Tuesday, 30 May 2023
Bills
State Taxation Acts Amendment Bill 2023
Bills
State Taxation Acts Amendment Bill 2023
Statement of compatibility
Tim PALLAS (Werribee – Treasurer, Minister for Industrial Relations, Minister for Trade and Investment) (11:48): In accordance with the Charter of Human Rights and Responsibilities Act 2006 I table a statement of compatibility in relation to the State Taxation Acts Amendment Bill 2023.
In accordance with section 28 of the Charter of Human Rights and Responsibilities Act 2006 (Charter), I make this Statement of Compatibility with respect to the State Taxation Acts Amendment Bill 2023.
In my opinion, the State Taxation Acts Amendment Bill 2023 (Bill), as introduced to the Legislative Assembly, is compatible with the human rights as set out in the Charter. I base my opinion on the reasons outlined in this Statement.
Overview
This Bill introduces a number of budget measures, and makes technical amendments to the Duties Act 2000 (Duties Act), the Fire Services Property Levy Act 2012 (FSPL Act), the Land Tax Act 2005 (Land Tax Act), the Payroll Tax Act 2007 (Payroll Tax Act), the Planning and Environment Act 1987 (Planning Act), the Subdivision Act 1988 (Subdivision Act), the Taxation Administration Act 1997 (Taxation Administration Act) and the Valuation of Land Act 1960 (Valuation of Land Act).
Many of the amendments made by the Bill do not engage the human rights listed in the Charter because they either do not affect natural persons, or they operate beneficially in relation to natural persons.
Human rights issues
The rights under the Charter that are relevant to the Bill are recognition and equality before the law, the right to property, the right to fair hearing and the right to protection from retrospective criminal laws.
Recognition and equality before the law: section 8(3)
Section 8(3) of the Charter provides that every person is equal before the law and is entitled to the equal protection of the law without discrimination. Discrimination, under section 6 of the Equal Opportunity Act 2010, includes discrimination on the basis of race, which is defined to include differentiation based on a person’s nationality or national origin.
Clauses 27 to 33, 39 and 41 of the Bill increase the tax rate for absentee owners of land by 2% from the 2024 land tax year. Clause 39 of the Bill also lowers the tax-free threshold for absentee owners of land (other than trustees of trusts) from $300,000 to $50,000 from the 2024 land tax year.
The Charter implications of the original absentee owner surcharge provisions were addressed in the Statement of Compatibility accompanying the State Taxation and Other Acts Amendment Bill 2015. The Bill may engage the section 8(3) rights of natural person absentees because these amendments differentiate between taxpayers’ liability on the basis of a person’s nationality. However, any limitation on those rights would be reasonable and justified in accordance with section 7(2) of the Charter because the amendments are directed to implementing the underlying purpose of collecting surcharge rates of land tax from absentee owners of land. Differential treatment of foreign natural persons is central to the policy intent, which is to improve housing affordability for Victorians and to fund vital infrastructure by increasing the cost of holding land for foreign persons in the Victorian residential housing market.
Right to property: section 20
Section 20 of the Charter provides that a person must not be deprived of his or her property other than in accordance with law. This right is not limited where there is a law that authorises a deprivation of property, and that law is adequately accessible, clear and certain, and sufficiently precise to enable a person to regulate their conduct.
Duties Act amendments
Division 1 of Part 2 of the Bill inserts provisions into the Duties Act to allow for the taxation of corporate collective investment vehicles (CCIVs) on an equivalent basis to the taxation of trusts under that Act. The right to property may be engaged by these amendments where natural persons are members of CCIV sub-funds and become liable to duty in that capacity.
Division 3 of Part 2 of the Bill replaces the current eligible pensioner exemption/concession with a new eligible cardholder exemption/concession. The right to property may be engaged by these amendments as natural persons may be required to pay duty or an increased amount of duty where currently an exemption or higher concession applies.
To the extent that people’s property rights are affected by the above amendments to the Duties Act, any limit is in accordance with the law, which is clearly articulated, not arbitrary, and sufficiently precise to enable affected natural person taxpayers to inform themselves of their legal obligations and to regulate their conduct accordingly. Any deprivation of property arising from the payment of duty under the CCIV amendments is further justifiable since these provisions are anti-avoidance in nature.
FSPL Act amendments
Clauses 23 and 24 of the Bill contain amendments to the refund and cancellation provisions of the FSPL Act to expressly preclude refund/cancellation requests the basis for which is a ground of objection under the Valuation of Land Act. To the extent that natural persons may overpay FSPL on the basis of an incorrect valuation and do not pursue an objection under the Valuation of Land Act, the right to property may be engaged. Any deprivation of property arising from limiting the grounds on which a refund may be issued, or an FSPL assessment cancelled, is justifiable since those affected remain entitled to dispute FSPL liabilities under the Valuation of Land Act. Further, the measures are designed to prevent revenue leakage and promote certainty of revenue that funds Victoria’s firefighting services.
To the extent that people’s property rights are affected, any limit is in accordance with the law, which is clearly articulated, not arbitrary, and sufficiently precise to enable affected natural person taxpayers to inform themselves of their legal obligations and to regulate their conduct accordingly.
Land Tax Act amendments
Division 1 of Part 4 of the Bill inserts provisions into the Land Tax Act to allow for the taxation of CCIVs on an equivalent basis to the taxation of trusts under that Act. The right to property may be engaged by these amendments where natural persons are members of CCIV sub- funds and become liable to land tax in that capacity.
Clauses 27 to 32, 39 and 41 of the Bill increase the tax rate for absentee owners of land by 2% from the 2024 land tax year. Clause 39 of the Bill also lowers from the 2024 land tax year the tax-free threshold for absentee owners of land (other than trustees of trusts) from $300,000 to $50,000. These amendments affect natural persons who will be required to pay land tax at a higher rate, and from a lower threshold, than that which currently applies and as such the right to property may be engaged.
Clause 35 of the Bill temporarily lowers the tax-free threshold for owners of land (other than absentee owners and/or trustees of trusts) from $300,000 to $50,000 from the 2024 land tax year, for a period of 10 years. It also temporarily increases the rate of tax payable by those owners with total taxable land of $300,000 or more. The right to property may be engaged as natural persons will become liable to land tax at a lower threshold where previously they were not so liable or will be required to pay land tax at a higher rate than that which currently applies.
