Building a Better Victoria (State Tax and Other Legislation Amendment) Bill 2014

Building a Better Victoria (State Tax and Other Legislation Amendment) Bill 2014

Introduction Print

EXPLANATORY MEMORANDUM

571481

BILL LA INTRODUCTION 6/5/2014

General

The Bill amends the Duties Act 2000 to—

·  abolish duty on life insurance;

·  provide for the duty treatment of insurance riders;

·  extend the requirement to be a registered insurer to include certain insurers who are registered under the Life Insurance Act 1995 of the Commonwealth;

·  increase the rate of duty on the application for registration or transfer of a motor vehicle by $0.40 per $200 from 1 July 2014.

The Bill amends the First Home Owner Grant Act 2000 to permit the disclosure of protected information to additional persons for specified purposes.

The Bill amends the Land Tax Act 2005 to—

·  make amendments in relation to the determination of the taxable value of land to reflect changes to the valuation of non-rateable leviable land as a result of the introduction of the fire services property levy, to permit use of valuations conducted in respect of taxable land that is non-rateable leviable land to assess land tax;

·  address minor technical and administrative issues identified in respect of land held on trust and primary production land;

·  bring the definition of greater Melbourne into line with the urban growth boundary under the Planning and Environment Act 1987 for the purposes of the primary production land exemption;

·  remove the requirement for a person to give notice of the acquisition of land in writing to the Registrar of Titles where the land transfer is conducted using an electronic lodgement network.

The Bill amends the Payroll Tax Act 2007 to reduce the rate of payroll tax from 4·90% to 4·85% with effect from 1 July 2014.

The Bill amends the Planning and Environment Act 1987 to impose a levy for the privilege of making certain planning permit applications.

The Bill amends the Road Safety Act 1986 to increase the fee payable for registration or renewal of registration of a motor vehicle or trailer.

The Bill amends the Taxation Administration Act 1997 to—

·  permit the disclosure of information obtained under or in relation to the administration of a taxation law in connection with the administration of the First Home Owner Grant in another Australian jurisdiction;

·  permit the disclosure of information obtained under or in relation to the administration of a taxation law to additional persons for specified purposes.

Clause Notes

PART 1—PRELIMINARY

Part 1 of the Bill outlines the purposes of the Bill and contains the commencement provisions.

Clause 1 outlines the purposes of the Bill.

Clause 2 provides the commencement dates for the Bill.

The Act (except Part 2, section 18, and Division 4 of Part 4 and Parts 6 and 7) comes into operation on the day after the Act receives Royal Assent.

Part 2 comes into operation on 1 July 2014 to give effect to an increase in motor vehicle duty and abolish life insurance duty, as announced in the 2014–15 Budget.

Section 18 operates retrospectively from 12 December 2007, to coincide with the date that provisions dealing with administration trusts were inserted into the Land Tax Act 2005 by the State Taxation and Accident Compensation Acts Amendment Act 2007. This section has been made retrospective to support the current administrative practice of assessing land held under an administration trust as if the land were the only land owned by the trustee of that trust. This ensures that land held under an administration trust is assessed separately from other land held by the trustee for another trust or in their own right, as technically required by the Land Tax Act 2005.

Division 4 of Part 4 comes into operation on a day to be proclaimed or 1 December 2014, whichever is earlier. This will ensure that the exemption from the requirement for a person to give notice of the acquisition of land in respect of land transfers effected electronically is not introduced until the national electronic lodgement network commences for land transfers in late 2014.

Part 6 comes into operation on 1 July 2015, to impose the Metropolitan Planning Levy for the privilege of making a leviable planning permit application.

Part 7 comes into operation on 1 July 2014 to give effect to an increase in the fee payable for registration or renewal of registration of a motor vehicle or trailer, as announced in the 2014–15 Budget.

PART 2—DUTIES ACT 2000

Part 2 of the Bill makes amendments to Chapter 8 of the Duties Act 2000 to abolish duty on life insurance, to provide that life insurance policy riders are taken to be general insurance for duty charging purposes, to provide that certain insurers registered under the Life Insurance Act 1995 of the Commonwealth must be registered for duty payment purposes, and to make consequential amendments on the abolition of duty on life insurance. Part 2 of the Bill also makes amendments to Chapter 9 of the Duties Act 2000 to increase the rate of duty on the application for registration or application for transfer of registration of a motor vehicle. These measures are included in the 2014–15 Budget.

Division 1—Insurance Duty

Clause 3 inserts a definition of insurer in section 3 of the Duties Act 2000 to replace the definitions of general insurer and life insurer, which are repealed by this clause. When life insurance duty is abolished from 1 July 2014, there will no longer be a need to distinguish between a general insurer and a life insurer.

The definition of life insurance is amended to refer to a new section 196A which is inserted by clause 7 of the Bill to replicate the current section 198 of the Duties Act 2000. Section 198 of the Duties Act 2000 is to be repealed together with the other sections on life insurance under Part 3 of Chapter 8 of the Duties Act 2000.

Clause 4 Clause 4 makes various amendments to Chapter 8 of the Duties Act 2000 which are required to give effect to the abolition of duty on life insurance policies.

Section 175 provides for the charging of duty on certain types of insurance. Subclause (1)(a) repeals section 175(4) of the Duties Act 2000, which provided that Part 4 of Chapter 8 of the Duties Act 2000 charged duty on policies of life insurance.

Subclause (1)(b) inserts a note at the foot of section 176(2) of the Duties Act 2000. The note is intended to alert the reader that general insurance includes life insurance policy riders as defined in the new section 196B which is inserted by clause 7 of the Bill.

Subclause (1)(c) omits the reference to "life insurance" in section176(3), which describes matters which are not included inthe definition of general insurance. This reference is no longer necessary as life insurance is exempted from duty under section 196(g) which is inserted by clause 6(k) of the Bill.

