Statutes Amendment and Repeal (Budget 2015) Bill

Second Reading

Adjourned debate on second reading.

(Continued from 27 October 2015.)

The Hon. G.E. GAGO (Minister for Employment, Higher Education and Skills, Minister for Science and Information Economy, Minister for the Status of Women, Minister for Business Services and Consumers) (17:59): I would like to make some concluding remarks in relation to this particular bill. I understand that all second reading contributions have been completed. There were a number of questions asked by the Hon. Rob Lucas and I intend to use this time to put on record answers to his questions.

In relation to the LGA seeking consideration of a rebate scheme, I am advised that the bill makes royalty payable on the minerals recovered by councils in South Australia from their borrow pits at a royalty rate of 55¢ per tonne from 1 July 2015, with the first royalty payment due on 31 January 2016. The budget measure aims to neutralise the competitive advantage provided to local councils where private quarries are being priced out of the market in the supply of extractive minerals for council works.

The Mining Act 1971 holds the overarching premise that everything below the subsurface belongs to the Crown and that, only upon the payment of royalty, does the ownership of the minerals pass to a third party (section 18 of the Mining Act 1971). With this in mind, the government's objective is to ensure consistent and equal treatment of the recovery of minerals through the payment of royalty.

Following the announcement, I have been advised that several meetings have been held with the Minister for Mineral Resources and Energy, the Department of State Development and the Local Government Association to discuss the impact of the announcement. In the course of the meetings, it was highlighted that the minister would be open to considering any reasonable proposals based on the premise that all extractions would require the payment of royalty due to the commercial and industrial nature of the use of that material.

I am also advised that, as part of the abovementioned discussions, an agreement in principle has now been reached that effectively allows the budget measure to go ahead, with recognition that in some instances councils that may be disproportionately affected by the change, particularly given their remote location and size of operation, are not disadvantaged in reaching this common sense and practical adjustment. The minister and the department have had extensive discussions with both the LGA and Cement Concrete and Aggregates Australia (CCAA). Once this in-principle agreement has been confirmed by the government, amendments will be moved to effect the required changes.

Further, I am advised that the bill provides an option of an application to waive royalty in accordance with section 17(10) of the Mining Act 1971. Royalty may be waived wholly or in part or at the rate at which the royalty is payable. The rate at which it may be payable may be reduced having regard to the effect of the royalty payment on the viability of the mining operation for the recovery of minerals. I am advised that, where distances from private quarries to the council roadworks are unreasonable, the local council could argue in the affirmative and the minister would consider a waiver of the royalty payable.

In relation to stamp duty changes, I am advised they can be summarised as following. In 1990, section 66AB was amended and renumbered as section 67 of the Stamp Duties Act 1923 by the Stamp Duties Act Amendment Act (No. 2) (No. 33 of 1990) (the '1990 bill'). Debate in the House of Assembly regarding the 1990 bill reveals member concerns with the potential for proposed section 67 of the Stamp Duties Act to capture circumstances where a purchaser acquires property from two independent arm's-length vendors. In response, the Hon. Frank Blevins (then member for Whyalla) stated that the policy intent in amending/introducing section 67 of the Stamp Duties Act was 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.

Upon being presented with the specific issue causing concern and then questioned as to whether the tabled amendments would apply to the circumstances presented, Mr Blevins responded:

Where a person enters into quite separate contracts to buy land—it may be adjoining, but under separate ownership—they are not covered by a proposed new section 67. There are clearly two separate contracts bought from two separate people, and this section would not apply.

Due to Mr Blevins response, an amendment tabled by Mr Stephen Baker, then member for Mitcham, to prohibit the application of section 67 in these circumstances was considered unnecessary.

In the 8 September 2015 sitting of the House of Assembly the member for MacKillop advised the house that he had a constituent who acquired three adjoining properties from arm's-length vendors, to which the Commissioner of State Taxation (the commissioner) applied section 67 of the Stamp Duties Act. In the 9 September 2015 sitting of the House of Assembly the Treasurer, the Hon. Tom Koutsantonis, responded to the member for MacKillop by stating:

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 the clause.

