Page 203 - Week 01 - Wednesday, 26 February 2014
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Here is some interesting data for members: in 2008-09, of the 58 contracts exchanged, none was handed back. In 2009-10, 434 contracts were exchanged and 22 were handed back, a ratio of 20 to one. In 2010-11, 805 contracts were exchanged and 115 were handed back; so the ratio drops to seven to one. In 2011-12, 623 contracts were exchanged and 321 were handed back—a two to one ratio. In 2012-13, 373 contracts were exchanged and 222 were handed back, or a 1.7 to one ratio. That is less than a two for one. I recall earlier this month where a house in Wright worth approximately $1.3 million was advertised as available under the four per cent, and indeed under the discounted two per cent, land rent rates.
We have a new scheme. The Canberra Liberals opposed Mr Barr’s changes to the new scheme of 19 September last year. At the time of the debate we noted the following changes to take effect from 1 October 2013 in this scheme: the land rent scheme would only be available to new entrants who were eligible for the discounted land rent rate of two per cent; the income threshold would be increased and would include the income of a lessee and their domestic partner; lessees who were no longer eligible for the discount rate would be obliged to transition out of the scheme by transferring their land rent crown lease to a nominal crown lease or transferring the block to another eligible applicant; lessees entering the scheme on or after 1 October 2013 would only be able to transfer their land rent crown lease to a purchaser who was also eligible for the discounted rate; and this legislation amended the calculation of interest on an outstanding land rent debt from a simple monthly rate to a compounding rate.
One of the key points for opposing it was the fact that the details on the threshold were not available at the time of the debate. We sought a briefing on this matter. A briefing was granted. The briefing was given and we were none the wiser at the end. The issue was only made clear on 30 September. Remember that the new scheme started on 1 October 2013. The matter was only made clear on 30 September, the day before, in 2013 when the Treasurer issued the government’s Taxation Administration (Amounts Payable Land Rent) Determination 2013 (No 2). In it income thresholds for the new two per cent scheme are $65,000 higher than the two per cent threshold for the old scheme.
This has some interesting outcomes. It will come as no surprise then that families who fall within the threshold for the new scheme, but who signed up a lease in the old scheme at four per cent, would feel somewhat cheated by the government. In effect, those who qualified for the new scheme who are paying the four per cent under the old scheme were, in effect, paying double what they would be paying if they signed a lease after 1 October 2013.
But let us tease that out a little bit. A person who took out a lease prior to 1 October last year with a household income of more than $94,500 per annum will pay rent at four per cent per annum. Contrast this to the new scheme where a person who signed a lease post 1 October with an income of less than $160,000—so up to $160,000 and after $94,500—will only pay two per cent.
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