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Legislative Council - Fifty-Fourth Parliament, Second Session (54-2)
2021-05-27 Daily Xml
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Bills

Land Tax (Discretionary Trusts) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 13 May 2021.)

The Hon. K.J. MAHER (Leader of the Opposition) (15:35): The bill before us contains two amendments. First, to amend the Land Tax Act 1936 and, second, to amend the Valuation of Land Act to address issues caused by delays in taxpayers receiving their 2020-21 land tax assessments.

This bill is a continuation of the chaotic nature of the land tax changes under this Treasurer. We are now approaching the 2021-22 financial year and this bill has still not been sorted out, after being introduced late in 2019. It is not just the Labor Party; there are a number of people—crossbenchers, the Hon. Frank Pangallo and others—who have made contributions on land tax, who have asked questions on land tax in this chamber, and there are many property owners and taxpayers in this state who are confused about the chaotic nature of this government's introduction of these land tax reforms.

The land tax changes passed by parliament in 2019 made significant changes to collection of land tax in South Australia, particularly in relation to how land tax is aggregated for the purposes of calculating land tax and higher rates of tax on land held in certain trusts. The aggregation changes required major changes to how land tax is assessed and calculated by RevenueSA.

The land tax amendment act before us extends the deadline for nominating designated beneficiaries for pre-existing trust land to 30 June 2022—a further year from the current deadline that applies—and allows for the giving of notice for a designated beneficiary to take effect for the financial year prior to the one in which the notice is lodged. According to the government, land tax payers would like the notice of assessment before they nominate a beneficiary or choose to be hit with a trust surcharge.

The amendment to the valuation of land tax act seeks to extend the time in which an objection to the 2020-21 land site value can occur by allowing an objection to the 2020-21 land site value to occur within 60 days after the service of the 2020-21 land tax assessment, even if that assessment is issued in the 2021-22 financial year and the site value that it relates to will no longer be in force.

The opposition has moved an amendment seeking to amend the government's bill to allow an extension, but only for three months rather than the 12 months the bill currently proposes. The rationale for this follows representations made to the opposition from both individual property owners and taxation professionals that the government's proposed extension for 12 months creates an inequitable situation between those taxpayers who have already been required to consider their ownership under the new legislation in preparation for the current 30 June 2021 deadline and those who would have an extra 12 months under the terms of the government's bill.

For example, those who have already made a nomination under the trust provisions in order to avoid the new half a per cent trust surcharge, or for those who have sold their properties, it has been put to the opposition that they will have divested themselves of those particular properties earlier under less favourable market conditions; for example, in the first six months of the operation of the new legislation while COVID was impacting on the economy and property markets. This is quite different to the advantage that property owners would now enjoy if they had the luxury of making the same decisions in the current market environment.

Conversely, it has been put to us that the proposed extension time of a whole 12 months can actually make things even more difficult for property owners yet to settle their arrangements, as outlined in the excerpt I will read from a prominent tax expert who has provided their view on this. The excerpt from the tax expert is as follows:

In answer to questions of 1 April 2021, the Treasurer stated that as of 4 March 2021 approximately 33,500 assessments had been sent out and there were approximately 18,000 yet to be sent. In a response stated that day to another question, the Treasurer stated that as of 29 March 2021 34,700 assessments had been sent out. On that basis it appears that approximately 48 assessments per day were being issued in that month. At that rate it will take 375 days to complete the issuing of the assessments. That would suggest it would be early April 2022 before the last of the 2020-21 assessments were issued.

On that basis it is also unclear when the 21-22 assessments will start. Assuming in respect of those taxpayers that they are at the tail end of the 20-21 assessments, the 21-22 assessments issue a few months later. Those taxpayers will then have two assessments in the space of several months. If the 20-22 assessments are issued on time then some taxpayers will receive three assessments in the course of 20-23 based on the foregoing numbers.

Whilst the taxpayers involved will have had the benefit of the delayed issue of the assessments, it does create a series of problems for them, including cash flow problems, federal income tax issues in seeking to claim the land tax as an expense and when they are entitled to recover land tax from commercial tenants seeking to recover such amounts once the liability is known. It becomes even more complicated for owners where leases with large commercial tenants expire and then the tenants vacate the premises before all of the assessments are issued.

These are some of the practical matters that are simply aggravated by delay. One may question whether significant further resources should not be applied to undertake the work required to significantly reduce the delay in issuing further assessments.

