Legislative Assembly for the ACT: 2007 Week 12 Hansard (Tuesday, 20 November 2007) . . Page.. 3540 ..
Legal Affairs—Standing Committee (performing the duties of a Scrutiny of Bills and Subordinate Legislation Committee)—Scrutiny Report 48, dated 19 November 2007, together with the relevant minutes of proceedings.
I seek leave to make a brief statement.
MR SESELJA: Scrutiny report 48 contains the committee’s comments on 29 pieces of subordinate legislation and four government responses. The report was circulated to members when the Assembly was not sitting. I commend the report to the Assembly.
Duties Amendment Bill 2007
Debate resumed from 18 October 2007, on motion by Mr Stanhope:
That this bill be agreed to in principle.
MR MULCAHY (Molonglo) (10.47): The opposition will be supporting this bill, which imposes an anti-avoidance measure into the Duties Act as part of the removal of duty on short-term leases. This bill was made as a consequence of the repeal of lease duty in the ACT, which is a reform undertaken as part of the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations. This agreement sets out a host of reforms to be made as part of the introduction of the GST. It requires the repeal of several taxes and the review of several others with a view to further tax reform. The agreement also allows jurisdictions to enact anti-avoidance provisions to protect those remaining taxes which are not within the scope of the agreement.
The repeal of taxes under the intergovernmental agreement has been proceeding slowly and, unfortunately, has somewhat been undermined by the introduction of new taxes within this territory. This is an issue that I have been quite vocal on in this Assembly as I believe that the ACT government has been dragging its heels on agreed-upon tax reform and certainly not living with the intent or spirit of the agreement it signed. In any event, from 1 July 2009 leases in the ACT will no longer be dutiable. However, long-term leases—that is, those over 30 years—will remain dutiable, and this is based on the principle applied under the Duties Act that such long-term leases are considered to be essentially de facto transfers of property.
This bill amends the provisions for duty on long-term leases to ensure that, after the removal of short-term lease duty, lessors are not able to escape duty on long-term leases by using consecutive short leases to associated parties for substantially the same land in order to construct a non-dutiable de facto long-term lease.
This is essentially an anti-avoidance provision designed to ensure consistency in the application of taxation laws. I have been advised by Treasury officials that there have not been any previous instances of this kind of avoidance being attempted, but I am