State Taxation Legislation Amendment (Housing Affordability) Act 2006

i State Taxation Legislation Amendment (Housing Affordability) Act 2006 Act No. 86/2006 TABLE OF PROVISIONS Section Page PART 1—PRELIMINARY 1 1. Purpose 1 2. Commencement 2 PART 2—DUTIES ACT 2000 3 3. New Division 4A inserted in Part 5 of Chapter 2 3 Division 4A—Principal place of residence concession 3 57G. Definitions 3 57H. What is a principal place of residence? 3 57I. What is a PPR transfer? 4 57J. Concessional rate of duty for PPR transfers 5 57K. Residence requirement 5 57L. Variation of residence requirement 6 57M. Liability for duty if residence requirement not complied with 7 57N. Transferee to notify Commissioner of change in circumstances 8 57O. Election to receive concession or additional first home owner grant 8 4. Consequential changes to pensioner and first home owner concession formulas 9 5. New clause 24 inserted in Schedule 2—transitional provision 10 24. State Taxation Legislation Amendment (Housing Affordability) Act 2006 10 PART 3—FIRST HOME OWNER GRANT ACT 2000 11 6. Extension of first home bonus 11 PART 4—PAY-ROLL TAX ACT 1971 13 7. Tax rate reduction brought forward 13 -- 1 of 17 -- Section Page ii PART 5—GENERAL 14 8. Repeal of Act 14 ═══════════════ ENDNOTES 15 -- 2 of 17 -- 1 State Taxation Legislation Amendment (Housing Affordability) Act 2006 † [Assented to 22 December 2006] The Parliament of Victoria enacts: PART 1—PRELIMINARY 1. Purpose The purpose of this Act is— (a) to amend the Duties Act 2000 and the First Home Owner Grant Act 2000 to improve housing affordability; (b) to amend the Pay-roll Tax Act 1971 to bring forward pay-roll tax cuts. Victoria No. 86 of 2006 -- 3 of 17 -- Part 1—Preliminary State Taxation Legislation Amendment (Housing Affordability) Act 2006 Act No. 86/2006 2 2. Commencement This Act comes into operation on the day on which it receives the Royal Assent. __________________ s. 2 -- 4 of 17 -- Part 2—Duties Act 2000 State Taxation Legislation Amendment (Housing Affordability) Act 2006 Act No. 86/2006 3 PART 2—DUTIES ACT 2000 3. New Division 4A inserted in Part 5 of Chapter 2 After Division 4 of Part 5 of Chapter 2 of the Duties Act 2000 insert— "Division 4A—Principal place of residence concession 57G. Definitions In this Division— guardian of a person under a legal disability includes— (a) a trustee who holds property on trust for the person under an instrument of trust or direction of a court or tribunal; (b) an administrator of the person's estate appointed under the Guardianship and Administration Act 1986; residence requirement means the requirement referred to in section 57K as varied (if at all) by the Commissioner under section 57L. 57H. What is a principal place of residence? (1) For the purposes of this Division, land is not taken to be occupied as a place of residence unless there is a building affixed to the land that, in the Commissioner's opinion— (a) is designed and constructed primarily for residential purposes; and (b) may lawfully be used as a place of residence. s. 3 See: Act No. 79/2000. Reprint No. 5 as at 10 February 2006 and amending Act Nos 38/2006 and 84/2006. LawToday: www.dms. dpc.vic. gov.au -- 5 of 17 -- Part 2—Duties Act 2000 State Taxation Legislation Amendment (Housing Affordability) Act 2006 Act No. 86/2006 4 (2) In determining whether land is occupied as the principal place of residence of a person, account must be taken of every place of residence of the person, whether in Victoria or elsewhere. 57I. What is a PPR transfer? (1) A PPR transfer is a transfer of dutiable property, being an estate in fee simple in land, if— (a) the transferee, or each transferee if there are more than one, is— (i) a natural person who is at least 18 years of age or, if such a person is under a legal disability, a guardian of the person; and (ii) a bona fide purchaser of the land for adequate consideration; and (b) the transferee, or at least one of the transferees, or, if the transferee is a guardian, the person under a legal disability, intends to occupy the land as his or her principal place of residence; and (c) the contract for the purchase of the land was entered into on or after 1 January 2007; and (d) the dutiable value of the dutiable property is more than $115 000 but not more than $500 000. (2) The Commissioner may determine that a transfer is a PPR transfer despite a transferee or person under a legal disability being under 18 years of age if the Commissioner is satisfied that the transfer does not form part s. 3 -- 6 of 17 -- Part 2—Duties Act 2000 State Taxation Legislation Amendment (Housing Affordability) Act 2006 Act No. 86/2006 5 of a scheme or arrangement designed to take advantage of the benefit of this Division. 