Further, the need for additional time arises because RevenueSA has not adequately resourced their operations to deal with the implementation of those changes to the taxation policy, despite them passing parliament in November 2019, some 18 months ago. This is unacceptable. It was not as if the government did not know that they had to do this. These were the consequences of their very own changes—changes that were, as all members would recall, the subject of very significant debate, a lot of public agitation and a lot of angst.

These are not things that the government, two weeks ago, woke up to one morning and said, 'We have made these changes. How did that happen?' These are their own changes. As the excerpt I read out from the prominent tax expert states, rather than have these delays creating an inequitable situation, we are not saying do not extend it at all, because we recognise that we are coming to the end of the financial year in five weeks, but extend it for a reasonable time—say, three months, as we propose—and then put the resources in to do the job properly. Do not simply extend it because you have created your own situation and have not resourced your department properly to do that. That creates the inequities that I have outlined.

As I have said, we have a number of amendments. For the benefit of the chamber before we get into the committee stage, after discussions with parliamentary counsel, we will not be moving the third amendment. Amendments Nos 1 and 2 are sufficient to change that time frame from the 12 months to the three months.

Parliamentary counsel were redrafting them to leave out the third amendment, but rather than do that and have new amendments lob fresh on desks now, which in my experience tends to confuse people—it certainly confuses me when you debate and the amendments come—I will say, on the advice of parliamentary counsel on what gives effect to the change to reduce from 12 months to three months, we will not be moving amendment No. 3; that is adequately done with the first two amendments.

The Hon. F. PANGALLO (15:43): I rise to indicate our support for the government's Land Tax (Discretionary Trusts) Amendment Bill 2021. I do so perhaps begrudgingly because, as this chamber knows, SA-Best were stridently opposed to the original land tax bill. This bill is designed to ensure South Australians paying land tax are not additionally burdened because of RevenueSA's late issue of 2020-21 land tax notices.

To use one of the Treasurer's favourite phrases in this place, this whole thing has become a dog's breakfast and it is of their own making. They were not ready for it after the bill had passed and it is quite clear they are not ready now. I have to point out that I have been contacted by a number of people in the taxation industry—accountants and others—who have expressed their total frustration, their total confusion at the extra costs their clients have been burdened with because of these delays caused because the Treasurer's department just cannot get its act together.

These provisions allow for land tax payers, who are trustees of discretionary trusts, to receive their 2021 land tax assessment before having to decide whether or not to nominate a designated beneficiary. The bill also wants to give them an additional year in which to do this. Extending the cut-off date to 30 June 2022 is intended to relieve pressure on trustees to nominate a designated beneficiary. We will not be supporting this, but we are inclined to support Labor's amendment, and we will hear more of what the government says in the committee stage.

The bill also clarifies that property owners who pay land tax still have 60 days to object to their land valuation after they receive their land tax assessment. We will support this, but we will oppose the amendment by the Hon. John Darley, although I note the Hon. John Darley's intent in his amendment.

As land tax assessments are being issued late, there would have been an issue where the ability to object perhaps would have been prevented because the land valuation may no longer have been in force. Under this provision, the taxpayer still has 60 days from receipt of their land tax assessment, even if the land value is no longer in force.

I am generally not supportive of the amendment filed by the Hon. Mr Darley, which aims to remove the 60-day limit. I believe the time limit the government is intending to impose is reasonable. The fairness provisions in this bill accommodate delays caused by RevenueSA's late issuance of the land tax assessments.

I understand these delays are a consequence of RevenueSA implementing the major reforms to land tax, which were passed by this parliament last year, and it is doing all it can, it says, to expedite the issuance of these land tax amendments. As I have pointed out, it is causing a lot of pain to many businesses, individuals and organisations. It has a roll-on effect because people are currently left in a vacuum, and it also impacts on their preparing their federal income tax assessments.

Notwithstanding these fairness provisions, there are some that are potentially detrimental consequences of these delays upon taxpayers. I will ask the Treasurer to assure us that he is aware of and will administratively deal with these. It is possible and indeed likely that many land tax payers will receive two financial years' land tax assessments, perhaps even three, within a short period, thus increasing the financial burden on them.

I would like the Treasurer to confirm that he will allow taxpayers who are impacted by RevenueSA's delays to be exempt from all penalty fees and interest charges for the financial years 2019-20, 2020-21 and 2021-22, should they seek repayment terms. I also want him to advise the Legislative Council that he will ensure that RevenueSA's time payment provisions are readily available and will be offered to all land tax payers for those financial years.

