Wednesday, 15 May 2024
Bills
State Taxation Amendment Bill 2024
State Taxation Amendment Bill 2024
Introduction and first reading
The PRESIDENT (18:34): I have a message from the Legislative Assembly:
The Legislative Assembly presents for the agreement of the Legislative Council ‘A Bill for an Act to amend the Duties Act 2000, the Environment Protection Act 2017, the Gambling Taxation Act 2023, the Land Tax Act 2005, the Payroll Tax Act 2007, the Planning and Environment Act 1987, the State Taxation Acts and Other Acts Amendment Act 2023, the Taxation Administration Act 1997 and the Victorian Conservation Trust Act 1972 and for other purposes’.
That the bill be now read a first time.
Motion agreed to.
Read first time.
Harriet SHING: I move, by leave:
That the second reading be taken forthwith.
Motion agreed to.
Statement of compatibility
Harriet SHING (Eastern Victoria – Minister for Housing, Minister for Water, Minister for Equality) (18:35): I lay on the table a statement of compatibility with the Charter of Human Rights and Responsibilities Act 2006:
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 Amendment Bill 2024.
In my opinion, the State Taxation Amendment Bill 2024 (Bill), as introduced to the Legislative Council, is compatible with the human rights as set out in the Charter. I base my opinion on the reasons outlined in this Statement.
Overview
The Bill makes a number of amendments to the Duties Act 2000, the Gambling Taxation Act 2023 (Gambling Taxation Act), Land Tax Act 2005 (Land Tax Act), the Payroll Tax Act 2007, the Planning and Environment Act 1987, the Taxation Administration Act 1997 (TA Act), the Environment Protection Act 2017 (Environment Protection Act) and the Victorian Conservation Trust Act 1972.
Many provisions of 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 the right to privacy and the presumption of innocence.
Right to privacy: section 13
Section 13(a) of the Charter provides that every person has the right to enjoy their private life, free from interference. This right applies to the collection of personal information by public authorities. An unlawful or arbitrary interference to an individual’s privacy will limit this right.
Social or emergency housing exemption: Land Tax Act
Clause 12 of the Bill introduces sections 78B and 78C into the Land Tax Act which relevantly provide that in order to obtain a land tax exemption in relation to social or emergency housing, the owner of the land must apply to the Commissioner for the exemption and provide the Commissioner with any information the Commissioner requests for the purpose of enabling the Commissioner to determine whether the land is exempt.
To the extent that the collection of any personal information from a natural person in relation to these land tax exemption applications may result in interference with a natural person’s privacy, any such interference will be lawful and not arbitrary as these provisions do not require that a person’s personal information be published.
Further, these provisions only require the provision of information necessary to achieve the purpose of determining eligibility for the land tax exemption which is exclusively in the taxpayer’s possession. Therefore, there are no other reasonable means available to achieve this purpose.
Presumption of innocence: section 25(1)
The right in section 25(1) is engaged where a statutory provision shifts the burden of proof onto an accused in a criminal proceeding, so that the accused is required to prove matters to establish, or raise evidence to suggest, that the accused person is not guilty of an offence.
Gambling Taxation Act amendment and TA Act failure to exercise due diligence
Clause 5 of the Bill inserts new section 14A into the Gambling Taxation Act which requires a casino operator to provide specified information requested by the Commissioner within a specified timeframe. Clause 23 of the Bill amends section 130B of the TA Act to specify that if a body corporate commits an offence against new section 14A of the Gambling Taxation Act, an officer of the body corporate also commits an offence against that provision if the officer failed to exercise due diligence to prevent the commission of the offence by the body corporate.
Although this provision requires a defendant to raise evidence of a matter to rely on a defence, it imposes an evidential, rather than legal burden.
Courts in other jurisdictions have generally taken the approach that an evidential onus on a defendant to raise a defence does not limit the presumption of innocence. The defences and excuses provided relate to matters within the knowledge of the defendant, which is appropriate in circumstances where placing the onus on the prosecution would involve the proof of a negative which would be very difficult. Therefore, this amendment is compatible with the right to the presumption of innocence protected by the Charter.
Conclusion
For these reasons, in my opinion, the provisions of the Bill are compatible with the rights contained in sections 13 and 25(1) of the Charter.
Hon Jaclyn Symes MP
Attorney-General
Minister for Emergency Services
Second reading
That the bill be now read a second time.
