Budget Measures Bill 2017

Introduction and First Reading

Received from the House of Assembly and read a first time.

Second Reading

The Hon. K.J. MAHER (Minister for Employment, Minister for Aboriginal Affairs and Reconciliation, Minister for Manufacturing and Innovation, Minister for Automotive Transformation, Minister for Science and Information Economy) (17:08): I move:

That this bill be now read a second time.

I seek leave to have the second reading speech and explanation of clauses incorporated into Hansard without my reading it.

Leave granted.

The Budget Measures Bill 2017 (hereafter, the Bill) contains measures relating to the Government's budget initiatives for 2017-18 and amends the First Home and Housing Construction Grants Act 2000, Land Tax Act 1936, Payroll Tax Act 2009, Stamp Duties Act 1923, and the Taxation Administration Act 1996.

This Bill amends the First Home Owner and Housing Construction Grants Act 2000.

Grants—$10,000 for off-the-plan apartments

The Bill amends the First Home and Housing Construction Grants Act 2000 to provide a $10,000 grant for eligible purchases of off-the-plan apartments where the contract is entered into while the development is still at the pre-construction stage. The $10,000 grant is only available for eligible contracts entered into between today (22 June 2017) and 30 September 2017 (both dates inclusive).

All other eligibility criteria applying to the off-the-plan stamp duty concession scheme included in the Stamp Duties Act 1923 will also apply to the grant, including that the grant will not be available to foreign purchasers.

Where a $10,000 grant is paid and the applicant is later found not to be eligible, the existing recovery provisions within the First Home and Housing Construction Grants Act 2000 will be extended to apply to the recovery of the $10,000 grant.

Grants—Penalty Appeal Rights

The First Home and Housing Construction Grants Act 2000 will also be amended to enable grant recipients to object and appeal against penalty charges that may be applied by the Commissioner of State Taxation where the grant recipient is, subsequent to the grant being paid, found to be ineligible for the grant in question. This aligns the objection and appeal rights for grant recipients to the rights that generally apply to taxpayers.

Grants—Recovery and Charges on Land

A technical amendment to the First Home and Housing Construction Grants Act 2000 will also be made to ensure that any grant which is recoverable will be a first charge on the land to which the grant was paid, irrespective of whether a home was completed on the land or not. Currently, the charging provisions only apply to 'homes' and not land upon which the applicant failed to build a home as required.

Land tax exemption—off-the-plan apartments

The Bill amends the Land Tax Act 1936 to provide for land to be exempt for five years where that land was subject to an off-the-plan stamp duty concession granted with respect to a contract entered into between today (22 June 2017) and 30 June 2018. If the land is on-sold by the recipient of the off-the-plan stamp duty concession during the five year exemption period, the land tax exemption will not transfer to the purchaser of the land.

Eligibility criteria for the exemption are the same as those that apply to the off-the-plan stamp duty concession scheme included in the Stamp Duties Act 1923, including that the exemption will not be available to foreign purchasers.

Introduction of the Major Bank Levy Act 2017

As part of the Budget's revenue initiatives, the Government will introduce a major bank levy from 1 July 2017.

The levy will apply to all authorised deposit-taking institutions (ADIs) that offer services in South Australia and are liable for the Commonwealth Government major bank levy.

The levy will supplement and leverage off the Commonwealth major bank levy. The amount payable under the State levy will be 0.015 per cent of South Australia's estimated share of the total value of bank liabilities subject to the Commonwealth major bank levy at the end of each quarter.

Under the legislation South Australia's estimated share of relevant bank liabilities will be determined as South Australia's gross state product share of national gross domestic product (currently around 6 per cent).

The timeframes for reporting and payment will align with the timeframes required for the Commonwealth Government's major bank levy.

Levy liabilities for the first quarter will be based on the total value of relevant bank liabilities as at 30 September 2017, but the first levy payment will not be due until 21 March 2018.

Payroll Tax—Tiered Rate Structure

The Bill amends the Payroll Tax Act 2009 to introduce a tiered payroll tax rate structure from 1 July 2017.

Under the structure, the payroll tax rate applying to small and medium sized businesses with annual Australian taxable payrolls of between $600,000 and $1 million will be lowered from 4.95 per cent to 2.5 per cent. The payroll tax rate will then phase up from 2.5 per cent to 4.95 per cent for businesses with annual Australian taxable payrolls of between $1 million and $1.5 million. Australian taxable wages above $1.5 million will incur a flat 4.95% rate.