Another unintended consequence of the late issuance of these land tax notices is that taxpayers may be unable to complete tax returns and comply with company returns within statutory time limits. Relief from those unintended consequences are not provided by this bill, but I would appreciate the Treasurer's assurances that RevenueSA will issue notices as expediently as possible.

As I have indicated, SA-Best has considered amendments by the opposition seeking to amend the extension the government wants in declaring ownership to trusts from 12 months to three months. The reason for this, as has been explained by the Leader of the Opposition in this place, is to address an inequity that was created when, to avoid the trust's surcharge, property owners sold off their holdings during the first few months of the law applying, and at a time when COVID was impacting on the property markets. As we are now seeing a boom in prices, and of course the revenue from taxes is flowing into the government now from stamp duty and others, it gives an unfair advantage to those who may now want to sell and have a generous time to do so.

It has also been pointed out by taxation specialists that, at the current rate of issuing the assessments for 2020-21 and 2021-22, taxpayers will get two assessments within weeks of each other and by the time those who are still waiting to get them—and this is considering the fact that they have issued these assessments at such a rate—it is quite feasible that some will find themselves receiving three assessments in the course of 2023, unless the Treasurer and his department can assure us that will not happen.

This would create financial hardship for some as well as federal income tax issues when compiling returns seeking various deductions. With those observations and comments, I conclude my remarks and look forward to the committee stage of the debate.

The Hon. R.A. SIMMS (15:51): I rise on behalf of the Greens to speak in favour of this bill. As members will be aware, the Greens have been long-term supporters of land tax reform. I think it is very disappointing that, when it has come to this reform, the Labor Party chose to play politics rather than actually use this as an opportunity to reform our land tax system and bring in more revenue that could be invested in vital things like health, education and other public services. Instead, we saw the Labor Party siding with developers and those who own multiple properties in what I think was a very cynical and populist campaign, and that is very disappointing.

The Greens do support what the government is seeking to do here in terms of land tax reform and we support this bill. We are, however, supportive of the Labor Party amendments and the change that has been proposed from 12 months to three months makes sense for the Greens. It would ensure more certainty and it would also ensure that revenue is made available at a time when it is needed. We are supportive of that amendment, on that basis.

The Hon. Mr Pangallo referred to potential amendments from the Hon. John Darley. Like SA-Best, we are not supportive of those amendments. We have concerns about how they would work in practice and therefore are not in a position to support those.

The Hon. R.I. LUCAS (Treasurer) (15:53): I thank honourable members for their contribution to the debate. Could I at the outset, as I have to a number of individuals and organisations, apologise as the minister responsible for the dilemmas that are confronting some individual taxpayers as a result of failures within my department to get the bills out within the time frame that they and we would have wished.

I do not shy away from the responsibility as the minister. Ultimately, I have responsibility for that and I accept the criticisms that have been made during this debate but also, as I said, by individual stakeholders and organisations with whom I have had discussions now over a number of months in relation to the issue.

What I have had to say to some of those individuals is that we hear what you say and we will look to see—we were urged to introduce legislation along these lines from individual taxpayers and others who said, 'We are going to be potentially disadvantaged until we know exactly what our circumstances might be in relation to the impact of the new land tax arrangements,' on their individual tax arrangements.

This bill has been prompted by listening to those who are aggrieved and concerned about the fact that they have not received a bill. This is individuals; it is actually accountants and lawyers who represent individuals. I respect the fact that there may well be some accountants and lawyers who put differing views in relation to this, but the overwhelming number of people over recent months who have spoken to me—accountants, lawyers and individuals—have certainly been urging the government to actually do something along the lines that we are proposing.

So that is the reason for this. The government could have ignored the requests to provide greater flexibility for individuals and sat on its digs, but we have chosen to at least ask the parliament whether or not it is prepared to agree. I guess the first thing the Hon. Mr Pangallo has raised in a private briefing, I think, with the representatives of the commissioner's staff is how individual taxpayers will be treated in the circumstances that he has outlined.

As the responsible minister, I am happy to place on the record advice I have received from the Commissioner of Taxation, because ultimately it is her staff who will manage the tax arrangements. I place on the record as follows:

A landowner who receives two land tax assessments within a short space of time and has difficulty making the payment due dates as set out in their assessments can contact RevenueSA and request an extended instalment arrangement. RevenueSA will work with individual taxpayers to put in place a payment plan that suits their individual financial circumstances. Providing taxpayers keep up with their payment plans, they will not incur penalty tax and interest. Taxpayers who are experiencing financial difficulty meeting a payment plan should contact RevenueSA as soon as possible to discuss their circumstances to avoid penalty and interest.

