Bills

Statutes Amendment and Repeal (Budget 2015) Bill

Committee Stage

In committee.

(Continued from 8 September 2015.)

Clauses 1 to 30 passed.

Clause 31.

Mr WILLIAMS: I take it that the minister has had the opportunity to be apprised of the matter I raised in the second reading debate yesterday? No? I will recap briefly. Clause 67 was introduced into this piece of legislation, I understand, in early 1990. In his second reading explanation, the then minister, one Frank Blevins, gave a bit of background to clause 67 because it appeared, I understand, as clause 66ab in a previous piece of legislation. On page 686 of the Hansard of 21 March 1990, he said:

Section 66ab was enacted in 1975 to counteract the tax avoidance practice of dividing land into smaller portions to avoid increased rates of stamp duty on higher value transactions. The same problem has again arisen but in relation to other property, such as businesses and units in a unit trust.

I read that in because it gives the clue to the ill that this clause, now clause 67, was trying to correct, namely, that the rate of stamp duty payable on property transactions increases with the increase in value of the property.

It seems that in previous times, but before the enactment of that particular section, landholders who owned a property that had more than one title to it would, in selling that property, sell it with contracts title by title, one at a time; thereby, each individual transaction attracting a lower rate of stamp duty than they would if they were all sold under one instrument and the total value was rated for stamp duty. That was the ill that the original legislation set about correcting.

At the time of the 1990 debate in the house on section 67 the opposition spokesperson, Stephen Baker, moved an amendment. He moved the amendment to clarify section 67 which he believed had some ambiguity to it. I will not read out the amendment that he proposed but it was not supported by the government, with Mr Blevins opposing it. I quote now from page 880 of the Hansard of 27 March 1990 where Mr Baker said, amongst other things, the following:

We are trying to avoid the situation where a person in good faith happens to buy adjoining properties which are under separate ownerships. That is they are buying properties which are adjoining but from different vendors.

He went on to say:

I would be astounded if the minister said to me that, in the situation of a person buying a property which is vaguely related from two separate individuals, there should be an aggregation of the property values for duty purposes.

That is, 'vaguely related' being that they were next door to each other. The minister, the Hon. Frank Blevins, in response to that said, amongst other things:

Where a person enters into two quite separate contracts to buy land—it may be adjoining but under separate ownership—they are not covered by proposed new section 67. There are clearly two separate contracts bought from two separate people, and this section would not apply. It does not apply now and it will not apply in the future. It has never been and will not be a problem—

He went on to say—

assuming that Parliament passes this Bill substantially as it was introduced. So the answer is 'No,' the Deputy Leader need have no fears that genuine separate contracts will be touched by this Bill, because that is not the intention of the legislation.

I was approached by a constituent recently who happened to have purchased three adjoining properties from three different vendors and, lo and behold, the conveyancing company (I need not mention the name of the solicitor) sought a ruling from Revenue SA. The ruling comes back with regard to it and it names the property so I will not go to that. It states:

Reference is made to your letter of 2 March 2015, my email of 5 March 2015, and your subsequent letter of 16 March 2015 in relation to a request for a private ruling on a matter that has taken place and the potential that section 67 of the Stamp Duties Act 1923 applies. From reviewing your submissions and the previous Crown advice this office is of the opinion that the factors for applying section 67 of the Act far outweigh the factors for not aggregating the transfers. There seems to be an essential unity of purpose in purchasing the three properties and the way it has been structured.

It goes on to say that as a result the stamp duty would be such and such an amount, which is $12,340 more than what was paid, and would be payable if the transactions were handled separately. I understand that the same purchaser has subsequently bought another piece of adjoining land from a fourth vendor and I am not sure how that transaction has been treated by Revenue SA.