Eligible small businesses will also receive a small business payroll tax rebate payment in 2017-18 (which is based on the 2016-17 payrolls) but rebates will no longer be paid in 2018-19 and 2019-20.

Payroll Tax—Owner-driver Exemption—Contractor Provisions

The Bill also amends the Payroll Tax Act 2009 to reinstate the policy intent on the introduction of the owner-driver exemption within the contractor provisions prior to the adverse decision in the New South Wales Supreme Court in the decision of Smith's Snackfood Company Limited v Chief Commissioner of State Revenue (NSW) [2012] NSWSC 998.

In that matter, the Court concluded that the owner-driver exemption provision can be apportioned into taxable and non-taxable services. The contractor provisions were not intended to apply to allow services provided under a contract to be apportioned between exempt and taxable services. They are intended to operate on the basis that the contract is either fully exempt because it falls within the relevant exemption or is taxable because it does not fall within the relevant exemption.

Payroll Tax—Exempt Rate for Motor Vehicle Allowances

The Bill amends the Payroll Tax Act 2009 to reflect changes to income tax legislation relating to the exempt rate for motor vehicle allowances. The amendments reflect the fact that the Australian Taxation Office now allows for the use of a standard rate for all motor vehicles, which is 66 cents per kilometre for the 2016-17 income year, rather than being based on the car's engine size.

These amendments will take effect from 1 July 2016 to coincide with the change at the Federal level.

Stamp Duty—Foreign Ownership Surcharge

The Bill amends the Stamp Duties Act 1923 tointroduce a foreign ownership surcharge on the conveyance or transfer of an interest in residential property to a foreign person, corporation or trust, executed on or after 1 January 2018 (including land holder acquisitions).

The surcharge will be set at a rate of 4 per cent of the dutiable value conveyed but will only be payable with respect to the extent of the interest in the residential property. The surcharge will be in addition to the normal stamp duty that is payable.

The definition of foreign person includes natural persons, corporations and trusts. A foreign natural person is a person who is not an Australian citizen or permanent resident. Generally, a company is a foreign company where it is incorporated outside Australia or where 50 per cent or more of its shareholding is held by other foreign persons or companies in aggregate. A trust will be a foreign trust where the trustee of the trust is a foreign individual or company, or where the trust itself is established for the benefit of, or is controlled by, foreign persons or companies.

Stamp Duty—off-the-plan concession

The off-the-plan stamp duty concession is scheduled to expire on 30 June 2017. The Bill extends the off-the-plan stamp duty concessionfor a further 12 months to 30 June 2018. The eligibility criteria for the concession will also be amended to exclude foreign purchasers from being eligible to receive the concession. This revised eligibility criteria will take effect from today (22 June 2017).

The definition of a foreign purchaser will be identical to the definition that will apply for the purposes of the foreign ownership surcharge.

Stamp Duty—Third Party Reporting

The Bill also makes a number of minor amendments to the Stamp Duties Act 1923 to facilitate the collection of data as part of the Commonwealth Government's initiatives on third party reporting and National Register of Foreign Ownership of Land Titles.

Amendments to the Taxation Administration Act 1996 are also included in the Bill for this purpose and provide for the Commissioner of State Taxation with the ability to collect and disclose the information required by the Commonwealth Government.

Explanation of Clauses

1—Short title

2—Commencement

3—Amendment provisions

These clauses are formal.

4—Interpretation

This clause defines terms used in the major bank levy measure.

5—GSP percentage

This clause requires the Commissioner of State Taxation to determine and publish the GSP percentage for each financial year (which is used in the calculation of the levy amount). The clause also specified how the GSP percentage is calculated and allows for proof of the applicable GSP percentage in legal proceedings.

6—Taxation Administration Act

The measure will be a taxation law for the purposes of the Taxation Administration Act 1996.

7—Liability to levy

This clause specifies who will be liable to the State major bank levy.

8—Payment of levy

This clause specifies when State major bank levy payments are to be made.

9—Amount of levy

This clause sets out the manner in which the amount of the levy will be calculated.

10—Returns

This clause requires the provision of returns by ADIs that are liable to the levy.

11—Returns etc to be completed in manner approved by Commissioner

Returns must be provided in a manner and form determined or approved by the Commissioner of State Taxation.