That is the statement that the commissioner and her staff have provided to me and as the minister I place that on the public record in relation to reasonable and genuine questions on behalf of taxpayers in relation to the possibility of penalty or interest payments.

Coming back now to the substantive issues, as I said, the government did have an option of sitting on its digs and doing nothing in relation to this but we, for the reasons that have been outlined, are mindful of the fact that we have created these difficult circumstances for a number of taxpayers and this is a genuine endeavour to try to provide some extra flexibility for some of those individuals.

I want to address the amendments that I only saw at lunchtime, or late this morning, from the Australian Labor Party. We think that those members who actually want to support taxpayers who are aggrieved should not be supporting the amendments that have been moved by the Australian Labor Party.

We understand the Australian Labor Party has opposed the structure of the new land tax arrangements, etc. What I am saying is that if as an individual we are trying to listen to taxpayers who have not had their bill and are aggrieved that they do not have their bill because they cannot organise their tax arrangements to pay the minimum amount of tax that they are lawfully required to pay, then they should not be supporting the amendments being moved by the Australian Labor Party.

As I said, I have only seen the amendments from the honourable member, the honourable Leader of the Opposition, at lunchtime today. I think he is indicating that he may well now be moving a different set of amendments in the committee stage, but when we get into the committee stage we can address whatever it is he ultimately moves.

In the amendments as currently circulated, there are two major problems. One is, for example—and we hope this is not the case—if for whatever reason RevenueSA is unable to get an individual landowners bill out until September of this year, under the Australian Labor Party's amendment that individual will either have no time or precious little time to make the judgement as to whether or not they want to designate a beneficiary for their trust.

Why is that important? Because under very limited circumstances—as members will know, this only relates to land that was held back in October 2019 and beneficiaries who were members of the trust at that particular time—for a family trust, for example, that has as a potential beneficiary for land tax purposes an 18-year-old son or daughter who owns no land in his or her name, there is potentially the capacity to designate them for land tax purposes as the beneficiary. If that occurs, they then do not pay the higher land tax trust rates that apply to land held by trusts.

Now, that is completely lawful. It is part of the scheme that the parliament ultimately adopted and voted for. This would actually allow that person, if it is to be the Labor Party's amendment, either just before September—or if the bill does not arrive until after September they lose the capacity to even do that; they would have to make the judgement even before they receive their particular bill.

All the government's amendment is doing is giving someone who is potentially aggrieved and wants to be able to lawfully pay the lowest amount of tax that they are required to pay the option to nominate a beneficiary once they receive their bill. The Labor Party amendment will mean that if they do not get their bill until October or very late September they potentially will be locked in to having to make a judgement to pay the higher land tax rate for trusts.

For anyone who is trying to support people to lower their land tax bill it makes no sense at all, in our view, to support the Labor Party's amendment. The 12 months gives the individual—and we hope they do not need it because the bills are delivered well before then—the maximum possible time to make their judgement in relation to their land tax arrangements.

There is the issue of whether people made judgements based on, for example, the scare campaign that was being mounted, saying 'Land prices are going to plummet,' which was the scare campaign during the land tax debate: 'People are going to be selling their properties off, land prices are going to be devalued and decline,' etc. We cautioned people against listening to that sort of argument, but some people listened to that argument from the Labor Party and others, and perhaps they made decisions on the basis of that advice.

As the land market has developed, clearly that would not have been a sound decision, but if they have made that decision they made that decision 12 months ago. In terms of this issue—of providing options for people in the future, for those who want to be able to structure their tax arrangements lawfully to take advantage of what is available—in our view it makes no sense to limit it to the potential set of circumstances that is outlined.

The other part of the Labor Party's amendment as circulated actually will rule out, in relation to the 2021 land tax bill year—if someone gets a bill after 30 June they will not even be able to avail themselves of the offer from the government. It may well be that the Labor Party has realised the problem with their amendment that has been circulated, and it might be that when we get to the committee that is what the honourable member is going to seek to correct. But as it is currently drafted it would actually stop anybody, if a bill arrives after 30 June, from being able to avail themselves of what the government is offering for their 2021 land tax bill.