Clauses 37 and 41 of the Bill temporarily increase the rate of land tax payable by trustees of trusts who own land with a total taxable value of $50,000 or more from the 2024 land tax year, for a period of 10 years. The right to property may be engaged as natural persons may be required to pay land tax at a higher rate than that which currently applies.
To the extent that people’s property rights are affected by the above amendments to the Land Tax Act, any limit is in accordance with the law, which is clearly articulated, not arbitrary, and sufficiently precise to enable affected natural person taxpayers to inform themselves of their legal obligations and to regulate their conduct accordingly. Any deprivation of property arising from the payment of land tax under the CCIV amendments is further justifiable since these provisions are anti-avoidance in nature.
Payroll Tax Act amendments
Clause 58 of the Bill corrects an omission in the Payroll Tax Act to specify the annual rate of payroll tax for the 2022–23 and subsequent financial years. To the extent that natural person employers will no longer be able to exploit a drafting error to avoid paying annual payroll tax, people’s property rights may be affected. However, any limit is in accordance with the law, which is clearly articulated, not arbitrary, and sufficiently precise to enable affected natural person taxpayers to inform themselves of their legal obligations and to regulate their conduct accordingly.
Planning Act amendments
Division 1 of Part 6 of the Bill amends the Planning Act to clearly impose the Growth Areas Infrastructure Contribution (GAIC) on the certification of a plan of subdivision under section 35 of the Subdivision Act. To the extent that natural person landowners can no longer use subdivision technicalities to avoid a liability to GAIC, the right to property may be engaged.
Clauses 102 and 103 of the Bill correct anomalies in the Planning Act to provide that, following subdivision of a parent lot, GAIC is apportioned to child lots on the proportionate area of the child lot to the parent lot, excluding land outside the contribution area. To the extent that natural person landowners may no longer be able to take advantage of technicalities in the apportionment provisions to avoid a liability to GAIC, the right to property may be engaged.
Any deprivation of property under these amendments to the Planning Act is justifiable since these provisions are anti-avoidance in nature. To the extent that people’s property rights are affected, any limit is in accordance with the law, which is clearly articulated, not arbitrary, and sufficiently precise to enable affected natural person taxpayers to inform themselves of their legal obligations and to regulate their conduct accordingly.
Taxation Administration Act and Valuation of Land Act amendments
Clause 108 of the Bill amends the objection provisions of the Taxation Administration Act such that an objection to either of the two valuations on which a windfall gains tax (WGT) assessment is based will be taken as an objection to both relevant valuations. In addition, clause 109 of the Bill amends the Valuation of Land Act to provide that an objection to either of the two valuations on which a WGT assessment is based will be taken as an objection to both relevant valuations.
To the extent that natural person landowners will not be able to manipulate valuation objections to minimise their WGT liability, the right to property may be engaged. Any deprivation of property arising from these amendments is justifiable as they are anti- avoidance measures. To the extent that people’s property rights are affected, any limit is in accordance with the law, which is clearly articulated, not arbitrary, and sufficiently precise to enable affected natural person taxpayers to inform themselves of their legal obligations and to regulate their conduct accordingly.
Clause 110 of the Bill includes amendments to give councils discretion whether to adopt any amended valuations that result from a WGT valuation objection. These amendments may engage the right to property in circumstances where a natural person landowner overpays council rates on the basis of a valuation which is later found to be overstated for WGT purposes, and the relevant council declines to issue an amended rates notice reflecting the revised value. Any deprivation of property arising from these amendments is justifiable as the purpose of the amendments is to ensure revenue certainty and promote efficiency for municipal councils by ensuring that that WGT objections do not place an undue burden on councils. Aggrieved landowners remain entitled to contest property valuations for council rates purposes under the Valuation of Land Act.
Right to fair hearing: section 24
The right to a fair hearing as protected under section 24 of the Charter provides that a person charged with a criminal offence or a party to a civil proceeding has the right to a fair hearing. The right to a fair hearing applies to both courts and tribunals, such as the Victorian Civil and Administrative Tribunal. Generally, the right to a fair hearing is concerned with procedural fairness and access to a court or tribunal, rather than the substantive fairness of a decision of a court or tribunal determined on the merits of a case.
FSPL Act amendments
Clauses 23 and 24 of the Bill contain amendments to the refund and cancellation provisions of the FSPL Act to expressly preclude refund/cancellation requests the basis for which is a ground of objection under the Valuation of Land Act. To the extent that section 24 of the Charter is engaged and limited by these provisions, I am satisfied that any such limit would be demonstrably justified. These amendments have been introduced to prevent landowners from using alternative pathways to the objections process set out in the Valuation of Land Act to contest land valuations for FSPL purposes and in particular to prevent the circumvention of the strict timeframes set out in the Valuation of Land Act. Any limit on the right to fair hearing by this amendment is justified as it is a revenue protection measure intended to prevent revenue leakage and promote revenue certainty. Aggrieved landowners remained entitled to contest property valuations for FSPL purposes under the Valuation of Land Act.
Planning Act amendments
Division 2 of Part 6 of the Bill abolishes the GAIC Hardship Relief Board (Board). To the extent natural person landowners will no longer be able to seek GAIC relief from the Board, the right to fair hearing may be engaged. However, I am satisfied that any limit would be demonstrably justified. These amendments eliminate unnecessary regulation and administrative burdens and promote government efficiency. Under the amendments, natural person landowners will be able to seek GAIC relief on financial hardship grounds from the Governor in Council instead of the Board.
Taxation Administration Act and Valuation of Land Act amendments
Clause 108 of the Bill amends the objection provisions of the Taxation Administration Act such that an objection to either of the two valuations on which a WGT assessment is based will be taken as an objection to both relevant valuations. In addition, clause 109 of the Bill amends the Valuation of Land Act to provide that an objection to either of the two valuations on which a WGT assessment is based will be taken as an objection to both relevant valuations.
To the extent that section 24 of the Charter is engaged and limited by these provisions, I am satisfied that any such limit would be demonstrably justified. These amendments have been introduced to prevent landowners from manipulating the objections process to minimise their liability to WGT. Any limit on the right to fair hearing by this is justified as a revenue protection measure intended to prevent tax leakage and avoidance activity. Aggrieved landowners remained entitled to contest property valuations for WGT purposes under the Taxation Administration Act, albeit that both relevant values will be reviewed.
