FIRST HOME OWNER GRANT (SPECIAL ELIGIBLE TRANSACTIONS) AMENDMENT BILL

Introduction and First Reading

The Hon. M.J. ATKINSON (Croydon—Attorney-General, Minister for Justice, Minister for Multicultural Affairs, Minister for Veterans' Affairs) (12:01): Obtained leave and introduced a bill for an act to amend the First Home Owner Grant Act 2000. Read a first time.

Second Reading

The Hon. M.J. ATKINSON (Croydon—Attorney-General, Minister for Justice, Minister for Multicultural Affairs, Minister for Veterans' Affairs) (12:01): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation inserted in Hansard without my reading it.

Leave granted.

The First Home Owners Boost ('the Boost') was announced by the Australian Government on 14 October 2008 and was extended in the Commonwealth Budget on 12 May 2009.

The First Home Owners Boost provides an additional $7,000 to first home buyers purchasing an established home and an additional $14,000 to first home buyers purchasing a newly-constructed home before the end of September 2009.

From 1 October 2009 to 31 December 2009, the Boost will halve to $3,500 for established homes and to $7,000 for newly-constructed homes.

The Boost is in addition to the existing First Home Owner Grant ('FHOG') and First Home Bonus Grant funded by the State Government, which provides assistance of up to $11,000 for first home buyers.

The Boost increases the assistance available to first home buyers from 14 October 2008 to 30 September 2009 to a maximum $25,000 for newly constructed homes and $18,000 for established homes.

With the halving of the Boost from 1 October 2009 to 31 December 2009, the maximum assistance available to first home buyers is $18,000 for newly-constructed homes and $14,500 for established homes in this period.

The States and Territories have agreed to administer the Boost, in addition to the existing FHOG.

To be eligible for the Boost, applicants must first satisfy all of the eligibility requirements for the existing FHOG.

To be eligible for the Boost for new homes the following additional criteria must be satisfied:

The home must not have been previously sold by the builder / vendor or ever occupied as a residence.

Construction of the home must commence within 26 weeks of entering into the contract, however the Commissioner will have a discretion to increase this period if the reasons for non commencement within 26 weeks are beyond the control of the applicant and the builder of the home.

The contract must specify a completion date of the eligible transaction within 18 months of the date of commencement of building or in any other case completion of the eligible transaction must occur within 18 months of the commencement of building.

Owner builders will be eligible for the Boost if they commence building between 14 October 2008 and 31 December 2009 and complete construction within 18 months of commencing construction.

Applicants who purchase new homes 'off-the-plan' will be eligible for the Boost if they sign a contract between 14 October 2008 and 31 December 2009 and the contract states that the eligible transaction will be completed by the relevant completion date stated in the Bill (which varies depending on the date that the contract was signed), or in any other case the eligible transaction is actually completed by the relevant date.

In addition to the above, the Commissioner will have a discretion to extend any of the completion time frames if building is delayed due to extenuating circumstances.

Home purchases and constructions which do not meet these time frames will nevertheless qualify for the existing State $7,000 FHOG and the $4,000 First Home Bonus Grant if they meet the eligibility criteria for these two existing schemes.

The Boost has been provided on an administrative basis since its announcement and this Bill will provide legislative backing to the Boost.

With the introduction of this legislation, the opportunity is also being taken to amend the First Home Owner Grant Act 2000 ('the Act') to clarify the application of discretions provided to the Commissioner to vary statutory time periods and to clarify when the Commissioner is required to consider whether to write off a FHOG liability.

Under the current provisions of the Act, applicants must apply for the grant within 12 months of the commencement of their eligible transaction and occupy the home to which the application applies within 12 months for a continuous period of not less than 6 months.

The Commissioner has a discretion to vary these time frames.

Since the inception of the scheme in 2000, RevenueSA has interpreted the Act to enable the Commissioner to exercise his discretion to vary these time periods at any time, including after the time period has expired.

This approach provides the maximum flexibility to the Commissioner to pay the FHOG where applicants are unable to meet the strict requirements of the Act due to their particular circumstances.

RevenueSA is now concerned that, due to the structure of the FHOG Act, it is arguable that the Commissioner should only consider whether to exercise these discretions at the time that the FHOG application is made.

Given that in almost all cases the applicant is unaware of the need for the discretion to be utilised at the time of application, this would mean that the discretions are inoperative for practical purposes. It is therefore proposed to amend the Act retrospectively to give the Commissioner sufficient flexibility to exercise these discretions at any time, where there are good reasons for doing so.

In relation to the writing off of a FHOG liability, RevenueSA is concerned that the Commissioner may be under a positive duty to consider whether or not to write off a liability in all cases where it is determined that a grant is required to be paid back, regardless of whether the applicant has requested that the Commissioner consider this course of action. This concern is based on the operation of common law principles regarding the exercise of discretions.

This interpretation places a significant administrative burden on RevenueSA to seek submissions from all taxpayers who are liable to pay back a FHOG when in most cases many of these persons will have no grounds for the liability to be written off. Additionally, this interpretation would result in many applicants being given an unrealistic expectation that they may not have to repay the FHOG.

It is therefore proposed to amend the Act to override these common law principles to clarify that the Commissioner need only consider whether or not to write off a liability in cases where the applicant has specifically applied to the Commissioner for this to occur or if the Commissioner is satisfied that action to recover the debt is impractical or unwarranted.

I commend the Bill to Members.

Explanation of Clauses

Part 1—Preliminary

1—Short title

This clause is formal.