The Treasurer further advised that in 2000 the commissioner received comprehensive advice in relation to the application of section 67 of the Stamp Duties Act. The advice, which reviewed all prior section 67 advices provided by the Crown Solicitor, was requested as RevenueSA required additional guidance in determining when and when not to apply section 67 of the Stamp Duties Act. I am advised that this was triggered by an advice received regarding a taxpayer's objection which at first appear to be an anomaly when compared to previous advice. Clarification was therefore sought by RevenueSA, and the Crown Solicitor undertook a comprehensive review of all section 67 advices in response to RevenueSA's request.

I am advised that the comprehensive advice received is applied to this day and is the basis upon which RevenueSA issued its document guide in 2008. The advice also confirmed that section 67 of the Stamp Duties Act is not limited to contract splitting and can sometimes apply where the vendors of two parcels of property are not the same. In these circumstances the test to be applied is whether, in all circumstances, there is a relationship or a connection or an interdependence between the transaction 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 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. I am advised that 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.

I am advised that additional advices since 2000, received in the course of considering taxpayer objections, have continued to slightly modify RevenueSA's application of section 67 of the Stamp Duties Act, but not so as to prevent the application of section 67 to the circumstances described. It should be noted that the circumstances of concern to Messrs Williams and Lucas are not commonly encountered by RevenueSA when considering section 67 of the Stamp Duties Act. Accordingly, any amendment to section 67 of the act to restrict its application in these circumstances would have very minimal effect on the state's revenue. Given the minimal impact on the state's revenue and the representations made by the government in 1990, the government will consider amending section 67 of the Stamp Duties Act in a similar way to that proposed by Mr Baker in 1990 as part of next year's budget.

In relation to questions asked relating to clause 8, section 13A, I am advised that proposed section 13A(9)(a)(i) in the bill is a restatement of the original provision, except for the addition of 'but does not include an interest consisting of a right to occupation'. This addition was made to address earlier submissions by practitioners concerning the potential for section 13A of the Land Tax Act to apply to life interests, assuming one could value and express the life interest as a percentage.

The submission seems to assume that it is possible to value and express interests such as a life interest as a percentage of interest in the relevant property such that sections 13A(2) and (3) of the Land Tax Act are enlivened. I am advised that the minor interest provisions do not and will not apply to life interests or rights of occupation. The additions to proposed section 13A(9)(a)(ii) in the bill concern trust interests only.

The interests referred to are beneficial and potential beneficial interests. I am advised that an explanatory note was released with the draft Land Tax (Avoidance and Other Matters) Amendment Bill 2014 (which subsequently formed part of the bill) to explain how the provisions will operate with respect to beneficial and potential beneficial interests. The provisions are of an anti-avoidance nature and are thus drafted broadly to accommodate avoidance practices.

Nevertheless, the provisions only apply when a beneficial, potential beneficial or legal (as trustee) interest is expressed as a percentage interest in the relevant trust document or by the registry, the LTO (respectively). There is no intention to attempt to value any other interest that could be considered 'beneficial' so as to assign a quantified percentage to that interest in the property. I am advised that existing sections 13(1) and (2) of the Land Tax Act (in conjunction with definition of 'owner') are the relevant provisions which deal with varying interests in property and to the extent such interests are ownership interests for the purposes of the Land Tax Act.

I am also advised that there have been no issues experienced by RevenueSA to date and any changes to the proposed amendment so as exclude additional interests in property would have no impact on the operation of section 13A of the Land Tax Act. In relation to concern about the requirement of section 13A that one of the purposes of holding the interest is the reduction of land tax, I am advised there are numerous examples where the commissioner has chosen not to apply sections 13A(2) and (3) of the act due to genuine commercial reasons for the creation of the minor interest. These provisions have worked very effectively for a number of years other than in relation to the issues with trusts which are being dealt with in the bill. The thresholds stipulated in sections 13A(2) and 13A(3) of the Land Tax Act are not insurmountable thresholds.

