Legislative Assembly for the ACT: 2018 Week 04 Hansard (Thursday, 12 April 2018) . . Page.. 1338 ..
Land Tax Amendment Bill 2018
Mr Barr, pursuant to notice, presented the bill, its explanatory statement and a Human Rights Act compatibility statement.
Title read by Clerk.
MR BARR (Kurrajong—Chief Minister, Treasurer, Minister for Economic Development and Minister for Tourism and Major Events) (10.35): I move:
That this bill be agreed to in principle.
This bill, which amends the Land Tax Act 2004, contains two initiatives to improve housing affordability. The first is to broaden the base of land tax to all residential properties except the principal place of residence of an owner, and the second is to introduce a foreign ownership surcharge which will apply to residential property owned by foreign individuals, companies and trusts. Both these initiatives will take effect from 1 July this year
In the states, land tax applies to all residential land except for principal places of residence. In the ACT, however, land tax only applies if a home is rented or owned by a company or trustee. Adopting the principal place of residence test for land tax in the territory will extend that tax to vacant properties as well as rented properties. This clearly creates a financial incentive for owners to make vacant properties available on the rental market. There will be no changes to properties which are currently rented or which are occupied by the owner.
The amendments bring vacant homes into the net for land tax but exclude properties that are occupied for a nil or nominal rent or properties unfit for occupation. Properties being occupied rent free under an arrangement to pay the rates, repairs, maintenance and insurance only will not be liable for land tax in the new system. This recognises that such properties are actively used for residential purposes even though they are not principal places of residence.
Properties will be deemed unfit for occupation and not subject to land tax if they are unavailable for use as a principal place of residence or rental property. This covers situations including construction of a new home, significant renovations and severely damaged properties. This exemption replaces the previous builders’ exemption, which provided up to two years of land tax relief for developers. The bill introduces further exemptions for moving into or out of a principal place of residence, deceased estates and life tenancies. The ACT Revenue Office will monitor these new exemptions closely to ensure that they are only applied in appropriate and genuine circumstances.
The second part of this bill imposes a surcharge, under the Land Tax Act, on residential land owned by a foreign person; that is, a foreign citizen residing overseas. The surcharge will also apply to companies and trusts under foreign control. The foreign ownership surcharge aims to improve the ability of local homebuyers to access and compete in the housing market with buyers located overseas. Whilst the