57J. Concessional rate of duty for PPR transfers The rate of duty chargeable on a PPR transfer is chargeable to the nearest whole dollar of the amount determined as follows, or if that amount is an amount of dollars and fifty cents, to the nearest whole dollar below that amount— Dutiable value of the dutiable property Rate of duty More than $115 000 but not more than $400 000 $2560 plus 5% of that part of the dutiable value that exceeds $115 000 More than $400 000 but not more than $500 000 $16 810 plus 6% of that part of the dutiable value that exceeds $400 000 57K. Residence requirement (1) The concessional rate of duty under section 57J is subject to the requirement that the transferee occupies the land as his or her principal place of residence for a continuous period of at least 12 months commencing within the 12 month period immediately after the transferee became entitled to possession of the land. (2) If there are 2 or more transferees, the requirement is complied with if the land is occupied for the period referred to in subsection (1) as the principal residence of at least one of them (whether separately or together with any of the others and whether or not the same transferee occupies the land for the whole period). s. 3 -- 7 of 17 -- Part 2—Duties Act 2000 State Taxation Legislation Amendment (Housing Affordability) Act 2006 Act No. 86/2006 6 (3) A reference in this section to a transferee in the case of a guardian who holds property on behalf of a person who is under a legal disability is a reference to the person under the legal disability. 57L. Variation of residence requirement (1) If satisfied that there is a good reason for doing so, the Commissioner may— (a) reduce the required period of residence; or (b) determine that a temporary absence from residence does not break the continuity of residence; or (c) extend the period in which residence must begin. (2) If the Commissioner determines that a temporary absence from residence does not break the continuity of residence, the transferee is not entitled to a concessional rate of duty under this Division in respect of any other PPR transfer during the period of temporary absence unless the transferee pays the difference between the duty paid on the original PPR transfer and duty on the original PPR transfer calculated at the rate set out in section 28(1). (3) If a transferee or person under a legal disability who is occupying land the subject of a PPR transfer as his or her principal place of residence, or is temporarily absent from the land in accordance with a determination under subsection (1), dies, the residence requirement is taken to have been complied with for the PPR transfer. s. 3 -- 8 of 17 -- Part 2—Duties Act 2000 State Taxation Legislation Amendment (Housing Affordability) Act 2006 Act No. 86/2006 7 57M. Liability for duty if residence requirement not complied with (1) If the residence requirement for a PPR transfer is not complied with— (a) the PPR transfer is chargeable with duty at the rate set out in section 28(1), subject to any exemption or concession other than in this Division; and (b) the Commissioner may reassess duty on the PPR transfer accordingly (giving an allowance for any duty already paid on the PPR transfer). (2) A liability for duty imposed because of subsection (1) on a PPR transfer arises when the residency requirement for that transfer is not complied with. Note Section 16 provides that a tax default does not occur if the duty is paid within 3 months after the liability for the duty arises. (3) A reassessment referred to in subsection (1)(b) is authorised if more than 3 years have passed since the initial assessment was made. Note Section 9(3)(c) of the Taxation Administration Act 1997 allows a reassessment to be made more than 3 years after the initial assessment if this is authorised by a taxation law. (4) If the residence requirement for a PPR transfer is not complied with, the transferee is not entitled to a concessional rate of duty under this Division in respect of any other PPR transfer until the transferee has paid duty for which he or she is liable because of this section. s. 3 -- 9 of 17 -- Part 2—Duties Act 2000 State Taxation Legislation Amendment (Housing Affordability) Act 2006 Act No. 86/2006 8 57N. Transferee to notify Commissioner of change in circumstances (1) A transferee who has received a concessional rate of duty under this Division must lodge a written notice with the Commissioner within 30 days after becoming aware of any circumstances that may result in the residence requirement not being complied with. (2) A failure of a transferee to comply with subsection (1) does not affect the Commissioner's power to reassess duty under section 57M or to exercise a discretion under section 57L. 57O. Election to receive concession or additional first home owner grant (1) This section applies to a transferee who, but for this section or section 18(7) of the First Home Owner Grant Act 2000, would be entitled— (a) to receive a concessional rate of duty under this Division in respect of a PPR transfer; and (b) to receive an amount under section 18(2) of the First Home Owner Grant Act 2000 in respect of an eligible transaction (within the meaning of that Act) relating to the land that is the subject of the PPR transfer. (2) The transferee, by written notice to the Commissioner, must elect to receive— (a) the concessional rate of duty under this Division in respect of the PPR transfer; or s. 3 -- 10 of 17 -- Part 2—Duties Act 2000 State Taxation Legislation Amendment (Housing Affordability) Act 2006 Act No. 86/2006 9 (b) the amount under section 18(2) of the First Home Owner Grant Act 2000 in respect of the eligible transaction. (3) If the transferee elects to receive the amount under section 18(2) of the First Home Owner Grant Act 2000, or does not make an election under this section, he or she is not entitled to the concessional rate of duty under this Division in respect of the PPR transfer.". 