Untitled document

Land Tax (Amendment) Act 1998

Act No. 41/1998

TABLE OF PROVISIONS

Section Page

1.	Purpose	1
2.	Commencement	1
3.	Principal Act	2
4.	Definitions	2
5.	New Part IIA inserted	2
PART IIA—PRINCIPAL PLACE OF RESIDENCE
EXEMPTION	2
13AA. Definitions	2

13A.	Principal place of residence exemption	4
13B.	Deferral of tax on certain residential land for 6 months	5
13C.	Temporary absence from principal place of residence	6
13D.	Exemption continues on death of resident	7
13E.	Exemption continues if land becomes unfit for occupation	8
13F.	Purchase of new principal residence	8
13G.	Sale of old principal residence	9
13H.	Unoccupied land subsequently used as principal residence 10
13I.	Partial exemption if land used for business activities	12
13J.	Partial exemption or refund for trustees	13
13K.	Prohibition on passing on land tax	14
13L.	Application of Part	14

6.	Notices of disposition no longer required	14
7.	New section 45 substituted and 45A inserted	14

45.	Assessment and liability of joint owners	14
45A.	Joint assessments in the case of principal place of
residence land	16

8.	Consequential amendments	18
9.	Regulations	18
10.	Repeal of spent legislation	18

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NOTES 19

i

Victoria

No. 41 of 1998

Land Tax (Amendment) Act 1998†

[Assented to 26 May 1998]

The Parliament of Victoria enacts as follows:

1. Purpose

The main purpose of this Act is to amend the Land Tax Act 1958 to introduce an exemption from land tax for land used as a person's principal place of residence.

2. Commencement

This Act comes into operation on the day on which it receives the Royal Assent.

Land Tax (Amendment) Act 1998

Act No. 41/1998 s. 3

3. Principal Act

In this Act the Land Tax Act 1958 is called the	No. 6289. Reprinted as
Principal Act.	at 1 February 1997 and
further amended by
Nos 31/1997, 40/1997,
86/1997 and 101/1997.

4. Definitions

(1) In section 3(1) of the Principal Act insert the

following definitions—

' "joint owners" means persons—

(a)	who own land jointly or in common, whether as partners or otherwise; or
(b)	who are deemed by this Act to be joint owners;

"principal place of residence" includes sole place of residence;'.

(2) In section 3(1) of the Principal Act—

(a)	in the definition of "owner", after "means" insert ", except in Part IIA,";
(b)	in the definition of "trustee", before "includes" insert ", except in Part IIA,".

5. New Part IIA inserted

After Part II of the Principal Act insert—

'PART IIA—PRINCIPAL PLACE OF RESIDENCE EXEMPTION

13AA. Definitions

(1) In this Part—

Land Tax (Amendment) Act 1998

s. 5 Act No. 41/1998

"discretionary trust" means a trust under which the vesting of the whole or any part of the trust property—

(a)	is required to be determined by a person either in respect of the identity of the beneficiaries or the quantum of interest to be taken, or both; or
(b)

will occur in the event that a trust is not exercised;

"owner", in relation to land, means a

person—

(a)	entitled to the land for an estate of freehold in possession; or
(b)	if the land is under a lease from the Crown, entitled to a leasehold interest as referred to in section 43—

and includes the owner of a life estate in the land as referred to in section 41;

"trustee" means trustee within the meaning of section 3(1) but does not include—

(a)	a trustee of a discretionary trust; or
(b)	a trustee of a trust to which a unit trust scheme relates; or

(c) a liquidator;

"unit trust scheme" means an arrangement

made for the purpose, or having the
effect, of providing facilities for
participation by a person, as a
beneficiary under a trust, in any profit
or income arising from the acquisition,

Land Tax (Amendment) Act 1998

Act No. 41/1998	s. 5
holding, management or disposal of property under the trust.

(2) For the purposes of this Part, a person is not a trustee of a trust relating to land by reason only that the land is subject to an implied or a constructive trust.

13A. Principal place of residence exemption

(1) Subject to this Part, the following land is

exempt from taxation—

(a)	land owned by a natural person that is used and occupied as the principal place of residence of that person;
(b)

land owned by a trustee of a trust that is place of residence of a natural person who is a beneficiary of the trust.

