Thursday, 30 November 2023

State Taxation Acts and Other Acts Amendment Bill 2023

Instruction to committee

The PRESIDENT (15:33): In consideration of the amendments circulated by Minister Symes, in my view amendments 1, 2 and 11 are not within the scope of the bill. Therefore an instruction motion pursuant to standing order 14.11 is required. I remind the house that an instruction motion to the committee is a procedural motion.

Jaclyn SYMES (Northern Victoria – Attorney-General, Minister for Emergency Services) (15:33): I move:

That it be an instruction to the committee that they have power to consider amendments and a new clause to amend the Fire Services Property Levy Act 2012 in relation to the Australian Valuation Property Classification Code for certain land uses.

Motion agreed to.

Committed.

Committee

The DEPUTY PRESIDENT: Before we start, I remind members that under section 64 of the Constitution Act 1975 the Council does not have the power to make amendments to certain clauses of this bill that impose a tax. No question will be put on these clauses, and any proposed amendments must be in the form of a suggestion to the Assembly. Standing order 14.16 sets out the procedure for dealing with those suggested amendments.

Clause 1 (15:36)

Jaclyn SYMES: Just for your information, Deputy President, we are going to seek to be pretty flexible given the arrangement of the committee here, amendments over there, so pretty much we will just step through it as much as you want to without restrictions.

David DAVIS: I get the Attorney-General’s desire to be flexible here. On clause 1 I just thought it was worth noting that there is an amendment to clause 1 with respect to the fire services property levy land use classification. This principally relates to renewable energy projects, and I wonder if the Attorney might provide to the committee the amount of tax that was intended to be collected but will now not be collected under the changes proposed with the amendments.

The DEPUTY PRESIDENT: If we are going to ask questions on the amendments, wouldn’t it be better that we actually –

David Davis interjected.

The DEPUTY PRESIDENT: Just moving the amendment – it does not have to be voted on.

David DAVIS: Let me explain, Deputy President. The bill as it is at the moment imposes a new tax on renewable energy, and the government clearly must know how much tax it is collecting there. The government has foreshadowed that it will move amendments to remove that change, so we can have the figure in either direction. I do not mind.

Jaclyn SYMES: Mr Davis, wind, solar and battery farms will pay roughly $3 million less in fire services property levy in 2024–25 with this change than they would have paid without it.

Evan MULHOLLAND: Attorney, how many additional properties is it anticipated that the vacant land tax will apply to by expanding the tax to the entire state? How many additional properties will that capture?

Jaclyn SYMES: Mr Mulholland, my advice is, as we have indicated previously, the expansion of the vacant residential land tax to all of Victoria is estimated to affect around 900 additional landowners.

Evan MULHOLLAND: How many additional properties is it anticipated that the vacant land tax will apply to by expanding the tax to include vacant undeveloped land that is zoned for residential use if it has not been improved within five years?

Jaclyn SYMES: The expansion to unimproved land is estimated to affect 3000 owners of unimproved land.

Evan MULHOLLAND: What is the start date of the vacancy period or unimproved period? For example, if land has not been improved for 20 years, would the vacant land tax immediately apply to this property, or would it apply five years after the tax begins?

Jaclyn SYMES: 1 January 2026.

Evan MULHOLLAND: Does the government actually have any modelling on the effect this will have on housing affordability and housing supply and how many extra properties will be on the market or rented out as a result?

Jaclyn SYMES: Thank you, Mr Mulholland. I certainly appreciate your question. The government has considered the impact on supply but is not in a position to provide quantitative estimates. However, it is clear from the data of current vacant residential land tax that the 1 per cent has not been a strong enough incentive for some property owners to bring dwellings onto the market. We are hoping that this improves the current situation.

Evan MULHOLLAND: I understand the government has no quantitative estimates, but I might try this question: does the government have any modelling on the effect this tax will have on property prices or rents?

Jaclyn SYMES: Mr Mulholland, you have articulated the motivation for the changes. We want more housing supply because more housing supply to meet demand will have a positive impact on rentals and housing affordability.

Evan MULHOLLAND: Does the government have any modelling on the effect of the 3 per cent rate after three years compared to the initial rate?

Jaclyn SYMES: Mr Mulholland, what we do know is that the current rate of 1 per cent is arguably not a strong enough incentive for some property owners to bring their properties to market. That is why we are making the changes to increase the rate to 2 per cent and 3 per cent in relation to those that are vacant for consecutive years to add an additional incentive to shake up those properties.

Evan MULHOLLAND: I wanted to ask about the trial to make the tax enforceable and how it will work. For example, how will the State Revenue Office identify potentially empty properties to then ask the owners to provide proof that people live in their residences? How will it work, and could the State Revenue Office demand proof from owners?

Jaclyn SYMES: Mr Mulholland, for obvious reasons the SRO does not publish detailed information about their compliance activities and the types of measures. But I can confirm that they look at various data sources to establish if a property is occupied, either by an owner occupier or a renter. And if based on data matching or other external sources of information a property appears vacant for six months or more than a year, then the SRO may contact the property owner. If there is evidence that suggests no-one is there, it will prompt contact from the SRO and people will be provided with an opportunity to provide evidence in relation to the vacancy or otherwise of that property.