4. Consequential changes to pensioner and first home owner concession formulas In the Duties Act 2000— (a) in section 59(3), for the formula substitute— ; " 000 40 4724P 40 2 "$47 − (b) in section 60(3), for the formula substitute— ; " 00) 8 $63 500(P P) 000 1181($400 D " − − × (c) in section 62(3), for the formula substitute— ; " 000 20 1724P 40 2 "$17 − (d) in sections 62(4) and 63(3), for the formula substitute— ". 00) 8 $63 250(P P) 000 431($200 D " − − × s. 4 -- 11 of 17 -- Part 2—Duties Act 2000 State Taxation Legislation Amendment (Housing Affordability) Act 2006 Act No. 86/2006 10 5. New clause 24 inserted in Schedule 2—transitional provision After clause 23 of Schedule 2 to the Duties Act 2000 insert— "24. State Taxation Legislation Amendment (Housing Affordability) Act 2006 (1) Sections 59 and 60, as amended by section 4 of the State Taxation Legislation Amendment (Housing Affordability) Act 2006, apply to a transfer to an eligible pensioner of dutiable property being an estate in fee simple in land if the contract of sale of the land was entered into on or after 1 January 2007. (2) Sections 59 and 60, as in force immediately before the commencement day, continue to apply to a transfer to an eligible pensioner of dutiable property being an estate in fee simple in land if the contract of sale of the land was entered into before 1 January 2007. (3) Sections 62 and 63, as amended by section 4 of the State Taxation Legislation Amendment (Housing Affordability) Act 2006, apply to a transfer to an eligible first home owner of dutiable property being an estate in fee simple in land if the contract of sale of the land was entered into on or after 1 January 2007. (4) Sections 62 and 63, as in force immediately before the commencement day, continue to apply to a transfer to an eligible first home owner of dutiable property being an estate in fee simple in land if the contract of sale of the land was entered into before 1 January 2007. (5) In this clause, commencement day means the day on which the State Taxation Legislation Amendment (Housing Affordability) Act 2006, received the Royal Assent.". __________________ s. 5 -- 12 of 17 -- Part 3—First Home Owner Grant Act 2000 State Taxation Legislation Amendment (Housing Affordability) Act 2006 Act No. 86/2006 11 PART 3—FIRST HOME OWNER GRANT ACT 2000 6. Extension of first home bonus (1) In section 18(2) of the First Home Owner Grant Act 2000— (a) in paragraph (b), for "1 July 2007." substitute "1 January 2007; or"; (b) after paragraph (b) insert— "(c) if the commencement date of the eligible transaction is on or after 1 January 2007 and before 1 July 2009— (i) $5000 if the eligible transaction is a contract for the purchase of new residential premises or an eligible transaction referred to in section 13(1)(b) or (c); or (ii) $3000 in any other case.". (2) After section 18(6) of the First Home Owner Grant Act 2000 insert— "(7) If a transferee of a PPR transfer elects under section 57O of the Duties Act 2000 to receive a concessional rate of duty in respect of the PPR transfer, he or she is not entitled to any amount under subsection (2) of this section in respect of the eligible transaction relating to the land that is the subject of the PPR transfer. (8) In this section— new residential premises has the same meaning as in section 40-75 of the A New Tax System (Goods and Services Tax) Act 1999 of the Commonwealth; s. 6 See: Act No. 5/2000. Reprint No. 1 as at 1 January 2004 and amending Act Nos 46/2004, 71/2004, 36/2005 and 38/2006. LawToday: www.dms. dpc.vic. gov.au -- 13 of 17 -- Part 3—First Home Owner Grant Act 2000 State Taxation Legislation Amendment (Housing Affordability) Act 2006 Act No. 86/2006 12 PPR transfer has the same meaning as in Division 4A of Part 5 of Chapter 2 of the Duties Act 2000.". __________________ s. 6 -- 14 of 17 -- Part 4—Pay-roll Tax Act 1971 State Taxation Legislation Amendment (Housing Affordability) Act 2006 Act No. 86/2006 13 PART 4—PAY-ROLL TAX ACT 1971 7. Tax rate reduction brought forward In section 7(1) of the Pay-roll Tax Act 1971— (a) in paragraph (l), for "July 2007" substitute "January 2007"; (b) in paragraph (m), for "June 2007" substitute "December 2006". __________________ s. 7 See: Act No. 8154. Reprint No. 10 as at 1 January 2004 and amending Act Nos 46/2004, 71/2004, 36/2005, 24/2006, 38/2006 and 84/2006. LawToday: www.dms. dpc.vic. gov.au -- 15 of 17 -- Part 5—General State Taxation Legislation Amendment (Housing Affordability) Act 2006 Act No. 86/2006 14 PART 5—GENERAL 8. Repeal of Act This Act is repealed on the first anniversary of its commencement. ═══════════════ s. 8 -- 16 of 17 -- State Taxation Legislation Amendment (Housing Affordability) Act 2006 Act No. 86/2006 15 ENDNOTES † Minister's second reading speech— Legislative Assembly: 19 December 2006 Legislative Council: 20 December 2006 The long title for the Bill for this Act was "to amend the Duties Act 2000, the First Home Owner Grant Act 2000 and the Pay-roll Tax Act 1971 to improve housing affordability and bring forward pay-roll tax cuts and for other purposes." Endnotes -- 17 of 17 --