(2) Subject to section 13B, the exemption in

sub-section (1) applies only to land used and occupied as the principal place of residence of the owner or beneficiary—

(a)	since 1 July in the year preceding the year for which the exemption is claimed; or
(b)	if the owner or trustee became the owner of the land on or after 1 July in the year preceding the year for which the exemption is claimed, since a later date during that year.

(3) The exemption in sub-section (1) applies, in addition to land of an owner that is used and occupied as a person's principal place of

residence ("the PPR land"), to land owned
by that owner—

Land Tax (Amendment) Act 1998

s. 5 Act No. 41/1998

(a) that is contiguous with the PPR land or that is separated from the PPR land only by a road or railway or other similar area across or around which movement is reasonably possible; and

(b) that enhances the PPR land; and

(c) that is used solely for the private benefit and enjoyment of the person who uses and occupies the PPR land and has been so used—

(i)  since 1 July in the year preceding the year for which the exemption is claimed; or

(ii) owner of the land on or after

if the owner or trustee became the year for which the exemption is claimed, so used and occupied since a later date during that year.

(4) This section applies to land whether owned by a sole owner or joint owners.

(5) In determining whether land is used or

occupied as the principal place of residence of a person, account must be taken of every place of residence of the person, whether in Victoria or elsewhere.

13B. Deferral of tax on certain residential land

for 6 months

(1) If—

(a)	land would be exempt from taxation in respect of a year under section 13A but for section 13A(2); and
(b)	the owner satisfies the Commissioner that the land is intended to be

Land Tax (Amendment) Act 1998

Act No. 41/1998	s. 5
continuously used and occupied as the principal place of residence of the owner or, in the case of a trustee, as the principal place of residence of a beneficiary, for a period of at least 6 months from the date that the land was first so used and occupied—

the Commissioner may determine that land tax in respect of the land for that year is not payable until the expiry of that 6 month

period.

(2) If land that would be exempt from taxation in respect of a year but for section 13A(2) has been continuously used and occupied as

the person's principal place of residence for
the period of 6 months, the land becomes
exempt from taxation in respect of that year

at the end of that period.

13C. Temporary absence from principal place of

residence

(1) For the purposes of this Part, land is taken to be used and occupied as the principal place of residence of a person despite the person's absence from the land if the Commissioner is

satisfied—

(a)	that the absence is temporary in nature; and
(b)	that the person intends to resume use or occupation of the land as his or her principal place of residence after the absence; and
(c)	that, in respect of the period of absence, no other land is exempt from taxation under this Part as the principal place of residence of the owner or, in the case of

Land Tax (Amendment) Act 1998

s. 5	Act No. 41/1998
a trustee, as the principal place of residence of a beneficiary; and

(d)	that the owner has not made any claim for exemption for land tax under a law of another jurisdiction (whether in or
outside Australia) in respect of the period of absence for his or her principal place of residence or, in the case of a trustee, as the principal place of residence of a beneficiary.

(2) For the purposes of section 13I, land to

which sub-section (1) applies is not to be
taken to be land used by a person to carry on
a substantial business activity only because
the owner lets the land for residential
purposes during the absence.

(3) Sub-section (1) does not apply in the case of a temporary absence that continues for more than 2 years or such longer period as the

Commissioner determines in a particular

case.

13D. Exemption continues on death of resident

(1) If land is used and occupied as the principal

place of residence of a person and the person
dies, liability for tax is to be assessed as if
the person had not died but had continued to
use and occupy the land as his or her

principal place of residence.

(2) Sub-section (1) operates only until the earlier

of—

(a)	the first anniversary of the person's death; or
(b)	the day on which the person's interest in the land vests in another person under a trust; or

Land Tax (Amendment) Act 1998

Act No. 41/1998 s. 5

(c)

the day on which the person's interest in the person's personal representative) under the administration of the person's estate.