As I understand the position of the Hon. Mr Pangallo and others that is certainly not what they have been supporting, and that is the structure of the Labor Party's amendment. It is just a huge cautionary note for anyone in this chamber who is seeking to support individuals and others who were talking about problems the government have created for them in the delay of the land tax bills. If you are trying to support them, supporting the Labor Party amendments, in our very respectful view, makes no sense at all. It is just reducing the options for certain people in certain circumstances. That is why I caution members.

Ultimately, as I said, the government could have resisted any flexibility in relation to these issues. From the government's viewpoint, it does not affect the level of income that we are going to collect. One way or another, people's tax arrangements are going to be broadly the same. It may well be that in the end, if we restrict the options, the government might end up with more land tax being paid because people pay at the trust rate, which is an additional 0.5 per cent in most of the circumstances. Again, that seems contrary to the position of the Australian Labor Party, who were criticising the government's overall structure of its tax changes.

We can ultimately see what particular form the Hon. Mr Maher is going to move his amendments in when we get into the committee stage. Certainly, from the government's viewpoint, we will be opposing the amendments because we think it defeats the purpose of why we have introduced the bill and why people urged us to introduce the bill.

In addressing that, I apologised earlier, as the responsible minister, for the problems that we have had in terms of getting the bills out on time—when we should have. It is not an excuse. The explanation is, as I have indicated on a number of occasions, the extraordinary complexity of some of the tax arrangements of some of the individual landowners. I have regaled the house, if I can use my phrase, with the example of one particular individual who had over 420 landowning entities, holding more than 260 separate individual arrangements for properties. The challenge was—and I accept the criticism—that this fairer system that we have introduced is one that we, through RevenueSA in particular and Treasury and myself as Treasurer, because I accept responsibility, needed to be ready for.

The calculation someone has done, that is, that for the last two months we have done 35 a day, or whatever the number is, and therefore it will not be finished until April, misses the point of what is actually the problem at the moment. The problem at the moment is actually trying to resolve some system or IT issues as you plug in significant numbers, hundreds or thousands of particular examples, in terms of actually having the system churn out the right responses. Once the system or IT issue is resolved, it is not a question of doing 35 a day—you will literally do hundreds within a 48-hour period. It is a system and an IT problem with the in-house people and the people who have been brought in to provide advice in relation to it as they resolve one issue; and, because of the complexity of these trusts and tax arrangements, another problem pops up.

I am reminded of that arcade game where you whack something on the head and, as soon as you whack something on the head, the other head pops up and you have to whack it on the head again. Guacamole or something I think it is. That is the problem of RevenueSA and the IT people in particular. Hopefully sooner rather than later, once the IT and system problem is resolved, it is not a question of 35 a day but hundreds will be done in a very short space of time.

I can assure the Leader of the Opposition and others that it is not a question of just piling in additional bodies. We have done that. We have additional staff in other parts of Treasury. We have put in additional staff from other areas of the public sector in areas they can do, but they are limited until the system and the IT issue is actually fully resolved. So we will continue to devote whatever resource is required by RevenueSA in an endeavour to get these bills out. Frankly, whether it is three months or 12 months is not the major issue but, as we are getting closer to 30 June, clearly we do need to decide whether or not we want to provide this greater flexibility for staff or not.

I acknowledge the fact that a number of members have already indicated they are not going to be supporting the amendments moved by the Hon. Mr Darley. The Hon. Mr Darley and I have had a brief discussion about this and he is aware that the government, too, will not be supporting the particular changes. There are a number of reasons why, but one of the particular problems with the current drafting of the amendments is that when we get beyond 30 June of this year, when taxpayers get their bill for 2021—and let's say they get it in July this year, so after 1 July—that land tax bill is based on a valuation for 1 July 2020.

The taxpayer may well want to object to the valuation on that bill, which is for 1 July 2020, for obvious reasons. It might be the first time that he or she realises that the Valuer-General has valued their property at a half a million dollars more than they think it is really valued at, and it might be the first time they actually see the valuation from the Valuer-General. In the way the amendments are currently drafted, the legal advice provided to me is that, because there will be a new valuation for that particular property—that is, for 1 July 2021—the individual taxpayer will not be able to lodge an objection to the 1 July 2020 valuation.

I certainly do not think that is what was intended by the Hon. Mr Darley, in the discussions that I have had with him. The legal advice I have had is that, in the way the amendments are currently drafted, it would restrict the capacity for an individual to object to the valuation of 1 July 2020 for their late 2021 land tax bill. As I said, I do not believe that is the intention of the Hon. Mr Darley, based on the discussions I have had. The advice I have is that is the implication of the particular amendment.

