Property Tax (First Home Buyer Choice) Act 2022 (NSW)

Property Tax (First Home Buyer Choice) Act 2022 No 60 An Act to enable first home buyers to opt to pay an annual property tax rather than duty when buying a first home. Part 1 Preliminary 1 Name of Act This Act is the Property Tax (First Home Buyer Choice) Act 2022. 2 Commencement This Act commences on a day or days to be appointed by proclamation. 3 Definitions Schedule 6, Dictionary defines certain terms used in this Act. Note— The Interpretation Act 1987 contains definitions and other provisions that affect the interpretation and application of this Act. 4 Relationship with Taxation Administration Act 1996 This Act must be read together with the Taxation Administration Act 1996, which makes provision for the administration and enforcement of this Act and other taxation laws. Part 2 Key terms 5 Meaning of "first home buyer" (1) In this Act— first home buyer means a person— (a) who is an individual, and (b) who is 18 years of age or older, and (c) who has not at any time owned residential land in Australia, either solely or with another person, and (d) who has not previously been a party to a relevant application approved by the Chief Commissioner, and (e) if the individual has a spouse—whose spouse— (i) has not at any time owned residential land in Australia, either solely or with another person, and (ii) has not previously been a party to a relevant application approved by the Chief Commissioner. (2) Land owned by a person on trust or as an executor of a will is taken not to be owned by the person for the purposes of subsection (1). (3) A person is taken not to be a party to a relevant application if the relevant application was made by the person in the person's capacity as a trustee or an executor of a will. (4) A person is taken to have owned land in the Australian Capital Territory if the person has held a leasehold interest granted by the Commonwealth in the land. (5) The Chief Commissioner may waive the requirement that an individual be 18 years of age or over to be a first home buyer in relation to a transfer of land if satisfied that— (a) the individual as a first home buyer will occupy the land following the transfer in accordance with section 15, and (b) the waiver is reasonable in the circumstances. (6) In this section— relevant application means an application under— (a) this Act, or (b) provisions of the Duties Act 1997, Chapter 2, Part 8 intended to assist persons to buy a first home, or (c) provisions of an Act prescribed by the regulations. 6 Meaning of "land" In this Act— land means the following— (a) a lot, including a strata-type lot, of land, (b) a parcel other than a lot if— (i) the parcel is owned by the Crown, and (ii) the parcel is leased to a person other than the Crown, and (iii) a valuation is reasonably available from the Valuer-General for the parcel. strata-type lot means— (a) a lot within the meaning of the Strata Schemes Development Act 2015, or (b) a development lot or a neighbourhood lot within the meaning of the Community Land Development Act 2021, or (c) an exclusive land use entitlement. 7 Meaning of "exclusive land use entitlement" (1) This section applies to an interest if the Chief Commissioner is satisfied— (a) the interest gives the owner an exclusive right to occupy part of a building on land, and (b) the interest is— (i) shares or units in a relevant entity that owns or leases the land, or (ii) a part ownership of the land if— (A) ownership of the land is as tenants in common, and (B) each part ownership gives an exclusive right to occupy a different part of the building on the land, and (c) the interest is transferable, and (d) the whole of the land is reasonably used in connection with the occupation of the building. (2) The interest giving the exclusive right to occupy part of a building may be jointly owned. (3) The owner of the interest is taken to be the owner of the part of the building that the owner is entitled to exclusively occupy because of the interest. (4) The part of the building is taken to be a separate lot (the exclusive land use entitlement). (5) An interest that gives an exclusive right to occupy part of a building only at certain times is not an interest to which this section applies. (6) If there is more than 1 building on the land, this section applies to an exclusive right to occupy a whole building, but not all buildings, in the same way as it applies to part of a building. (7) In this section— relevant entity means a company or unit trust where all shares in the company or units in the trust— (a) are distributed to persons, and (b) give the persons a right to occupy parts of a building on land owned by the company or trust. 