In relation to the question about clause 9—section 19(2), I am advised that the relevant amendments ensure that land tax is treated on par with the other taxes subject to the Taxation Administration Act 1996. The extent of any default is again determined, having regard to the normal definitions of 'reasonable care' and 'deliberate' under the Taxation Administration Act. The proposed provision specifically targets situations where RevenueSA has been misled through the provision of incomplete information with respect to exemption applications.

In relation to questions asked about clause 10(3)–Retrospective Operation of section 13A, I have been advised that amendments to section 13A of the Land Tax Act ensure the original policy intent of the section is maintained. The amendments fix a loophole in the provisions which in RevenueSA's experience has been exploited. The operation of the amendments is consistent with the retrospective operation of section 13A of the Land Tax Act when it was introduced in 2008-09 financial year. To do as suggested would render amendments ineffective and meaningless as existing trust structures would continue to avoid aggregation.

In relation to questions asked about part A–Amendments of the Stamp Duties Act 1923, I am advised proposed part 4AA to be inserted into the Stamp Duties Act will provide an exemption for transactions in which a person acquires a prescribed interest or increases such an interest in a land holding entity from another member of the same corporate group and which would otherwise give rise to duty under part 4 of the Stamp Duties Act.

The exemptions provided at sections 102G(3) and (4) of the Stamp Duties Act are to be repealed, as they are most likely to apply to the same transactions to which the proposed part 4AA exemption applies, but are not subject to the same eligibility criteria. The provisions are not necessary and only contribute to confusion as to how the Stamp Duties Act should be interpreted. I am advised that the discretions in sections 102G(3) and (4) of the Stamp Duties Act have never been needed.

To the extent that other intragroup transactions give rise to duty under part 4 of the Stamp Duties Act and it is obvious that the incidence of duty is harsh in the circumstances, the Treasurer retains the discretion to provide stamp duty relief on a case by case basis. Given the breadth of the exemption in proposed part 4AA, this is unlikely to occur.

In relation to the question relating to clause 24, Corporate reconstructions, I am advised that the definition of 'hold' in proposed section 102H(1) includes references to a person controlling the exercise of rights attached to the property.

I am advised that in this context a person controls the voting rights attached to property, such as shares, if they have the power to check, restrain or govern how the votes are used. A shareholder of a company may agree in a contract to exercise the voting rights in a particular manner for the benefit of another person.

A company can issue different classes of shares. The rights and restrictions attached to shares in a class distinguish it from other classes. The commissioner and parliamentary counsel are comfortable with the drafting as it stands. This is a conjunctive 'and' and this is consistent with the collation intended to operate as 'hendiadys' or at least something similar.

In relation to the proposed section 102H(2) using 'and' at the end of each paragraph, I am advised that the use of the word 'and' in section 102H(2) is a drafting preference of the parliamentary counsel. The frequent use of the word 'and' does not give rise to any interpretive issues.

In relation to the question about a member of a partnership having a proportionate interest, I am advised that in determining the proportionate share of a partner and partnership assets, the commissioner will take into account the terms of any partnership agreement and any instrument effecting a change of partnership which clearly stipulates each partner's proportionate share. The guidance provided by the Stamp Duty Land Holder Guide to Legislation, which addresses equivalent provisions in part 4 of the Stamp Duties Act will be followed when determining partnership proportionate shares. Any guide issued in relation to the operation of proposed part 4AA will provide similar guidance in relation to partnership proportionate shares. This is not a new concept.

In relation to the question about section 71E applying to a particular transaction, I am advised that section 71E of the Stamp Duties Act applies to a transaction which results in the change of ownership of a legal beneficial interest in land. Such transactions that involve conveyance of land from a member of a corporate group to another member will be exempt transactions if proposed part 4AA applies. The commissioner and parliamentary counsel are comfortable with the drafting as it stands.

In relation to the question about commissioner exemptions, I am advised that as an exemption provided by the commissioner may be revoked, it is important that any instrument that gives effect to, acknowledges, evidences or records the transaction exists.

