STAMP DUTIES (TRUSTS) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 17 June 2008. Page 3309.)

The Hon. G.E. GAGO (Minister for Environment and Conservation, Minister for Mental Health and Substance Abuse, Minister Assisting the Minister for Health) (23:25): I thank the Hon. Russell Wortley and the Hon. Rob Lucas for their contributions to this most important bill.

During the second reading stage, the Hon. Rob Lucas asked when the Treasurer was first advised by RevenueSA. I am advised that the Treasurer was first advised in September 2006. Advice to the Treasurer was not provided prior to this time on the basis that the decision was a Victorian land tax case and the commissioner was not initially concerned that the CPT case would have any impact on stamp duty in South Australia. It was only in June 2006, following the WA decision applying it to stamp duty, that the potential implications became apparent.

In answer to the Hon. Rob Lucas's question in relation to when were the objections lodged against the assessment of stamp duty, I am advised that there have been no objections lodged in relation to the CPT case, but 25 objections were lodged in relation to exemption 26 between February 2004 and February 2008, and the total stamp duty in dispute in these matters is approximately $900,000.

In response to the question: 'So, what was the total at-risk revenue', etc. (it is quite a lengthy question, so I will not read the whole question if that is okay), I am advised that there is significant revenue at risk if the amendments are not passed, given that unit trusts are a commonly employed means to hold high value property, such as office buildings and shopping centres. The Treasurer was first advised on 1 September 2006. A Commissioner's Circular announced in December 2006 the intention for retrospective legislation to be enacted. It is considered that there has been minimal revenue leakage, given the announcement that the position has been accepted by industry and that no objections have been received as a result of the High Court case. The decision has no impact on the land rich provisions of the Stamp Duties Act.

In relation to the question: 'On what date after 28 September 2005 did the Crown Solicitor advise the commissioner', etc., I am advised that the Crown Solicitor's advice was provided to RevenueSA on 29 August 2006 and the Treasurer was advised on 1 September 2006.

In relation to the question: 'I understand there was no consultation with the industry in relation to the legislation', etc., I am advised that detailed consultation was undertaken with industry in relation to all the matters in this bill, other than the exemption 26 amendment, which is closing a loophole.

In response to the question, 'I seek confirmation that the government did not consult any individual', I refer the honourable member to my previous answer in this regard. In relation to the question, 'I also seek a response from the Treasurer specifically in relation to the issues that were identified as "at risk",' the response is as previously advised. The CPT case dealt with the Victorian land tax provisions. The commissioner was not initially concerned that the CPT case would have any impact on stamp duty in South Australia. It was only in June 2006 following a WA decision applying to stamp duty that the potential implications became apparent.

In response to the question, 'I also ask particularly in these areas as to whether the government had any other legal advice at any time', I am advised that the legal advice on the CPT issue was provided by the Crown Solicitor and Solicitor-General and this advice confirmed that the private unit trust provisions required amendment but the land rich provisions did not. No other advice was sought or received in this matter other than comments provided by industry through the consultation process.

In response to that question, 'I also seek advice from the Treasurer regarding the extent of revenue at risk should parliament not confirm these provisions', I am advised that it was not possible to quantify the revenue risk and no figure was included in the cabinet submission. However, the risk to revenue would be high if the amendments are not passed.

In response to the question, 'Regarding the objections I also ask what, if any, position has been arrived at in terms of people who have lodged objections', I am advised that there have been no objections lodged in relation to the CPT case and no arrangements have therefore been made. The provisions will operate to ensure that they continue to apply in the same way that they did prior to the CPT decision in the High Court.

In relation to the question, 'My questions to the commissioner through the minister are as follows: first, have I understood what the second reading explanation is trying to tell us as legislators is the nature of the issue here', and there is a second question following that as well, I understand that this relates to the following part of the second reading explanation and I quote:

...the bill amends section 71(5)(e) to exempt from ad valorem duty distributions from unit trusts or transfers of property to superannuation trusts to the extent of the value of the unit holder's or fund member's interest in the trust.

I am advised that the honourable member has understood the second reading explanation correctly in relation to the nature of this issue. The advice of the Crown Solicitor was sought in this matter after senior RevenueSA officers questioned how the relevant provisions should be interpreted. The Crown Solicitor advised in May 2002 that the 2000 amendments had unintended consequences in relation to which the honourable member referred.

Since that time exhaustive consultation was undertaken with industry in order to remedy the problems that the amendments created. As already conceded by the honourable member, this is a complicated area of law and negotiations between RevenueSA and industry have been protracted as care needed to be taken so as not to provide any greater or lesser exemption than that which is intended.

As indicated in the second reading explanation, the commissioner has continued to provide the exemption in the circumstances intended by parliament, that is, the status quo position prior to the decision in the MSP case. That is, the commissioner has interpreted the relevant section broadly in favour of taxpayers pending legislative clarification of the issue. In the intervening period, further issues have arisen in relation to the operation of the private unit trust provisions and the government considered it was better to deal with them in the same bill at one time.

Whilst the government acknowledges that resolution of all these issues in this area has taken some time, it is of the view that the current bill should be passed in order to finalise the issue. In response to the question, 'Will the commissioner also indicate what level of stamp duty is covered by this particular area', I am advised that it is not possible to quantify the figure as records are not kept in this regard. I look forward to the bill's quick passage through the committee stage.

Bill read a second time.