Evan MULHOLLAND: Could the government or the Attorney provide any information on the location or locations of this trial, when the trial might take place and over what period?

Jaclyn SYMES: Mr Mulholland, my advice is in relation to the compliance trial it will involve apartment towers in 2024 and in 2025 involve inner and middle suburbs of Melbourne.

Evan MULHOLLAND: How does the trial differ to the usual compliance and enforcement activities undertaken by the SRO?

Jaclyn SYMES: Mr Mulholland, the State Revenue Office will use existing capabilities and compliance tools but will be looking at a larger number of dwellings.

Evan MULHOLLAND: How much will the trial cost the State Revenue Office and how much will the expansion of the scheme cost the SRO to administer?

Jaclyn SYMES: The compliance activities are expected to bring in more than they cost, and I saw some figures. Initial estimates are that the compliance trial may cost around $3 million to $4 million, although we will be able to revise that number after the initial 2023 pilot is completed over the next month or so. It is anticipated that we are looking at around $7 million to $11 million, as the best estimate, in relation to revenue that would be recouped from those activities.

Evan MULHOLLAND: Does the government have any estimates on the compliance cost to property owners of complying with the expanded vacant land tax?

Jaclyn SYMES: Do you mean in having to pay the tax or in having to demonstrate that you are living there when you are not?

Evan MULHOLLAND: The compliance cost to property owners. I assume there might have been some sort of impact modelling of the expansion of the vacant land tax; that is what I am asking about.

Jaclyn SYMES: Do you mean on the individual landowner or the SRO?

Evan MULHOLLAND: The property owner.

Jaclyn SYMES: Mr Mulholland, compliance cost is always considered by the SRO and will be considered by the SRO as part of the trials. And in terms of complying with a request to demonstrate whether you are liable for the tax or not, we do not expect that to be onerous. You can just provide a utility bill, for example.

The DEPUTY PRESIDENT: Attorney, I invite you to move your amendment 1, which is a test for your amendments 2 and 11 on your sheet JS36C.

Jaclyn SYMES: Given Mr Mulholland knows what I am talking about, I move:

1. Clause 1, page 2, after line 6 insert –

“(ab) to amend the Fire Services Property Levy Act 2012 in relation to the Australian Valuation Property Classification Code for certain land uses; and”.

Amendment agreed to; amended clause agreed to; clauses 2 and 3 agreed to.

Clauses 4 to 7 (15:49)

Evan MULHOLLAND: On clause 7, just in regard to the threshold formula and the rounding rules, it seems as if it could be rounded up by $50,000. I am just wanting some clarification from the Attorney.

Jaclyn SYMES: I will seek clarification from the box on that one. Yes, Mr Mulholland, it is rounded.

No question put pursuant to standing order 14.16(2).

Clauses 8 to 10 agreed to.

Clauses 11 and 12 – no question put pursuant to standing order 14.16(2).

New clause (15:51)

Jaclyn SYMES: I move:

2. Insert the following New Part to follow Part 2 –

‘Part 2A – Amendment of Fire Services Property Levy Act 2012

12A Amendment of Schedule

(1) In item 3 of the Table in the Schedule to the Fire Services Property Levy Act 2012, for “615–623, 626–637,” substitute “615–620, 623, 628–637,”.

(2) In item 5 of the Table in the Schedule to the Fire Services Property Levy Act 2012, for “640–642,” substitute “621, 622, 626, 627, 640–642,”.’.

New clause agreed to; clauses 13 to 15 agreed to.

Clause 16 (15:52)

Jaclyn SYMES: I move:

3. Clause 16, line 8, after “land” insert “for a sale price less than the threshold amount”.

4. Clause 16, line 16, after “land” insert “for a sale price less than the threshold amount”.

5. Clause 16, after line 24 insert –

“(3) In this section –

sale price, in relation to a contract, means the price of the land that is specified in the contract, however expressed, less any discount or rebate that is specified in the contract, whether or not the discount or rebate is contingent;

threshold amount has the meaning given in section 10I.”.

6. Clause 16, page 16, line 9, omit ‘1997.”.’ and insert “1997.”.

7. Clause 16, page 16, after line 9 insert –

‘10I CPI adjusted threshold amount

(1) The threshold amount for a calendar year is to be determined in accordance with the following formula –

(a) for a contract entered into on or after 1 January 2024 and on or before 31 December 2024, $10 000 000;

(b) for each subsequent calendar year, the amount determined in accordance with the following formula –

where –

TA is the threshold amount being determined for a calendar year;

A is the amount of the threshold amount for the previous calendar year, as rounded up or down in accordance with subsection (2);

B is the sum of –

(a) the consumer price index number for the last reference period in the calendar year preceding the previous calendar year; and

(b) the total of the consumer price index numbers for each of the reference periods (other than the last) in the previous calendar year;

C is the sum of –

(a) the consumer price index number for the last reference period in the calendar year one year earlier than the calendar year referred to in paragraph (a) of B; and

(b) the total of the consumer price index numbers for each of the reference periods (other than the last) in the calendar year one year earlier than the calendar year referred to in paragraph (b) of B.

