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1
Revenue and Other Legislation Amendment Bill 2007
Revenue and Other Legislation
Amendment Bill 2007
Explanatory Notes
General Outline
Policy Objectives
To amend the Duties Act 2001 and the Land Tax Act 1915 to implement
measures announced in the 2007-08 State Budget.
To amend the Petroleum Products Subsidy Act 1965 to reflect the
Commonwealth Government's decision to abolish the Petroleum Products
Freight Subsidy Scheme.
To amend the Electricity Act 1994 and Electricity and Other Legislation
Amendment Act 2006 to clarify the application of the Fair Trading Act
1989 and industry codes made under the Electricity Act 1994 and Gas
Supply Act 2003.
Reasons for the Bill
The Bill implements the following revenue measures announced in the
2007-08 State Budget:
· a 50% reduction of the mortgage duty rate to give effect to the
first stage of mortgage duty abolition;
· changes to vehicle registration duty rates;
· an increase in the land tax threshold for natural residents from
$500,000 to $600,000;
· an increase in the land tax threshold for companies, trustees and
absentees from $300,000 to $350,000; and
· the introduction of a 50% cap on annual increases in the land
value used for calculating land tax.
Amendments to the Petroleum Products Subsidy Act 1965 will reflect the
Commonwealth Government's decision to abolish the Petroleum Products
Freight Subsidy scheme effective 30 June 2006.
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Revenue and Other Legislation Amendment Bill 2007
The Electricity and Other Legislation Amendment Act 2006 amended the
Electricity Act 1994 and Gas Supply Act 2003 to give effect to full retail
competition (FRC) in the Queensland electricity and natural gas markets.
These amendments, and FRC, will commence on 1 July 2007 (the FRC
day).
The Electricity Act 1994 and Electricity and Other Legislation Amendment
Act 2006 will be amended to clarify the application of the Fair Trading Act
1989 and industry codes made under the Electricity Act 1994 and Gas
Supply Act 2003 and also make minor, technical drafting changes to earlier
amendments.
Achievement of Objectives
Duties Act 2001
Reduction of mortgage duty rate
As announced in the 2005-06 and subsequent State Budgets, mortgage duty
will be abolished in two stages (50% on 1 January 2008 and 100% on 1
January 2009). The Bill gives effect to the first stage of abolition by
reducing the mortgage duty rate by 50% from 1 January 2008. A later Bill
will give effect to full abolition of mortgage duty from 1 January 2009.
Chapter 5 of the Duties Act 2001 imposes mortgage duty on instruments
that are mortgages, particular caveats claiming an interest under a
mortgage, and particular releases of mortgage. Duty is imposed on the
amount secured by the mortgage, which is determined under Part 4 of
Chapter 5. The rate of mortgage duty imposed on a mortgage is 40c for
each $100, or part of $100, of the amount secured by the mortgage.
Mortgage duty on caveats and releases of mortgage that are subject to
mortgage duty is calculated at the same rate.
The Bill amends the Duties Act 2001 to reduce the mortgage duty rate to
20c for each $100, or part of $100, of the amount secured by the mortgage,
where a mortgage duty liability arises on or after 1 January 2008.
Changes to vehicle registration duty rates
Chapter 9 of the Duties Act 2001 imposes vehicle registration duty on
applications to register or transfer registration of a vehicle. The rate of duty
is $2 for each $100, or part of $100, of the dutiable value of the vehicle.
The 2% rate of duty does not apply to special vehicles (that is,
conditionally registered vehicles and tractor-based mobile machinery). A
flat concessional duty of $25 is imposed on applications to register or
transfer these vehicles.
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Revenue and Other Legislation Amendment Bill 2007
As announced in the 2007-08 State Budget, new rates of vehicle
registration duty will apply from 1 January 2008. The rate of duty will in
most cases be determined by reference to the number of cylinders or rotors
of the vehicle. The rates of duty that will apply for applications to register
or transfer vehicles which are made on or after 1 January 2008 are set out
below.
Vehicle registration duty rates from 1 January 2008
Vehicle type Duty rate
1 to 4 cylinders, 2 rotors or steam 3%
5 or 6 cylinders or 3 rotors 3.5%
7 or more cylinders 4%
Hybrid or electric vehicles 2%
Special vehicles $25
The Bill amends the Duties Act 2001 to effect these rate changes.
