Stamp Duties (Transfers Exemption) Amendment Bill

Introduction and First Reading

Mr WILLIAMS (MacKillop) (10:47): Obtained leave and introduced a bill for an act to amend the Stamp Duties Act 1923. Read a first time.

Second Reading

Mr WILLIAMS (MacKillop) (10:47): I move:

That this bill be now read a second time.

Last year when we were debating the Statutes Amendment Repeal (Budget 2015) Bill, there was, indeed, in that repeal bill an amendment to the Stamp Duties Act. I utilised the opportunity in that debate to bring to the house's attention a matter which had been raised with me by one of my constituents. I have been through it fairly extensively, but I am going to go back through it, because now I am presenting a bill to the house not only to redress the ill that I believe has occurred but also so that the Stamp Duties Act 1923 would, indeed, reflect what this house was told it would do back in 1990 by the Hon. Frank Blevins, who was then the minister of carriage of amendments to the bill at that time.

Briefly, section 67 of the Stamp Duties Act allows the Commissioner of Stamps to amalgamate separate instruments of transfer of property for the purpose of assessing the stamp duty payable. The reason this is done is because when you transfer property the scale of the stamp duty or the rate of the stamp duty payable increases with the gross value of the property being transferred. So if you transfer a property with a value of, say, $1 million, the rate of stamp duty on that may well be less than what it would be if the value of that property was $2 million.

Apparently, historically, and particularly with farming land, this would potentially happen quite regularly where a farming property consisted of a number of titles (which is not uncommon) and the vendor decided to sell it, he would sell or conveyance each of those titles separately and they would therefore attract a lower rate of stamp duty on these individual transactions than they would if they were treated as one whole transaction.

Apparently, this had become a reasonably common practice and I understand that, back in 1975, the Stamp Duties Act was amended to give the Commissioner of Stamps the powers, notwithstanding that separate instruments were being utilised, to amalgamate those instruments for the sake of assessing stamp duty payable and assessing the stamp duty on the total value of the instruments and, therefore, the state getting the return which it would have expected on the transfer of that particular property.

Later, it became evident that the same thing was happening with other properties. In 1990, the then minister (Frank Blevins) brought some amendments to the house, and I refer the house to page 686 of Hansard of 21 March 1990 where Frank Blevins said:

Section 66ab—

which was the number in a previous act—

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.

He brought this amendment to make the same section of the act applicable to these other businesses. Stephen Baker was the opposition spokesperson at the time. When he moved an amendment to clarify section 67 he said:

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.

For Hansard's benefit, I am quoting from the Hansard at page 2386 of Wednesday 9 September. Frank Blevins, on behalf of the government at the time, told the house that the government would not accept the amendment and, in doing so, told the house:

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 would not apply in the future. It has never been and will not be a problem 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.

Well, hello, Deputy Speaker: roll forward a few years and, indeed, what was told to the parliament at that time is not the way that the Commissioner of Stamps has been interpreting section 67, I believe, ever since the year 2000.

I raised this matter with the Treasurer, as I said, in the debate on the Statutes Amendment and Repeal (Budget 2015) Bill, and the Treasurer informed the house that, indeed, in the year 2000, RevenueSA received comprehensive advice in relation to the application of section 67. 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. That guide tells conveyancers that, for the purposes of section 67, notwithstanding that there might be two separate vendors involved in a transaction, they would be amalgamated for the sake of assessing stamp duty.

I think this is a travesty. The house was clearly told that this would not be a problem. The house, when it was voting on the amendment, was clearly of the opinion that this would not be utilised in this manner. In fact, I somewhat question this, because apparently the advice came from crown law, and I would have thought that if crown law was asked a question about the interpretation of a piece of legislation, somebody fully trained as a lawyer and working for crown law might have been at least as adept as I was in going back and finding the source, the Hansard description, and having a look at that and saying, 'What did the house intend?' And that is exactly what I did. It was not that difficult. If I could do it, I would have thought that a trained lawyer in crown law should have been able to do it before morning smoko.