8 Meaning of "owner of land" (1) In this Act, owner of land means— (a) for a lot within the meaning of the Strata Schemes Development Act 2015—the owner of the lot within the meaning of that Act, or (b) for a development lot or neighbourhood lot within the meaning of the Community Land Development Act 2021—the owner of the lot within the meaning of that Act, or (c) for an exclusive land use entitlement—the owner of the interest that gives the entitlement, or (d) for land leased from the Crown in perpetuity by a person other than the Crown—the lessee, or (e) for land subject to an eligible life estate—the owner of the life estate, or (f) otherwise—the legal owner of the lot. (2) If a lessee is taken to be the owner of land for the purposes of this Act, the person who owns the fee simple in the land is taken not to be an owner of the land for the purposes of this Act. (3) If an exclusive land use entitlement arises from ownership of shares or units in a relevant entity that owns land, the relevant entity is taken not to be the owner of the land for the purposes of this Act. (4) In this section— eligible life estate means a life estate— (a) created directly by the terms of a will and not by the exercise of a discretion under a will, and (b) conferred for the life of the owner of the life estate. relevant entity has the same meaning as in section 7. 9 Meaning of "residential land" (1) In this Act, land is residential land if the Chief Commissioner is satisfied— (a) the land contains either of the following that is suitable for occupation or use as a dwelling— (i) a building, (ii) a strata-type lot, including associated utility lots, and (b) the land is, or is suitable to be, occupied or used predominantly for residential purposes. (2) If a strata-type lot is residential land, associated utility lots are also taken to be residential land. (3) In this section— associated utility lot means a utility lot if— (a) the utility lot is transferred with the strata-type lot, and (b) its use is restricted to the owner or occupier of the strata-type lot, and (c) it is not suitable to be used— (i) for human occupation, or (ii) as a residence, office, shop or similar. building includes a moveable dwelling within the meaning of the Local Government Act 1993 if the Chief Commissioner is satisfied the moveable dwelling is designed, constructed or adapted for use as a dwelling on a long-term basis. 10 Meaning of "approved trust" (1) In this Act, a trust is an approved trust if— (a) the trustee is an apparent purchaser of the land, or (b) the trustee will hold the land for a person who— (i) is under a legal disability, and (ii) is under the guardianship of the trustee. (2) In this section— apparent purchaser means an apparent purchaser referred to in the Duties Act 1997, section 55. 11 Meaning of "transferee" (1) In this Act— transferee means a person who will be the owner of land as a result of a transfer of— (a) for an exclusive land use entitlement—the interest that gives the entitlement, or (b) for land leased from the Crown in perpetuity by a person other than the Crown—the lease, or (c) otherwise—the fee simple in the land. (2) In this Act, for transferred land that will be subject to an approved trust— (a) a reference to the transferee is taken to be a reference to the beneficiary under the approved trust, and (b) the actual transferee is referred to as the trustee transferee. Part 3 Eligibility 12 Basis for making application (1) A transferee may make an application to subject transferred land to property tax if at the time the application is made— (a) the transferee is an eligible transferee, and (b) the transfer is an eligible transfer. (2) However, a transferee may not make an application if— (a) there is more than 1 eligible transferee, and (b) another eligible transferee does not agree to the application being made. (3) A transferee may not make an application if the transferred land will be held on trust following the transfer of the land, unless the trust is an approved trust. (4) For an approved trust referred to in section 10(1), a trustee transferee is eligible to make an application under this section on behalf of a beneficiary who would be eligible to make the application. 13 Eligible transferees (1) A transferee is an eligible transferee if— (a) the transferee is an eligible first home buyer, or (b) the transferee is not an eligible first home buyer but— (i) the transferee is a first home buyer, and (ii) there is more than 1 transferee under the transfer, and (iii) at least 1 other transferee is an eligible first home buyer, or (c) for an approved shared equity scheme where all transferees other than approved equity partners are eligible transferees—the approved equity partners are also eligible transferees. (2) In this section— approved equity partner has the same meaning as in the Duties Act 1997. eligible first home buyer means a person who is— (a) a first home buyer, and (b) an Australian citizen or a permanent resident. permanent resident has the same meaning as in the Duties Act 1997. 