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2018
THE LEGISLATIVE ASSEMBLY FOR
THE
AUSTRALIAN CAPITAL
TERRITORY
Planning and Development
(Lease Variation Charge Deferred Payment Scheme)
Amendment
Bill 2018
EXPLANATORY STATEMENT
Presented By
Andrew Barr MLA
Treasurer
PLANNING AND DEVELOPMENT (LEASE VARIATION CHARGE DEFERRED PAYMENT SCHEME) AMENDMENT BILL 2018
The Planning and Development (Lease Variation Charge Deferred Payment
Scheme) Amendment Bill 2018 amends the:
• Planning and
Development Act 2007 (Planning Act);
• Planning and Development
Regulation 2008 (Planning Regulations);
• Taxation
Administration Act 1999 (Tax Administration Act);
• Building
Act 2004 (Building Act); and
• Building (General) Regulation
2008 (Building Regulations).
The Bill establishes the legislative framework for the implementation of a deferred payment scheme for the Lease Variation Charge (LVC). In addition, the Bill makes minor changes to simplify and improve the administration of LVC.
Overview
The LVC is administered by the Environmental Planning and Sustainable Development Directorate (EPSDD), the ACT Revenue Office (ACTRO) and Access Canberra under inter-related provisions contained in the Planning Act and the Tax Administration Act.
Deferred payment scheme – Planning Act, Tax Administration Act, Building Act and Building Regulations
A lessee must pay the LVC before a nominal rent lease is varied. Under the deferred payment scheme, lessees with an LVC above a monetary threshold will have the option of deferring the payment of LVC to a later date, after the lease is varied. In this way, lessees that qualify for the scheme can elect to pay LVC nearer the end of a project to match development cashflows.
Lessees of the scheme must enter into a deferral arrangement with the Commissioner of Revenue. The arrangement will set out the terms of payment and a requirement that the LVC and interest, at a rate determined by the Treasurer, must be paid on the earlier of:
• The issuance of a certificate of occupancy for the building work for a development; or
• The expiration of a four year period that commences from the date of the lease variation.
The LVC is a tax under the TAA, and interest and penalty tax may accrue if there is a default in payment by specified timeframes. The LVC payable will also be secured by a first charge on the land the subject of the lease variation. If required, the Commissioner may exercise powers under the TAA to sell the land to recover the debt due to the Territory.
The Bill also makes provision for the more operational aspects of the scheme such as the inclusion of deferral arrangements in the planning and land authority register, the application process for the deferral arrangement, how changes to the deferred amount will be dealt with, and the certification of LVC amounts outstanding in respect of a parcel of land. The monetary threshold and the interest rate applicable on amounts payable under the scheme will be described by disallowable instrument.
Minor LVC changes – Planning Act and Planning Regulations
The Bill makes minor, administrative changes to the LVC regime to improve
clarity and readability of the Planning Act by moving the definition for
variations that relate to codified LVC into regulations; by establishing a role
for the Planning Minister for codified LVC determinations to enable
consideration of planning outcomes; by consolidating the heads of power for
specific-purpose remissions into a single head of power; removing the provision
stating the Treasurer may issue guidelines regarding how lease variation charges
must be determined; and inserting a head of power for the Minister for Planning
to prescribe circumstances where a lease variation development application is to
be lodged along with other documents or information, such as a development
application for a building design and siting.
Human
rights
This Bill does not have human rights implications.
The amendments will commence on the day after the notification day.
Details of the Planning and Development
(Lease Variation Charge Deferred Payment Scheme) Amendment
Bill 2018
Clause 1 Name of Act
This clause provides that the name
of the Act is the Planning and Development (Lease Variation Charge Deferred
Payment Scheme) Amendment Act 2018.
Clause
2 Commencement
This clause provides that the Act commences on the day
after it is notified.
Clause 3 Legislation amended
This
clause provides that the Act amends the Planning and Development Act 2007
(Planning Act) and other legislation described in Schedule 1.
Clause
4 Legislation repealed
This clause provides for the repeal of
Disallowable Instruments for remission of lease variation charges, namely
DI2011-318 (Community Purpose – Housing Assistance), DI2016-260
(Environmental Remediation), and DI2016-28 (Economic Stimulus and
Sustainability), as a consequence of the amendment in this Act to sections 278
to 278F of the Planning Act.
Clause 5 Contents of public
register
Section 28 (1) (e)
This clause amends section 28
(1) (e) to remove the reference to section 278E as section 278E will be replaced
with a new section 278 for remission of lease variation
charges.
Clause 6 New section 28 (1) (ea)
This clause
inserts a new section 28 (1) (ea) that the public register of the planning and
land authority must contain the date a deferral arrangement is entered into and
the amount of the lease variation charge deferred.
Clause 7 Form of
development applications
New section 139 (2) (ia)
This
clause inserts a new section 139 (2) (ia) that allows the Minister for Planning
to specify certain applications for approval of a chargeable variation of a
nominal rent lease be accompanied by any information or document prescribed by
regulation.
Clause 8 New subdivision 9.6.3.1
heading
This clause inserts a new subdivision 9.6.3.1 heading for
Definitions for division 9.6.3.