In response to the question about duties being paid on an assessment, I am advised that the provisions of the Taxation Administration Act clearly provide a mechanism for the provision of a refund of duty in the event that the commissioner provides an exemption to a transaction under proposed part 4AA on instruments where stamp duty has been paid. I am further advised that there is no entitlement to interest on any refund where the duty has already been paid. Applications for an exemption under proposed part 4AA of the Stamp Duties Act can be made at any time before the transaction and within 12 months after the transaction. Timely applications for an exemption can preclude the payment of any duty.

In relation to the question regarding the five-year period proposed by this bill, the government agrees that extending the period of application for the proposed corporate reconstruction exemption to five years from the date of the transaction ensures consistency with the commissioner's reassessment powers under section 10 of the TAA and other rights of refund under the act. Amendments will be moved to give effect to this.

The Hon. Rob Lucas asked what was the position with respect to already stamped documents and how this provision might apply. I am advised that for corporate group restructure transactions that have been completed before an application for exemption is made, the instruments that give effect to, acknowledges, evidences or records transactions are submitted with the application. If the commissioner is satisfied that proposed part 4AA applies to the transaction, the commissioner must assess any relevant instrument. The application form provides guidance in relation to the submission of executed instruments.

Questions in relation to section 102M(5) being extended to the statements to be brought into existence under section 71E and under part 4: I am advised that section 71E of section 102B statements are considered to be within operation of proposed sections 102M(5). In relation to questions about the words 'asset' and 'property', the government agrees that consistent use of the term 'property' is preferable to alternate use of the term 'assets', at proposed sections 102H(2)(c) and 102K(d), and amendments will be moved to that effect.

In relation to the provisions applying to companies limited by guarantee and Indigenous corporations, I am advised that the provisions do not apply to corporate groups involving companies limited by guarantee or Indigenous corporations established under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Commonwealth) unless those corporations are the ultimate parent corporation of the restructuring corporate group. This is because such bodies are not organisations with issued capital that can be subject to acquisition, and as such they cannot form part of a corporate group as defined in the bill.

In relation to the question on clause 25, definition of land, I am advised that a leasehold interest does not fall within the proposed definition of 'land' as an interest in land, much like a lease constitutes a land asset for landholder purposes. Generally speaking, a lease has nominal value, and assignment transfer of such would be stamped by the commissioner with the nominal stamp duty. However, ad valorem stamp duty may be imposed on the assignment transfer of a lease or an interest in a lease in the following circumstances:

when section 64 of the Stamp Duties Act applies;

for longer term leases, which in any event generally include consideration for the assignment/transfer of the lease and thus would be subject to section 64 of the Stamp Duties Act; and

when the landholder provisions apply.

Revenue SA reserves the right to seek the opinion of the Valuer-General should Revenue SA suspect the assignment/transfer of a lease possesses a more significant market value (that is, above nominal).

It is the government's intention that an aquaculture lease granted under the Aquaculture Act 2001 (SA) should not be included in the definition of land. It is therefore agreed that such leases should be expressly excluded and amendments will be moved to give effect to this. I am advised that the commissioner will not assess the transfer of a commercial lease for nominal consideration by reference to the value of any prescribed goods.

In relation to leases of commercial properties being exempt after 1 July 2018, I am advised that amendments to exclude leases of less than five years would prevent the capturing of premiums paid for the assignment of such leases, and has the potential to create a loophole in the Stamp Duties Act.

In relation to the question asked on clause 26, instruments to be separately charged: I am advised that the amendments to section 14 of the Stamp Duties Act seek to amend that the instrument that conveys multiple items of property—some items exempt, some items taxable at ad valorem rates and/or some items taxable at 'phase out rates'—can appropriately be stamped.

In relation to the question: what does type of property mean, I am advised that the use of the word 'type' must be read in conjunction with its surrounding words, which add clarification to the type of property to which the section relates. The type of property targeted is property that is dutiable at ad valorem rates, property that is dutiable at a discounted rate, and property that is exempt or not taxable. 'Type', therefore, refers directly to the dutiable treatment under the Stamp Duties Act.