The fact that a number of members and the government are not supporting it means that I do not know that we need to spend an inordinate amount of time on whether that is correct or not. The reality is that it is now unlikely to pass the Legislative Council. I will not go into the other details. I have had discussions with the Hon. Mr Darley as to why we do not support the amendments, but I think that is a key one that needs to be placed on the record at this stage. With that, we thank the honourable members for their consideration of the second reading and we look forward to the committee stage of the debate.

Bill read a second time.

Committee Stage

In committee.

Clause 1.

The Hon. J.A. DARLEY: I want to ask a question of the Treasurer in relation to his second reading speech. I had two briefings on this bill and, on the last time, the Commissioner of State Taxation assured me that all land tax bills would be issued before 30 June. If that is the case, the Labor opposition amendment of three months would sound reasonable.

The Hon. R.I. LUCAS: The whole reason for this particular bill is that, as the Treasurer, we have given no such assurance. I have said publicly that the reason we have introduced this bill is that it may well be that some of the assessments will be issued after 30 June. That is the reality, and that is the reason we have introduced the legislation. We are only 4½ weeks—or five weeks, perhaps—away from 30 June. The reality is that I have said publicly and privately to a number of people that there will be some deals that will go out after 30 June. The Leader of the Opposition did a complicated calculation and said that in some circumstances it might not be until April 2022 or something.

The Hon. K.J. Maher interjecting:

The Hon. R.I. LUCAS: Merely relaying the tax—

The Hon. K.J. Maher interjecting:

The CHAIR: Order!

The Hon. R.I. LUCAS: If it is the tax period I am thinking of he is very good at interpreting the law; he is not necessarily the expert in terms of calculating the extent of delivery of tax assessments.

The Hon. K.J. Maher interjecting:

The Hon. R.I. LUCAS: No, he is very good in relation to interpreting tax law but not in terms of deciding how many assessments are going to be issued each day between now and April. Can I be quite clear to the Hon. Mr Darley, and certainly in the discussions I have had with him I have never given him any indication that all these bills are going to be issued by 30 June. If they were then we probably would not have proceeded with the legislation, but we have proceeded with the legislation on the understanding that, at this stage, we cannot give a guarantee that all the bills will go out.

We will certainly try to get them out as soon as we can and, as I said, if the system or the IT problem can be solved this morning or tonight or whenever it is, then very large numbers can be done in a short space of time. However, at this particular stage I cannot give that assurance and that is the reason why we are proposing to give greater flexibility to individuals.

As I said, when we get to the particular amendment in clause 3 from the Labor Party, those people in this chamber who are seeking to support people to lawfully minimise the amount of tax that they have to pay, in our very respectful view, would not be supporting the amendment from the Labor Party.

All we are doing is seeking to give people the option under the law to pay the appropriate amount of tax; that is, under the law if they are entitled to nominate a beneficiary of their family trust then they should be allowed to do so, and they should not be disadvantaged by the fact that we are in error because we have delayed sending them their land tax assessment.

As I said, I accept responsibility as the responsible minister that we have not got these bills out on time when we intended them to. But we do not believe that an individual taxpayer should be disadvantaged and end up potentially paying more than they are required to because we have been delayed in sending them a tax bill. That is why we caution against supporting the amendment from the Australian Labor Party.

The CHAIR: Before going any further, there were a couple of things in the last little while that I want to alert members to. One is that, once again, if a member brings a mobile device into this chamber they should make sure that it is on a silent setting. Secondly, we have had two instances just then when the Treasurer was addressing a member's question and we had two conversations going across the chamber in front of the member who was receiving the advice. I do not think that helps either the Treasurer or the member trying to listen to it.

Members interjecting:

The CHAIR: There was more than one member involved. Are there any other matters on that clause?

The Hon. D.W. RIDGWAY: Point of order, Mr Chair: I do not believe I was involved in any conversations and yet interjections are coming constantly from the other side.

The CHAIR: There were two conversations across the chamber in front of the Hon. Mr Darley. I am not going to go into who was participating in that, I would just ask members to not continue to do it.

The Hon. F. PANGALLO: Just to be clear, the Treasurer has given an assurance that there will be zero interest and no penalties imposed on those seeking payment plans. Is that correct—zero interest?

