Mr PALLAS (Treasurer) — I move:

That this bill be now read a second time.

Speech as follows incorporated into Hansard under standing orders:

I am pleased to introduce this bill which amends Victoria’s taxation and valuation laws including the Congestion Levy Act 2005, Duties Act 2000, Fire Services Property Levy Act 2012, Land Tax Act 2005, Payroll Tax 2007, Taxation Administration Act 1997, Unclaimed Money Act 2008, Valuation of Land Act 1960 and the Victorian Civil and Administrative Tribunal Act 1998.

The amendments being made by this bill will support effective and sustainable tax administration by continuing to improve Victoria’s revenue and valuation laws. The bill clarifies the operation of a number of tax laws by correcting technical or drafting defects and removing anomalies, ensures that the State Revenue Office is positioned to meet the expectations of government and the community by maintaining best practice tax administration and provides for a cost effective valuation process in Victoria.

The bill amends the Congestion Levy Act 2005 in order to clarify the operation of existing exemptions for parking spaces provided at the Melbourne Zoo and to shift workers. When the congestion levy area was expanded in 2014 to include a number of inner metropolitan suburbs, the expansion of the boundary encompassed the Melbourne zoological gardens in Royal Park. Whilst an exemption from the congestion levy was included for parking at the zoo, some of the zoo’s visitor car parking is located outside the currently defined exempt zone. Accordingly, these amendments will confirm that all zoo visitor and staff parking spaces are located inside the exempt zone. The exemption from the congestion levy for shift workers is intended to apply to parking spaces that are used only for the parking of motor vehicles by shift workers who do not work standard business hours. The amendments in this bill will better target this exemption towards workers who are genuine shift workers, reflecting the policy intent of the exemption and ensuring that it is not exploited.

The amendments to the Duties Act 2000 correct possible anomalies in the operation of the foreign purchaser additional duty and the calculation of the first home buyer duty concession. The amendments clarify that the foreigner purchaser additional duty applies even where the principal place of residence duty concession is obtained. To ensure the legislation is consistent with administrative practice, this amendment will be taken to be effective from the commencement of the additional duty provisions on 1 July 2015. The amendment to the first home buyer duty concession clarifies the application of the calculation formula so that it reflects the concessional amount of duty payable.

This bill makes amendments that will extend the current exemption provisions relating to the absentee owner surcharge in the Land Tax Act 2005 to landowners that are trustees of absentee trusts. Eligibility for the exemption will be subject to similar requirements that apply to absentee corporations, ensuring a level playing field between Australian‑based corporations and trusts that make a significant contribution to Victoria. Currently, a trustee of an absentee trust is required to pay the surcharge on the trust land based on the proportion of the absentee beneficiary’s interest in that trust. Determining the correct interest held by an absentee beneficiary can become challenging where there is a sub‑trust structure involved without the ability to trace the ultimate absentee beneficiary’s interest through to the head trust. By providing the State Revenue Office the ability to ‘look through’ the sub‑trust structure to identify the absentee beneficiary’s ultimate interest in the trust land will ensure that where land is owned under a sub‑trust structure, the head trust will only be liable for the surcharge on the proportion of the absentee beneficiary’s interest in the trust land.

The Land Tax Act 2005 currently provides a number of exemptions for the benefit of charitable and non‑profit organisations. The bill makes necessary amendments that confirm the policy intent of these exemptions. Accordingly, the amendments limit the type of landowners who can benefit from the exemption so that it only applies to land owned by a charitable institution that is leased for sporting, recreational or cultural purposes. Similarly, in relation to sporting, recreational or cultural land owned by certain non‑profit organisations, the bill clarifies that the exemption from land tax is confined to land used exclusively for those purposes, but importantly also enables the exemption to be granted in respect of a part of the land if it is used exclusively for the exempt activities. Integrity measures are also being inserted for the land tax exemption that applies to land that is owned by a charitable institution and declared to be held for future use for charitable purposes. These include imposing a time limit of two years on the commencement of the proposed future charitable use of land, while allowing this period to be extended by the commissioner under appropriate circumstances; requiring the proposed future use of the land to be exclusively for charitable purposes; and ensuring that land tax is assessable on the part of the land that is not being used for charitable purposes. Notably, this amendment is not intended to restrict the land tax exemption from applying to charitable bodies that have genuine intentions to use the land for a charitable purpose. For example, non‑government schools that have acquired land for future educational purposes.