14 Eligible transfers (1) A transfer is an eligible transfer if— (a) it is for the acquisition of— (i) residential land, or (ii) vacant land the Chief Commissioner is satisfied will be residential land, and (b) it is for the whole of the land, and (c) the dutiable value of the land is not more than— (i) for vacant land—$800,000, or (ii) otherwise—$1,500,000, and (d) it is not for the transfer of— (i) business premises, or (ii) a business, or (iii) land used for primary production within the meaning of the Land Tax Management Act 1956, section 10AA, or (iv) a holiday home, and (e) all transferees are eligible transferees, and (f) the transfer of land occurs— (i) before 1 July 2023, or (ii) on or after 1 July 2023 but relates to, or is made in conformity with, an agreement for sale or transfer entered into before 1 July 2023. (2) Subsection (1)(e) does not apply if— (a) more than 1 transferee will own the land other than under an approved shared equity scheme, and (b) at least 1 transferee is an eligible transferee, and (c) eligible transferees will own at least 50% of the land, and (d) no transferee is a company, unless the Chief Commissioner is reasonably satisfied the transfer should be an eligible transfer despite the transferee being a company. 15 Residence requirement (1) If an application to subject transferred land to property tax is approved by the Chief Commissioner, at least 1 first home buyer who is a transferee must occupy the transferred land as a principal place of residence for a continuous period of at least 6 months. (2) The occupation must start within 12 months after the land is transferred. (3) The Chief Commissioner may, if satisfied there are good reasons to do so— (a) approve a shorter period of occupation by a first home buyer, or (b) approve a later day on which occupation by a first home buyer must start, or (c) exempt a first home buyer from the occupation requirement. (4) The Chief Commissioner may give the approval or exemption even if— (a) it is more than 12 months after the land is transferred, or (b) the first home buyer no longer occupies the land as a principal place of residence. (5) This section does not apply to transferred land that is vacant land if the Chief Commissioner is satisfied— (a) the land is intended to be used as the site of a home, and (b) the home will be occupied by a first home buyer as a principal place of residence. (6) This section does not apply if at the time the application is made— (a) at least 1 of the first home buyers is a member of the Permanent Forces of the Australian Defence Force, within the meaning of the Defence Act 1903 of the Commonwealth, and (b) each first home buyer is enrolled to vote in State elections under the Electoral Act 2017. Part 4 Opting in 16 Making the application (1) A transferee, including a trustee transferee, who is eligible to make an application to subject land to property tax may make the application to the Chief Commissioner. (2) The application must be made— (a) for an agreement for sale or transfer—before the transfer of the land, or (b) otherwise—before the earlier of— (i) the end of the duty default period, or (ii) the time at which the instrument effecting the transfer is endorsed under the Duties Act 1997, section 289. (3) The application may be revoked by the applicant if the applicant makes an application to the Chief Commissioner for revocation before the land is transferred. (4) An application under this section must be in a form approved by the Chief Commissioner. (5) The Chief Commissioner may require an applicant to provide further information if the Chief Commissioner considers it necessary for the proper administration of this Act. (6) The Chief Commissioner may impose the requirement at any time, including after the application has been approved. (7) In this section— duty default period for a relevant transaction, means the period of 3 months after the liability to pay duty arises under the Duties Act 1997 for the transaction. 17 Decision on application (1) The Chief Commissioner must approve an application to subject transferred land to property tax if the Chief Commissioner is satisfied— (a) the application is made in accordance with this Act, and (b) if the application relates to an agreement for sale or transfer—the transfer will conform or substantially conform with the agreement, and (c) if applicable, the residence requirement in section 15 will be satisfied. (2) For this section, a transfer substantially conforms with an agreement for sale or transfer if— (a) the transfer would be in conformity with the agreement if the transferee, or a trustee transferee, was the purchaser under the agreement, and (b) the transfer occurs at the same time as, or proximately with, the settlement of the agreement, and (c) at the time the agreement was entered into, and at the settlement of the agreement— (i) the purchaser under the agreement, other than a purchaser who purchased as a trustee, and the transferee under the transfer were related persons, or (ii) if the purchaser purchased as a trustee—the purchaser and the beneficiary were related persons. (3) In this section— related person means an individual who is a related person within the meaning of the Duties Act 1997. transfer does not include an agreement for sale or transfer. transferee does not include a purchaser. 