Clause 110 of the Bill includes amendments to the Valuation of Land Act to give councils discretion whether to adopt any amended valuations that result from a WGT valuation objection. To the extent that section 24 of the Charter is engaged and limited by these provisions, I am satisfied that any such limit would be demonstrably justified. These amendments have been introduced to ensure revenue certainty and promote efficiency for municipal councils by ensuring that WGT objections do not place an undue burden on councils. Aggrieved landowners remain entitled to contest property valuations for council rates purposes under the Valuation of Land Act.
Retrospectivity: section 27
Section 27 of the Charter is concerned with the retrospective operation of criminal laws. It provides that a person has the right not to be prosecuted or punished for things that were not criminal offences at the time they were committed.
Payroll Tax Act amendments
Clause 58 of the Bill corrects an omission in the Payroll Tax Act to specify the annual rate of payroll tax for the 2022–23 and subsequent financial years. The proposed amendment is to take effect retrospectively from 1 July 2022 to confirm the annual payroll tax rates that apply for the 2022–23 and subsequent financial years.
The provisions being inserted into the Payroll Tax Act do not amend any criminal laws and therefore section 27 of the Charter is not engaged. In any event, the retrospective operation of clause 58 is necessary to correct a drafting anomaly by which monthly payroll tax is imposed but an annual rate is not specified for the 2022–23 financial year. Importantly, clause 58 of the Bill does not in practice operate to impose payroll tax retrospectively. For the 2022–23 financial year, employers are already under a legislated obligation to pay payroll tax on a monthly basis at the relevant rate. The amendments only affect the annual rate of payroll tax which is relevant to the annual reconciliation completed after the end of the financial year, i.e. after 30 June 2023 in respect of the 2022–23 financial year, and part-year reconciliations where an employer has not employed for the full financial year.
For these reasons, in my opinion, the provisions of the Bill are compatible with the rights contained in sections 8(3), 20, 24 and 27 of the Charter.
TIM PALLAS MP
Treasurer
Second reading
That this bill be now read a second time.
I ask that my second-reading speech be incorporated into Hansard.
Incorporated speech as follows:
I am pleased to introduce this Bill, which amends the Duties Act 2000, Fire Services Property Levy Act 2012, Land Tax Act 2005, Payroll Tax Act 2007, Planning and Environment Act 1987, Subdivision Act 1988, Taxation Administration Act 1997 and Valuation of Land Act 1960 to ensure that these Acts remain consistent with their underlying policy intent.
This Bill delivers 2023–24 budget initiatives and amends several laws to ensure they support fair and effective revenue administration.
COVID Debt Repayment Plan – COVID Debt Levy
The Government’s Covid Debt Repayment Plan, which aims to offset debt incurred assisting Victorians through the COVID-19 pandemic, contains a temporary and targeted levy that will apply for 10 years, expiring on 30 June 2033, with two components.
Firstly, the Bill will introduce a new payroll tax surcharge that will apply to employers who pay wages of $10 million or more nationally. A rate of 0.5 per cent will apply for businesses with national payrolls above $10 million, and businesses with national payrolls above $100 million will pay an additional 0.5 per cent. The additional rates will be paid on the Victorian share of wages above the relevant threshold. This surcharge is expected to raise $836 million in 2023–24 and is projected to raise around $1 billion a year by the end of the forward estimates.
Secondly, the Bill will reduce the general rates land tax-free threshold to $50,000. In addition, it will impose land tax surcharges and increase current land tax rates by imposing a temporary flat surcharge of $500 on general taxpayers with landholdings between $50,000 and $100,000 and a temporary flat surcharge of $975 on general taxpayers with landholdings between $100,000 and $300,000. Trust rates will increase in a consistent manner. For general taxpayers with landholdings over $300,000 (and trust taxpayers with landholdings above $250,000), land tax rates will temporarily increase by 0.1 per cent of the value of landholdings above $300,000, in addition to the $975 temporary flat surcharge. Following the conclusion of the applicable 10-year period on 30 June 2033, these changes will be reversed.. It is estimated that the increased land tax rates will raise an additional $4.7 billion in revenue over the budget and forward estimates.
Better business tax
To support the growth of the Victorian economy, the Bill will gradually abolish business insurance duties (which apply to public and product liability, professional indemnity, employers’ liability, fire and industrial special risks, and marine and aviation insurance) by reducing the applicable duty rate by 1 per cent per annum over a 10-year period commencing from 1 July 2024. Duty on business insurance will therefore be abolished by 2033 and will result in the reduction of insurance duty revenue received over the budget forward estimates period by more than $275 million.
To further support Victorian small businesses, the Bill will increase the payroll tax-free threshold from $700,000 to $900,000 from 1 July 2024, and subsequently increase further to $1,000,000 from 1 July 2025. Around 6,000 businesses, who otherwise would have paid payroll tax, will stop paying when the threshold reaches $1 million. More than 26,000 small businesses will benefit from the Government increasing the tax-free threshold to $1 million. The Bill will also introduce a ‘phase out’ of the allowable deduction for payroll tax for businesses who pay wages over $3 million. The Payroll Tax Act 2007 (PTA) currently allows a deduction based on the tax-free threshold to be subtracted from Victorian taxable wages in determining the amount of payroll tax payable. The allowable deduction is adjusted on a pro- rata basis in accordance with the proportion of the employer’s total Australian wages that are taxable wages and partly adjusted for employers who pay wages for part of a financial year. Under the ‘phase out’, businesses who pay wages between $3,000,000 and $5,000,000 will receive a progressively smaller deduction resulting in proportionately more payroll tax payable. Businesses who pay wages over $5 million will not be eligible for the deduction in payroll tax on their taxable wages. This measure will commence from 1 July 2024 to give businesses time to adjust their operations to the new payroll tax framework and is expected to cost around $62 million over the budget and forward years.
Revenue measures
The Bill will limit the existing payroll tax exemption applying to non-government schools to low-fee non-government schools as declared by the Minister for Education with the consent of the Treasurer. The PTA currently exempts from payroll tax, wages paid by not-for-profit non-government schools as defined by the Education and Training Reform Act 2006 (ETRA), provided those wages are paid to people in relation to the provision of education within that school. In practice, this has the effect of exempting all non-government schools in Victoria from payroll tax. Under this budget measure, declared schools will be eligible for the exemption from payroll tax and non-declared schools would be liable to pay payroll tax and additional surcharges where their taxable wages exceed the tax-free threshold. This initiative will align the payroll tax treatment of high-fee non-government schools with that of government schools and ensure the benefit of this exemption only flows to schools that need support. Approximately 110 schools, or around the top 15 per cent by fee level, will lose their exemption. This measure is proposed to commence from 1 July 2024 and is expected to generate $422 million across the budget and forward years.