Example

In the case of a determination of the threshold amount for 2025, “A” is the threshold amount for 2024, “B” is the sum of the consumer price index numbers for December 2023, March 2024, June 2024 and September 2024 and “C” is the sum of the consumer price index numbers for December 2022, March 2023, June 2023 and September 2023.

(2) The threshold amount determined under subsection (1)(b) is to be rounded up or down to the nearest $100 000 and, if the amount of the CPI to be adjusted is an exact multiple of $50 000, is to be rounded up.

(3) The Director of Consumer Affairs must publish the threshold amount for a calendar year on an appropriate website on or before 1 December in the calendar year preceding the relevant calendar year.

(4) A failure to comply with subsection (3) in respect of a calendar year does not affect the operation of section 10G in respect of the threshold amount for that year.

(5) In this section –

consumer price index means the all groups consumer price index weighted average of eight capital cities in original terms published by the Australian Bureau of Statistics as at 15 ‍November immediately preceding the date on which the Director of Consumer Affairs publishes the threshold amount under subsection (3).”.’.

Amendments agreed to; amended clause agreed to.

New clause 16A (15:53)

Jaclyn SYMES: I move:

8. Insert the following New Clause to follow clause 16 –

‘16A New section 58 inserted

After section 57 of the Sale of Land Act 1962 insert –

“58 Apportionment of amounts under contracts of sale of land

(1) Section 10G does not apply to a contract of sale of land entered into before 1 January 2024.

(2) Section 10H does not apply to any of the following –

(a) a contract of sale of land entered into before 1 January 2024;

(b) an option to enter into a contract of sale of land granted before 1 January 2024;

(c) a contract of sale of land entered into on or after 1 January 2024 under the exercise of an option that was granted before 1 January 2024.”.’.

New clause agreed to; clauses 17 to 20 agreed to.

Clause 21 – no question put pursuant to standing order 14.16(2).

Clauses 22 to 26 agreed to.

Clause 27 – no question put pursuant to standing order 14.16(2).

Clauses 28 to 31 agreed to.

Clause 32 – no question put pursuant to standing order 14.16(2).

Clause 33 agreed to.

Clause 34 (15:54)

Jaclyn SYMES: I move:

9. Clause 34, page 28, line 20, omit ‘tax.”.’ and insert “tax.”.

10. Clause 34, page 28, after line 20 insert –

‘(4D) In making a determination under subsection (4B), the Commissioner must have regard to guidelines issued by the Treasurer under this section.

(4E) The Treasurer must issue guidelines for the exercise of the Commissioner’s discretion under subsection (4B) and cause those guidelines to be published in the Government Gazette.

(4F) Guidelines issued under subsection (4E) are not a legislative instrument within the meaning of the Subordinate Legislation Act 1994.”.’.

Amendments agreed to; amended clause agreed to.

Clause 35 – no question put pursuant to standing order 14.16(2).

Clause 36 agreed to.

Clauses 37 to 46 – no question put pursuant to standing order 14.16(2).

Clause 47 agreed to.

Clause 48 – no question put pursuant to standing order 14.16(2).

Clause 49 agreed to.

Long title (15:56)

Jaclyn SYMES: I move:

11. Long title, after “Duties Act 2000,” insert “the Fire Services Property Levy Act 2012,”.

Amendment agreed to; amended long title agreed to.

Reported to house with amendments, including amended long title.

Jaclyn SYMES (Northern Victoria – Attorney-General, Minister for Emergency Services) (15:57): I move:

That the report be adopted.

Motion agreed to.

Report adopted.

Third reading

Jaclyn SYMES (Northern Victoria – Attorney-General, Minister for Emergency Services) (15:58): I move:

That the bill be now read a third time.

The PRESIDENT: The question is:

That the bill be now read a third time and do pass.

Council divided on question:

Ayes (22): Ryan Batchelor, John Berger, Lizzie Blandthorn, Katherine Copsey, Enver Erdogan, Jacinta Ermacora, David Ettershank, Michael Galea, Shaun Leane, Sarah Mansfield, Tom McIntosh, Rachel Payne, Aiv Puglielli, Georgie Purcell, Samantha Ratnam, Harriet Shing, Ingrid Stitt, Jaclyn Symes, Lee Tarlamis, Sonja Terpstra, Gayle Tierney, Sheena Watt

Noes (16): Matthew Bach, Melina Bath, Jeff Bourman, Gaelle Broad, Georgie Crozier, David Davis, Renee Heath, Ann-Marie Hermans, David Limbrick, Wendy Lovell, Trung Luu, Bev McArthur, Joe McCracken, Nick McGowan, Evan Mulholland, Rikkie-Lee Tyrrell

Question agreed to.

Read third time.

The PRESIDENT: Pursuant to standing order 14.28, the bill will be returned to the Assembly with a message informing them that the bill has been agreed to with amendment.