13E. Exemption continues if land becomes unfit

for occupation

(1) If land that is exempt from taxation under

section 13A(1) becomes unfit for occupation
as the principal place of residence of a
person because of damage or destruction
caused by an event such as fire, earthquake,
storm, accident or malicious damage,
liability for tax is to be assessed while the
owner continues to own the land as if it had
continued to be used and occupied as the
person's principal place of residence.

(2) Sub-section (1) operates until the second anniversary of the day on which the land became unfit for occupation as the person's

principal place of residence.

(3) Sub-section (1) does not apply if, at any time

during which it would otherwise apply, any
other land is exempt from taxation under
section 13A(1) as the principal place of
residence of the owner or, in the case of a
trustee, as the principal place of residence of
a beneficiary.

13F. Purchase of new principal residence

(1) If a person—

(a) becomes the owner of land in a year for use and occupation as his or her principal place of residence; and

Land Tax (Amendment) Act 1998

s. 5 Act No. 41/1998

(b) as at 31 December in that year uses and occupies other land as his or her principal place of residence—

the land referred to in paragraph (a) is

exempt from taxation for the following year.1

(2) If a trustee—

(a)	becomes the owner of land in a year for use and occupation as the principal place of residence of a beneficiary under the trust; and
(b)	as at 31 December in that year the beneficiary uses and occupies other land as his or her principal place of residence—

the land referred to in paragraph (a) is
exempt from taxation for the following year.2

(3) An exemption under sub-section (1) or (2) is revoked if the owner or beneficiary does not continuously use and occupy the land as his or her principal place of residence for at least

6 months, commencing within 12 months
after the date on which the owner or trustee
became the owner of the land.

(4) The Commissioner may assess the tax payable by the owner or trustee in the circumstances referred to in sub-section (3).

13G. Sale of old principal residence

(1) If an owner—

(a)	as at 31 December in a year uses and occupies land as his or her principal place of residence; and
(b)	as at that date is the owner of other land that, for a period of at least 6 months during that year, was continuously used

Land Tax (Amendment) Act 1998

Act No. 41/1998	s. 5
and occupied as the principal place of residence of the owner—

the land referred to in paragraph (b) is exempt from taxation in respect of the following year.3

(2) If—

(a)	as at 31 December in a year, land is used and occupied as the principal place of residence of a beneficiary under a trust; and
(b)	as at that date the trustee is the owner of other land that, for a period of at least 6 months during that year, was continuously used and occupied as the principal place of residence of the beneficiary—

the land referred to in paragraph (b) is exempt from taxation in respect of the following year.4

(3) An exemption under sub-section (1) or (2) is

revoked if the owner or trustee is still the
sole or joint owner of the land referred to in
sub-section (1)(b) or (2)(b) at the end of the
year in respect of which the land is exempt.

(4) The Commissioner may assess the tax payable by the owner or trustee in the circumstances referred to in sub-section (3).

13H. Unoccupied land subsequently used as

principal residence

(1) An owner who has paid tax in respect of a

year in respect of land that is not occupied is
entitled to a refund of that tax if—

(a) for at least 6 months commencing in that year, the land is continuously used

Land Tax (Amendment) Act 1998

s. 5	Act No. 41/1998
and occupied as the principal place of residence of the owner; and

(b) an application for a refund is made before the end of the next following year.

(2) A trustee who has paid tax in respect of a

year in respect of land that is not occupied is
entitled to a refund of that tax if—

(a) for at least 6 months commencing in

that year, the land is continuously used
and occupied as the principal place of
residence of a beneficiary under the
trust; and

(b) an application for a refund is made before the end of the next following year.

(3) If—

(a)	an owner or trustee is entitled under sub-section (1) or (2) to a refund of tax in respect of a year in respect of land; and
(b)	the owner or trustee is not entitled to an exemption under this Part in respect of any other land in respect of that year or the following year—

the land referred to in paragraph (a), while
owned by the owner or trustee, is exempt
from taxation in respect of that next

following year.

(4) Sub-sections (1), (2) and (3) do not apply if

the owner or trustee derived any income from the land at any time during which it was not occupied as a principal place of
residence.