I am further advised that the purpose of this provision is to ensure that taxable property can be treated differently to non-taxable property when conveyed by the same instrument. Notwithstanding this, the government agrees that different terminology should be used to describe the property targeted by proposed section 14(2), and the appropriate amendment will be moved.

In relation to the question raised regarding calculating stamp duty, I am advised that to calculate stamp duty on a conveyance of units in a unit trust scheme which holds land including South Australian land, the net value of the South Australian land will be ascertained. In determining the net value of the South Australian land held in a unit trust scheme the commissioner will deduct from the market value of the South Australian land any liabilities which relate to the land. The primary example of a liability that will be deducted from the value of the land is a mortgage secured against the land. Business or commercial loans which are not secured over any assets of the trust will be apportioned in accordance with the value of each asset.

Questions in relation to the proposed section 14(2), the use of the word 'or' between 'an instrument relating to types of property': I am advised that proposed section 14(2) can be applied multiple times to the situation described. An example: assume an instrument which conveys a property dutiable at full ad valorem rates, property which is chargeable at a phase-out discounted rate and property which is exempt. The words 'type of property chargeable with duty and type of property not chargeable with duty' would apply to split the instrument into two separate instruments.

The exempt item of property now being in one instrument and the two chargeable items of property in the other instrument. The words 'type of property that are chargeable with different rates of duty' can be applied to the instrument with the remaining two chargeable items of property, the result being that three instruments notionally exist in order to apply different stamp duty treatments. Parliamentary counsel is comfortable with this drafting. Given the hour of the day I seek leave to have the rest of my summing-up incorporated into Hansard without my reading it.

Leave granted.

In relation to the question asked regarding Clause 27—Section 31 Amendments. I am advised that the Commissioner's Revenue Ruling SDA008[V3] makes it clear that RevenueSA has always interpreted the 'date of the sale' to mean the date the property in question is conveyed or transferred. In the context of real property, this has meant that the 'date of the sale' is the date the Memorandum of Transfer is executed. Therefore, whether in the case of a conveyance on sale or in any other case, the 'date of the conveyance' has been the only date used by RevenueSA when determining the market value of property.

To resolve any potential ambiguity regarding the application of section 60A(1) of the Stamp Duties Act, the Bill seeks to retrospectively amend this section to confirm RevenueSA's long-standing interpretation. Taxpayers are therefore not adversely affected by the retrospective application of these amendments, especially given that, in RevenueSA's experience, most taxpayers have relied and acted on the advice in Revenue Ruling SDA008 [V3].

In relation to the statement that the proposed section 31(2){a} refers to the value being greater than the consideration specified in the contract. It should refer to the value of the interest under the conveyance being greater than the consideration expressed in the contract or the value of the property if the Commissioner has assessed the contract on that value under section 31(1b).

The Government agrees and will move an amendment to address the issue.

In relation to the question asked regarding Clauses 31 and 40—Section 67, I am advised that the insertion of section 67(5) into the Stamp Duties Act is taken to have occurred from the date of the Budget announcements (18 June 2015). Proposed section 67(5) could be considered to have retrospective effect assuming an instrument which forms part of a series of instruments is executed after 18 June 2015. In circumstances where the phase-out of stamp duty has not commenced, this 'retrospective' application has no adverse effect on taxpayers. Proposed section 67(5) ensures that a consistent rate of stamp duty can be imposed on an aggregated market value where a series of transactions straddles phase out dates.

The proposed retrospective amendment of section 67(2)(b) is complimentary to the amendment made to section 60A of the Stamp Duties Act. The policy for the retrospective amendment of section 60A of the Stamp Duties Act is covered elsewhere in this response.

In relation to the question asked regarding Clause 32—Repeal of Section 71B I am advised that the exemption contained at section 71B of the Stamp Duties Act is an archaic one that has led to a considerable amount of tax avoidance. As there is no policy basis on which family members should receive such beneficial stamp duty treatment, it is considered appropriate that this exemption be removed.

In relation to the question asked relating to Part 9—Amendments to the Stamp Duties Act 1923, clause 38, I am advised that the defined term 'dutiable land transaction' is a stylistic drafting preference of Parliamentary Counsel and the Government is comfortable with the current drafting. No explanation has been provided as to why the suggested alternate definition should be adopted.