Ordered that second-reading speech be incorporated into Hansard:
It is with pleasure that I introduce this Bill to deliver a number of 2024–25 Budget initiatives. The Bill also amends several state taxation laws to support fair and effective revenue management for all Victorians.
The Bill contains amendments to the Duties Act 2000, the Environment Protection Act 2017, the Gambling Taxation Act 2023, the Land Tax Act 2005, the Payroll Tax Act 2007, the Planning and Environment Act 1987, the State Taxation Acts and Other Acts Amendment Act 2023, the Taxation Administration Act 1997 and the Victorian Conservation Trust Act 1972 to ensure their consistent operation.
Budget measures
Land tax exemption for social and emergency housing
In line with the 2024–25 Budget announcement, the Bill amends the Land Tax Act 2005 to introduce a social and emergency housing exemption. Existing land tax exemptions, such as those for public statutory authorities and charities, cover many types of social and emergency housing but not all situations are exempt. The new exemption covers social housing or emergency housing owned directly by an appropriate housing provider, as well as privately-owned housing where the owner has engaged a provider to manage the property. Vacant land declared for future use as social and emergency housing by a charity will also be exempt. The exemption reflects the diverse range of delivery models in use by the community housing sector and supports the reduction of costs for owners who use land for this purpose. The new exemption will commence on 1 January 2025 for the 2025 land tax year onwards.
Waste levy changes
In Victoria we send around 4.8 million tonnes of waste to landfill each year. This is a waste of precious resources, which could be avoided by reducing the amount of waste we generate and recycling more. To drive this change, and support Victoria’s transition to circular economy, waste levies will be increased from 1 July 2025. The Bill amends the Environment Protection Act 2017 to increase the metropolitan municipal and industrial waste levy from to $169.79 per tonne from 1 July 2025. The amendment also proportionally increases the waste levy rates at rural landfills, which attract lower levies than metropolitan landfills, and increases the reportable priority waste levy for Category C and D wastes to $169.79 per tonne from 1 July 2025. The rates for other categories of priority waste are unchanged to continue encouraging the safe disposal of hazardous waste materials. These changes harmonise Victoria’s waste levy rates with the comparable rates in New South Wales and South Australia and will encourage investment in resource recovery infrastructure and disincentivise waste going to landfill. The revenue raised from the waste levy provides core funding for agencies including the Environment Protection Authority, Sustainability Victoria and Recycling Victoria. The remaining revenue is added to the Sustainability Fund to advance environmentally sustainable uses of resources, best practices in waste management, and community action or innovation to reduce greenhouse gas emissions or address climate change in Victoria.
Conservation covenants
The Bill amends the Victorian Conservation Trust Act 1972 to establish a legislated trust to support the establishment of conservation covenants by Trust for Nature (the Trust) to protect and conserve privately owned land in metropolitan Melbourne. To support the Trust’s work, the Victorian Conservation Trust Act 1972 is amended to establish the Vacant Land Conservation Covenants Account (the Account) under the Trust Fund. The Secretary of the Department of Energy, Environment and Climate Action (DEECA) may authorise payments out of the Account to the Trust for reasonable costs and expenses incurred in relation to the entry of conservation covenants for land that is in metropolitan Melbourne, is vacant and unimproved (does not have a dwelling) and is within a zone other than a non-residential zone. DEECA’s annual report prepared under Part 7 of the Financial Management Act 1994 must include details about income and expenditure in relation to the Account along with the number of covenants entered into as a result of money paid out of the Account.
Vacant residential land tax amendments
Expanding the holiday home exemption
As part of the 2024–25 Budget the Bill amends the Land Tax Act 2005 to extend the holiday home exemption from vacant residential land tax (VRLT)to certain homes owned by companies or trustees of trusts. Last November the Government committed to extending the exemption to properties held in the name of a trust or company as of 28 November 2023. The current exemption only applies to holiday homes used and occupied by the person who owns the land, or the vested beneficiary of a trust to which the land is subject. The Bill broadens the exemption to allow shareholders of companies, certain beneficiaries of trusts and relatives of those shareholders and beneficiaries to satisfy the holiday home exemption requirements for a property owned by a company or trust. However, the exemption only applies if land has been continuously owned by the same company or a trustee since 28 November 2023 without any change in beneficial ownership (other than any transfers between relatives). The expanded exemption will commence on 1 January 2025 for the 2025 land tax year onwards.