Land Tax (Amendment) Act 1998

Act No. 41/1998 s. 5

13I. Partial exemption if land used for business

activities

(1) Despite anything to the contrary in this Part,

if land that would be exempt from taxation under another provision of this Part, but for this section, is used by any person to carry
on a substantial business activity, the
exemption applies only to the extent that the
land is used and occupied for residential
purposes.

(2) In determining whether land is used by a person to carry on a substantial business activity, account must be taken of—

(a)	whether paid employees or contractors (other than employees or contractors who are relatives of, and who ordinarily reside with, the person who uses and occupies the land as his or her principal place of residence) work on the land; and
(b)	whether any part of the land is used or allocated solely for business purposes; and
(c)	if part of the land is used or allocated (whether solely or partly) for business purposes, the proportion of the area of the land, or of the floor space of
buildings on the land, that is so used or allocated; and
(d)	the amount of income (if any), and the proportion of the person's total income, that is derived from business activities carried on on the land; and

Land Tax (Amendment) Act 1998

s. 5 Act No. 41/1998

(e) such other matters (if any) as are prescribed for the purposes of this section.

(3) If sub-section (1) applies, the Commissioner

must apportion the value of the land as
between use and occupation for residential
purposes and use for business purposes,
having regard to the proportion of the land
used for each purpose and the extent to
which each proportion is so used.

(4) The Commissioner may consult the Valuer-

General in relation to an apportionment under this section.

13J. Partial exemption or refund for trustees

(1) Despite anything to the contrary in this Part,

if—

(a)	an exemption from taxation or a refund of tax is provided for in this Part as a consequence of the continuous use and occupation of land as the principal place of residence of one or more beneficiaries under a trust; and
(b)	other beneficiaries under the trust who do not use and occupy the land as their principal place of residence have a

beneficial interest in the land—

the amount of the exemption or refund is
determined as if the value of the land for the
purposes of the exemption or refund were
such proportion of the value of the land as is
equal to the proportion that the interest in the
land held by the beneficiary bears to the total
interests of all beneficiaries in the land.

Land Tax (Amendment) Act 1998

Act No. 41/1998 s. 6

(2) Nothing in sub-section (1) applies in the case

of a beneficiary entitled to a life estate in
possession.

13K. Prohibition on passing on land tax
(1) A provision in a residential tenancy

agreement entered into on or after 1 January 1998 to the effect that the tenant is liable to pay, or to reimburse the landlord in respect of, any land tax payable by the landlord in respect of the rented premises is void.

(2) This section applies despite anything to the contrary in section 71(3).

(3) In this section—

"residential tenancy agreement" means an

agreement, whether or not in writing
and whether express or implied, under
which a person lets premises as a
residence.

13L. Application of Part

The exemptions and refunds contained in this Part apply with respect to land tax for 1998 and each subsequent year.'.

6. Notices of disposition no longer required

In section 15 of the Principal Act sub-section (3) is repealed.

7. New section 45 substituted and 45A inserted

For section 45 of the Principal Act substitute—
'45. Assessment and liability of joint owners
(1) Joint owners of land are to be assessed and

liable for tax in accordance with this section. (2) Joint owners of land are to be jointly

assessed and liable for tax in respect of the

Land Tax (Amendment) Act 1998

s. 7 Act No. 41/1998

land as if it were owned by a single person,

without regard to—

(a)	the separate interest of each joint owner; or
(b)	any other land owned by any joint owner (either alone or jointly with someone else).

(3) Each joint owner of land is also to be

separately assessed and liable in respect of—

(a)	the owner's individual interest in the land (as if the owner were the owner of a part of the land in proportion to that interest); and
(b)	any other land owned by the owner alone; and
(c)	the owner's individual interest in any other land.

(4) There is to be deducted from the tax payable

by a joint owner under sub-section (3) an amount (if any) necessary to avoid double taxation, being the lesser of—

(a) the amount determined by the formula:

A B ×

where— the jointly-owned land under sub- section (2); and

A is the proportion of the owner's
individual interest in the jointly-owned
land to the total interests in that land;

Land Tax (Amendment) Act 1998

Act No. 41/1998 s. 7

(b) the amount determined by the formula:

C × E

D

where— sub-section (3).