The Hon. R.I. LUCAS: I repeat the assurance I have given on behalf of the commissioner: the caveat is, providing that taxpayers keep up with their payment plans. If there is an agreed payment plan with the taxpayer and all of a sudden they refuse to pay, then there will be the option for a penalty or interest payments. As long as you keep up with an agreed payment plan—and I think members who have represented constituents before will know that you enter into an arrangement with RevenueSA in relation to an agreed payment plan—that will be the circumstance.

We are hoping that will not eventuate. As I have said, a number of constituents have said to me, 'We accept the fact we've had the cash flow benefit for the last nine months. We should have got this bill in October. We know we have to pay a certain amount of money, but we haven't had to pay the money until June or July.' They have actually kept within their business the amount of money they are going to have to pay anyway, so they have received that cash flow benefit in relation to those circumstances.

We are seeking to get these bills out as quickly as we can and then have a reasonable gap between that and the next round of bills, which generally does not start until October or November. They do not go out on 1 July, or whatever it is, the next round of bills, in terms of the delay in relation to that. If there is a particular set of circumstances where someone is in difficulty, then there is an assurance from the commissioner that she and they will enter into an arrangement in terms of time payment or term payment, and as long as they meet the agreed terms of the term payment there will be no interest or penalty payments in relation to that.

The Hon. F. PANGALLO: I appreciate what the Treasurer is saying. Of course, if people do not meet those payment plans they would be liable to a penalty. What I am saying is if a person went to RevenueSA and said, 'Look, you've hit me with a bill for $50,000. I'm unable to pay this now. Can we enter into terms to repay that amount of money?' and they come back and say, 'Yes, we can do something over the next 12 or 18 months where you can repay it,' will those repayments have interest attached to them or will they be interest free?

The Hon. R.I. LUCAS: If there is an agreed repayment plan with the commissioner, the commissioner's statement that I read onto the public record says that there will not be interest or penalty payments. That is an arrangement that will be entered into between an individual taxpayer and the others. As I said, these will be negotiated.

This is a judgement call for the Commissioner of Taxation. The assurance I have read onto the record is an assurance in exactly the terms provided to me by the commissioner, that I give on behalf of the commissioner in the house as to how this will be approached. I can only repeat that if there is an agreed payment plan and that payment plan is met then there will not be any interest or penalty payments in relation to that.

The Hon. F. PANGALLO: I do not think you get what I am saying, Treasurer. If the bill is $50,000 and I go to the commissioner and say, 'Look, commissioner, I'm sorry but I can't pay this in one hit. Can we enter into terms to repay this amount of money?' and the commissioner says, 'Yes, Mr Pangallo, we'll be generous and give you 18 months to pay off this bill,' and then I say to the commissioner, 'Thank you,' will those amounts be at zero interest or will there be an interest payment added to those repayments?'

The Hon. R.I. LUCAS: I cannot be any clearer than saying that the answer to the question is no. There is no interest, there is no penalty, in the circumstances. I have read onto the record what the commissioner has said, and the answer is no. The only area where there might be interest or penalty is if you agree to a plan and then you do not pay. Logically, you leave yourself open to interest and penalty payments in those circumstances. However, to answer your question, consistent with what I have just said on behalf of the commissioner, the answer is no.

The Hon. F. PANGALLO: Thank you. That is actually what I wanted from the Treasurer: an absolute clarification that those repayments over that period of time will be done without any interest being charged on that amount. Of course, if there is a default naturally I would imagine that the commissioner would want to have a penalty attached to it. I thank the Treasurer. He has made it quite clear that if people enter into an arrangement for repayment for a significant amount of money over a period of time it will not be subject to interest on top of what is owed. I thank the Treasurer for that.

Clause passed.

Clause 2 passed.

Clause 3.

The CHAIR: I should point out to the committee that this clause, being a money clause, is in erased type. Standing order 298 provides that no question should be put in committee under any such clause. The message transmitting the bill to the House of Assembly is required to indicate that this clause is deemed necessary to the bill.

The Hon. K.J. MAHER: I move:

Amendment No 1 [Maher–1]—

Page 3, line 11 [clause 3(1)]—Delete '2021' and insert '30 June 2021'

As I indicated to—sorry, I am distracted by the Hon. David Ridgway, slightly.

The Hon. D.W. Ridgway interjecting:

The CHAIR: Order! The leader will continue.

