Page 2831 - Week 07 - Thursday, 7 June 2012
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The second bill, the Rates and Land Tax Legislation Amendment Bill, improves community title schemes in the ACT by removing a further anomaly. These community title schemes were introduced in 2001. They were created as a new form of title where separate crown leases are grouped with a shared interest in a common area. The common areas under these schemes have separate leases which are valued and rated independently of their associated crown leases.
Under the current rates and land tax acts, because these common areas have purpose clauses that are neither specifically residential nor rural, they are charged the default of commercial rates. This occurs even when their purpose clause does not specifically allow for commercial activities. Uses of common area leases include community use, outdoor recreation facilities or road infrastructure.
Clearly, this situation needs to be corrected. This bill rectifies the anomaly by better aligning the charging of rates with the purpose of the common area. So, for example, where a community title scheme comprises separate crown leases that all have residential purposes then residential rates will be charged on the common area, providing the purpose clause of the common area is not commercial.
If, however, there are any commercial crown leases within the community title scheme then commercial rates will be applied to the common area. This is because it would be difficult and onerous practically to adjust the rates calculations to a pro rata assessment of residential as against commercial. As the common area has its own crown lease, there is no way of determining how much of the common area would be utilised by the owner of any associated commercial lease. In that circumstance, as an apportionment cannot be determined between commercial and residential use, hence commercial rates will apply to the whole common area.
It is important to note that this bill does not increase taxation on any person who holds a lease under a community title scheme. Individuals under a community title scheme will be better off if their common area does not specifically allow commercial activities. It should be noted that currently all community title schemes are residential. Further, it should be noted that the proposed amendments would only change the treatment of the common area within a community title scheme. It does not change the treatment of the individual blocks associated with it.
The government, of course, places a premium on the equitable treatment of the ACT community under its various tax laws, as we have seen in recent reforms in this area. This bill fixes an anomaly and in doing so improves the community title scheme. I thank members for their unanimous support for some red tape reduction. I am always pleased, Mr Speaker, to be able to deliver on the commitments that I have outlined. With that I commend both the Rates and Land Tax Legislation Amendment Bill and the Duties Amendment Bill 2012 (No 2) to the Assembly.
Question resolved in the affirmative.
Bill agreed to in principle.
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