Legislative Assembly for the ACT: 2007 Week 10 Hansard (18 October) . . Page.. 3095..
Thursday, 18 October 2007
MR SPEAKER (Mr Berry) took the chair at 10.30 am and asked members to stand in silence and pray or reflect on their responsibilities to the people of the Australian Capital Territory.
Duties Amendment Bill 2007
Mr Stanhope, pursuant to notice, presented the bill, its explanatory statement and a Human Rights Act compatibility statement.
Title read by Clerk.
MR STANHOPE (Ginninderra—Chief Minister, Treasurer, Minister for Business and Economic Development, Minister for Indigenous Affairs, Minister for the Environment, Water and Climate Change, Minister for the Arts) (10.31): I move:
That this bill be agreed to in principle.
The Duties Amendment Bill 2007 amends the Duties Act 1999 to address a potential risk to revenue arising out of the government's decision to abolish tax on certain business leases. As a consequence of the review of certain taxes initiated under the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations, the IGA, lease duty, that is, the tax chargeable on a lease instrument, will be abolished in the ACT on 1 July 2009. Duty on long-term leases is retained under chapter 2 of the Duties Act.
A long-term lease is a lease for a term of longer than 30 years, including where this arises as a consequence of a renewal option. Long-term leases provide effective control of the land and are liable at conveyance rates of duty. This reflects the reality of the situation in that a lease over land that extends over that period is a de facto transfer of the land and should be treated as such. In accordance with the IGA, this bill strengthens existing anti-avoidance measures related to lease instruments under chapter 5 of the Duties Act and long-term leases under chapter 2. The bill reinforces the intention of the legislation and safeguards the duty base. It is not intended to source any new revenue.
The bill broadens the definition of long-term lease to clarify certain lease structures as long-term lease arrangements. In this regard, the bill deals specifically with the granting of a lease on surrender of another lease and the variation of a lease to extend its term. The provisions are intended to prevent the manipulation of leases in order to disguise what is effectively a long-term lease for the purpose of avoiding duty at the conveyance rate. Where a lease falls into these new definitions of long-term lease, conveyance duty will be assessed and a credit will be allowed for any duty that has already been paid under the chapter 5 lease provisions.
Transitional provisions have already been inserted into the Duties Act to ensure consistent and equal treatment for all lessors, both before and after the abolition of the lease duty in 2009. The bill introduces two amendments that serve to clarify the intent of those transitional provisions.