The Bill increases the absentee owner land tax surcharge rate from 2 per cent to 4 per cent cent to align with the rate in New South Wales. The Bill will also decrease the minimum threshold for non-trustee absentee owners from $300,000 to $50,000. This means the surcharge will be payable if the total taxable value of Victorian land held by a non-trust absentee owner is equal to or exceeds $50 000. There will be no change to the minimum threshold for trust taxpayers. These measures ensures that foreign property owners continue to contribute towards the provision of government services and infrastructure in Victoria, to the ultimate benefit of all Victorian property owners. This measure is expected to generate around $1.2 billion in revenue over the budget and forward estimates.
Support measures
To support those impacted by builder insolvencies, the Bill will provide the Commissioner of State Revenue with the discretion to extend the existing land tax exemption for principal places of residence under construction or renovation by up to an additional two years effective from the 2024 land tax year. The Land Tax Act 2005 (LTA) currently contains a principal place of residence exemption for land which is unoccupied and contains a residence which is under construction or renovation. The current exemption applies from the commencement date of construction or renovation and is available for a maximum of four tax years after the year in which construction or renovation commenced. This measure, commencing the day after Royal Assent, will provide the Commissioner of State Revenue with discretion to extend the exemption period by up to an additional two years where further time is required to complete construction due to builder insolvency. It is estimated the extension of the principal place of residence exemption will reduce land tax revenue by approximately $2.4 million over the budget and forward estimates.
The Bill will introduce a number of land tax and transfer duty relief measures to provide further support to families providing housing to family members facing severe disabilities. Firstly, the Bill amends the Duties Act 2000 (the Duties Act) to increase the special disability trust (SDT) deduction threshold from $500,000 to $1,500,000 for transfers of dutiable property to the trustee of an SDT, but only where the property is to be used as the principal place of residence of the principal beneficiary of the SDT. Secondly, the Bill will introduce an exemption from duty for transfers of property from immediate family members for no consideration to a qualifying person with a disability which is to be used as the principal place of residence of that qualifying person. Currently, duty exemptions are available to families who establish an SDT for the purposes of providing accommodation and housing to family members who suffer from a severe disability. However, costs and complexities associated with establishing and operating an SDT have been onerous and prohibitive for some families. This measure will provide a similar duty exemption, without the requirement to establish an SDT, provided the qualifying person with a disability meets certain residency requirements and the dutiable value of the property does not exceed $1,500,000. Thirdly, the Bill will also introduce a land tax exemption for land used as the home of an individual eligible to be the beneficiary of an SDT, even in the absence of an established SDT, provided there is no consideration or rent provided. The duties exemption and the land tax exemption will apply on the basis that the person with a disability meets the impairment and disability conditions of the beneficiary requirements of an SDT under the Social Securities Act 1991 (Cth) or Veterans’ Entitlements Act 1986 (Cth) and meets other PPR exemption criteria. Collectively, these measures will assist people to provide long-term housing solutions for immediate family members with severe disabilities and are expected to reduce tax revenue by approximately $5.4 million over the budget and forward estimates.
The Bill will assist pensioners and other concession card holders by increasing the land transfer duty exemption and concession threshold from $330,001 and $750,000, to $600,001 and $750,0000. Accordingly, a full exemption from duty will be available for dutiable property that is below $600,000 rather than $330,000, provided that an eligible pensioner acquires an interest of 25 per cent or more and satisfies a residency requirement. Separately, if an eligible pensioner purchases a share or an interest in a property, the exemption and concession thresholds are currently assessed against the dutiable value of the fractional interest of the eligible pensioner, rather than the dutiable value of the whole property. The new measure will therefore be aligned with the first home buyer exemption and concession and improve fairness by assessing eligibility on the total value of the purchase, rather than on the fractional interest of the eligible pensioner. The proposed amendments are to have effect to contracts entered into from 1 July 2023.
The Bill will also introduce a new land tax exemption for land protected by a conservation covenant entered into with Trust for Nature, commencing from 1 January 2024. A conservation covenant is a voluntary legal agreement made between a private landowner and Trust for Nature that binds the landowner as to the development or use or the conservation of land subject to the covenant. The new land tax exemption will therefore support landowners to protect the conservation value of the land and is estimated to reduce land tax revenue by approximately $3.1 million over the budget and forward estimates.
General taxation amendments
The Bill makes several amendments to Victoria’s laws that will clarify their operation, correct drafting defects and remove anomalies that disadvantage taxpayers.
Corporate collective investment vehicles
The Bill will amend the Duties Act 2000, Land Tax Act 2005 and Payroll Tax Act 2007 to address the corporate collective investment vehicle (CCIV) reforms recently made by the Australian Government. CCIVs were established as a new fund management entity, intended to be an alternative structure to the existing trust-based management investment scheme to increase the competitiveness of Australia’s managed fund industry and attract foreign investment. A CCIV is a company limited by shares, thus a single legal entity with all assets, liabilities and businesses of a CCIV assigned to one or more segregated sub-funds. Each sub-fund has its own set of members, who are at law shareholders of the CCIV, however the sub-funds do not have separate legal personality and no trust relationship is created between the CCIV and the members of a sub-fund in respect of the property held in that sub-fund. As CCIVs are brand new entities, existing Victorian taxation legislation views a CCIV as a single legal person and the sole legal and beneficial owner of all land across the CCIV’s sub-funds.
The Bill amends the Duties Act 2000 and the Land Tax Act 2005 to deem each sub-fund of a CCIV as equivalent to a separate unit trust scheme for duties and land tax purposes. Under this approach, CCIVs would be regulated and taxed as if they were trustees; property of the sub-funds would be treated as trust property, and the members of each sub-fund would be treated as beneficiaries/unit holders. Consequential amendments to the Duties Act 2000 will also ensure the principle that each sub fund is deemed to be equivalent to a unit trust scheme is carried throughout each Act. The Bill will amend the Payroll Tax Act 2007 to exclude amounts paid or payable by a CCIV to its corporate director as wages for payroll tax purposes. This is intended to prevent payroll tax from applying to payments from the CCIV to its corporate director.