2—Commencement

The clause provides for the majority of the measure to be taken to have come into operation on 14 October 2008. Certain provisions will come into operation on assent.

3—Amendment provisions

This clause is formal.

Part 2—Amendment of First Home Owner Grant Act 2000

4—Amendment of section 12—Criterion 5—Residence requirement

Section 12 is amended by this clause to make it clear that the Commissioner may, if he or she considers that there are good reasons for doing so, vary the residence requirement in respect of a particular applicant. Under section 12(1), an applicant for a first home owner grant must occupy the home to which the application relates as his or her principal place of residence for a continuous period of at least 6 months. That period of residence is to commence within 12 months after completion of the eligible transaction. Under proposed subsection (3), the Commissioner will be able to vary the residence requirement at any time by approving a shorter residence period or a longer completion period. A residence requirement that is so varied is to be taken to have been to applicant's residence requirement from the date of the determination of his or her application.

5—Substitution of section 13A

This clause deletes the provision of the Act relating to special eligible transactions and substitutes a new section.

13A—Special eligible transactions

Under proposed section 13A, the following are special eligible transactions:

an eligible transaction that is a contact for the purchase of a home made between 14 October 2008 and 31 December 2009 (this does not include a contract for an 'off the plan' purchase of a new home);

an eligible transaction that is a comprehensive home building contract for a new home if it is made between 14 October 2008 and 31 December 2009 and the building work commences within 26 weeks of the contract being made and the contract states that the eligible transaction must be completed with 18 months following commencement (or the eligible transaction is so completed);

an eligible transaction that is the building of a new home by an owner-builder if the commencement date is between 14 October 2008 and 31 December 2009 and the transaction is completed within 18 months following the commencement of the building work;

an eligible transaction that is a contract for an 'off-the-plan' purchase of a new home if the contract is made between 14 October 2008 and 31 December 2009 and the contract states that the eligible transaction must be completed on or before 31 December 2010, 31 March 2011 or 30 June 2011 (the applicable date being determined by reference to the date on which the contract was entered into) (or the eligible transaction is completed on or before that date).

However, a contract is not a special eligible transaction if the Commissioner is satisfied that it replaces a contract for the purchase of the same home, or a comprehensive home building contract to build the same or a substantially similar home, made before 14 October 2008.

Various terms used in section 13A, including contract for an 'off-the-plan' purchase, new home and substantially renovated home are defined in subsection (8). Subsection (9) provides that the Governor may, by regulation, alter a date or period specified in the section, or determine some other transaction to be a special eligible transaction. Any such alteration or determination must be consistent with the Commonwealth/State scheme for the payment of grants under the Act.

6—Amendment of section 18—Amount of grant

Section 18, which specifies the amount of the first home owner grant, is amended by incorporating some of the provisions of section 18A, which is to be repealed, in an amended form.

As amended, section 18 will provide that if an eligible transaction is a special eligible transaction, the amount of the first home owner grant will be increased by an additional payment as follows:

if the transaction is a contract for the purchase of a home that is not a new home and the commencement date of the transaction is between 14 October 2008 and 30 September 2009, the additional payment will be $7,000;

if the transaction is a contract for the purchase of a home that is not a new home and the commencement date of the transaction is between 1 October 2009 and 31 December 2009, the additional payment will be $3,500;

if the transaction is some other type of special eligible transaction and the commencement date of the transaction is between 14 October 2008 and 30 September 2009, the additional payment will be $14,000;

if the transaction is some other type of special eligible transaction and the commencement date of the transaction is between 1 October 2009 and 31 December 2009, the additional payment will be $7,000.

7—Repeal of section 18A

Section 18A is repealed by this clause. That section relates to earlier special eligible transactions. Provisions relating to current transactions are to be incorporated into section 18.

8—Amendment of section 18B—Bonus grant

Section 18B(3) is deleted. The subsection is no longer required because of the insertion of section 18C by clause 9.

9—Insertion of section 18C

This clause inserts a new section.

18C—Amount of grant must not exceed consideration

Proposed section 18C has the effect of preventing the total payment made to an applicant for a first home owner grant from exceeding the consideration for the eligible transaction.

10—Amendment of section 20—Payment in anticipation of compliance with residence requirement

This amendment is consequential on the amendment made to section 12 by clause 4. The amendment is necessary because the Commissioner may, under section 12 as amended, revise an applicant's residence requirement. Under section 20 as amended, an applicant who fails to meet the original residence requirement will not be committing an offence if he or she fails, in relation to that original requirement, to fulfil the conditions specified in section 20(2).

11—Amendment of section 40—Power to recover amount paid in error etc

Section 40(6) currently provides that the Commissioner may write off the whole or part of a liability to pay an amount to which section 40 applies. The Commissioner must be satisfied that action to recover the amount outstanding is impracticable or unwarranted. The amendment made by this clause makes it clear that the Commissioner may write off a liability on application or on his or her own initiative. The Commissioner is under no obligation to consider whether to act under subsection (6) unless or until an application is made or it otherwise appears necessary for him or her to do so.

12—Insertion of section 40A

This clause inserts a new section.

40A—Extensions of time

Proposed section 40A provides that if the Commissioner is authorised to extend a time limit, or to shorten a minimum period, under the Act, he or she may extend the time limit or shorten the period even if it has already expired (but only if to do so is consistent with the provisions of the Act).

13—Amendment of section 46—Regulations

This consequential amendment removes a reference to section 18A, which is to be repealed, and substitutes a reference to section 18.

Debate adjourned on motion of Mr Hamilton-Smith.