LAND TAX (MISCELLANEOUS) AMENDMENT BILL

Second Reading

Second reading.

The Hon. G.E. GAGO (Minister for State/Local Government Relations, Minister for the Status of Women, Minister for Consumer Affairs, Minister for Government Enterprises, Minister for the City of Adelaide) (16:00): 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.

This Bill contains significant land tax relief measures that were announced as part of the government's 2009-10 Mid Year Budget Review.

The Bill amends the Land Tax Act 1936.

The Government has decided to increase the land tax tax-free threshold from $110,000 to $300,000, adjust the subsequent land tax bracket to between $300,001 and $550,000 and introduce a tax rate for the bracket of 0.5 per cent.

The top band of the following bracket will be increased to $800,000 from $750,000.

The threshold increases and revised tax brackets and rates will provide land tax relief of up to $1,245 for land tax payers.

All land tax payers will benefit from the proposed threshold changes, with approximately 74,500 ownerships no longer liable for land tax in 2010-11.

From 2011-12, all land tax thresholds will be indexed by the average movement in land values from 2011-12 to provide ongoing relief to taxpayers from bracket creep.

The average percentage change in site values for a particular financial year will be determined by the Valuer-General having regard to the Valuation of Land Act 1971 and the Land Tax Act 1936.

On or before 30 June in each financial year (commencing 2011), the Valuer-General will publish a notice in the Gazette setting out the average percentage change in land values and the index value applicable to the land tax year relevant to the adjustment of thresholds.

The Commissioner of State Taxation will, on or after the Valuer-General's notice, publish a notice in the Gazette setting out the adjusted thresholds relevant to the land tax year.

The index value is to be applied to the 2010-11 land tax thresholds, in years from and including 2011-12, only when the index value is higher than all preceding index values, otherwise thresholds remain unchanged. Reductions in thresholds are not permitted.

In addition, this Bill contains measures to provide a land tax exemption for land that is used as a residential aged care facility approved under the Commonwealth Aged Care Act 1997 effective from the 2009-10 financial year.

Currently the Land Tax Act 1936 provides a land tax exemption for not-for-profit associations supplying living accommodation, medical treatment, nursing or other help to persons in necessitous circumstances. Not-for-profit aged care facilities are eligible for a land tax exemption on these grounds. Aged care facilities that are owned privately and conducted on a commercial basis are not currently eligible for a land tax exemption.

This Bill ensures that both profit and not-for-profit organisations that operate approved aged care facilities will be exempt from land tax.

If only part of the land is used for the purpose of residential care for the aged, a partial exemption will be given based on the proportion of the land used for the exempt purpose.

Land tax exemptions for aged care facilities are available in New South Wales, Victoria, Queensland and Western Australia.

The Bill also provides for an exemption from land tax for up to three years in situations where an owner's principal place of residence is destroyed or rendered uninhabitable by an occurrence for which the owner is not responsible or which resulted from an accident. The owner must intend to repair or rebuild the building within a period of 3 years from the date on which the building was destroyed or rendered uninhabitable. An owner will only be eligible to claim one principal place of residence exemption in any financial year.

I commend this Bill to Honourable Members.

Explanation of Clauses

Part 1—Preliminary

1—Short title

This clause is formal.

2—Commencement

The Act will come into operation (or, if necessary, will be taken to have come into operation) at midnight on 30 June 2010. However, certain subsections of section 4, which provide an exemption for land used for the provision of residential care, will be taken to have come into operation at midnight on 30 June 2009.

3—Amendment provisions

This clause is formal.

Part 2—Amendment of Land Tax Act 1936

4—Amendment of section 5—Exemption or partial exemption of certain land from land tax

Section 5 of the Land Tax Act 1936 provides for the granting of exemptions from land tax. Under the section, an owner of land may apply for an exemption or partial exemption from land tax and the Commissioner may wholly or partially exempt the land if satisfied that there are proper grounds for doing so.

