Page 2865 - Week 10 - Tuesday, 13 September 1994

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TREASURER FOR THE AUSTRALIAN CAPITAL TERRITORY

LEGISLATIVE ASSEMBLY QUESTION

Question No. 1364

Budget Supplementation

MS CARNELL - Asked the Treasurer upon notice on 24 August 1994- In relation to the Treasurers advice to members of the Assembly concerning Budget Supplementation for the 1993-94 financial year

1) Can the Treasurer explain why a liability has arisen for at least $580,000 which relates in

part to a settlement of a contractual dispute over a sewer.

2) Why has a liability arisen for taxation payments in relation to past joint ventures.

3) Does this liability relate to (a) tax avoidance arrangements (b) failed joint venture partners and (c) to what type, or types of tax does the liability relate and (d) how much of the liability is (i) primary tax and (ii) penalties, costs or the like.

4) Are there other potential liabilities for tax either for the Government or on behalf of failed joint venture partners, which are yet to be finalised. If so, (a) what are the details of the liabilities; (b) why have they arisen; or (c) how much is in dispute, or required to settle the claims; (d) does this relate to (i) tax avoidance arrangements or (ii) failed joint venture partners; and (e) to what type, or types of tax does the liability relate.

5) How much of the liability is (a) primary tax and (b) penalties, costs or the like.

MS FOLLETT - The answer to the Members question is as follows:

1) The call on the Treasurers Advance of $0.528m represented claims which could not be

fully met from within the Land Program budget. This supplementation allowed for the

negotiated settlement of a contractual dispute over a sewer associated with the provision

of infrastructure in Kambah and, the payment of a taxation liability.

The private sector developer, as part of a deed of Agreement, was required to undertake

sewer system works during the course of which the standards for sewer augmentation

changed. As a result of the increase in costs incurred by the developer, the company

instigated legal action to recover its costs. Legal advice received was to the effect that

the Territory would most likely be found liable for the additional cost. Subsequently an

out of court settlement of $0.235m was agreed and paid.

(2) The taxation liability arose from the Governments participation in four joint ventures established for land development purposes and which were based on a unit trust operating structure. The joint ventures were established with the Master Builders Association (MBA) and the Housing Industry Association of the ACT (HIA) to ensure an adequate supply of affordable land was available for first hone buyers following the introduction of private sector land development.

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