The Hon. K.J. MAHER: As I indicated to the chamber before—I was slightly and possibly deliberately being misrepresented by the Treasurer, which is a tactic he occasionally employs in here to make his points. I indicated reasonably clearly at the outset that I would not be moving amendment No. 3 [Maher-1] but I would be moving amendment No. 1 [Maher-1] and amendment No. 2 [Maher-1]. So I have moved the first amendment. If that is not successful, I indicate I will not move the second amendment; it does not make sense without both of those amendments.

What those amendments do, quite simply, is in relation to the main part of this bill that seeks to extend the date by which a trustee of a discretionary trust to which land is subject to tax may lodge with the commissioner a notice specifying the beneficiary. The government proposes to extend that from 30 June this year. They have said they are not able to meet that deadline and we agree. With five weeks to go, if they are not able to, it would be unreasonable to try to say now, 'Employ a thousand extra people to make it happen within five weeks.'

We concede that would be unreasonable, but we do not concede that it is reasonable to extend it for an extra 12 months when there have been taxpayers who have effectively done the right thing and made that election before this date. We think three months is a reasonable amount of time for the government to apply their minds and the resources to do what is necessary, rather than a full 12 months, given the inequity, as I outlined in the second reading speech.

So I have moved amendment No. 1 [Maher-1] and indicate that, if that is successful, I will be moving amendment No. 2 [Maher-1] but I will not be moving it if this is unsuccessful. I will not be moving amendment No. 3 [Maher-1].

The Hon. R.I. LUCAS: I will not prolong the debate. I think members are aware of the fact that the government is going to oppose all the amendments. We are pleased to hear that amendment No. 3—for the reasons I outlined in the second reading, it does not make any sense—is not going to be proceeded with. We oppose amendments Nos 1 and 2. We accept the fact that they are contingent on each other, so if one succeeds or fails the other should succeed or fail.

I will conclude by saying that, for those members in this chamber who want to give the maximum flexibility for people to avail themselves of their legal entitlements under the legislation, it is a complex package which was much discussed and debated—it was very controversial 18 months or so ago—but is, nevertheless, we believe, the most comprehensive land tax reform in this state's history. A fairer and more competitive system was arrived at by the parliament and this, in our view, gives the greatest option to all people to legally pay whatever it is that they should legally pay under this fair and competitive package.

If the Labor Party amendment gets up, then there will be certain individuals who will be aggrieved if we are unable to get our bills out before or very late in the period where this new cut-off would be, which is 30 September. So the same people who are complaining now with four or five weeks to go that they are being disadvantaged will also be complaining in September, if this particular amendment is supported.

We make it clear that, if people want to support people being able to pay legally and lawfully what they are required to under this legislation, and have the choice of either the provisions of a designated beneficiary in their family trust or not, which the parliament voted for, our amendment gives them the greatest flexibility. If the Labor amendment is supported by members, it may leave some individuals, come September or October, very aggrieved with those people who supported the Labor amendment.

The Hon. F. PANGALLO: Would the government consider an extension to 31 December 2021?

The Hon. R.I. LUCAS: The government's position is to support the 12-month extension, but the longer the extension the better. We are hopeful, for example, that an amendment would be possible in three months. If the honourable member is prepared to support a six-month extension, that certainly makes more sense than the three-month extension, but I note that, if the member was going to move that particular way, we need to get this bill passed this afternoon to get it through both houses of parliament by 30 June.

We are open to that if the honourable member is prepared to support it. I am not sure where the numbers lie in the chamber. Clearly, we need to hear from the Hon. Mr Darley and the Greens in relation to their position on these amendments. We are opposed to the Labor amendment as it stands at the moment.

The CHAIR: I point out that I did say earlier that it was clause 3, page 3, but it is actually clause 3, page 2. There was a typographical error.

The Hon. R.A. SIMMS: I rise on behalf of the Greens in support of the Labor amendment. I have heard what the minister has had to say. Our view is that we should be looking to recover these funds as quickly as possible in light of the importance of land tax reform, which is something the Greens have always supported. Our philosophical view is that land tax is one of the fairest forms of taxation, because the more property you own the more tax you should pay. It is a fairly simple principle and, as I stated earlier, it is disappointing that the Labor Party squibbed that opportunity for reform and instead chose to play politics with the issue.

Land tax reform means more money for health, more money for education, more money for housing, more money for transport, more money for vulnerable people who need support. It is on that basis that we think: let's start trying to recover the money now, rather than having a prolonged extension period of 12 months. That is where we sit on this amendment.

Progress reported; committee to sit again.

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