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Legislative Assembly for the ACT: 1996 Week 9 Hansard (29 August) . . Page.. 2838 ..

METHODS USED FOR CALCULATING BETTERMENT

A brief history of the various methods used during the past years for collecting betterment in respect of lease variations.

. Prior to 1 January 1970 land rent was charged for all commercial and residential leases. If a lease was varied the rent was varied. Reappraisal of rent was carried out every 20 years.

. On 1 January 1970 land rent was abolished in respect of all commercial and residential leases issued under the City Area Leases Act. It was also a Departmental policy to apply the same rules to leases issued pursuant to the Leases (Special Purposes) Act. From 1 January 1970 to 22 February 1990 lessees could make application to vary a lease pursuant to Section 11A of the City Area Leases Act. Section 11A involved an application to the Supreme Court and if successful betterment was charged in the following manner:-

"before" and "after" values were determined for the purpose of calculating betterment. These figures were based on the value of the land and improvements. The before value was the value of the property in its current use the day before the variation and the after value was the value of the land and existing improvements with the new purpose. The after value took into consideration demolition costs and any off site works considered necessary for the new use. Betterment was calculated at 50% of the added value less $1,500. Leases (Special Purposes) Act leases were treated in the same manner under Departmental policy. This was known as Method "A".

. On 22 February 1990 the new ACT Government (Kaine) introduced an amendment to Section 11A CALA (CALA (Betterment Charge Assessment) Regulations) which defined the before and after values to be the same as the unimproved value as defined in the Rates and Land Tax Act. No assumption was made that the lease purpose would remain unchanged and there was no requirement to exclude potential for redevelopment. It was also assumed that the lease would remain in force for 99 years. The value of improvements was not a consideration. With potential included the before value increased and the gap between the before and after values was reduced - hence less betterment. In addition to this change in valuation technique a schedule of remission for betterment was also introduced. Leases that had run for terms of 20 years or more were entitled to a maximum remission of 50%. The scale was graduated in years so that a lease that had run for a period of 5 years or less was not entitled to any remission with varying percentage remissions from 5 years to 20 years. This method of arriving at betterment remained in force to 22 April 1992. It is known as Method "B".

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