Electricity Act 1994 and Electricity and Other Legislation Amendment
Act 2006
The amendments to the Electricity Act 1994 and Electricity and Other
Legislation Amendment Act 2006 will ensure that, when FRC commences
on 1 July 2007, the electricity and gas markets operate in a manner
consistent with the policy objectives of the government's decision to
introduce FRC. In particular, that the Fair Trading Act 1989 operate in
parallel to the provisions of any industry codes made under the Electricity
Act 1994 and Gas Supply Act 2003.
Land Tax Act 1915
Increase in land tax thresholds
Land tax for a financial year is levied on all freehold land owned in
Queensland by the taxpayer as at midnight on 30 June immediately before
the financial year. Land tax is calculated by applying the relevant land tax
rate to the taxable value of the land after taking into account any
exemptions or deductions that may apply.
There are two land tax rate scales - one for natural residents and another
for companies, trustees and absentees.
Currently, an exemption threshold of $500,000 applies to natural residents.
If the taxable value of land owned by a natural resident is less than
$500,000, no land tax is payable. Once the taxable value reaches $500,000
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Revenue and Other Legislation Amendment Bill 2007
or more, the minimum land tax payable is $500, with this amount
increasing as the taxable value of the land increases.
For companies, trustees and absentees, an exemption threshold of $300,000
currently applies. If the taxable value of land owned by a company, trustee
or absentee is less than $300,000, no land tax is payable. Once the taxable
value reaches $300,000 or more, the minimum land tax payable is $1,500,
with this amount increasing as the taxable value of the land increases.
As announced in the 2007-08 State Budget, the exemption threshold for
natural residents will be raised from $500,000 to $600,000 for the 2007-08
and later financial years. The minimum land tax payable will be $1,200
once the taxable value of the land reaches $600,000.
In addition, the exemption threshold for companies, trustees and absentees
will be raised from $300,000 to $350,000 for the 2007-08 and later
financial years. The minimum land tax payable will be $2,250 once the
taxable value reaches $350,000.
The Bill amends the Land Tax Act 1915 to give effect to these changes.
Introduction of capped value
Land tax is payable by an owner of land on the taxable value of all land
owned and not exempt from land tax. The taxable value is the amount of
the relevant unimproved value of the land (or where there is more than one
parcel of land, the aggregate of the relevant unimproved values of all
parcels) less any applicable deduction.
The relevant unimproved value of land for a financial year is the lesser of
the unimproved value or the averaged unimproved value of the land for that
year. Averaging of unimproved values over three years was introduced in
1996 to smooth the impact of fluctuating land values on land tax liability.
As announced in the 2007-08 State Budget, a 50% cap is to be introduced
on annual increases in the relevant unimproved value of land for the
purposes of levying land tax for the 2007-08, 2008-09 and 2009-10
financial years. This will be achieved by amending the definition of
relevant unimproved value to include a capped value.
A capped value will apply to a parcel of land for a financial year if all of the
following criteria are satisfied.
· The land has an unimproved value for the previous financial year
(that is, it is a not a new parcel created in the previous year by
subdivision, amalgamation or other means).
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Revenue and Other Legislation Amendment Bill 2007
· The 40% discount under section 3CA of the Land Tax Act 1915
for certain lots which are created by subdivision and continue to
be owned by the subdivider does not apply to the unimproved
value of the land for the financial year.
· The unimproved value or the averaged unimproved value
(whichever is less) of the land for the financial year is more than
150% of the value that applied for land tax purposes for the
previous financial year.
The Bill amends the Land Tax Act 1915 to give effect to this change.
Petroleum Products Subsidy Act 1965
The purpose of the Petroleum Products Subsidy Act 1965 was to enable the
Queensland Government to administer funds made available from the
Commonwealth through the Petroleum Products Freight Subsidy Scheme
under the States Grants (Petroleum Products) Act 1965 (Cwlth).
The Commonwealth Government's decision to abolish the Petroleum
Products Freight Subsidy Scheme effective 30 June 2006 was announced in
the Commonwealth Government's 2004 Energy White Paper, Securing
Australia's Energy Future.
The repeal of the Commonwealth legislation will be effective 1 July 2007,
therefore State legislation will need to be amended as no further funding
can be made available.
Alternatives to the Bill
The policy objectives can only be achieved by legislative enactment.