Clause 9 Definitions–div
9.6.3
Section 276, new definition of deferral
arrangement
This clause inserts in section 276 a new definition
for a lease variation charge deferral arrangement that is described in
section 279AB (2).
Clause 10 Section 276, definitions of s 276E
chargeable variation and s 277 chargeable variation
The
definitions in section 276 for s 276E chargeable variation and s 277
chargeable variation are substituted with a definition that describes a
section 276E chargeable variation to mean a variation that is prescribed by
regulation and the definition for s 277 chargeable variation which is the
same as the definition under section 276A.
Clause 11 Meaning of s
276E chargeable variation and s 277 chargeable
variation
–div 9.6.3
Section
276A
This clause omits section 276A which defines a s 276E
chargeable variation and a s 277 chargeable
variation.
Clause 12 New subdivision 9.6.3.2
heading
This clause inserts a new subdivision 9.6.3.2 heading for
Chargeable variations.
Clause 13 Chargeable variation of nominal rent
lease–lease chargeable variation
Section 276B (1), except
note
This clause substitutes section 276B (1) for a section that
provides that the planning and land authority must not execute a chargeable
variation of a nominal rent lease unless the lease variation charge has been
paid to the Territory, or if a deferral arrangement in relation to the lease
variation charge has been entered into.
Clause 14 Section 276B
(3)
This clause substitutes section 276B (3) for a section that
provides that the payment of the lease variation charge, or the entering into of
a deferral arrangement does not affect a person’s right to apply for a
reconsideration of lease variation charge under section 277C.
Clause
15 Lease variation charges–s 276E chargeable
variations
Section 276E (1)
This clause amends section
276E (1) to clarify that the Minister for Planning plays a role in the
determination of a lease variation charge.
Clause 16 Section
276E (3) (d) and (6)
This clause omits sections 276E (3) (d) and 276E
(6) that refer to guidelines approved under section 276F as a consequence of the
amendment in this Act to omit section 276F.
Clause 17 Lease variation
charges–guidelines for LVC determination
Section
276F
This clause omits section 276F as it has not been used and no
guidelines have been issued. Any future guidelines for determining and preparing
lease variation charges may be provided for under section 276E.
Clause
18 Sections 278 to 278F
Sections 278, 278A, 278B, 278C, 278D, 278E
and 278F are replaced by a new section 278 that amalgamates the remission
provisions under one section. Specific purpose remissions will continue to be
determined by disallowable instrument. The Minister for Planning may determine
which circumstances will attract an LVC remission, with the Treasurer to
determine the amount of the remission.
Clause 19 New subdivision
9.6.3.3
Clause 19 inserts new subdivision 9.6.3.3 Deferring lease
variation charges, comprised of new sections 279AA, 279AB, 279AC, 279AD and
279AE.
New section 279AA applies where the applicant for a
development application for a chargeable variation of nominal rent lease is
assessed for a lease variation charge, the lease variation charge is at least
the monetary threshold amount determined by the Treasurer in a disallowable
instrument, and the applicant satisfies any other criteria determined by the
Treasurer.
Under these circumstances, an applicant may apply to the
Commissioner for Revenue for a deferral of the payment of the lease variation
charge. In doing so, the applicant must provide the Commissioner with any
information the Commissioner considers necessary. If the applicant for the
development application is not the lessee, the lessee may apply for a deferral.
Irrespective of who applies, the lessee must sign the deferral
application.
Under new section 279AB the Commissioner must approve
an application if satisfied that the application is given a notice of assessment
of lease variation charge, the lease variation charge is at least the amount
determined by the Treasurer and the applicant satisfies any other criteria
determined by the Treasurer. The approval is subject to the applicant entering
into an arrangement with the Commissioner about the payment of the deferred
lease variation charge. If the applicant for the development application is not
the lessee, the lessee may enter into the deferral arrangement. Irrespective of
who enters into the deferral arrangement, the lessee must sign the deferral
arrangement.
New section 279AC sets out the conditions of a
deferral arrangement. These include the requirement to pay the amount of the
lease variation charge and any interest that may accrue to the Commissioner for
Revenue no later than the earlier of the following trigger dates or
events:
(i) If stated in the deferral arrangement, the date a certificate
of occupancy is issued for part of the building work for the development;
or
(ii) The date the certificate of occupancy is issued for all of the
building work for the development; or
(iii) Four years from the date of
the lease variation.
An example of the payment being triggered under (i)
is where a certificate of occupancy is issued for the completion of building
works on building but there is another certificate of occupancy still to be
issued for the building of a number of utility sheds on the same parcel of land.
In that situation, the deferral arrangement may state that the payment of the
deferred lease variation charge and any interest is payable when the first
certificate of occupancy is issued on the completion of the building.
In
addition to the stated conditions of payment, the Treasurer may determine (by
way of a disallowable instrument) other conditions for a deferral arrangement,
including the rate of interest charged on the amounts payable under the
arrangement.
New section 279AC (4) provides that the conditions that the
Commissioner for Revenue may determine for a deferral arrangement under section
52 of the Taxation Administration Act 1999 (Tax Administration Act) must
not be inconsistent with the conditions of new section 279AC.