As life insurance duty is abolished there is no longer a need to distinguish between general insurers and life insurers in Chapter8 of the Duties Act 2000. Accordingly subclause (1)(d), andsubclauses (2), (3) and (4) omit the references to "general insurer" where occurring in sections 180, 183(1), 183(3), 183(4) and 183(5) of the Duties Act 2000 and in the heading to Division2 of Part 2 of Chapter 8 and replaces them with a reference to "insurer".

Clause 5 replaces the existing definition of general insurer in section 184 of the Duties Act 2000 with a new section 184 that defines an insurer as a person who writes general insurance, who does so otherwise than as an insurance intermediary and who is authorised under the Insurance Act 1973 of the Commonwealth to carry on insurance business or who is registered under the Life Insurance Act 1995 of the Commonwealth.

This definition includes insurers registered under the Life Insurance Act 1995 of the Commonwealth, as it is intended to include all types of insurers that write general insurance, including life insurers.

Clause 6 omits the references to "general insurer" where occurring in the heading to section 185, section 185, section 186, section 187(1), the heading to sections 188 and 189, section 189(1), and section194(2) of the Duties Act 2000 and substitutes them for references to "insurer".

Paragraph (d) amends section 187(1)(a) of the Duties Act 2000 to enable the Commissioner to cancel the registration of an insurer under Part 2 of Chapter 8 of the Duties Act 2000 if the insurer's registration under the Life Insurance Act 1995 of the Commonwealth is cancelled. This amendment is required because insurers registered under the Life Insurance Act 1995 of the Commonwealth are included in the new definition of insurer inserted by clause 5 of the Bill.

Paragraph (i) removes the reference to "life insurance" from section 195(1) of the Duties Act 2000, which provides for the application of Division 4 of Part 2 of Chapter 8 to apportionment of premiums and other amounts between different types of insurance.

Paragraph (k) inserts new paragraph (h) in section 196 of the Duties Act 2000 to make it clear that life insurance is no longer chargeable with duty.

Clause 7 inserts a new section 196A in the Duties Act 2000 which defines life insurance as any insurance in respect of a life or lives, or an event or contingency relating to or depending on a life or lives ofa person who is, or persons who are, domiciled in Victoria at the time the policy is issued but does not include insurance against accident. Insurance against accident is defined under section 196A(2) of the Duties Act 2000.

The new definition of life insurance largely replicates the existing definition in section 198 of the Duties Act 2000, whichis repealed by clause 8 of the Bill. However, the new section196A of the Duties Act 2000 is required to be read subject to the new section 196B of the Duties Act 2000, which makes provision for "life insurance policy riders" to be treated asgeneral insurance and not life insurance.

The new section 196B(1) provides that section 196B does not apply to a policy of life insurance unless the insured person is or the insured persons are domiciled in Victoria.

The new section 196B(2) provides that if a policy of life insurance (as defined in the new section 196A), also provides for the payment of a benefit on the occurrence of a contingency or event that does not relate to or depend on a life or lives (that is, the additional insurance), then the additional insurance is taken to be general insurance and not life insurance.

The new section 196B(3) provides that section 196B(2) applies whether or not the life insurance and the additional insurance are separate or distinct matters, and whether or not payment of a benefit under the additional insurance component of the policy will or may reduce the benefit payable under the life insurance component of the policy, or will or may terminate the policy.

The new section 196B(4) provides that the Commissioner may determine the amount or proportion of the premium attributable to the additional insurance for the purposes of calculating the duty payable if there is no separately identifiable part of the premium payable in respect of the policy attributable to the additional insurance or, in the Commissioner's opinion, the identified part of the premium attributable to the additional insurance does not appear to correctly reflect the additional insurance.

Clause 8 repeals Part 3 of Chapter 8 of the Duties Act 2000. Part 3 provided for duty on life insurance.

Clause 9 inserts new clause 32 in Schedule 2 to the Duties Act to provide transitional arrangements for the registration of general insurers and life insurers associated with the abolition of duty on life insurance. This provision is intended to ensure that any general insurer or life insurer who is currently registered under Chapter 8 of the Duties Act 2000 does not need to re-register as a result of these amendments.

Division 2—Motor vehicle duty

Clause 10 substitutes the existing rates of duty on an application for registration or a transfer of registration of a motor vehicle in section 218(1)(a), (ab) and (b) of the Duties Act 2000 to reflect an increase in the rate by $0.40 per $200, or part, of the dutiable value of the motor vehicle. This increase was announced in the 2014–15 Budget.

PART 3—FIRST HOME OWNER GRANT ACT 2000

Part 3 of the Bill amends the First Home Owner Grant Act 2000 to permit the disclosure of protected information to certain persons for specified purposes.

Clause 11 inserts definitions of Australia's Foreign Investment Policy, Chief Executive Centrelink, Child Support Registrar and IBACCommissioner in section 3(1) of the First Home Owner Grant Act 2000. These definitions support the amendment to section50 of the First Home Owner Grant Act 2000 by clause12 of the Bill, which permits the disclosure of protected information to additional persons for specified purposes.

Clause 12 amends section 50(4) of the First Home Owner Grant Act 2000 which permits certain persons to disclose information about an applicant, or an applicant's partner, for a first home owner grant obtained under or in relation to the administration of that Act. This information is referred to as protected information under the First Home Owner Grant Act 2000.

Clause 12 inserts a new paragraph (cb) in section 50(4) to permit the disclosure of protected information to the following persons—

·  the Chief Executive Centrelink for the purposes of administering the social security law within the meaning of the Social Security Act 1991 of the Commonwealth or any regulations made under that law;