Exempting land contiguous to holiday homes in metropolitan Melbourne
From 1 January 2026, VRLT will apply to unimproved residential land in metropolitan Melbourne that remains undeveloped for 5 years or more, in line with changes to the Land Tax Act 2005 made by the State Taxation Acts and Other Acts Amendment Act 2023. This change may lead to situations where residential land is used and occupied as a holiday home and therefore exempt from VRLT, but adjoining residential land on a separate title is not exempt because it has been unimproved for 5 years or more. This would result in inconsistent treatment of a holiday home and any land contiguous to the home that enhances its use and occupation. The Land Tax 2005 is therefore amended to allow unimproved residential land contiguous to an exempt holiday home to also be exempt. The amendment commences on 1 January 2026 in line with the expansion of the VRLT to unimproved residential land in metropolitan Melbourne.
Other amendments
Metropolitan planning levy
The Bill amends the Planning and Environment Act 1987 to provide additional circumstances where metropolitan planning levy (MPL) can be refunded and to extend the 90-day validity period of the MPL certificate. MPL is imposed as a requisite for making a leviable planning permit application for the development of land in metropolitan Melbourne where the estimated cost of the development exceeds a threshold amount. The Commissioner of State Revenue (Commissioner) issues a certificate on the full payment of the levy, which is valid for 90 days after issue. The limited 90-day validity period and inability to provide refunds impose administrative difficulties on planning permit applicants and the State Revenue Office. This includes the need for applicants to extend planning permit applications in many cases, and unfair outcomes where the levy cannot be refunded in unforeseen circumstances. To improve the fairness and effectiveness of MPL, the Bill extends the 90-day certificate validity period to 180 days, and allows refunds applications to be made either where an applicant died before the application was made and no other person is proceeding with the application, or the relevant planning scheme was amended before the application was made resulting in either the proposed leviable development no longer being permitted or no longer requiring a permit. The amendments commence on the day after Royal Assent.
Land tax deductions
The Bill amends the Land Tax Act 2005 to provide a taxpayer, who is a member of only one joint ownership or a beneficiary of only one trust and who owns no other lands individually, is not to be assessed at the secondary level. Both joint owners of land, and land held on trust where a trustee of a fixed trust or unit trust has notified the Commissioner of the beneficial interests in the trusts, are assessed for land tax at two levels. Joint owners are first assessed together on their jointly owned land, and then individually on all taxable land they own, including their interest in any jointly owned land. For affected trusts, the trustee is first assessed on the trust land at the general land tax rates, and then the beneficiary is individually assessed on all taxable land they own, including their beneficial interest in the trust land. In each case, a deduction applies to the individual assessment to reflect the share of land tax that was already assessed to the joint ownership or trustee. The changes to land tax under the COVID Debt Repayment Plan from the 2024 to 2033 land tax years include a temporary fixed charge amount, which currently applies at both the primary and secondary levels. This means the deductions available to some joint owners or relevant beneficiaries may not fully offset the secondary liability as intended, resulting in exposure to double taxation. To remove this anomaly the Land Tax Act 2005 is amended to provide that a taxpayer, who is a member of only one joint ownership or a beneficiary of only one trust and who owns no other lands individually is not to be assessed at the secondary level. This restores the position of the above taxpayers prior to the introduction of the surcharge. The amendment operates retrospectively from 1 January 2024 to ensure it applies for the full duration of the temporary surcharge under the COVID Debt Repayment Plan (2024 to 2033), and that affected taxpayers are not subject to a higher land tax liability than intended for the 2024 land tax year.
Insurance duty
As announced in the 2023–24 Budget and legislated in the State Taxation Acts Amendment Act 2023, duty on business insurance will be gradually abolished over a 10-year period starting from 1 July 2024. Business insurance is defined as general insurance relating to specified classes of business in the Prudential Standards issued by the Australian Prudential Regulation Authority (APRA). To respond to changes to the classes of business in new Prudential Standards issued by APRA after the introduction of the 2023 amendments, the Bill amends the Duties Act 2000 to include Directors & Officers insurance and Cyber insurance as classes of business insurance for insurance duty purposes. This amendment is proposed to come into operation from 1 January 2025, to provide insurance providers with sufficient time to update their systems and processes.
