Page 3005 - Week 09 - Thursday, 21 September 2006
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measures announced in the 2005-06 budget. The last three taxes in this package to be abolished are duty on rental arrangements, by 1 July 2007; lease duty, by 1 July 2009; and duty on unquoted marketable securities, by 1 July 2010. Although the abolition dates vary, the three taxes are being dealt with in a single bill. The passage of legislation to abolish these taxes provides certainty to taxpayers, with adequate advance notice to enable them and, in some cases, their clients to adjust contracts, business practices and computer systems to accommodate the changes.
The provisions in this bill involve a fundamental shift in the tax base. Transitional provisions are required to ensure that all taxpayers are treated consistently, equitably and fairly both before and after the abolition of each tax. To limit opportunities for avoidance and to protect revenue, the transitional provisions in the bill ensure that, for each of the taxes, the provisions prior to repeal continue to apply to replacement arrangements and also to arrangements made with the only, or main, purpose of deferring transactions so they do not incur duty.
Because the bill cannot anticipate every avoidance issue that may arise, there is provision for the executive to make transitional regulations to deal quickly with unanticipated issues, including those that may arise during the implementation phase. Accordingly, the bill provides that when an issue is identified the executive may make a transitional regulation if the executive considers it is not, or is not adequately or appropriately, dealt with in the transitional chapter. This will ensure that taxpayers discharge their liabilities, notwithstanding any legislative deficiency. This allows urgent issues to be dealt with in subordinate legislation that is scrutinised by the Assembly.
The regulations will apply prospectively and will expire 12 months after commencement. The time frame allows for issues dealt with by regulation to be put to the Assembly as a legislative amendment. This transitional regulation-making power is the same as that recently passed by the Assembly in relation to the abolition of duty on non-real core business assets. The Standing Committee on Legal Affairs acknowledged in that case that there are circumstances in which the delegation of legislative power may be useful, for example, as would apply to the implementation of the arrangements provided by the bill.
The first of the taxes to be abolished by this bill is hiring duty. Chapter 6 of the Duties Act imposes a liability on commercial hiring businesses to pay duty on the total amount of hiring charges received in a month. After consultation and agreement with key stakeholders, the bill removes duty on the hire of goods on both new and existing contracts for any liability incurred after 30 June 2007. Chapter 6 of the Duties Act will expire on that date. Where a contract spans the abolition date, the duty payable is only for any liability incurred prior to July 2007 and there will be no pro rata refunds. The obligations of a commercial hiring business to register with the Commissioner for ACT Revenue and pay hiring duty monthly by returns will also cease in relation to any period after 30 June 2007.
Where a person hires goods from someone who is not a commercial hiring business, the hirer is required to lodge a statement with the Commissioner for ACT Revenue and pay the duty. Their obligation will also cease for any liability incurred after 30 June 2007.
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