Page 1567 - Week 06 - Thursday, 3 May 1990
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will bring the ACT into line with the States and address the Commonwealth Grants Commission's findings, as outlined in its third report on the ACT, which named the lack of such a tax as one of the reasons for the ACT's below average revenue effort.
Mr Speaker, under current arrangements, stamp duty on the transfer of a motor vehicle is payable by the purchaser on the market value of the vehicle at the time of registration, which under the Motor Traffic Act 1936 should occur within 14 days of purchase. The practice in the ACT is for motor vehicle dealers to register new vehicles and pay the duty on behalf of the purchaser, while both the registration and the payment of duty on second-hand vehicles is left to the purchaser. There is evidence that revenue is being lost by purchasers understating vehicle values and for payment of the duty being deferred by delaying registration until the renewal date. The States and the Northern Territory have also experienced revenue losses caused by the understatement of values as occurs here.
Victoria has successfully overcome this problem by shifting the liability for payment of the tax from the purchaser to the motor dealer. The Bill provides for the adoption of this approach in the ACT for both new and used vehicle dealers. The question of "value" is also being addressed by imposing tax on market value or purchase price, whichever is the higher. This will bring the ACT into line with a majority of States and the Northern Territory.
In addition to the specific revenue raising measures already discussed, the Bill includes provisions which will clarify the basis on which tax on insurance is to apply. A majority of the States and the Northern Territory impose tax on insurance based on where the risk is located, and insurance companies have adopted this criterion for determining which State or Territory should receive the tax. The current ACT legislation does not make it clear whether the nexus for tax purposes is where risks are located or a more narrow approach based on premiums in the ACT. The proposed amendments will clarify the liability of insurance premiums for tax when the risk is located in the ACT, regardless of where the premium is paid. The insurance industry will welcome the clarification of this issue in line with the States and current industry practices.
Mr Speaker, the Bill also provides for the protection of the revenue base by the inclusion of certain anti-avoidance provisions. At present there is some question as to whether a liability to pay duty arises on an instrument which relates to property in the ACT but is executed and held outside the ACT. The proposed amendments will clarify this issue by requiring those instruments to be lodged with the commissioner for assessment within three months of execution. To avoid the possible situation of double duty being paid, the commissioner has been given the authority
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