18 Land subject to property tax if application approved (1) If an application to subject transferred land to property tax is approved by the Chief Commissioner— (a) on the transfer of the land—each eligible transferee becomes an included owner, other than an eligible transferee who is a beneficiary under an approved trust, in which case the trustee transferee becomes the included owner, and (b) on the transfer of the land—the proportion of the transferred land owned by included owners becomes subject to property tax, and (c) on the giving of the approval—the duty chargeable on the transfer is reduced by the proportion referred to in paragraph (b). Note— If the proportion of the transferred land owned by included owners is 100%, the transfer is exempt from duty under the Duties Act 1997, Chapter 2. (2) Duty chargeable on the transfer is payable only by the transferees who are not eligible transferees. (3) If only a proportion of land is subject to property tax, the land may be referred to as hybrid land. 19 Land wrongly opted in (1) An approval of the Chief Commissioner is void and is taken never to have been given for the purposes of this Act if the Chief Commissioner is satisfied— (a) the transfer to which the approval relates is not in conformity or substantial conformity with the agreement for sale or transfer as required by section 17, or (b) the residence requirement in section 15 has not been satisfied, or (c) the approval would not have been given had the Chief Commissioner been aware of all relevant information. (2) If the approval is void, duty is chargeable as if the application had never been made. (3) Duty chargeable is a charge on the land transferred until the duty is paid. Part 5 Liability for property tax 20 Liability for property tax (1) An included owner of land subject to property tax is liable to pay property tax on the land each financial year. (2) If there is more than 1 included owner of the land, each included owner is jointly and severally liable to pay the property tax. (3) The liability for a financial year arises at the start of the financial year. (4) If land becomes subject to property tax during a financial year, the liability is only for the part of the financial year commencing when the land becomes subject to property tax. (5) If land ceases to be subject to property tax during a financial year, the liability is only for the part of the financial year until the land ceases to be subject to property tax. 21 Amount of property tax depends on class of land use The amount of property tax payable on land depends on the class of land use of the land. 22 Classes of land use (1) For the purposes of this Act, class of land use means— (a) land that is owner-occupied, or (b) land that is not owner-occupied. (2) Schedule 1 sets out circumstances in which certain land— (a) is treated as being a particular class of land use for the purposes of this Act, or (b) is otherwise treated differently for the purposes of this Act. 23 Mixed use land (1) The Chief Commissioner may approve parts of land being treated as if they were separate lots (deemed lots) for the purposes of this Act. (2) An included owner of land may apply to the Chief Commissioner to have parts of the land treated as deemed lots if the parts have different classes of land use. Example— a residential flat building in which 1 flat is owner-occupied and the rest are leased out by the owner (3) The Chief Commissioner may approve the application if the Chief Commissioner is satisfied each deemed lot is identifiable using— (a) an apportionment factor recorded in the Register of Land Values for the land, or (b) if no apportionment factor is recorded in the Register of Land Values for the land—an apportionment factor approved for the land by the Chief Commissioner taking into account— (i) the floor space or land area used for each class of land use, and (ii) other factors the Chief Commissioner considers relevant. (4) If no apportionment factor is recorded in the Register of Land Values for the land— (a) the Chief Commissioner may ask the Valuer-General to determine an apportionment factor for the land, and (b) the Valuer-General must— (i) determine the apportionment factor in accordance with the Valuation of Land Act 1916, Part 1B, Division 5 or 5A, and (ii) record the apportionment factor in the Register of Land Values. 