Fire services property levy
The Bill amends the refund and cancellation provisions under the Fire Services Property Levy Act 2012 (the FSPL Act) in response to the Victorian Court of Appeal case of Valuer General (Vic)v AWF Prop Co 2 Pty Ltd [2021] VSCA 274 (the AWF Decision). The refund and cancellation provisions under the FSPL Act allows collection agencies to refund or cancel payments for mistakes, such as duplicated payments or mathematical errors. In the AWF Decision, the Ararat Rural City Council sent notices to an operator (being the lessee of land) with Capital Improved Values calculated on the assumption that the wind turbines connected to underground foundations were fixtures forming part of the land. The Court subsequently held that the fixtures did not form part of the land and should be excluded from the hypothetical fee simple estate to be valued by a valuation authority for FSPL and rates purposes. Following the AWF Decision, several wind farm operators have made refund requests under the refund and cancellation provisions in respect of historical FSPL paid. However, these provisions were not intended to provide a person aggrieved by a valuation with an alternative avenue to dispute amounts paid if they were otherwise too late to lodge an objection under the Valuation of Land Act 1960 (VLA). Accordingly, the Bill will amend the refund and cancellation provisions to expressly carve out overpayments/errors, the basis for which is a ground of objection under the VLA. These amendments will ensure consistency between the refund and cancellation provisions in the FSPL Act and will adequately reflect the policy intent of the statutory scheme.
The Bill will make a minor amendment to the PTA to correct the omission of annual payroll tax rates being in place for the 2022-23 financial year and subsequent financial years in respect of regional employers and bushfire relief regional employers. The Bill will therefore amend the PTA by inserting the words ‘or any subsequent financial year’, in clause 1 of Schedule 1. This amendment will ensure that the annual payroll tax rates will apply for the financial year commencing 1 July 2021 continue to apply for the 2022–23 and future financial years, as was always intended.
Growth areas infrastructure contribution
The Bill abolishes the Growth Areas Infrastructure Contribution (GAIC) Hardship Relief Board in line with the recommendations of the Commissioner for Better Regulation. Section 201TE of the Planning and Environment Act (PE Act) empowers the Governor in Council to, on the recommendation of the Minister for Planning, grant a reduction of or exemption from GAIC liability in exceptional circumstances. The Bill will amend this to include financial hardship as an exceptional circumstance, which will provide an alternative means for landowners to seek relief from GAIC liability.
The Bill also closes a loophole in the GAIC provisions of the PE Act and its interaction with section 35 of the Subdivision Act 1988. The current framework enables developers to excise land for public purposes early and prior to GAIC being triggered, with the result being that GAIC liabilities on these parcels are never realised to state revenue, or are imposed on local government and other government agencies. Use of the section 35 loophole means that councils and other acquiring authorities were acquiring land with a GAIC liability on title which becomes a financial risk for them. This amendment introduces a new GAIC event, being the certification of a non-statement of compliance subdivision to ensure that any GAIC liability on land which is subdivided through section 35 of the Subdivision Act 1988 is paid prior to transfer to an acquiring authority. This removes the financial risk and burden from councils and other municipal authorities and provides that GAIC continues to apply to all land within the contribution area on a broad hectare basis, as intended by GAIC policy.
The Bill also amends the PE Act to prevent GAIC from being apportioned from a parent lot to any child lot wholly outside the contribution area, where the parent lot is partly inside and outside the contribution area. This can lead to the apportionment of GAIC to a child lot that is not within the contribution area, or allocate a child lot that is partially outside the contribution area with a greater GAIC liability that it should otherwise be liable to. To prevent this unintended outcome, the Bill will amend the PE Act to provide that GAIC is apportioned to child lots based on the proportionate area of the child lot to the parent lot, excluding land outside the contribution area.
The Bill rectifies the unintended consequences of an earlier amendment to the Duties Act which aimed to close a loophole relating to acquisition of economic entitlements. This had the effect of triggering a GAIC liability at the time a person enters into an agreement with a landowner where the profits of the development of the land are split, but the title to the property remains with the original landowner. This brought forward the requirement to pay GAIC much earlier in the development cycle, and while a triggered liability can be deferred, it attracts interest from the time it is triggered, resulting in a higher liability than would have ordinarily been incurred. The Bill ensures that acquisition of economic entitlements becomes an excluded event. The Bill also includes a range of minor and technical amendments to ensure the Act is consistent with changes that have occurred in recent years to the Duties Act. Collectively, these amendments to GAIC will come into operation on the day after the day on which this Act receives the Royal Assent.
The Bill will also amend the Taxation Administration Act 1997 and VLA to clarify the scope of objections lodged to valuations of land used in an assessment of Windfall gains tax (WGT). The WGT was legislated in the WGT Amendment Act and will come into operation from 1 July 2023, which will apply to land subject to a rezoning decision that results in a land value uplift of more than $100,000. Value uplift is calculated as V2 minus V1, where V2 relates to the capital improved value in a post-rezoning supplementary valuation undertaken by the Valuer-General Victoria (Valuer-General) and V1 relates to the capital improved value in a pre- rezoning valuation of the land. Under the current WGT regime, landowners may object to either or both valuations and the Valuer-General can only consider and adjust a valuation which the owner has objected to. An owner could therefore manipulate the value uplift on which WGT is calculated by objecting to only one of the valuations. Changes to the amendments to the Taxation Administration Act 1997 and VLA in the WGT Amendment Act are proposed so that an objection to either V1 or V2 is taken as an objection to both V1 and V2. This would empower the Valuer-General to consider grounds of objection for both valuations and adjust either or both as part of determining the objection’s outcome, if appropriate. In addition, the VLA is proposed to be amended (via the WGT Amendment Act) to give councils discretion whether to adopt any amended valuations that result from a WGT valuation objection. This ensures councils are not required to issue a secondary rate notice every time that a WGT objection leads to an adjusted value, such as in cases where the adjustment is minor, or substantial time has elapsed before the amended notice of valuation is issued. These amendments are proposed to take effect from the day after Royal Assent to be in place when the WGT commences on 1 July 2023.
I commend the Bill to the house.
