistent with the aim of the congestion levy to reduce traffic congestion. Clause 6 substitutes a new section 34(2) to ensure that owners of private car parks can pass on the full cost of the congestion levy to car park users. Currently, a person who uses a leviable parking space in a private car park must pay to the owner the 'amount of the levy' payable on that parking space. This does not permit owners to recover the GST payable on the amount which they receive from car park users. New section 34(2) will require car park users to reimburse owners for both the amount of the levy, as well as any GST which the owner is required to pay on that amount. Clause 7 contains transitional provisions in respect of the new indemnity clause for public car parks and the new GST pass-through provision. In both cases, the respective provisions are taken to have applied from the commencement of the Congestion Levy Act 2005. To the extent that this requires any person to pay an amount which they would not otherwise have had to pay, the relevant amount must be paid within 90 days of the commencement of the proposed sections. PART 3--LAND TAX ACT 2005 Part 3 of the Bill makes amendments to the Land Tax Act 2005. Clause 8 subclause (1) repeals paragraph (f) of the definition of excluded trust. Subclause (2) inserts the following definitions in section 3(1) of the Land Tax Act 2005: administration trust which is defined to mean a trust under which the assets of a deceased person are held by a personal representative but only during the period ending on the earlier of the-- · completion of administration of the deceased estate; or · third anniversary of the death of the deceased person or a further period approved by the Commissioner under subclause 8(3). personal representative is defined to mean a person acting in the capacity of an executor or administrator of a deceased estate. 3

 


 

Subclause (3) amends the definition of trust to include a trust under which the assets of a deceased person are held by a personal representative but does not include an implied or constructive trust. Subclause (4) substitutes a reference to paragraph (f)(i) of the definition of excluded trust with a reference to paragraph (b) of the definition of administration trust in section 3(3). This allows the Commissioner to approve a longer period for a trust to remain an administration trust as defined in section 3(1). Clause 9 inserts a provision into section 21 of the Land Tax Act 2005 which allows the Commissioner of State Revenue to use a valuation made under the Valuation of Land Act 1960 that has determined the value of each separate occupancy on the land and to include in a notice of land tax assessment a description of the occupancy on land. It also deems a valuation of occupancy on land made under the Valuation of Land Act 1960 to be a valuation of land for the purposes of the Land Tax Act 2005. Clause 10 inserts paragraph (d) into section 46A(3) to provide that section 46A does not apply to land subject to an administration trust. Such land is therefore not subject to the land tax surcharge for trusts. Clause 11 amends section 46B(3)(b) to provide that a notice of notification of beneficial interests in land lodged for the purposes of section 46B takes effect in the tax year in respect of which the notice is lodged. Section 46B provides for the imposition of land tax for fixed trusts if beneficial interests are notified to the Commissioner. This means a notice takes effect, not necessarily in the land tax year it is lodged, but in the land tax year in respect of which it is lodged. Clause 12 amends section 46C(3)(b) to provide that a notice of notification of the unitholdings in a unit trust scheme lodged for the purposes of section 46C takes effect in the tax year in respect of which the notice is lodged. Section 46C provides for the imposition of land tax for unit trust schemes if the unitholdings are notified to the Commissioner. Clause 13 subclause (1) amends section 46F(5)(a)(ii) to provide that a lodgment of a notice of nomination of a beneficiary of a discretionary trust which has pre-2006 lands for the purposes of section 46F takes effect in the tax year in respect of which the notice is lodged. Section 46F provides that the trustee of a discretionary trust may nominate a person to be the nominated 4

 


 