24 Property tax amount—class of land use (1) The property tax amount must be calculated as if land had a single class of land use for a financial year. (2) The property tax amount for a class of land use for land for a financial year is— (a) if subsection (5) applies—the property tax indexed amount for the class of land use for the land for the financial year, or (b) otherwise—the lesser of the following— (i) the property tax indexed amount for the class of land use for the land for the financial year, or (ii) the property tax amount for the class of land use for the land for the previous financial year multiplied by 1.04. (3) The property tax indexed amount for a class of land use for land for a financial year is calculated by adding the land value component for the class of land use for the land for the financial year to— (a) for land that is owner-occupied—the fixed component for the financial year as set out in Schedule 2, section 1(1), or (b) for land that is not owner-occupied—the fixed component for the financial year as set out in Schedule 2, section 1(2). (4) The land value component for a class of land use for land for a financial year is calculated by multiplying— (a) the land value of the land subject to property tax— (i) at the beginning of the previous financial year, and (ii) as if the proportion of the land subject to property tax were 100%, and (b) the land value rate for the financial year, as set out in Schedule 2, section 2 for the class of land use. (5) This subsection applies for the purposes of subsection (2)(a) if— (a) the land was not subject to property tax in the previous financial year, or (b) no included owner of the land was an included owner of the land in the previous financial year, or (c) the land is a deemed lot under section 23 which has an apportionment factor that has been introduced or changed in the financial year or the previous financial year, or (d) the class of land use of the land in the current financial year was not a class of land use of the land at any time in the previous financial year, or (e) the land was consolidated with other land in the financial year or the previous financial year, or (f) the land was subdivided in the financial year or the previous financial year. 25 Property tax payable (1) If a single class of land use applies to land in a financial year—the property tax payable is the property tax amount for the class of land use for the land for the financial year. (2) If more than 1 class of land use applies to land in a financial year—the property tax payable for the land for a financial year is calculated by— (a) for each class of land use that applies—reducing the property tax amount for the class of land use for the land for the financial year proportionally to reflect the number of days in the financial year that the class of land use applied to the land, and (b) adding together each amount calculated under paragraph (a) for each class of land use. Note— The property tax payable may be adjusted in certain circumstances. See, for example, sections 26–27. 26 Reduction in property tax if only proportion of land subject to property tax If only a proportion of land is subject to property tax, the property tax payable must be reduced proportionally. 27 Reduction in property tax for land subject to property tax for only part of year For land that becomes, or ceases to be, subject to property tax during a financial year, the property tax payable for the financial year must be reduced proportionally to reflect the number of days in the financial year for which the land is subject to property tax. Part 6 Assessments and payment of property tax 28 Issue of notice of assessment or reassessment (1) The Chief Commissioner must give the included owner of land subject to property tax a notice of assessment of the property tax payable on land for a financial year as soon as practicable after— (a) for land that becomes subject to property tax after the start of the financial year—the land becomes subject to property tax, or (b) otherwise—the start of the financial year. (2) The Chief Commissioner must give the included owner of land subject to property tax a notice of reassessment during a financial year as soon as practicable after the Chief Commissioner is notified of a change affecting the property tax payable, including— (a) a change of land use class applying to the land, or (b) a change in the value of the land, or (c) a change in the proportion of the land subject to property tax. (3) A reassessment may be made more than 5 years after the initial assessment. Note— See the Taxation Administration Act 1996, section 9(3)(c). (4) Property tax is payable by the included owner of the land in accordance with the notice of assessment or reassessment. (5) No payment of property tax is required earlier than 30 days after the notice is given to the included owner of the land. 29 Time for payment (1) As far as practicable, a notice of assessment or reassessment must give an included owner of land subject to property tax an option of