Treasury Laws Amendment (Housing Tax Integrity) Act 2017 (126 of 2017)

Schedule 3   Vacancy fees for foreign acquisitions of residential land

Part 1   Amendments

Foreign Acquisitions and Takeovers Act 1975

7   After Part 6

Insert:

Part 6A - Vacancy fees for foreign acquisitions of residential land

Division 1 - Simplified outline of this Part

115A Simplified outline of this Part

A vacancy fee is payable by a foreign person for any dwelling on residential land, for any year (called a vacancy year), if the dwelling is residentially occupied for less than 183 days in the year.

A dwelling is residentially occupied on a day in any of the following circumstances (or any combination of these circumstances over the vacancy year):

(a) the foreign person, or a relative of the foreign person, genuinely occupies the dwelling as a residence (whether or not with other persons);

(b) the dwelling is genuinely occupied as a residence under a lease or licence with a term of 30 or more days;

(c) the dwelling is genuinely available for occupation as a residence under a lease or licence with a term of 30 or more days.

The amount of the vacancy fee is found in the Foreign Acquisitions and Takeovers Fees Imposition Act 2015. However, a vacancy fee may be waived or remitted.

The foreign person is required to give a vacancy fee return to the Commissioner of Taxation after the end of each vacancy year for a dwelling. The person must also keep all relevant records for 5 years after disposal of the interest in residential land.

Unpaid vacancy fees for a dwelling may be recovered as a debt, or by the creation of a charge over Australian land in which an interest is held by the foreign person. The charge also secures any unpaid penalties for contraventions of civil penalty provisions under this Part relating to giving annual returns and keeping records.

Division 2 - Vacancy fees: liability

115B Scope of this Division - persons and land

(1) This Division applies in relation to a person if:

(a) the person is a foreign person; and

(b) the person acquires an interest in residential land on which one or more dwellings are, or are to be, situated; and

(c) either:

(i) the acquisition is a notifiable action; or

(ii) the acquisition would be a notifiable action were it not for section 49 (actions that are not notifiable actions - exemption certificates).

Note: Regulations made for the purposes of section 37 may provide for circumstances in which this Division does not apply in relation to a person or a dwelling.

(2) The Commissioner of Taxation has the general administration of this Part.

Note: This Part is therefore a taxation law for the purposes of the Taxation Administration Act 1953 (among other laws). That Act contains a wide range of provisions about gathering, protecting and dealing with information, the exercise of powers and the performance of functions, under taxation laws, and the enforcement of taxation laws.

(3) However, the provisions of the Taxation Administration Act 1953 mentioned in subsection 138(2) of this Act do not apply in relation to this Part.

115C Liability for vacancy fees

Main rule

(1) The person must pay a fee (a vacancy fee ) in relation to each dwelling on the land that is residentially occupied for fewer than 183 days during each vacancy year for the dwelling.

Note: The amount of the vacancy fee is in Part 2 of the Foreign Acquisitions and Takeovers Fees Imposition Act 2015.

Vacancy year

(2) A vacancy year , for a dwelling on the land, is the first, and each successive, period of 12 months since the occupation day for the dwelling during which the person has continuously held the interest in land.

Occupation day

(3) The occupation day for a dwelling on the land is:

(a) if the dwelling is an established dwelling, unless paragraph (c) applies - the first day the person acquires the right to occupy the dwelling; or

(b) if the dwelling is a new dwelling, or the interest in the dwelling acquired by the person is a near-new dwelling interest (within the meaning of the Foreign Acquisitions and Takeovers Regulation 2015), unless paragraph (c) applies - the later of:

(i) the day on which a certificate of fitness for occupancy or use (however described) is issued in relation to the dwelling for the purposes of the law of a State or Territory relating to approvals of new dwellings; and

(ii) the first day the person acquires the right to occupy the dwelling; or

(c) a day prescribed by regulations made for the purposes of this paragraph.

Residential occupation

(4) A dwelling is residentially occupied on a day if:

(a) the person, or a relative of the person, genuinely occupies the dwelling as a residence on that day (with or without any other persons); or

(b) the dwelling is genuinely occupied on that day as a residence under a lease or licence with a term of 30 or more days; or

(c) the dwelling is genuinely available on that day for occupation as a residence under a lease or licence with a term of 30 or more days.

115D Vacancy fee liability - vacancy fee return

(1) Within 30 days after the end of the vacancy year for a dwelling on the land, the person must give a vacancy fee return to the Commissioner of Taxation for the dwelling, in accordance with subsection (2).

Civil penalty: 250 penalty units.

(2) The return must be in the approved form within the meaning of section 388-50 in Schedule 1 to the Taxation Administration Act 1953.