Estimated Cost for Government Implementation
Implementation costs of amendments to the Duties Act 2001 and the Land
Tax Act 1915 are not expected to be significant.
There will be no cost to Government in implementing amendments to the
Petroleum Products Subsidy Act 1965, as all funding in relation to the
Petroleum Products Freight Subsidy Scheme was provided by the
Commonwealth.
There is no implementation cost associated with the amendments to the
Electricity Act 1994 and the Electricity and Other Legislation Amendment
Act 2006 for FRC.
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Revenue and Other Legislation Amendment Bill 2007
Consistency with Fundamental Legislative Principles
This Bill raises no fundamental legislative principle issues.
Consultation
Consultation on amendments to implement the 2007-08 State Budget
initiatives was not appropriate. The mortgage duty amendments have been
announced in previous State Budgets. Further, the mortgage duty and land
tax measures are beneficial for taxpayers.
The Departments of State Development, Employment and Industrial
Relations and Communities, along with other Government stakeholders
were consulted regarding the amendments to the Petroleum Products
Subsidy Act 1965. Public consultation was not undertaken by the State, as
the Act is enabling legislation for the administration of a Federal scheme.
However, the Commonwealth Government wrote to all key stakeholders in
June 2005.
The Petroleum Products Subsidy Act 1965 enabled the Queensland
Government to administer funds made available by the Commonwealth
through the Petroleum Products Freight Subsidy Scheme under the States
Grants (Petroleum Products) Act 1965 (Cwlth).
Registered distributors of eligible petroleum products in certain country
areas were able to seek payments from Treasury Department to subsidise
their fuel distribution costs. The scheme allowed for registered distributors
to submit claims for up to 12 months after becoming entitled to a subsidy
payment. Claims could be made where the cost to distribute petroleum to
regional and rural Queensland exceeded approximately 15 cents per litre.
Treasury Department made the subsidy payments from Commonwealth
funds held in trust. An imprest account of approximately $250,000 has
been maintained by Treasury Department and reimbursement from the
Commonwealth was sought on a frequent basis.
The Energy Competition Committee, appointed to oversee the
implementation of FRC in Queensland, and the Department of Mines and
Energy have consulted with representatives of the Queensland
Government, energy businesses and consumer groups on the policy and
legislative framework for FRC. Specific consultation has also been
undertaken with the Office of Fair Trading and Department of Tourism,
Fair Trading and Wine Industry Development in the drafting of these
amendments. All stakeholders consulted support the proposed
amendments.
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Revenue and Other Legislation Amendment Bill 2007
Notes On Provisions
Clause 1 cites the short title of the Bill.
Clause 2 states the date on which Parts 2, 5 and 6 of the Bill are taken to
commence.
Clause 3 states that Part 2 amends the Duties Act 2001.
Clause 4 amends section 254 of the Duties Act 2001, which prescribes the
rate of mortgage duty, to reduce the rate from 40c to 20c per $100, or part
of $100, of the amount secured by the mortgage. The reduced rate will
apply where a liability for mortgage duty arises on or after 1 January 2008.
Clause 5 amends section 383 of the Duties Act 2001, which prescribes the
rate of vehicle registration duty for vehicles other than special vehicles, to
replace the existing flat rate of $2 per $100, or part of $100, of the vehicle's
dutiable value, with the rates set out in Schedule 4C (inserted by clause 7 of
this Bill). The new rates will apply to applications to register or transfer
registration of vehicles made on or after 1 January 2008.
Clause 6 inserts a new part 7 into Chapter 17 of the Duties Act 2001. Part 7
contains transitional and savings provisions for the reduction of the
mortgage duty rate from 1 January 2008 under clause 4 of this Bill.
· New section 584 ensures that the reduced mortgage duty rate will
only apply to a mortgage if the liability date for the mortgage is
on or after 1 January 2008.
Further, section 584(2) ensures that the reduced mortgage duty
rate will not apply in certain circumstances where a liability date
for a mortgage is deferred until on or after 1 January 2008.
Section 584(3) clarifies that no refunds of mortgage duty paid
before 1 January 2008 will be provided only because a liability
date for the mortgage is on or after 1 January 2008.
Example
Pursuant to section 257 of the Duties Act 2001, a mortgage is
stamped before 1 January 2008 in respect of an advance that is
made after that date. No refund of mortgage duty paid in respect
of the advance made after 1 January 2008 will be available.