paying the property tax in a single instalment or in multiple approximately equal instalments. (2) If a notice relating to a financial year is issued before 1 August in the financial year, it must provide as far as practicable for— (a) a single annual instalment to be payable by 31 August in the financial year, or (b) 4 quarterly instalments to be payable by 31 August, 30 November, 28 February and 31 May in the financial year. (3) The Chief Commissioner may give reminder notices to included owners who are paying in more than 1 instalment about upcoming instalment payments. (4) Failure to give a notice of assessment or reassessment or a reminder notice does not affect the liability of an included owner to pay property tax at the times set out in this section. 30 Included owner of land taken to have opted to pay in instalments The included owner of land subject to property tax is taken, for the purposes of this section, to have opted to pay property tax for a financial year in instalments, if— (a) the notice of assessment has been given to the included owner for the land for the financial year, and (b) the full amount of property tax payable for the financial year is not paid by the time specified in the notice for payment of the single instalment. 31 Unpaid property tax—tax default The included owner of land is taken to have committed a tax default for the purposes of the Taxation Administration Act 1996, Part 5 if an amount of property tax required to be paid under this Act by a particular time is not paid in full within that time. Part 7 Deferral and recovery of unpaid property tax 32 Definitions In this Part— basic living expenses means— (a) reasonable expenses for food, shelter, clothing and medical treatment of the relevant individual and the dependants of the individual, and (b) other expenses the Chief Commissioner considers to be basic living expenses. grounds for deferral means the grounds for deferral set out in section 33. 33 Grounds for deferral For land that is owner-occupied, there are grounds for deferral if the payment of the property tax would cause an individual to be unable to meet basic living expenses. 34 Applying for deferral of payment of property tax (1) A person (the applicant) who is liable to pay property tax on land may apply to the Chief Commissioner to defer the payment of property tax on the land if there are grounds for deferral. (2) The application must be in a form approved by the Chief Commissioner. (3) The Chief Commissioner may, if satisfied grounds for deferral exist— (a) approve the application, and (b) defer some or all of the property tax payable for— (i) a financial year, or (ii) if satisfied the grounds for deferral will continue for more than a financial year—a longer period. (4) The Chief Commissioner may make a deferral for more than a financial year subject to conditions the Chief Commissioner considers to be reasonable and appropriate. 35 Assessing grounds for deferral In making a decision about whether an individual can meet basic living expenses, the Chief Commissioner must consider the following— (a) the income and expenses of the individual, (b) whether the individual has disposed of assets since a property tax liability was previously deferred or since property tax became payable for the financial year, (c) the ability of the individual to rearrange current financial commitments or otherwise manage the individual's financial affairs, (d) whether the individual's ability to manage the individual's financial affairs is impaired because of ill health, including a mental illness, intellectual disability or cognitive impairment, (e) other matters the Chief Commissioner reasonably considers to be relevant. 36 Effect of deferral (1) Unpaid property tax continues to be a charge on land even if the Chief Commissioner approves deferral of payment. (2) Interest is payable on the deferred unpaid property tax. (3) The rate of interest is the relevant interest rate set out in section 37. (4) Unpaid property tax, the payment of which is deferred, is payable in the next financial year or at a later time specified by the Chief Commissioner unless— (a) a further application to defer the payment is approved by the Chief Commissioner, or (b) the Chief Commissioner specifies a later date for payment. 37 Relevant interest rate (1) The relevant interest rate for a period is— (a) the rate for the period specified by the Chief Commissioner by notice in the Gazette, or (b) if no rate is specified for the period under paragraph (a)—the monthly NSW Treasury Corporation 10 year bond yield published by the Reserve Bank of Australia in the following months— (i) 1 January–31 March in a year—the rate published for November in the preceding year, (ii) 1 April–30 June in a year—the rate published for February in the same year, (iii) 1 July–30 September in a year—the rate published for May in the same year, (iv) 1 October–31