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Legislative Council - Fifty-Fourth Parliament, Second Session (54-2)
2021-05-13 Daily Xml
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Land Tax (Discretionary Trusts) Amendment Bill

Introduction and First Reading

The Hon. R.I. LUCAS (Treasurer) (16:49): Obtained leave and introduced a bill for an act to amend the Land Tax Act 1936 and to make a related amendment to the Valuation of Land Act 1971. Read a first time.

Second Reading

The Hon. R.I. LUCAS (Treasurer) (16:50): I move:

That this bill be now read a second time.

The Land Tax (Discretionary Trusts) Amendment Bill 2021 (the bill) contains two amendments to, firstly, amend the Land Tax Act 1936 and, secondly, amend the Valuation of Land Act 1971 in order to address issues caused by delays in taxpayers receiving their 2020-21 land tax assessments.

The land tax reform package approved by parliament in 2019 made significant changes to the collection of land tax in South Australia from the 2020-21 financial year. This included large reductions in tax rates and changes to tax thresholds, delivering significant relief to taxpayers, along with changes to how land is aggregated together for the purposes of calculating land tax and higher rates of tax on land held in certain trusts. This required major changes to how land tax is assessed and calculated by RevenueSA.

RevenueSA has been issuing land tax assessments for the 2020-21 financial year under the new arrangements since October 2020. For a range of reasons, including system complexity and complex land holding ownership structures needing to be reviewed, there are still a number of taxpayers yet to be billed.

Under the reforms to the Land Tax Act, a transitional provision was introduced allowing for the nomination of a designated beneficiary for pre-existing trust land; that is, land subject to a discretionary trust as at midnight on 16 October 2019. Where a nomination is made, the trustee is assessed at the lower general rates of land tax rather than the higher trust rates of land tax. The deadline for nominating a designated beneficiary for pre-existing trust land is 30 June 2021. If a designated beneficiary notice is lodged after 30 June 2021, the late notice cannot be accepted and the trustee is to be assessed at the higher trust rates of land tax. There are no legislative means to extend the deadline.

The first amendment amends the Land Tax Act to extend the deadline for nominating a designated beneficiary for pre-existing trust land to 30 June 2022 (being a further year from the current 30 June 2021) and allow for the giving of a notice of a designated beneficiary to take effect for the financial year prior to the one in which the notice is lodged.

Under the Valuation of Land Act, a landowner can object to a valuation, but must do so within 60 days of receipt of the first notice of the valuation and only while the valuation is in force. Valuations only remain in force for the duration of a financial year, after which they are superseded. There are no provisions which allow for the consideration of an objection or which extend the period in which to object where a valuation is no longer in force. In most cases, a land tax assessment will be the first and only such valuation notice that makes the site value, as opposed to the capital value, apparent to the landowner.

The second amendment amends the Valuation of Land Act 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 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 values it relates to are no longer in force.

The government is committed to ensuring that no unnecessary burden is imposed on South Australian taxpayers. In line with this commitment, these measures will ensure that trustees of discretionary trusts are able to receive their 2020-21 land tax assessments before deciding whether to nominate a designated beneficiary. The measures also preserve landowners' objection rights on the site value of a property, and ensure that they are not disadvantaged by any delay in receiving their 2020-21 land tax assessments. I commend this bill to the house and seek leave to incorporate in Hansard without my reading it the detailed explanation of the clauses.

Leave granted.

EXPLANATION OF CLAUSES

Part 1—Preliminary

1—Short title

2—Amendment provisions

These clauses are formal.

Part 2—Amendment of Land Tax Act 1936

3—Amendment of section 13A——Land tax for discretionary trust if beneficiary notified to Commissioner

This clause amends section 13A of the Land Tax Act 1936 so as to extend to 30 June 2022 the date by which a trustee of a discretionary trust to which land is subject may lodge with the Commissioner a notice specifying a beneficiary of the trust who is to be taken to be the designated beneficiary of the trust for the purposes of the section. The section as amended will provide that the notice may, at the option of the trustee, take effect for the previous tax year.

Schedule 1—Related amendment of Valuation of Land Act 1971

1—Amendment of section 24—Objection to valuation

This clause amends section 24 of the Valuation of Land Act 1971 in order to permit an owner or occupier of land who has received notice of a valuation of the site value of the land under the Land Tax Act 1936 in the 2020/2021 or 2021/2022 financial year to object to the valuation even if it is no longer in force. The objection must be made within 60 days of the date of service of the notice.

Debate adjourned on motion of Hon. I.K. Hunter.

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