The Victorian government is committed to creating jobs and supporting the employment of new apprentices and trainees. The Payroll Tax Act 2007 currently exempts wages paid to a new entrant by an organisation declared to be an approved group training organisation (GTO). The new entrant must be employed by the GTO in accordance with the requirements of an approved training scheme. This bill makes amendments that will extend the types of organisations that can be declared to be an approved GTO to include ‘for‑profit’ organisations who employ new entrant apprentices under an approved training scheme. This measure will reduce the payroll tax liability of for‑profit GTOs that engage in the recruitment and on‑hiring of apprentices and trainees, thereby encouraging the take‑up and placement of apprentices and trainees.

Earlier this year, the Victorian government sought to make important changes to the valuation system in Victoria that would improve the efficiency, robustness and cost effectiveness of valuations used by rating authorities. The proposed changes included centralising Victoria’s valuation function with the Valuer‑General Victoria and providing for valuations to be undertaken annually. General valuations are currently conducted biennially by local councils or the valuer‑general and establish the value of properties as at 1 January every second year. Supplementary valuations are also completed during each cycle to account for new properties and changes in the use of existing properties. These valuations are used for the purposes of assessing council rates, land tax and the fire services property levy. Undertaking annual valuations will have the added benefit of smoothing out the existing biennial increases in land tax for landowners.

During debate on these changes, the Victorian government agreed to consult further with the local government sector to ensure that the benefits of these amendments were better understood and then to bring the necessary changes back to Parliament for consideration. As a result of the consultation process, which also included the Municipal Association of Victoria, the Victorian government is now bringing these measures back to Parliament. Notably, the amendments will now provide local councils with the ability to opt out of the proposed centralised system by nominating themselves as the relevant valuation authority for their municipal district, thereby allowing them to continue undertaking valuations. The ability to opt out will be subject to the valuer‑general’s agreement and will be available until 2022. This will provide local councils with sufficient time to make the necessary preparations to transition to the new centralised valuation system. Councils that choose to opt out will still be required to undertake annual valuations. In addition, following consultation with the local government sector, the Victorian government has agreed to pay the full cost of all general valuations returned each year under the new centralised system, whilst councils pay for the full cost of all supplementary valuations each year. Councils that choose to opt out of the new centralised valuation system will continue on current payment arrangements and contribute half of the cost of existing biennial valuations. These amendments strike the right balance between the advantages that a centralised valuation system will bring and the concerns from local councils.

Some councils have raised a particular concern around supplementary valuation turnaround times and the impact this has on their revenue. The government acknowledges these concerns, and the model we will work towards will give them greater control over supplementary valuations, and does not propose to change the process for initiating them. The valuer‑general’s Valuation Best Practice — Specification Guidelines provide a framework of processes, tasks and outputs required for the return of general and supplementary valuations. Under the terms of standard contractual arrangements, the valuer‑general undertakes to complete supplementary valuations on a monthly basis within a four‑week time period. The government notes that, if a quicker turnaround is required, this can be negotiated as part of service level agreements.

As part of a general move towards a fully digital environment, the State Revenue Office is looking to provide taxpayers with alternative digital channels to manage their tax affairs. The amendments in this bill to the Taxation Administration Act 1997 will enable the State Revenue Office to serve an assessment or other documents by notifying the taxpayer electronically (i.e. by SMS or email) of an assessment or document available for retrieval by the taxpayer via a secure internet site maintained by the State Revenue Office. Other amendments to the Taxation Administration Act 1997, Unclaimed Money Act 2008 and Fire Services Property Levy Act 2012 will ensure consistency with administrative and postal changes in the servicing of documents and payments, repeal a redundant provision previously enacted to deliver an online duty ‘look up’ service that is no longer required and update references to certain state and federal departments and agencies.

The Victorian Civil and Administrative Tribunal Act 1998 governs the conduct of proceedings referred to the tribunal under taxation and revenue laws administered by the State Revenue Office. The bill amends the definition of ‘taxing act’ in the Victorian Civil and Administrative Tribunal Act 1998 to include all the laws administered by the State Revenue Office that currently provide for referrals to/reviews by the Victorian Civil and Administrative Tribunal and allow for the inclusion of new taxation laws in the future.

The passage of this bill will ensure that Victoria maintains best practice tax administration, confirms the intention behind various taxation laws and will introduce a robust and cost‑effective valuation process in Victoria.

I commend the bill to the house.