beneficiary of the trust for the purposes of the Act. The section applies only to a discretionary trust where the trust property includes any pre-2006 land. Subclause (2) amends section 46F(8)(b) to provide that a notice of nomination lodged for the purposes of sub-section 46F(6) or (7) takes effect in respect of the tax year in which the notice is lodged. Clause 14 subclause (1) amends section 46H(a)(ii) to provide for a notice of nomination of a PPR beneficiary of a unit trust scheme or discretionary trust lodged for the purposes of section 46H to take effect in the tax year in which the notice is lodged. Section 46H provides that the trustee of a unit trust scheme or discretionary trust may nominate a person to be the nominated PPR beneficiary of the scheme or trust for land tax purposes. Subclause (2) amends section 46H(4)(b) to ensure that a nomination lodged under sub-section 46H(3) remains in force until the nominated PPR beneficiary dies or the nominated PPR beneficiary ceases to use and occupy the land as his or her principal place of residence, whichever first occurs. Subclause (3) amends section 46H(5) to allow the Commissioner to accept a nomination of a PPR beneficiary for the purposes of section 46H if the Commissioner considers the nomination is just and reasonable when a nominated PPR beneficiary ceases to use and occupy the land as his or her principal place of residence. Subclause (4) amends section 46H(6)(a) to provide for a nomination lodged under subsection 46H(5) to take effect in respect of the tax year in which the notice is lodged. It also provides for a notice lodged under section 46H(5) to remain in force until the nominated PPR beneficiary dies or the nominated PPR beneficiary ceases to use and occupy the land as his or her principal place of residence, whichever first occurs. Clause 15 subclause (1) amends section 46(I)(2) to ensure that land is used and occupied as a principal place of residence by a nominated PPR beneficiary for a unit trust scheme or discretionary trust so that the trustee is to be assessed for land tax on that land as if the land were the only land owned by the trustee. Subclause (2) inserts a provision to state the criterion which the nominated PPR beneficiary needs to satisfy in order for section 46I(2) to apply. The criterion requires the land to be used and occupied as the PPR of the nominated PPR beneficiary since 1 July in the year preceding the tax year in which the nomination for that PPR beneficiary is lodged under section 46H or if the trustee became owner of the land on or after 1 July in the year 5

 


 

preceding the tax year in which the nomination for that PPR beneficiary is lodged under section 46H, since a later date during that year. Clause 16 inserts subsection 46K(5A) which requires a personal representative of a deceased estate that has land in Victoria to lodge a written notice with the Commissioner within one month after the administration of that deceased estate is completed. Clause 17 subclause (1) inserts section 53A which sets out the criteria that must be satisfied in order for a right to constitute a right to reside on land for land tax purposes. These criteria are that the right was-- · granted on the death of the person previously occupying the land; and · granted in writing under a will or testamentary instrument; and · not granted or acquired for monetary consideration. Subclause (2) further provides that a right to occupy land as a lessee or as a beneficiary of a discretionary trust or unit holder in a unit trust scheme does not constitute a right to reside. Clause 18 subclause (1) inserts paragraph (ab) into section 54(1) to include land that is used and occupied as a principal place of residence of a natural person who has a right to reside on that land as exempt land. Subclause (2) inserts a new provision which provides that land is not exempt land pursuant to subsection (1)(ab) unless the following conditions are met-- · immediately before the natural person was granted a right to reside on that land, the land was exempt land under section 54(1)(a) or (b); and · that person is not entitled to a PPR exemption in respect of any land under Part 4 of the Land Tax Act 2005 or to an exemption from land tax under a law of any other State or Territory that corresponds to this Part. This to ensure that the PPR exemption which extends to land used and occupied by a natural person who was granted a right to reside on that land is a continuation of the PPR exemption previously held by the grantor of that right and that such a person is not holding another PPR exemption in respect of land in Victoria or in any another State or Territory. 6

 


 

Subclause (3) amends section 54(2) so that this section does not apply to exempt land that is used and occupied by a holder of a right to reside. Clause 19 subclause (1) amends section 57(2)(a) to increase the period of the principal place of residence exemption on death of a resident. The period of the PPR exemption is extended beyond the first anniversary of the death of the resident, on the basis that the administration of the estate of the deceased may take longer than one year. Subclause (2) allows the Commissioner to approve a further period if the three year period in section 57(2)(a) has expired. Clause 20 inserts a new Clause 12 into Schedule 3 to the Land Tax Act 2005 which sets out the following transitional provisions: Subclause (1) provides that, despite its repeal, paragraph (f) of the definition of excluded trust in section 3(1) is to apply on and after the commencement of clause 8(1) of this Bill to a testator who died before that commencement. Subclause (2) provides for the new provisions relating to an administration trust set out in Clauses 10 and 16 of the Bill to apply to a person whose estate is subject to the trust died on or after the commencement of those provisions. Subclause (3) deems section 21 of the Land Tax Act 2005 to have always been enacted as amended by Clause 9 of the Bill. Subclause (4) provides amendments made to sections 46B(3)(b), 46C(3)(b), 46F(5)(a)(ii), 46F(8)(b), 46H(4)(a)(ii) and 46H(6)(b) in the Bill apply and are taken always to have applied to nominations made on or after 1 January 2006. Subclause (5) allows a taxpayer to claim a refund of land tax paid on or after 1 January 2006 that is not payable because of subclause (4) above. PART 4--ACCIDENT COMPENSATION ACT 1985 Part 4 of the Bill makes amendments to the Accident Compensation Act 2005. Clause 21 removes reference to home and car modifications from the definition of personal and household expenses in section 5(1) of the Accident Compensation Act 1985. 7