C is the value of the joint owner's
individual interest in the jointly-owned
land (as determined under sub-section
(3)(a));
D is the total value of all land of the
joint owner assessed under sub-section
(3);

(5) For the purposes of this section a joint owner

may be separately assessed under sub-
section (3) in respect of land even though no
tax is jointly assessable in respect of that
land under sub-section (2).

(6) The liability of a joint owner for tax must be

taken always to have been as set out in this
section as substituted by section 7 of the
Land Tax (Amendment) Act 1998.

(7) Despite sub-section (6), section 45, as in

force immediately before the commencement of section 7 of the Land Tax (Amendment) Act 1998, continues to apply with respect to the assessment of joint owners if proceedings
were issued before 21 April 1998 in which
the liability for tax of the joint owners was in
issue.

45A. Joint assessments in the case of principal place of residence land

(1) For the purposes of section 45 and subject to this section, if land that is jointly owned is

Land Tax (Amendment) Act 1998

s. 7 Act No. 41/1998

exempt from taxation under Part IIA as the principal place of residence of one or more, but not all, of the joint owners—

(a)	no tax is jointly assessable in respect of that land under section 45(2);
(b)	each joint owner who does not use and occupy the land as his or her principal place of residence is liable to pay tax
and may be separately assessed in respect of that land under section 45(3).

(2) A joint owner of land that is exempt from

taxation under Part IIA in respect of a year
("the tax year") because of its use and
occupation as the principal place of
residence of another joint owner of the land
is not, in respect of the tax year, liable to pay
or be assessed under section 45(3) for tax in
respect of the land—

(a) if, at any time during the first year before the tax year, the land was used and occupied as the principal place of residence of the first mentioned joint owner and that other joint owner of the land; or

(b) if—

(i)  at any time during the second year before the tax year the land was used and occupied as the principal place of residence of the first mentioned joint owner and that other joint owner of the land; and

(ii)  there is no other land that is exempt from taxation under Part IIA in respect of the tax year because of its use and occupation

Land Tax (Amendment) Act 1998

Act No. 41/1998 s. 8

as the principal place of residence of the first mentioned joint owner.

(3) Despite anything to the contrary in this

section or Part IIA, if a joint owner of land
("the PPR land") who, because of sub-
section (2), is not liable to be assessed under
section 45(3) for tax in respect of the PPR
land in respect of a year ("the tax year"),
resumes use and occupation of the PPR land
during the tax year, the joint owner is liable
for tax in respect of the tax year in respect of
any other land that, but for this sub-section,
would be exempt from tax under Part IIA in
respect of the tax year.

(4) Except to the extent set out in sub-section

(3), nothing in this section takes away from
or affects the operation of Part IIA.'.

8. Consequential amendments

In the Principal Act, sections 50A and 91AB are repealed.

9. Regulations

After section 93(1)(b) of the Principal Act
insert—

"(c) prescribing factors to be taken into account

for the purposes of section 13I;".

10. Repeal of spent legislation

No. 74/1991

The Land Tax (Revision) Act 1991 is repealed.	as amended by Nos
71/1992, 76/1992 and
30/1993.

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Land Tax (Amendment) Act 1998

Notes Act No. 41/1998

NOTES

†

Minister's second reading speech—

Legislative Assembly: 23 April 1998

Legislative Council: 14 May 1998

The long title for the Bill for this Act was "to amend the Land Tax Act 1958 to introduce a principal place of residence exemption, to repeal the Land Tax (Revision) Act 1991 and for other purposes."

1 In this situation, the owner will also be exempt from taxation in respect of

the land referred to in paragraph (b) in the circumstances set out in

section 13A(1)(a).

2 In this situation, the owner will also be exempt from taxation in respect of

the land referred to in paragraph (b) in the circumstances set out in

section 13A(1)(b).

3 In this situation, the owner will also be exempt from taxation in respect of

the land referred to in paragraph (a) in the circumstances set out in

section 13A(1)(a).

4 In this situation, the owner will also be exempt from taxation in respect of

the land referred to in paragraph (a) in the circumstances set out in
section 13A(1)(b).