In relation to the question asked regarding the proposed section 104B(2), I am advised that the proposed section 104B(2) in the Bill ensures the continued unimpeded operation of the land holder provisions and section 71(3) of the Stamp Duties Act (whether relating to unit trusts or not). This is why the proposed section does not merely refer specifically to the circumstances suggested. The provision is to be inserted out of an abundance of caution to ensure that other provisions within the Stamp Duties Act which impose stamp duty on interests in land are maintained.

With respect to issues raised in relation to section 104B(4) I am advised that it is considered that proposed section 104B(4) in the Bill adequately lists business assets which are exempt from stamp duty as of 18 June 2015. These excluded assets mirror those listed in section 91(1) of the Stamp Duties Act. I am advised that the operation of the landholder provisions and proposed sections 104A to 104F in the Bill with respect to goods will be identical. However, the Government agrees that the wording in proposed sections 1048(4) and 91(1) with respect to prescribed goods should be more closely aligned. An amendment will therefore be moved in that regard. The definition of 'primary production' can be adequately gleaned from general concepts. The definition of 'business of primary production' in section 2(1) is needed for section 71CC of the Stamp Duties Act for example.

In relation to questions asked regarding Clause 39—Section 109, I am advised that it was considered appropriate to provide a specific anti­avoidance provision in connection with proposed sections 71DC and 105A rather than amend Part 6A of the Taxation Administration Act given that it will only be required for the next three years. Part 6A of the Taxation Administration Act should not be referring to specific tax heads under specific transitional circumstances when it was designed to be a generic anti­avoidance provision for all tax heads.

In relation to Clause 40—Transitional Provision I am advised that similarly, for the reasons given above, retrospective effect is warranted.

In relation to the question raised about the proposed amendment to section 60, I am advised the proposed beneficial amendments to section 60 of the Act ensure that voluntary dispositions inter vivos are not taxable under any other provision of the Stamp Duties Act where the exemptions in section 71(5) of that Act apply. There is no need to limit the provisions which actually charge instruments stamp duty.

In relation to issues raised relating to Clauses 42, 43 and 49, I am advised that, with respect to the issues raised, the Crown Solicitor consistently advised as early as 1990 (and most likely earlier, however, record keeping has prevented earlier searches by RevenueSA) that it is the date of actual conveyance and not the contract date which is relevant for calculating stamp duty. This long held position was never successfully challenged by a taxpayer on objection nor, more to the point, taken on appeal by any taxpayer. This is notwithstanding claims in this House that RevenueSA's position was clearly wrong at law and contrary to the history of the Stamp Duties Act which has been described. Accordingly, the position of RevenueSA was widely known, accepted and applied by taxpayers, since at least 1990 and probably earlier.

In any event, in more recent advice from the Crown Solicitor dated 14 August 2013, that long held position was called into question. Due to the potential resultant revenue impacts should that long held position be abandoned, the Treasurer obtained Cabinet approval on 16 December 2013 to amend the Stamp Duties Act retrospectively. On 19 December 2013, the Commissioner released Revenue Ruling SDA008 which stated:

'RevenueSA has always interpreted the 'date of the sale' to mean the date the property in question is conveyed or transferred.

In the context of real property (or land), this has meant that the 'date of the sale' is the date the Memorandum of Transfer is executed.

Therefore, in all situations, whether in the case of a conveyance on sale or in any other case, the 'date of the conveyance' has been the only date used by RevenueSA when determining the market value of property.

To resolve any potential ambiguity or disagreement regarding the application of Section 60A(1) of the Act, Cabinet has approved the drafting of retrospective amendments to this section that if passed into law will confirm and reflect RevenueSA's long-standing interpretation of this section.

To give effect to this Cabinet approval, suitable legislative amendments would need to be approved by Cabinet and then introduced into and passed by Parliament.

If such amendments are passed into law, instruments subsequently found to have been processed via RevNet using an alternative interpretation of this section will be assessed appropriately."