 


 

Clause 22 Subclause (1) extends the definition of reasonable costs in section 99(2) to new sub-sections (5A) and (5D). Subclause (2) inserts new sub-sections 5A-5H into section 99 of the Accident Compensation Act 1985 to provide for an expanded and separate category of benefit relating to modifications of injured workers' cars and homes. · New subsection 5A provides that where a worker reasonably requires a car that they use to be modified as a result of their injury the Victorian Workcover Authority is liable to pay either the reasonable costs of modifying that car or if the car is not able to be modified, to contribute a reasonable amount to the purchase cost of a suitably modified car selected by the Victorian Workcover Authority. · New subsection 5B provides that where a worker because of their injury reasonably requires access to a car but does not have access to one, the Victorian Workcover Authority will be liable to contribute a reasonable amount to the purchase cost of a suitable car selected by the Victorian Workcover Authority. · New subsection 5C sets out a non-exhaustive list of factors that must be considered by the Victorian Workcover Authority when determining a reasonable amount to be contributed by it to the purchase cost of a suitably modified or suitable car. · New subsection 5D provides that where a worker because of their injury reasonably requires modifications to a home in which they live the Victorian Workcover Authority will be liable to pay the reasonable costs of modifying the home, or, where the home cannot be reasonably modified, to pay either the purchase costs of a semi-detachable portable unit or the costs of relocating the worker to another home that is able to be suitably modified. · New subsection 5E sets out a non-exhaustive list of factors that must be considered by the Victorian Workcover Authority when determining the reasonable costs or amount to be contributed by it under subclause 5D. 8

 


 

· New subsection 5F provides that where a worker moves from a modified home to which the Victorian Workcover Authority has contributed, and in assessing whether to make any contribution to the cost of modifying the worker's new home, the Victorian Workcover Authority must consider the appropriateness of the new home for modification in light of all relevant circumstances and the modifications needed. · New subsection 5G provides that no contribution to a car, home or semi-detachable unit can be made by the Victorian Workcover Authority for an amount in excess of $10 000, unless the worker enters into an agreement with the Victorian Workcover Authority with respect to ownership and maintenance obligations relating to the car, home or semi-detachable unit. · New subsection 5H sets out a non-exhaustive list of provisions that must be included in an agreement under subclause 5G. Subclause (3) amends section 99(15) of the Accident Compensation Act 1985 to clarify that the exclusion of contributions by the Victorian Workcover Authority to capital contributions and costs associated with buying and selling property does not apply to contributions and costs towards home modifications and relocations or to the purchase of a semi detachable portable unit. Clause 23 exempts the amount referred to in new sub-section (5G) from the application of the indexation formula in section 100(2B)(d) of the Accident Compensation Act 1985. Clause 24 makes clear that section 99 of the Accident Compensation Act 1985, as amended by the State Taxation and Accident Compensation Acts Amendment Bill 2007, applies to any claim for compensation irrespective of when the injury occurred. PART 5--REPEAL OF AMENDING ACT Clause 25 provides for the automatic repeal of this amending Act on the first anniversary of its commencement. As suggested by the Scrutiny of Acts and Regulations Committee, all amending Acts now contain an automatic repeal provision, which will save the time and expense of having to repeal amending Acts in statute law revision Bills. The repeal of this Act does not affect in any way the operation of the amendments made by this Act (see section 15(1) of the Interpretation of Legislation Act 1984). 9

 


 

 


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