To my mind, the law as enacted in 1990—and I have been through the act and looked at the history and I can see no other amendments to section 67 other than to delete certain subparagraphs to that section, so it would not impact on the undertaking given by minister Blevins in 1990. I can see no reason or no authority from this parliament to change the situation whereby the commissioner could indeed amalgamate the separate values of properties being transferred from different vendors to one purchaser. Notwithstanding that, I find that a document which is a guide, particularly for conveyancers from Revenue SA, 'Stamp Duty Document Guide', dated February 2008 suggests that:

Section 67 of the SD Act can apply where the two or more documents have—

There are four dot points and the one I think that is relevant is:

different transferor(s) and the same transferee(s);

That is certainly not what the parliament was told in 1990 when the bill passed through this house. I remind the house that the Hon. Frank Blevins said, when asked that specific question:

Where a person enters into two quite separate contracts to buy land—it may be adjoining, but under separate ownership—they are not covered by proposed new section 67. There are clearly two separate contracts bought from two separate people, and this section would not apply. It does not apply now and it will not apply in the future. It has never been and will not be a problem…

He went on to say:

So the answer is 'No', the Deputy Leader need have no fears that genuine separate contracts will be touched by this Bill, because that is not the intention of the legislation.

My question to the minister is: on what authority is the Commissioner of Stamps amalgamating the valuations under such circumstances?

The Hon. A. KOUTSANTONIS: God forbid a politician was wrong. We rely on crown law advice, and whatever the intent of the act was the words are the important aspect here and they are interpreted for us independently of what you and I may think or the parliament's intent, and courts and lawyers give us advice. We take that advice and that is the outcome. If the member is not satisfied, move an amendment, but regardless of the intent that is the outcome of that clause.

I want to read out some advice that I have received to you, but I understand your frustration. There are many times I have heard politicians say, 'The outcome will be this' and you have received the legal advice and the legal advice says, 'Yes, draft the bill this way. This will be the outcome.' You use your second reading speech and you say, 'This is what we are intending to do with this legislation,' then it goes off somewhere else and a court says, 'That's a lovely intent you had, but the legislation actually means this,' and that is what has happened.

As much as I have respect for your legal opinion as a standing JP of, I think, nearly 20 years, the reality is we take independent crown law advice, and the independent crown law advice gives the commissioner the ability to do that. The moment that advice changes, he will change his practice. This is not the government attempting to change a law without reference to the parliament. This is advice that was provided incorrectly to the parliament at the time—not intentionally, unintentionally, but the outcome is the examples you have shown to the parliament.

I am advised by the commissioner that section 67 of the Stamp Duties Act 1923 (the act) has always been the subject of some dispute between the commissioner and taxpayers; that is, me, you and him. In 2000, RevenueSA received comprehensive advice in relation to the application of section 67—comprehensive advice. That advice is applied to this day and is the basis upon which RevenueSA has issued its document guide to section 67 of the act.

The advice in 2000 made it clear, I am advised, that it was permissible to refer to Hansard for assistance with the interpretation of an amendment if its meaning is unclear. However, the advice went on to say that Hansard could only be evidence as to what was the intention—which is something I do not like either—of the government but cannot be conclusive as to the amendment's proper meaning. The advice also confirmed that section 67 is not limited to contract splitting and can sometimes apply where the vendors of two parcels of property are not the same. In all cases, the making of an assessment under section 67 requires more than a mere application of a checklist of its features.

The test to be applied is whether in all circumstances there is a relationship or a connection or an interdependence between the transactions that gives them the required unity of purpose, and this makes it necessary to ascertain the intentions of the parties in entering into several contracts. In the objections that the commissioner has been successful in, there has been an additional factor which has served to tip the balance in order to establish the essential unity required for this section to apply.

The commissioner has been successful, for example, in relation to an objection where the vendors were not identical but where the properties in question are intended to be used for a singular purpose. Each matter must be assessed on its own facts and circumstances, however, to ascertain whether the essential unity exists. The commissioner is bound to follow past advice in relation to this issue and must interpret the words of the statute as they stand. So, do not blame the commissioner, do not blame the late Frank Blevins, blame the act, is my advice to the member.

If a taxpayer, your constituents, are dissatisfied with the commissioner's application of section 67, they may seek a review of that decision on objection and then potentially may appeal to the Supreme Court, which is independent of this parliament. I refer honourable members to the RevenueSA Stamp Duty Document Guide which contains a number of useful examples in how the commissioner may treat matters under this section.

The member has resources. He has the ability to draft amendments. If your complaint is on the interpretation of the act or of the words, I cannot assist you. If you want to make it clearer, parliamentary counsel will draft your amendments, you can put them to the parliament—the bill is open—and do so. I understand your frustration, I do, but, unfortunately, it is not the individual's fault, it is not the officer's fault: it is a failure of the legislation to match the intent of the original mover.

Progress reported; committee to sit again.

Sitting suspended from 12:59 to 14:00.