Under the section as amended by this clause, there will be grounds for exempting land from land tax if residential premises on the land have been destroyed or rendered uninhabitable by an occurrence for which the owner of the land is not responsible or which resulted from an accident. In order for the exemption to be granted, the Commissioner must be satisfied as to various matters relating to the owner's intentions in respect of rebuilding or renovating, and occupying, residential premises on the land. An exemption under the new provision cannot apply for a period exceeding three years.

Under the section as amended, there will also be grounds for exempting land used for the provision of residential care from land tax. Residential care will have the same meaning as in the Aged Care Act 1997 of the Commonwealth. The Commissioner will be authorised to wholly exempt land from land tax if the whole of the land is used for the provision of residential care by an approved provider (within the meaning of the Aged Care Act 1997). The Commissioner will also be able to partially exempt land from land tax if part of the land is used for the provision of residential care by an approved provider. The partial exemption will be achieved by reducing the taxable value of the land by an amount equal to the value of the part of the land that is used for the provision of residential care.

5—Amendment of section 5A—Waiver or refund of land tax for residential land in certain cases

Section 5A, which provides for a waiver or refund of land tax in certain circumstances, is amended by this clause to make it clear that a person is not eligible for a waiver or refund under the section in respect of land in relation to which the person has had the benefit of an exemption under section 5(10)(ab) (inserted by clause 4) for a period of three financial years immediately before the land becomes the person's principal place of residence.

6—Substitution of section 8

Section 8 of the Act provides that land tax is calculated on the basis of the taxable value of land and includes a table that specifies the amount of tax payable in respect of different taxable values. This clause repeals section 8 and substitutes three new sections.

8—Scales of land tax—2009/2010

Proposed new section 8 specifies rates of land tax in respect of the taxable value of land for the 2009/2010 financial year. The rates specified in the table included in section 8 are the same as those that appear in the current section. The relevant thresholds for determining the rate of land tax payable are as follows:

exceeding $110,000;

exceeding $350,000;

exceeding $550,000;

exceeding $750,000;

exceeding $1 million.

These thresholds will continue to apply only for the 2009/2010 financial year. The thresholds that are to apply for the 2010/2011 financial year will be specified in new section 8A.

8A—Scales of land tax—2010/2011 and beyond

Section 8A specifies rates of land tax for the 2010/2011 financial year and sets out the method for determining land tax in each subsequent year. The amount of land tax payable in respect of land is to be determined by reference to different thresholds. For the 2010/2011 financial year, the thresholds are as follows:

Threshold A = $300,000;

Threshold B = $550,000;

Threshold C = $800,000;

Threshold D = $1,000,000.

For the 2011/2012 financial year and for each subsequent financial year, each of these thresholds is to be adjusted to take into account increases in the site value of land. The adjustments are to be made in accordance with a formula set out in subsection (3). For the purposes of that subsection, the average percentage change in site values for a particular financial year is to be determined by the Valuer-General following the application of certain principles set out in subsection (4).

Under subsection (5), if the application of the principles set out in subsection (4) to determine the Index value for a particular financial year would result in the Index value for that year being less than or equal to an Index value that applied for a previous financial year, the thresholds for the later financial year will not be changed.

Subsection (6) requires publication by the Valuer-General in the Gazette, on or before 30 June in each year, of the average percentage change in site values and the Index value for the following financial year.

8B—Aggregation of land

The provisions of section 8B currently appear as subsections (2) and (3) of section 8. These provisions provide that—

land tax is calculated on the basis of the aggregate taxable value of all land owned by the taxpayer: and

if a taxpayer is liable to pay land tax in respect of land included in more then one assessment, the land tax is apportioned to and chargeable on the land included in the various assessments in the proportions that the taxable value of the land included in each separate assessment bears to the aggregate taxable value of all the land.

Debate adjourned on motion of Hon. J.M.A. Lensink.

At 16:14 the council adjourned until Tuesday 22 June 2010 at 14:15.