12—Notice of adjustment of Commonwealth levy liability

An ADI must notify the Commissioner of State Taxation if its liability for Commonwealth major bank levy is reassessed or otherwise the subject of a determination under the Taxation Administration Act 1953 of the Commonwealth that has the effect of altering the liability. Failure to notify is an offence with a maximum penalty of $10,000 (which matches the level of penalties under the Taxation Administration Act 1996).

13—Levy not to be paid by customers

The clause specifies that the State major bank levy payable by an ADI must be paid out of the profits of the ADI and cannot be directly recovered from customers of the ADI.

14—Regulations

This is a regulation making power.

Schedule 1—Related amendments—major bank levy

Part 1—Amendment of Taxation Administration Act 1996

1—Amendment of section 3—Interpretation

This is a related amendment so the Taxation Administration Act 1996 refers to a levy as well as a tax or duty.

2—Amendment of section 4—Meaning of taxation laws

This makes this measure a taxation law under the Taxation Administration Act 1996.

Schedule 2—Other budget measures

Part 1—Amendment of First Home and Housing Construction Grants Act 2000

1—Amendment of section 3—Definitions

This clause inserts definitions needed for the measure.

2—Insertion of section 6A

This clause relocates the current section 18BB to the preliminary Part of the Act.

3—Amendment of section 7—Entitlement to grants

This clause makes an amendment that is consequential to clause 2 and provides that an off-the-plan apartment grant is payable on an application if the requirements of section 18BB are satisfied. Only 1 off-the-plan apartment grant is payable in relation to a particular qualifying apartment.

4—Insertion of section 12C

This clause sets out the criteria applicable to an applicant for the off-the-plan apartment grant. An applicant must be a purchaser of a qualifying apartment under a qualifying off-the-plan contract.

5—Insertion of section 13B

This clause defines an eligible off-the-plan apartment transaction.

6—Amendment of section 14—Application for grant

This clause is consequential.

7—Amendment of section 15—All interested persons to join in application

This clause is consequential.

8—Substitution of section 18BB

This clause provides for payment of the off-the-plan apartment grant if:

the applicant complies with the criteria set out in section 12C; and

the application relates to an eligible off-the-plan apartment transaction; and

the eligible off-the-plan apartment transaction has been completed.

The amount of the off-the-plan apartment grant is $10,000. There is however no entitlement to a grant if the Commissioner is satisfied that a contract that formed the basis of an eligible off-the-plan apartment transaction for the purchase (or purported purchase) of a qualifying apartment does not constitute a genuine sale of the apartment.

9—Amendment of section 18C—Amount of grants must not exceed consideration

This clause is consequential.

10—Amendment of section 25—Objections

This clause allows an objection to be made by an applicant or former applicant who is dissatisfied with a decision of the Commissioner to impose a penalty under section 39(2) or (3).

11—Amendment of section 40—Power to recover amount paid in error etc

This clause extends the charge securing a payment, or repayment, to unimproved land (currently the charge only applies to a home).

12—Transitional provision

This clause provides a transitional provision allowing ex gratia payment by the State of the off-the-plan apartment grant for the period between 22 June 2017 and the day on which this measure is assented to by the Governor.

Part 2—Amendment of Land Tax Act 1936

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

This clause allows an exemption from land tax, for up to 5 years, where the current owner of land acquired the land under a qualifying off-the-plan contract (within the meaning of section 71DB of the Stamp Duties Act 1923 and that contract was entered into between 22 June 2017 and 30 June 2018.

Part 3—Amendment of Payroll Tax Act 2009

14—Amendment of section 29—Motor vehicle allowances

This clause makes technical amendments to section 29 of the Payroll Tax Act 2009 related to technical changes to the ITAA relating to calculating deductions for motor vehicle expenses.

15—Amendment of section 32—What is a relevant contract?

This clause amends section 32 of the Payroll Tax Act 2009 which defines relevant contract. The amendments address deficiencies in the owner-driver exemption which were identified in a 2012 New South Wales Supreme Court decision (The Smith's Snackfood Company Limited v Chief Commissioner of State Revenue). The amendments also remove the door-to-door sale of goods and insurance seller exemptions.

16—Amendment of Schedule 1—Calculation of payroll tax liability

This clause amends Schedule 1 of the Payroll Tax Act 2009 to provide for differing payroll tax rates depending on the total wages paid or payable by an employer.

