Page 4613 - Week 15 - Wednesday, 15 December 1993
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MADAM SPEAKER: We will now proceed with the debate on the Stamp Duties and Taxes (Amendment) Bill (No. 4) 1993.
MS FOLLETT (Chief Minister and Treasurer) (11.28): Madam Speaker, in speaking to the amendment Bill that has been moved by Mr Kaine I repeat that the substance of this matter has been dealt with administratively. It has been dealt with by the change which I have made to the stamp duty on longer-term leases. As members will know, I have changed from the original legislation which required that leases for over 15 years be charged stamp duty at conveyance rates. That has been changed to 25 years. That change was made in the light of advice that we had had from a number of industry groups, including some that Mr Kaine has mentioned. It was made because this legislation was not intended as a windfall gain for the Government but rather as an anti-avoidance measure. I am sure members realise that it is possible, by having very long-term leasing arrangements, to avoid paying stamp duty at conveyance rates and that this is not fair to the broader community who, of course, do not have those sorts of options available to them. So the provision was intended as an anti-avoidance measure. It was clear to us that long-term leases take on the attributes of ownership and, as such, the Government did consider it inequitable that they should be charged on the same basis as conveyances.
Mr Kaine has not presented a valid basis for supporting his 30-year period, but I have said on previous occasions that the selection of any period is at best arbitrary. The line does have to be drawn somewhere and the initial 15-year period was chosen in order to provide some balance between the planning needs of businesses and the need to provide tax equity. As I have said, on the basis of representations that we have received, that 15 years has been varied administratively to 25 years. I consider, Madam Speaker, that, where lessors or lessees would prefer to have a longer-term lease, then those persons should be required to face the same tax regime as taxpayers who are purchasing property. I can see no reason why they should not. Madam Speaker, with the 25-year period the overwhelming majority of leases in the Territory would not be subject to this new regime.
There have been arguments put forward that a long-term lease is necessary in order to amortise the fit-out costs, and the move from 15 to 25 years, I consider, more than adequately deals with that factor. Changes to tax policy in relation to depreciation allowances now mean that the taxpayer determines the reasonable life expectancy of depreciable costs. The instances quoted of anchor tenants in large retail shopping complexes requiring more than 15 years to amortise set-up and fit-out costs are very difficult to reconcile with the extensive and frequent refurbishment that occurs in these premises. Advice from industry sources suggests that fit-out costs often occur on a very regular basis, and in some cases as frequently as every four to five years.
The nub of the issue is whether the policy of dutying long-term subleases at conveyancing rates is correct. I would submit that it is. Businesses that operate out of owned premises absorb stamp duty at conveyance rates regardless of the length of their ownership. If they own it for a short time they have still paid the full cost of that conveyancing at the higher rate. Businesses operating from leased premises incur the lower lease duty. Madam Speaker, it is simply a question of deciding the most desirable balance between the integrity and the equity of the tax system and the economic effects of the tax. Also, one must ask: At what point should a sublessee be deemed to be gaining the benefits of ownership as a result of long-term leasing contracts and that transaction be dutied accordingly?
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