James NEWBURY (Brighton) (11:48): I move:
That the debate be now adjourned.
Motion agreed to.
That debate be adjourned until tomorrow.
James NEWBURY (Brighton) (11:49): This is outrageous. It is outrageous that the Treasurer would bring a tax bill into this chamber that no Victorian has seen – this bill is hot because it has just come off the photocopier – and move that the bill be considered tomorrow and guillotined tomorrow. It is a bill that does a number of things. It is a long bill. It is an 80-page bill of new taxes to be imposed upon Victoria, and I note that one of them that is particularly egregious and has been received so incredibly poorly by the community is the new tax on non-government schools. In fact I know of a number of schools that will be making comment at some point. Their view is they will be made insolvent by these new taxes, and I do not say that lightly. They are going to talk about that publicly. They are going to talk about the fact that these new taxes are going to make them insolvent. This government is going to make non-government schools insolvent with this new set of taxes.
This package of measures is something that we have never seen before – that Victorians have never seen. Victorians have not seen what is being proposed in it, and the Treasurer has wandered into the chamber and said ‘Not only, Victoria, have you not seen it, we refuse to give you time to consider it’, despite the fact that only last year the government did the right thing – I will give them credit; they did the right thing – and they allowed the Parliament to consider these budgetary measures for two weeks, as would normally be the case. So why this year is the government hiding these measures from the community? Why are they hiding it from the community? Because they know how dangerous these measures are. They know the impact of these measures, and as I said, I only spoke to one.
There are a number of measures that are going to cause absolute havoc in the community. One of them that I mentioned was the new tax on schools, the new tax on kids – taxing kids! – overturning an almost 100-year principle in this nation that schools, benevolent institutions, are not taxed. This government is now proposing to overturn that principle, and we know that that will not be the end of where these measures go. This is only the start, and every member of this place should be aware that these new tax measures on schools are not going to end here. This is the thin end of the wedge. If you have a child who goes to a non-government school, any non-government school, you should be worried; if you ever want your child to, you should be worried. This is a debate about whether or not these state tax measures are given the time in this place to be considered by Victoria.
Pauline Richards: On a point of order, Acting Speaker, this is a procedural debate, and as such we should stick to the rules of procedural debates.
The ACTING SPEAKER (Paul Hamer): Manager of Opposition Business, you were straying into debating the bill, and I ask you to talk about the procedural debate.
James NEWBURY: The sentence, Acting Speaker, that just came out of my mouth was that this is a debate around whether this bill should be given time to be considered by the Victorian community. That is exactly what the procedural motion is about.
The ACTING SPEAKER (Paul Hamer): Yes, and in the previous 4 minutes you had been talking about the content. I ask you to talk about the procedural motion.
James NEWBURY: Acting Speaker, with respect, no member raised any concern at any point in my debate, so therefore I would ask you to rule that point of order out of order.
The ACTING SPEAKER (Paul Hamer): No. I have ruled on the point of order, and I ask you to come back to the procedural debate.
James NEWBURY: The Treasurer has moved to ram through a set of new tax measures in one day – ram through and guillotine them. Fortunately we now know Victorians have seen what the government is doing in this place. We know that Victorians can now see the government for what it is and its tactics in this place for what they are. You cannot introduce such punitive, nasty measures that are going to hurt people – they are going to hurt children; they are going to send schools to the wall – and not allow the community to see them. We oppose the government’s measure to do that. We oppose it, and we certainly will be voting against the government trying to ram this bill through.
Paul EDBROOKE (Frankston) (11:54): Acting Speaker, I will just give you the guarantee that I will actually stick to what we are talking about and not argue with you. The members opposite would argue over winning a million bucks in a lottery, I think. It is just amazing to hear people so sidetracked with their own issues – here we go.
James Newbury: On a point of order, Acting Speaker, the member, despite his own contribution, has clearly strayed from the motion, and I ask you to bring him back to it.
The ACTING SPEAKER (Paul Hamer): The member for Frankston shall speak on the procedural motion.
Paul EDBROOKE: Thanks very much, Acting Speaker. We know that those opposite are distracted by their own issues. We know they are distracted by people in their party telling Indigenous Australians they should be thankful. We know that they have got their own issues. But that is not an excuse to hold up government business. I might remind those opposite that the good people of Victoria voted this government in with one more seat in the lower house. They are confident that we can do the job. Sometimes that job is not doing what is pretty, sometimes that job is not what people want to hear. That job is really hard, and it is about hard decisions. Part of what we are talking about in this government business program debate is that bills like the tax bill, which those opposite are talking about at the moment, are very, very important bills to talk about in the government business program.
James Newbury: On a point of order, Acting Speaker, with respect, this debate is not the government business program debate. It is a debate about whether the government should be ramming through a bill in one day, which we oppose. It has nothing to do with the government business program. It is about the government ramming through new tax laws in one day.
The ACTING SPEAKER (Paul Hamer): The member for Frankston shall continue and will restrict their comments to the procedural motion.
Paul EDBROOKE: Thank you very much. We know we are talking on a motion, but it does talk about the government business program debate because it is part of that. We know, as I said, those opposite are very sidetracked. We had the member for Brighton just talk about how this new bill will make all schools insolvent.
James Newbury: I didn’t say that.
Paul EDBROOKE: Well, that is what I heard: ‘Why are we taxing kids?’ These are the people that took the EMA away – the education maintenance allowance. To hear that rubbish from that side is just –
Members interjecting.
Paul EDBROOKE: And he cannot hack it. He just cannot hack it.
James Newbury: On a point of order, Deputy Speaker, this is a tight procedural debate around whether or not the government can ram through a bill in one day. It has nothing to do with any political points that the member is unsuccessfully trying to make. It is about whether the bill should be rammed through in one day.
The DEPUTY SPEAKER: I will rule on the point of order. It is a procedural debate. It would be appreciated if you could stick to that. However, I did listen to the Manager of Opposition Business’s lead speech, and it was going somewhere outside it, so please stay within the realms of the debate at hand.
Paul EDBROOKE: Thank you, Deputy Speaker. With that, I will take it that you are advising us that it has been a wideranging debate and we should, on this side of the house, be able to touch on things that the opposition have touched on, like school funding and like their history of taking away the EMA and closing schools –
James Newbury: On a point of order, Deputy Speaker, this is outrageous. I would say to you that this is a tight procedural debate. I note your comments earlier, but I think that in the spirit of the order of the house that the comments of all members should be somewhat closer to the motion at hand.