New
section 279AD applies where there is a change in the amount of the lease
variation charge deferred under a deferral arrangement. If the lease variation
charge is decreased, the deferral arrangement applies to the decreased amount
however if the charge is increased, the arrangement applies to the increased
amount unless the applicant (or lessee) applies and the Commissioner for Revenue
agrees, to vary the conditions of the deferral arrangement.
New
section 279AE applies if there is a charge on land under section 56H of the
Tax Administration Act in relation to a lease variation charge. A person may
apply to the Commissioner for Revenue for a certificate of the amount of the
lease variation charge that remains unpaid and any interest and penalty tax
under division 9.6.3, a deferral arrangement or the Tax Administration
Act.
The certificate is conclusive proof for an honest buyer for value of
the matters certified. Further the lease variation charge and other amounts
payable are taken to be immediately payable even though any necessary time after
a date or event, or the service of a notice, has not
lapsed.
Clause 20 New subdivision 9.6.3.4
heading
This clause inserts a new subdivision 9.6.3.1 heading for
Application of Taxation Administration Act.
Clause 21 Application of
Taxation Administration Act
Section 279B, note
This
clause substitutes the Note to section 279B to provide that the planning and
land authority must not execute a variation of a nominal rent lease unless the
lessee has paid or deferred the lease variation charge.
Clause 22 New
chapter 24
This clause inserts a new chapter to make provision for
transitional arrangements for the lease variation charge deferred payment
scheme.
New section 496 defines commencement day for the purposes
of the transitional provisions.
Under new sections 497 and 498, lease
holders with development applications for a chargeable variation of a nominal
rent lease which have either not been assessed or paid before the commencement
day, can apply to defer payment of LVC as if the development application had
been lodged after commencement day.
New section 499 provides that the
transitional provisions expire 12 months after the commencement
day.
Clause 23 Dictionary, new definition of deferral
arrangement
This clause inserts a definition for deferral
arrangement in the Dictionary to the Planning Act.
Clause
24 Dictionary, definitions of s 276E chargeable variation and s 277
chargeable variation
This clause omits the references to section
276A from the Dictionary meanings of s 276E chargeable variation and s 277
chargeable variation and replaces them with a reference to section
276.
Schedule 1 Other amendments
Part 1.1 Building Act
2004
Clause [1.1] Section 69 (4), except note
This
clause substitutes section 69 (4) with a section that provides for the
prescription by regulation of matters that must be considered by the
construction occupations registrar in deciding whether a building is fit for
occupation and use, and requirements that must be satisfied before a certificate
of occupancy may be issued. This is to provide for a power to refuse the issue
of a certificate of occupancy if there is an outstanding LVC debt in relation to
the parcel of land.
Part 1.2 Building (General) Regulation
2008
Clause [1.2] Section 35A
This clause omits the
references to section 69 (4) in section 35A and replaces it with references to
section 69 (4) (a).
Clause [1.3] New section 35B
This
clause inserts new section 35B that relates to section 69 (4) (b) of the
Building Act 2004, requirements that must be satisfied before a
certificate of occupancy may be issued. The new section 35B provides that if a
deferral arrangement under section 279AB of the Planning Act applies in relation
to land where building work (the subject of a lease variation charge) was
carried out, the amounts payable in respect of the deferral arrangement must be
paid to the Commissioner for Revenue before a certificate of occupancy is
issued.
Part 1.3 Planning and Development Regulation
2008
Clause [1.4] Section 170A
This clause substitutes
in the place of section 170A another section that incorporates the definition of
s 276E chargeable variation from the Planning Act. In this way, the
definition of s 276E chargeable variation is prescribed in the one place
under the Planning and Development Regulation 2008.
Part 1.4 Taxation
Administration Act 1999
Clause [1.5] New section 56F
(ba)
This clause inserts a new section 56F (ba) so that division 7.3
of the Tax Administration Act (for tax in arrears - sale of land) applies to the
chargeable variation of nominal rent leases under division 9.6.3 of the Planning
Act.
An unpaid amount of lease variation charge under a deferral
arrangement or an amount unpaid due to a reconsideration, reassessment or
review, is a tax payable to the Territory. Under section 56H a tax payable in
relation to a parcel of land is a charge on the interest held by the owner of
that parcel of land and has priority over any other interests in relation to
that parcel.
Clause [1.6] New section 56H (3) (a)
(iv)
This clause inserts new section 56H (3) (a) (iv) and provides
that the charge does not have effect against an honest purchaser of the parcel
of land if the purchaser had obtained a certificate under new section 279AE of
the Planning Act before the purchase, and at the time of purchase, the purchaser
did not have notice of liability under the charge.
Clause
[1.7] Schedule 1, new section 1.2 (l), (m) and (n)
This clause
inserts new clauses under schedule 1 of the Tax Administration Act which provide
objection and review rights to persons dissatisfied with a decision made by the
Commissioner of Revenue under new sections 279AB (1), 279 AB (2) and 279AD (3)
of the Planning Act that relate to deferral arrangements and the approval of
deferral arrangements for payment of the lease variation charge.