Notwithstanding that, we have had this crown law opinion given to Revenue SA and it seems that ever since then this is the way that section 67 has been interpreted. The Treasurer defended the officers, certainly in his department, and I expect that he was referring to crown law as well, where he said, '…rather than pour scorn on people who cannot defend themselves', well, might I say, I think that the actions of crown law in this matter are indefensible, so I do not know why they would even try to defend themselves.

In my opinion it is quite clear that if we come in here and we pass a piece of legislation and we question it to the point where the opposition—and it does not matter who is in government—raises a pertinent point, to the point where it proposes an amendment simply to clarify and the minister representing the government says, 'No, no, no, you don't need to do that. I assure the house that the intent is not to capture this particular circumstance', and the house goes on and passes the bill, I would have thought that crown law should interpret that as being what the parliament intended. I would have thought so. So, I am disappointed with the Treasurer, who went on to say:

I think the solution for the member for MacKillop is to write to me. I will have a look at it.

He also said:

You have done yourself a lot of favours by calling us dishonest.

Well, I did not call anybody dishonest. I did question how honest was a Labor government and a minister giving a position to the parliament at one point in time and whether the government would back up that position into the future. The minister said:

I will look at it over the next few months, but public servants are only implementing this in the way they are advised. They are not trying to rewrite the laws.

Well, they have rewritten the laws. That is the reality. Crown law in this matter has rewritten the law. That is the reason I bring this matter to the parliament. It is a simple bill that I propose, and all it would do would be to reinstate the interpretation that the parliament was led to believe with respect to section 67 of the Stamp Duties Act, and that interpretation is that, if two separate vendors sell two separate properties (notwithstanding the same purchaser advised them), the stamp duty would be assessed separately on those transactions.

I need to tell the house that my constituent bought, indeed, four properties, four farms, which are adjoining. Now, there might be roads between them, etc., but they are neighbouring farms. He bought them as four separate transactions from four independent vendors. It just so happened that they all came on the market at around about the same time.

Indeed, when he bought the first three, the fourth vendor through his agent contacted the purchaser and said, 'Is this purchaser interested in buying another property, because I'm interested in selling mine as well?' So, the purchaser bought these four properties and Revenue SA has amalgamated the value of all four of them for the purpose of assessing stamp duty, and this has cost my constituent considerably more money than what he would otherwise have been due to pay.

The reality is, if those four properties were one property and the transaction occurred as one transaction, as one deal to buy a much larger property, I can assure the house that the value would have been less. It is pretty common knowledge in the farming community that, if you buy a block of farming land that is a thousand acres, you will get it at a price per acre less than what you would if you bought a block of land in the same area of only a hundred acres. The simple reason is supply and demand. There are a lot more intending or potential purchasers to a small block than there are to a large block.

The reality is that, if those four farms were one farm, the total price would have been less and the total stamp duty payable would have been less. I believe the state has already got a bit of a windfall gain through that series of transactions, because they were sold as four separate farms. But, no, in spite of what the parliament believed it was doing, the Commissioner for Stamps has amalgamated all four. He says, 'The reason I have done this is because of the unity of purpose. The purchaser had a unity of purpose for each of the transactions.' For goodness sake, they are all broadacre farming land, and that is the same purpose that those four farms are being used for today.

I wrote back to the Treasurer after he wrote declining to help my constituent and pointed out to him that I can see there being an argument—but it has not been brought to the parliament—where somebody bought two adjoining properties, particularly with the intent of amalgamating them and utilising them for something which they could do on the two amalgamated properties that they could not do on them individually, say because of their physical size. I can understand there being an argument that the commissioner may want to have the power to look at the way stamp duty would be assessed in that instance, but that is not an argument that has been thrashed out in this parliament.

The reality here is that this situation has occurred in spite of the best efforts of this parliament. I bring this matter to the house simply to clarify section 67(2) and add another caveat to that section, which would particularly preclude, where there are two separate vendors and two separate conveyancers, the value of those properties being amalgamated for the purpose of assessing stamp duty. All I am trying to do is fix up something which should have been fixed up back in 1990. I commend the bill to the house.

Debate adjourned on motion of Hon. T.R. Kenyon.