Land Tax Management Act 1956
Special disability trusts
The amendments provide that a special disability trust is a concessional trust for the purposes of the Land Tax Management Act 1956 (the Act).
A special disability trust is a trust that is established for the purpose of making financial provision for people with disabilities and that complies with the requirements of the Commonwealth Social Security Act 1991. This enables the principal place of residence exemption to be claimed by the trustee of the trust.
Mixed development and mixed use land
The amendments relate to the land tax reduction that is applicable to mixed use or mixed development land where part of the land is used and occupied as a principal place of residence.
The amendments apply certain concessions that are available under the principal place of residence exemption for residential land, so that the land tax reduction can be applied in certain circumstances where the residence concerned is not actually being used and occupied by the owner of the land.
The concessions concerned are the concession for absences from a former residence, the concession on death of the owner, and the concession for a tenancy following the death of an owner. The last two concessions are already available in relation to mixed use and mixed development land, but the amendments restructure the relevant provisions so that they are all located in the one place.
Principal place of residence exemption
The general rule for exemptions from land tax is that the exemption applies to the benefit of the owner of the land who is exempt, and not to any other owners. The amendments make it clear that this is subject to the principal place of residence exemption (that is, if one owner uses and occupies the land as a principal place of residence all owners receive the benefit of the principal place of residence exemption).
The amendments extend (from two to four years) the period during which the principal place of residence exemption can be claimed in respect of unoccupied land that is intended to be the owner’s principal place of residence. As a consequence of this amendment, the Chief Commissioner of State Revenue will no longer have the discretion to extend that period further.
The amendments make it clear that the concession under the principal place of residence exemption for the sale of a former principal place of residence can apply only for one tax year.
The amendments revise the conditions under which a person can claim the principal place of residence exemption during an extended absence. At present, the exemption can be claimed only if the residence is not rented for more than six months in a tax year. The amendments clarify that the residence also must not be rented for a total period in excess of 182 days in a tax year, with each overnight stay counting as one day.
The amendments further provide that the principal place of residence exemption ceases to have effect if the land ceases to be capable of being used and occupied as a principal place of residence and remains incapable of being so used and occupied for a period exceeding four years.
The amendments allow the principal place of residence exemption to be claimed in respect of land owned by a company in its capacity as the personal representative of a deceased person, where the existing principal place of residence concession for a continuing tenancy following the death of an owner of the land would apply.
The amendments clarify the circumstances in which the principal place of residence exemption can be claimed in respect of two adjoining lots of land where the lots are divided by a fence, wall or other structure. In order for the exemption to apply, access must be readily available between the lots by means of gates, doors, steps, stiles, elevators or openings, or by similar means. This requirement is additional to the other requirements applicable to adjoining lots of land (for instance, that the lots must be in the same ownership and occupied as the site of a single residence).
The amendments provide, in relation to the same exemption, that lots may be regarded as being in the same ownership if the lots are beneficially owned by the same person or persons.
Classification of trusts
Previously, the Act allowed the Chief Commissioner to classify a trust as a special trust either on the application of the trustee or by his or her own decision. Land that is the subject of a special trust does not receive the benefit of the tax-free threshold. Land that is the subject of a fixed trust does receive the benefit of the tax-free threshold.
The amendments make it clear that the fact that the Chief Commissioner does not classify a fixed trust as a special trust until a particular year does not prevent the Chief Commissioner from assessing or re-assessing the land tax liability in respect of land the subject of that trust for a previous year if that trust was not a fixed trust.
However, a classification of a fixed trust as a special trust that is made on the application of the trustee of the trust has a prospective application only.
Alteration of strata scheme unit entitlements
The amendments repeal section 65A of the Act. This provision enables the Chief Commissioner to alter unit entitlements under a strata scheme for land tax purposes.
The amendments clarify the circumstances in which land the subject of a voluntary conservation agreement will be exempt from land tax. The requirement is that the agreement must be one that has effect in perpetuity. The amendment defines that to mean an agreement that remains in force for an indefinite period and which cannot be unilaterally terminated by the owner of the land.
The amendments clarify that a purchaser under an agreement for sale of land will be taken to be the owner of the land for land tax purposes (to the exclusion of the owner) if, under the terms of the agreement, the purchaser is entitled to receive any rents or profits derived from a tenancy of the land or the purchaser is entitled to exclusive possession of the land.