· New section 585 prescribes the applicable rate of mortgage duty
for debenture subscriptions made in the financial year ending 30
June 2008. For subscriptions between 1 July 2007 and 31
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Revenue and Other Legislation Amendment Bill 2007
December 2007 inclusive, the current rate of 40c for each $100,
or part of $100, of the amount secured, applies. For
subscriptions on or after 1 January 2008, the reduced rate of 20c
per $100, or part of $100, of the amount secured, applies.
In addition, section 585(3) ensures that the reduced mortgage
duty rate will not apply in certain circumstances where a
subscription for debentures is deferred until on or after 1 January
2008.
· New section 586 clarifies the applicable rate of mortgage duty
for caveats and releases of mortgage. To the extent mortgage
duty is calculated on the relevant mortgage by reference to the
current rate of 40c for each $100, or part of $100, of the amount
secured, that rate will also apply for calculating mortgage duty
on the caveat or release of mortgage, even if the caveat or release
is effected on or after 1 January 2008.
Clause 7 inserts a new Schedule 4C into the Duties Act 2001 which
prescribes the rates of vehicle registration duty that will apply for vehicles
other than special vehicles from 1 January 2008.
Clause 8 provides that Part 3 amends the Electricity Act 1994.
Clause 9 makes a minor, transitional drafting amendment to clarify the
operation of a provision of the Community Ambulance Cover and Other
Acts Amendment Act 2006 which amended the Electricity Act 1994.
Clause 10 provides that Part 4 amends the Electricity and Other Legislation
Amendment Act 2006.
Clause 11 amends section 30 (Replacement of ch5, pts 1A-1C of Act No.
64 of 1994) by inserting a new division 7 into chapter 5, part 1A of the
Electricity Act 1994 (as amended by the Electricity and Other Legislation
Amendment Act 2006). This new Division provides that industry codes
made under the Electricity Act 1994 do not affect the operation of the Fair
Trading Act 1989 to clarify that the Fair Trading Act 1989 continues to
operate even if an industry code makes provisions on a matter contained in
the Fair Trading Act 1989. This provision will ensure the operation of both
the industry code and the Fair Trading Act 1989 cannot be challenged on
relevant issues in the electricity sector.
Clause 11 also clarifies how a party will achieve compliance with both the
Fair Trading Act 1989 and an industry code to the extent that the two
instruments have inconsistent provisions. This amendment ensured
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Revenue and Other Legislation Amendment Bill 2007
technical compliance with both instruments can be achieved where a party
complies with the more onerous of the relevant provisions.
Clause 12 amends section 44 (Insertion of new ch 11, pt 1A of Act No. 64
of 1994) by renumbering certain sections to ensure they follow in sequence
from preceding provisions in the Electricity Act 1994.
Clause 13 amends section 145 (Insertion of new ch 5A of Act No. 29 of
2003) by inserting a new part 6 into chapter 5A of the Gas Supply Act 2003
(as amended by the Electricity and Other Legislation Amendment Act
2006). This new part provides that industry codes made under the Gas
Supply Act 2003 do not affect the operation of the Fair Trading Act 1989 to
clarify that the Fair Trading Act 1989 continues to operate even if an
industry code makes provisions on a matter contained in the Fair Trading
Act 1989. This provision will ensure the operation of both the industry
code and the Fair Trading Act 1989 cannot be challenged on relevant issues
in the natural gas sector.
Clause 13 also clarifies how a party will achieve compliance with both the
Fair Trading Act 1989 and an industry code to the extent that the two
instruments have inconsistent provisions. This amendment ensured
technical compliance with both instruments can be achieved where a party
complies with the more onerous of the relevant provisions.
Clause 14 states that Part 5 amends the Land Tax Act 1915.
Clause 15 amends the definition of relevant unimproved value in section 3
of the Land Tax Act 1915 to include a capped value of land if section 3G(3)
applies. Clause 15 also inserts a new definition of capped value. These
changes, together with the insertion of section 3G under clause 16 of this
Bill, give effect to the introduction of a 50% cap on annual increases in the
relevant unimproved value of land for the purposes of levying land tax for
the 2007-08, 2008-09 and 2009-10 financial years.
Clause 16 inserts a new section 3G into the Land Tax Act 1915 which
prescribes the circumstances in which a capped value will apply for a
financial year.