17—Amendment of Schedule 2—South Australia specific provisions

This clause amends Schedule 2 of the Payroll Tax Act 2009 (the South Australia specific provisions) to provide for differing payroll tax rates depending on the total wages paid or payable by an employer.

18—Transitional provision

The transitional provision relates to the backdating of the amendments to section 32 to 1 July 2017.

Part 4—Amendment of Stamp Duties Act 1923 that takes effect on day fixed by proclamation

19—Amendment of section 2—Interpretation

This clause defines the proposed new stamp duty certificates and sets out the legal effect of such certificates.

20—Insertion of Part 1 Division 4

This clause inserts a new Division allowing the Commissioner to determine classes of instruments that may be the subject of an application for a stamp duty certificate and providing for the issue of such certificates.

21—Transitional provision

Section 2(13) of the Stamp Duties Act 1923, as in force immediately before the commencement of clause 19, will continue to apply in relation to dutiable instruments described in that provision that are executed before the commencement of clause 19.

Part 5—Amendment of Stamp Duties Act 1923 that is taken to have effect on 22 June 2017

22—Amendment of section 2—Interpretation

This clause inserts definitions of the terms foreign person and foreign trust.

A natural person is a foreign person if the person is not—

an Australian citizen within the meaning of the Australian Citizenship Act 2007 of the Commonwealth; or

the holder of a permanent visa within the meaning of section 30(1) of the Migration Act 1958 of the Commonwealth; or

a New Zealand citizen who is the holder of a special category visa within the meaning of section 32(1) of the Migration Act 1958 of the Commonwealth.

A corporation is a foreign person if it is incorporated in a jurisdiction that is not an Australian jurisdiction or a person who is a foreign person or a trustee for a foreign trust (or a number of such persons in combination)—

(a) holds or hold 50% or more of the corporation's shares; or

(b) is or are entitled to cast, or control the casting of, 50% or more of the maximum number of votes at a general meeting of the corporation.

A trust is a foreign trust if the beneficial interests of the trust are fixed and a beneficial interest of 50% or more of the capital of the trust property is held by 1 or more foreign persons. A discretionary trust is a foreign trust if a trustee under the trust, a person who has power to appoint under the trust, an identified object under the trust or a person who takes capital of the trust in default is a foreign person.

The clause also inserts related definitions of wholly foreign owned corporation and wholly foreign owned trust.

23—Amendment of section 71DB—Concessional duty on purchases of off-the-plan apartments

This clause amends section 71DB so that the section will not apply in relation to a contract entered into on or after 22 June 2017 if the Commissioner is satisfied that the purchaser under the contract, or a person who is to become owner of a qualifying apartment as a consequence of the purchase, is a foreign person or the trustee for a foreign trust.

Part 6—Amendment of Stamp Duties Act 1923 that is taken to have effect on 1 July 2017

24—Amendment of section 71DB—Concessional duty on purchases of off-the-plan apartments

Section 71DB, which provides for a concession on duty in relation to purchases of off-the-plan apartments, is amended by this clause to extend the availability of the concession so that it applies in relation to conveyances giving effect to qualifying off-the-plan contracts entered into between 1 July 2014 and 30 June 2018 (rather than 2017).

Part 7—Amendment of Stamp Duties Act 1923 that takes effect on assent

25—Amendment of section 71DC—Concessional duty on designated real property transfers

This clause removes a reference to the Development Act 1993. Section 71DC will refer instead to the planning and development law of the State. This wording is consistent with the new sections proposed to be inserted by clauses 26 and 27.

26—Insertion of Part 3 Division 9

This clause inserts a new Division into Part 3 of the Act.

Division 9—Foreign ownership surcharge

72—Surcharge for foreign purchasers of residential land

Proposed section 72 makes provision for a foreign ownership surcharge payable in respect of a dutiable instrument executed on or after 1 January 2018 if the instrument effects, acknowledges, evidences or records a transaction whereby an interest in residential land is acquired by a foreign person or a person who takes the interest as trustee for a foreign trust. The surcharge, which is equal to 4% of the value of the interest acquired by the person, is to be taken to be duty payable on the instrument and is payable in addition to duty otherwise payable under the Act.

The proposed section includes a requirement for the Commissioner to refund a foreign ownership surcharge to a person where, within 12 months of the acquisition of the relevant interest, the person ceases to be a foreign person or the trust for which the person is trustee ceases to be a foreign trust. The refund is payable only if the interest is retained by the person when the person ceases to be a foreign person or the trust ceases to be a foreign trust.

