Page 996 - Week 03 - Thursday, 10 April 2014
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These amendments will prevent the imposition of conveyance duty on Canberra’s long standing businesses (both large and small), conducting successful and long-term commercial leasing arrangements. It is also possible that businesses who have previously considered investing in lengthy commercial leasing arrangements in the ACT will now see Canberra as a more attractive taxation (and thus business) environment.
The EM concludes with this:
The amended provisions will align the ACT with the approach taken to commercial leases in other jurisdictions and will provide greater certainty to the Territory’s business community.
We had a briefing from officials, and I thank the minister for that. The officials told us that the bill was developed in consultation with stakeholders and had taken a year or so to put together, and that the intention was for the bill to be revenue neutral. They were not able to tell us why, given that this bill is going to be passed today, the government could not tell us what the premium will be set at.
Clause 5 of the bill is for provision of a new section for the meaning of a commercial lease with a premium. Clause 6, again reading from the EM, “removes long-term lease and franchise arrangements from being liable”. Clause 7 “allows for the imposition of duty on the grant of a commercial lease with a premium”. Clause 8 omits all long-term lease and franchise arrangements as dutiable property. Clause 14 provides a dutiable value of a transaction. Clause 16 gives power to the commissioner to require a party to provide a declaration by value of the market rent of the subject lease.
There are a number of key considerations here. The ACT is the only jurisdiction with leases managed in this way. Other jurisdictions already have 40-year leases. There have been representations that, for instance, commonwealth government buildings are nearly hitting their 30-year mark—perhaps Geoscience or the FAHCSIA building in Tuggeranong. But it affects little buildings or small businesses as well. The Charcoal restaurant is apparently being affected. And one of the examples in the brief was that perhaps the fish and chip shop at the Curtin shops, which has been there for almost 30 years, will be caught up in this. The amendment would avoid requiring the above to pay what, for either of them, would be a large duty payment. There is also a push, for instance, for Woolies in Gungahlin to have a 40-year lease, which would currently attract the duty.
What the bill does is remove the term for when duty is liable on the lease. If there is a premium associated with the lease, the premium is dutiable. What it does is remove an unintended consequence which is causing business to sign possibly 29-year leases.
From the briefings we have received from the government, they think that this change is revenue neutral.
I refer members back to the IGA signed in the lead-up to the introduction of the GST. The GST was meant to have a trade-off where there would be no stamp duty on leases
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