I am advised that, at the time, it was envisaged that if the Crown Solicitor's new interpretation of section 60A of the Stamp Duties Act was adopted, this would encourage illegal but hard to detect exploitation of the new interpretation by taxpayers and/or their representatives, particularly by means of back-dated contracts/agreements or contrived long-term settlements between non-arm's length parties.

In response to issues relating to Retrospective Operation—Penalties and Interest I am advised that given RevenueSA's position was widely known, accepted and applied by taxpayers, RevenueSA moved quickly to ensure taxpayers were clearly aware of RevenueSA's position on any alternative interpretations of the Stamp Duties Act. Accordingly, taxpayers that chose to self-endorse conveyances on the value of property as at the date of contract would have chosen to disregard RevenueSA's published position.

As advised by RevenueSA in SDA008[V3], instruments subsequently found to have been processed via RevNet using alternative interpretations of the relevant sections will be assessed appropriately, with interest and penalty tax only applying to any such instruments processed via RevNet on or after 18 June 2015. That is, instruments self-endorsed clearly in contradiction to RevenueSA's published position post 18 June 2015.

In relation to Part 11—Stamp Duties Act 1923, I am advised that the Commissioner intends to rely on the Valuer General's land use codes to provide certainty to taxpayers. If a taxpayer disagrees with the Valuer General's assigned land use code and the Commissioner's reliance on the same, the taxpayer can object to the Commissioner's determination.

In relation to the proposed section 71DC(2) and the use of the expression 'after taking into account information provided by the Valuer-General'. I am advised that the suggested amendment proposes including an explicit discretion for the Commissioner which does not seem to provide any further clarity, especially given the words 'appropriate in the circumstances' would elicit interpretation issues and provide a point of contention. It is clear the intent is to rely on the Valuer-General's land use codes. If a taxpayer disputes a determination by the Commissioner as to land use, the taxpayer may exercise their rights of objection and appeal.

In relation to the issue raised about the classification to be determined at the time of the conveyance not the date of the contract of sale. In view of the difficulties described above about what is the relevant date, this should be explicitly stated. The Government agrees with this submission and will move an amendment to rectify the issue.

In relation to the question about how broad acres under development for sale as residential allotments are to be classified, I am advised that tl1e land use determination will be made at the date of conveyance.

In relation to the question raised relating to Part 12—Stamp Duties Act 1923, I am advised that following the first reduction in conveyance duty for non-residential property on 1 July 2016 South Australia will have some of the lowest conveyance duty rates for non-residential property in the nation. When duty is abolished from 1 July 2018 South Australia will be the only State to not levy duty on non-residential real property transfers providing a significant competitive advantage. This will make South Australia a very attractive place to invest and should lead to an increase in transactions.

I am advised that the phased abolition of conveyance duty on non-residential property was introduced following advice from experts in the property sector about the potential impact on the market. The three year phase out reduces the potential for market disruptions, although there may be some delays just prior to a phased abolition date.

The Treasurer has also previously stated that he reserves the right to bring forward the phased abolition dates should there be any adverse impacts on markets.

In relation to the statement regarding Part 13—Supreme Court Act 1935, I am advised probate Fees exist is each state and I'm advised the introduction of a tiered fee is consistent with similar arrangements in New South Wales, Tasmania and the Australian Capital Territory.

In relation to Part 14—Taxation Administration Act 1996, I am advised that as a matter of policy these decisions are considered non-reviewable to avoid the escalation of disputes as a strategy to avoid paying the relevant tax. Taxpayer's can potentially lodge appeals as both a strategy to procure a settlement from the Commissioner (without ever intending to dispute the matter before a Court) and to provide more time for the taxpayer to meet the outstanding liability.

I am further advised that in matters where a taxpayer lodges an appeal to the Commissioner's assessment/decision or the Treasurer's determination on objection and 50 per cent of the tax in dispute is paid, it will be the Commissioner's policy that no further interest accrues and action to recover the remaining outstanding debt will not be taken until any appeal is determined. Where required, RevenueSA will however take some form of action to protect its interests such as placing a charge or caveat over property.

Bill read a second time.