The DEPUTY SPEAKER: I would encourage the member to stay within the realms of our current time frame.
Paul EDBROOKE: Thank you for your advice on that, Deputy Speaker. Look, it is obvious that those opposite are up and about. They are a bit angry. They know that this is something they should be voting for. They know that this motion should go through. They know that by pausing things in this house the government needs to stand up and waste their time like this, arguing about things we should be moving on with. With that, we can see that they would rather hear more from themselves in standing up and interrupting other speakers than actually hearing other people’s opinions. I mean, that was voted out very, very well at the last election. We have got the Treasurer in here at the moment, a person who I think has done the hard yards over the last few years and who has put through an amazing bill that is responsible, as it is a way forward for Victoria – and many states are going through this at this stage. While those opposite want to obfuscate and obstruct to ensure that we pass this debt on to further generations, we on this side of the house will not.
Cindy McLEISH (Eildon) (11:59): This is a fairly simple debate. We are debating the period of adjournment of debate on bills – it is absolutely simple. We have had a practice in this house for a considerable period of time that allows us two weeks to go out to consult. I have some history here from quite a long time ago. The first example of a disagreement about the period of adjournment actually was in 1932. This is when the government proposed one week and the opposition at the time asked for two weeks. We have had fairly solidly since that time acceptance in this house that the adjournment period for debating bills is two weeks. We come in here, and when you lose that one day – it is 13 days, and we expect it to be 14 – it is one day less, and as happens so often, when we are out engaging with stakeholders, which is what our role is, they do not always get back to us within that time. It depends on the complexity of the bill and the availability of people.
So it is very often that we come into this place to debate the second reading and we do not have all of the consultation back, because we know that that is what they need. That is a fair thing to be doing; that is the right thing to be doing. The occasions when this time has been truncated to one day or to the same day have been times that have been negotiated; they have been times when there has been an urgency. These typically in my time have been around council matters, when councils are appointing a monitor. The government moves to appoint a monitor or administrators, and this goes through very quickly with our agreement. The Leader of the House works with the Manager of Opposition Business and we agree, because we know when those things are urgent.
It seems that the acceptance of longstanding procedures and processes is being absolutely thrown out of the window by the government – the traditions that we have had here. Last sitting week we were absolutely appalled to think that we were given six days to do the consultation – that was absolutely staggering to us. But then to find out that we have the bill that we are debating at the moment – the State Taxation Acts Amendment Bill 2023 –
James Newbury: We haven’t even seen it.
Cindy McLEISH: We haven’t seen it, and we are expected to debate it tomorrow. We are expected to go out and get feedback from all of the stakeholders that are concerned – and there are a lot of stakeholders, because we know this government are absolutely having to look under every rock for money because they are broke. So they are having to impose taxes on taxes everywhere. It is one thing for the Treasurer to flag publicly the sorts of taxes that might be included in this bill, but it is another to go through clause by clause and have a look at the absolute detail, because you are guaranteed there will be gremlins there that the Treasurer has not raised with the public – absolutely there will be gremlins there.
We need time. We do not just need today and overnight to consult with the stakeholders to get their views, we need further time. It tells me of the arrogance of this government when they are looking to truncate the period of adjournment of the debates that we would normally expect not to 13 days, not to six days, which was not confected outrage – we were horrified last week at six days – but, as we hear now, to overnight. It is extraordinary.
A member: It’s the end of the world as we know it.
Cindy McLEISH: It is almost the end of the way that procedure and debate has happened in this chamber for a very long period of time. The government have no regard for anybody else but themselves. It is not about Victorians, it is about them. We have this government business program that has been all mucked up, so the Treasurer has no opportunity to actually bring this in to get it debated and through to the other place before 30 June. He does not have the time, so he has to now do what he is told and give it one day, and that puts everybody behind the eight ball. It is grossly unfair, and it is something that I hope that we do not have to argue again but that I am expecting we are going to be arguing again very shortly, because this government is one of the most arrogant and, this term, the most disorganised that we have seen. The program is all over the place. They are not organised. They really need to get their act together.
Juliana ADDISON (Wendouree) (12:04): I am delighted to participate in today’s procedural debate. The heavy-lifting member for Eildon strikes again – her stats are right up there – but we are going to have to talk about what we are doing today, and I support that we get on with debating the State Taxation Acts Amendment Bill 2023. I want to thank the Treasurer and his ministerial office for the work that they have been doing to bring in this bill, which is to amend the Duties Act 2000, the Fire Services Property Levy Act 2012, the Land Tax Act 2005, the Payroll Tax Act 2007, the Planning and Environment Act 1987, the Subdivision Act 1988, the Taxation Administration Act 1997 and the Valuation of Land Act 1960 and for other purposes.
I come from a regional community, and I come here to do the work. I come here to do the work for my community. I leave my family, I leave my kids – I am missing the year 9 social tomorrow night, but they will be right – because I want to do the work here for my community and this state, and debating this bill is about doing the work. We know there are constitutional requirements in this state to allow the other place to look through this as well, to have scrutiny and to have the opportunity to debate this bill, and that is what we are doing today. We are moving forward and governing for Victorians and bringing debate on rather than messing about with procedure. We are not compromising the members of this place. This is my fifth budget, which I am really proud of, with some really great things for my community, delivering on all our election commitments in full for Ballarat and for the electorate of Wendouree, and I will be talking about that at length because I am going to get 15 minutes on my feet in the budget take-note motion. Every single person in this house will be given that opportunity.
Emma Kealy: On a point of order, Deputy Speaker, it is a very narrow procedural debate. I ask you to bring the member for Wendouree back to the matter at hand.
Sarah Connolly: On the point of order, Deputy Speaker, we have been sitting here now for quite some time watching the opposition consistently interject with irrelevant points of order. The member was being entirely relevant to the procedural debate here before the house this afternoon. Can I suggest she just keep on getting on with it. You are doing a great job.
James Newbury: On the point of order, Deputy Speaker, I have heard the point of order from both previous members and I would say it is a tight procedural debate. Though I am sure that we are all looking forward to the member’s contribution on the take-note motion, this is not the take-note motion. I ask you to bring the member back to the question.