In recognition that APRA may issue new or amended Prudential Standards in the future, the Duties Act 2000 is also amended to give the Treasurer the power, by notice published in the Government Gazette, to include other APRA classes of business as business insurance under the Duties Act 2000, or to carve out one or more kinds of insurance under a class of business from the same definition.
It is my intention to exclude public liability cover attaching to householder insurance (which is otherwise part of the public and product liability class of business) to ensure such insurance is not included within the definition of business insurance, by making of a declaration to that effect after the Bill has passed. This declaration will be effective from 1 July 2024.
Casino tax records
The Bill amends the Gambling Taxation Act 2023 to enable the Commissioner to compel a casino operator to produce a document or information on a prospective basis for periods of up to 6 months. The Victorian casino operator is required to lodge a return and pay casino taxes to the Commissioner each month. The Commissioner under section 73 of the Taxation Administration Act 1997 (TAA) has an existing investigative power to require the production of information, documents or things in a person’s custody or control by way of written notice (section 73 notice). However, the Commissioner cannot use a section 73 notice to require the production of records on a regular or ongoing basis, such as the daily records created by the casino operator. The Gambling Taxation Act 2023 is thus amended to enable the Commissioner to require the casino operator to provide information, documents or things specified in a written notice that are or may come into the operator’s possession for a prospective period not exceeding 6 months. In recognition of historical non-compliance by the casino operator in disclosing and reporting on its operations for tax purposes, as identified by the Royal Commission into the Casino Operator and Licensee, the penalty for failure to comply is equivalent to the existing penalty for failure to comply with a section 73 notice under the TAA (500 penalty units in the case of a body corporate and 100 penalty units in any other case). The Bill also amends the TAA to provide for the criminal liability of officers of the casino operator who fail to exercise due diligence to prevent the commission of this offence. The amendment commences on the day after Royal Assent.
Growth areas infrastructure contribution
The Bill amends the Planning and Environment Act 1987 in respect of the growth areas infrastructure contribution (GAIC) to ensure it interacts with section 35 of the Subdivision Act 1988 as intended. The State Taxation Acts Amendment Act 2023 closed a loophole that previously enabled developers to utilise subdivisions under section 35 of the Subdivision Act 1988 (section 35 subdivisions) to excise land for public purposes at an early stage and prior to GAIC being triggered, thus avoiding realisation of a GAIC liability. However, the Planning and Environment Act 1987 further provides that subdivisions do not trigger GAIC if they are carried out by a public authority or municipal council and no additional lots are created, which is applicable to section 35 subdivisions. This may provide an avenue for developers to minimise their GAIC liability in a similar manner. The amendment provides that a section 35 subdivision is only an excluded subdivision if it subdivides land owned by a public authority or municipal council, which aligns with the policy intent to enable these authorities to separate part of a parcel of land that is or has been acquired compulsorily or by agreement from the balance of a parcel. The amendment commences on the day after Royal Assent.
Payroll tax for high-fee non-government schools
The Bill amends the Payroll Tax Act 2007 in respect of the payroll tax exemption applying to non-government schools. The State Taxation Acts Amendment Act 2023 amends the Payroll Tax Act 2007 from 1 July 2024 to limit the exemption to low-fee non-government schools declared by the Minister for Education with the consent of the Treasurer (declared schools). However, the Payroll Tax Act 2007 has other exemptions that high-fee non-government schools (undeclared schools) or related entities providing educational services to them could potentially claim in some circumstances. These include exemptions for wages paid by religious institutions or non-profit organisations to employees engaged exclusively in charitable work, or wages paid to persons providing educational services in connection with the curriculum of a school (other than for profit or gain). Therefore the Payroll Tax 2007 is amended from 1 July 2024 to provide that undeclared schools are not eligible for exemption as religious institutions, and separate entities providing educational services in connection with the curriculum of undeclared schools are not eligible for exemption as religious institutions, non-profit organisations or for educational services, in relation to services provided to undeclared schools. The amendment will reinforce the policy of limiting the exemption for undeclared schools so that their payroll tax treatment aligns with that of government school, without affecting the status of any declared schools from 1 July 2024.
I commend the bill to the house.
Georgie CROZIER (Southern Metropolitan) (18:36): I move, on behalf of my colleague Mr Mulholland:
That debate on this bill be adjourned for one week.
Motion agreed to and debate adjourned for one week.