Clause 17 amends section 16 of the Land Tax Act 1915 to reflect the effect
of the changes in tax thresholds under clauses 21 and 22 of this Bill on the
obligation of land owners to lodge returns. Also, section 16(1)(b) is
amended to remove references to tax thresholds applicable to financial
years before 1 July 2007.
Clause 18 amends section 27 of the Land Tax Act 1915 to ensure that there
is no right of appeal against an assessment under that Act on the grounds
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Revenue and Other Legislation Amendment Bill 2007
that a capped value is excessive if an unimproved value used, directly or
indirectly, to work out the capped value, is the value under the Valuation of
Land Act 1944.
Clause 19 replaces section 62 of the Land Tax Act 1915 with a new section
62 which provides that the amendments made by part 5 of this Bill apply to
land tax levied for a financial year starting on or after 1 July 2007.
Clause 20 inserts a new section 66 into the Land Tax Act 1915 which is a
savings provision relating to the amendments to section 16 of that Act
under clause 17 of this Bill.
Clause 21 amends schedule 1 of the Land Tax Act 1915 to increase the land
tax threshold for individuals (otherwise than in the capacity of a trustee)
who are not absentees from $500,000 to $600,000, and increase the
minimum tax payable from $500 to $1,200.
Clause 22 amends schedule 2 of the Land Tax Act 1915 to increase the land
tax threshold for companies, trustees and absentees from $300,000 to
$350,000, and increase the minimum tax payable from $1,500 to $2,250.
Clause 23 provides that Part 6 amends the Petroleum Products Subsidy Act
1965.
Clause 24 amends section 2 (Meaning of terms) by omitting definitions
authorised officer, Commonwealth Minister and scheme, inserting new
definitions authorised officer, repealed and scheme and amending
definition registered distributor of eligible petroleum products and section
2(2). With the repeal of the Commonwealth legislation effective 1 July
2007, these amendments will reflect the Commonwealth's discontinuance
of the Petroleum Products Fuel Subsidy Scheme and ceasing of payments
for claims from 1 July 2007.
Clause 25 amends section 3 (Calculation of subsidy) by inserting new
subsection (2) to provide for the payment for deliveries made prior to 1
July 2006 up to 30 June 2007. No claims will be paid from 1 July 2007 as
the Commonwealth legislation will be repealed effective 1 July 2007.
Clause 26 omits sections 4 to 6. As the Commonwealth Government
abolished the Petroleum Products Freight Subsidy Scheme effective 30
June 2006 and no claims will be paid from 1 July 2007, these sections
relating to advances on account of subsidy, appointment of authorised
officers and claims for payments are no longer required.
Clause 27 amends section 7 (Certificates) by omitting section 7(1) and (2)
and amending section 7(3). The amendment removes the subsections
relating to the provision of certificates to claimants authorising payment,
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Revenue and Other Legislation Amendment Bill 2007
however, still reserves the State's right to issue certificates to claim back
any overpayments or amounts inappropriately claimed.
Clause 28 omits section 8 (Payments) as no further funding will be made
available (for deliveries made prior to 1 July 2006) with the
Commonwealth legislation being repealed effective 1 July 2007.
Clause 29 amends section 10 (Preservation of accounts etc.) to ensure that
a person who has received a payment under the Act is to maintain
appropriate records for a period of not less than two years after the date of
making the claim in respect of which the payment was made.
Clause 30 amends section 11 (Stocktaking and inspection of accounts etc.)
to reserve the State's right to inspect accounts and investigate any claims
which require investigation.
Clause 31 omits section 12 (Powers of authorised officer) as such powers,
authorities, protection and jurisdiction of a commission under the
Commissions of Inquiry Act 1950 extended to authorised officer will not be
required.
Clause 32 omits sections 15 (Delegation), 16 (Financial provisions) and 17
(Regulations) and inserts new sections 15 (Closure of Commonwealth
Petroleum Products Subsidies Fund) and 16 (Expiry of Act). Sections 15-
17 are no longer required with the Commonwealth scheme having been
abolished from 30 June 2006 and no further Commonwealth funding will
be available from 1 July 2007. A new section is inserted for the closure of
the balance of the Commonwealth Petroleum Products Subsidies Fund
being returned to the Commonwealth after the Auditor-General certifies
the disbursements and receipts for the financial year ended 30 June 2007.
The Act is also amended to provide for the expiry of the Act on 1 July
2009.
© State of Queensland 2007