The DEPUTY SPEAKER: It is a tight procedural debate that has become somewhat less tight since we started. The member to continue, please, on the procedural debate.
Juliana ADDISON: Absolutely. I referred to the former speaker, the member for Eildon, talking about history. Maybe we need to go back to ancient Rome for a bit of history about filibustering, about trying to obstruct and about trying to frustrate process rather than actually getting on with the job. When we heard the commentary in another procedural debate earlier from the member for Gippsland South, describing chaos and things that are out of order –
James Newbury: On a point of order, Deputy Speaker, this debate is in no way in relation to the question before us, and I would ask you to bring the member back, again, to the question.
The DEPUTY SPEAKER: The member to return to the procedural motion.
Juliana ADDISON: It is clear that we are getting on with the business of governing. It is clear that we are getting on with the business of wanting to move forward with bills in this house. I am not going to waste any more time. There is enough filibustering going on; there is enough frustrating of the process going on. I will be supporting the Treasurer and supporting people in this chamber to get on with the state taxation bill.
Emma KEALY (Lowan) (12:08): This is a very, very narrow procedural debate, and it is something that we perhaps have not heard applied appropriately from members of government who have spoken to this. We are absolutely aggrieved that there is such a large taxation bill that has been brought before the house today to be debated again in this house tomorrow. This is not the government’s house, this is the people’s house. The traditions and customs of this place mean that we usually have 14 days before debate is brought on, and the reason for that is so that we have an opportunity to go back to our key stakeholders, to talk to industry leaders and to talk to people who will be impacted by the legislative changes put forward by the government to understand what the implications will be. This is usually undertaken over a two-week period because that is fair. That is fair for people who are not used to reading through very detailed legislation which involves a number of significant changes to the taxes that they will pay and that will impact on their household budget and will impact on the number of people that they can employ. It will have far-reaching impacts for individuals and for families, and that is why we are opposing this position of debating this bill in just one day.
I note the comments from the member for Wendouree that we are messing around with procedure.
Roma Britnell: Such disrespect.
Emma KEALY: I think that is entirely disrespectful, I agree, member for South-West Coast. It is so disrespectful to people in the community who elect us to be here. They elect us here. They have an opportunity to put it on –
Juliana Addison interjected.
The SPEAKER: Order! Member for Wendouree!
Emma KEALY: It is an opportunity for every Victorian to give their point of view and perspective about legislation before this house so that as members of Parliament we can properly represent the people who elect us and put us in this place. It is not about ramming through brand new tax laws that are going to hurt businesses, hurt schools and hurt families and just say, ‘No, this is the government’s business. We can do whatever we want. We don’t care what you think. We don’t care what you say. We don’t care what the impact will be on you. We want to just barge on and do what we want to do and only give one day’s notice to do so.’ For the member for Wendouree to think that this is fair is, absolutely, disrespectful to everybody in her electorate of Wendouree, because it will have an impact on people who voted her in here. This is –
Paul Edbrooke: On a point of order, Speaker, this is a very narrow debate. It is not time to pass judgement on other members of Parliament from the opposite side.
Members interjecting.
The SPEAKER: Order! The member for South-West Coast will come to order. Member for Lowan, I ask you to keep your comments on the procedural motion.
Emma KEALY: I fully believe that every single piece of legislation that comes through this place should be retained in place for 14 days so that we can make sure we are properly representing all of the people, the businesses and the communities across the state of Victoria. I do not believe that bringing in legislation with only one day’s notice before we debate it in this place, legislation which introduces a new tax on schools, introduces a new rent tax, introduces a new job tax – this will have far-reaching implications for every single Victorian. There is absolutely no way in any democratic society that putting forward such a complex piece of legislation that will have such far-reaching impacts on every single corner of the Victorian community should be debated with just one day’s notice. Look at just the report that we have got from the Treasurer; the summary report is seven pages. It is a complex bill. It is not a straightforward bill where there are only a couple of little changes here or there – a full stop, a grammatical error – this is a barrage of new taxes which are going to be unleashed upon Victorians.
I urge the government to reconsider their position and not put this bill on the Parliament of Victoria with just one day’s notice. We need to ensure that our community groups, our businesses, our families, our schools, people who own apartments and who are providing really important low-cost rentals for the community and everybody can have their say on this, not just the members of government. Because being a representative within this place is far more than just speaking up for yourself. You have to speak up for all Victorians. (Time expired)
Assembly divided on motion:
Ayes (54): Juliana Addison, Jacinta Allan, Daniel Andrews, Colin Brooks, Josh Bull, Anthony Carbines, Ben Carroll, Darren Cheeseman, Anthony Cianflone, Sarah Connolly, Chris Couzens, Jordan Crugnale, Lily D’Ambrosio, Daniela De Martino, Steve Dimopoulos, Paul Edbrooke, Will Fowles, Matt Fregon, Ella George, Luba Grigorovitch, Bronwyn Halfpenny, Katie Hall, Paul Hamer, Martha Haylett, Mathew Hilakari, Melissa Horne, Natalie Hutchins, Lauren Kathage, Sonya Kilkenny, Nathan Lambert, Alison Marchant, Kathleen Matthews-Ward, Steve McGhie, Paul Mercurio, John Mullahy, Tim Pallas, Danny Pearson, Pauline Richards, Tim Richardson, Michaela Settle, Ros Spence, Nick Staikos, Natalie Suleyman, Meng Heang Tak, Jackson Taylor, Nina Taylor, Kat Theophanous, Mary-Anne Thomas, Emma Vulin, Iwan Walters, Vicki Ward, Dylan Wight, Gabrielle Williams, Belinda Wilson
Noes (32): Brad Battin, Jade Benham, Roma Britnell, Tim Bull, Martin Cameron, Annabelle Cleeland, Chris Crewther, Gabrielle de Vietri, Wayne Farnham, Sam Groth, Matthew Guy, Sam Hibbins, David Hodgett, Emma Kealy, Tim McCurdy, Cindy McLeish, James Newbury, Danny O’Brien, Michael O’Brien, Kim O’Keeffe, John Pesutto, Tim Read, Richard Riordan, Brad Rowswell, Ellen Sandell, Ryan Smith, David Southwick, Bill Tilley, Bridget Vallence, Peter Walsh, Kim Wells, Jess Wilson
Motion agreed to.
Debate adjourned until tomorrow. Debate adjourned until Wednesday 31 May.