There is also a requirement for a person who acquires an interest in residential land effected, acknowledged, evidenced or recorded by an instrument to which the section applies to pay the surcharge if the person becomes a foreign person, or the trust for which the person is trustee becomes a foreign trust, less than three years after the acquisition. A person who is liable to pay duty in these circumstances must notify the Commissioner that the person has become a foreign person, or that the trust has become a foreign trust, within 28 days.

The criteria for determining whether land is residential land are the same criteria that apply under section 71DC. Land will be taken to be residential land for the purposes of the section if—

the Commissioner, after taking into account information provided by the Valuer-General, determines that it is being predominantly used for residential purposes; or

the Commissioner, after taking into account information provided by the Valuer-General, determines that although the land is not being used for any particular purpose at the relevant time the land should be taken to be used for residential purposes due to improvements that are residential in character having been made to the land; or

the Commissioner, after taking into account information provided by the Valuer-General, determines that the land is vacant, or vacant with only minor improvements, that the land is within a zone established under the planning and development law of this State that envisages the use, or potential use, of the land as residential, and that the land should be taken to be used for residential purposes due to that zoning (subject to the qualification that if the zoning of the land indicates that the land could, in a manner consistent with the planning and development law, be used for some other purpose (other than for primary production) then the vacant land will not be taken to be used for residential purposes).

27—Insertion of section 102AB

This clause inserts a new section into Part 4 of the Act (Land holding entities).

102AB—Surcharge where foreign person or group acquires interest in residential land

Proposed section 102AB provides for the payment of a foreign ownership surcharge in relation to transactions entered into on or after 1 January 2018 that are dutiable under Part 4. The surcharge is payable by a foreign entity if the entity, or a group of which the entity is a member, notionally acquires an interest in residential land. A foreign entity is a foreign person or a foreign trust. The amount of the surcharge is 4% of the value of the interest notionally acquired by the entity, or 4% of the entity's interest in the interest notionally acquired by the group, in the residential land. Section 102AB includes requirements for the payment of a refund where an entity that has paid the surcharge ceases to be a foreign entity within 12 months of the relevant notional acquisition. The refund is payable only if the relevant interest is retained when the entity ceases to be a foreign entity. As with section 72, there is also a requirement for an entity to pay the surcharge if it becomes a foreign entity within three years of the notional acquisition of an interest in residential land by the entity, or by a group of which the entity is a member, as a result of a transaction to which the section applies.

The criteria for determining whether land is residential land are the same as the criteria that apply under section 71DC and proposed section 72.

Part 8—Amendment of Taxation Administration Act 1996

28—Amendment of section 78—Permitted disclosure in particular circumstances or to particular persons

29—Amendment of section 80—Prohibition of disclosures by other persons

30—Amendment of section 81—Restriction on power of courts to require disclosure

These clauses make consequential amendments.

31—Insertion of Part 9 Division 4

This clause inserts a new Division as follows:

Division 4—Collection of information for disclosure to Commonwealth

81A—Interpretation

This section defines certain terms used in the proposed new Division, including the concept of 'reportable information'.

81B—Relationship with other laws

Other laws don't prevent the collection of information under the Division (and the Division doesn't prevent the collection of information under other laws). Reportable information may be collected under the Division for disclosure to the Commonwealth even if the information is not required for the purposes of any State law.

81C—Collection and disclosure of reportable information

The Commissioner or a public sector agency may collect reportable information. Where it is collected by a public sector agency, it may then be disclosed to the Commissioner. The Commissioner may disclose reportable information to the Commissioner of Taxation of the Commonwealth.

81D—Commissioner may direct agency to collect and disclose

The Commissioner may direct that reportable information be collected and disclosed by a public sector agency.

81E—How reportable information may be collected

Reportable information may be collected by requiring a person providing information for the purposes of a function carried out under a State law to provide the reportable information (for example, by requiring it to be provided in connection with the lodgment of an instrument, record or return, or the making of an application, under a State law).

81F—Enforcement

This section provides for the application of various enforcement powers in the Taxation Administration Act 1996.

Schedule 3—Substitution of short title

1—Amendments on commencement

This Schedule makes amendments to allow the body of the measure to be retitled as the Major Bank Levy Act 2017 after it commences (and once the other budget measures set out in Schedule 2 have taken effect).

Debate adjourned on motion of Hon. D.W. Ridgway.