(3) If the Commissioner of Taxation is satisfied that the person has contravened subsection (1), the person is taken to be liable to pay a vacancy fee in relation to the dwelling under section 115C regardless of the number of days during the vacancy year on which the dwelling is residentially occupied.

Note: This section has no application to the person if the person has disposed of his or her interest in the land before the end of the vacancy year.

115E Vacancy fee liability - notice of liability for vacancy fee

(1) The Treasurer or the Commissioner of Taxation must give written notice to a person liable to pay a vacancy fee for a dwelling in relation to a vacancy year of the amount of the fee, and the reasons why the person is liable to pay the fee.

Note: Section 25D of the Acts Interpretation Act 1901 sets out rules about the contents of a statement of reasons.

(2) If the Treasurer decides to waive or remit all of the vacancy fee under section 115H, reasons for the waiver or remission are not required to be given under subsection (1).

(3) A notice given to a person by the Treasurer or the Commissioner of Taxation under this section is prima facie evidence of the matters stated in the notice.

115F Vacancy fee liability - due date

A vacancy fee for a dwelling becomes due for payment on a day specified in the notice under section 115E, which must be at least 21 days after the notice is given to the person.

115G Vacancy fee liability - requirement to keep records

Main requirement

(1) The person must:

(a) keep records, in accordance with subsection (2), that record and explain all transactions and other acts the person engages in that are relevant to the person's liability for vacancy fees for each dwelling on the land in each vacancy year for the dwelling; and

(b) retain those records for at least 5 years after theend of each such vacancy year.

Civil penalty: 250 penalty units.

Records in English

(2) The records must be in English, or readily accessible and easily convertible into English.

Exception

(3) This section does not require the person to retain a record if:

(a) the Commissioner of Taxation notifies the person that the person does not need to retain the record; or

(b) the person is a company that has been finally dissolved.

115H Vacancy fee liability - waiver and remission

The Treasurer may, on behalf of the Commonwealth, waive or remit the whole or a part of a vacancy fee if the Treasurer is satisfied that it is not contrary to the national interest to waive or remit the fee.

Division 3 - Vacancy fees: recovery of unpaid fees

115J Vacancy fee recovery - as a debt

A vacancy fee may be recovered by the Treasurer or the Commissioner of Taxation, on behalf of the Commonwealth, as a debt due to the Commonwealth in a court of competent jurisdiction.

115K Vacancy fee recovery - creation of charge over Australian land

(1) This section applies in relation to Australian land in which a person has an interest if:

(a) the person is liable to pay a vacancy fee under section 115C in relation to that land or any other Australian land in which the person holds an interest; and

(b) the vacancy fee is due for payment under section 115F, and has not been paid; and

(c) the interest in Australian land can be registered on a land register; and

(d) the Treasurer makes a declaration under section 115L that this section applies in relation to the interest.

Note: Subsection (4) contains an exception to this section (proceeds of crime orders).

Creation of charge

(2) A charge is created on the land to secure the payment of the following amounts:

(a) amounts of vacancy fees ( unpaid vacancy fees ) that are due for payment under section 115F, and have not been paid, in relation to that land or any other interest in land held by the person;

(b) any amounts of pecuniary penalties ( unpaid vacancy penalties ) payable for contravention by the person of the following provisions, if the amounts have not been paid:

(i) subsection 115D(1) (which deals with vacancy fee returns);

(ii) subsection 115G(1) (which deals with the requirement to keep records).

(3) The charge under subsection (2) is created at the time the declaration under section 115L comes into force.

Exception in relation to proceeds of crime orders

(4) This section does not apply if at the time mentioned in subsection (3):

(a) a restraining order is in force in relation to the land under Part 2-1 of the Proceeds of Crime Act 2002; or

(b) a forfeiture order is in force in relation to the land under Part 2-2 of that Act; or

(c) an order (however described) of a kind prescribed by the regulations is in force in relation to the land under a law of the Commonwealth, a State or a Territory.

115L Vacancy fee recovery - Treasurer's declaration relating to charge over land

(1) The Treasurer may, by notifiable instrument, declare that section 115K applies in relation to a specified interest in Australian land held by a person if satisfied that the declaration is necessary to secure the payment of:

(a) unpaid vacancy fees; and

(b) unpaid vacancy penalties (if any).

(2) A declaration under subsection (1) must specify:

(a) the time the declaration is to come into force; and

(b) the Australian land to which section 115K applies.

115M Vacancy fee recovery - effect of charge on land

(1) A charge created on land under section 115K in which a person holds an interest has priority over any other interest in the land (even if the interest has been registered on a land register).

(2) The charge remains in force until all of the following amounts are paid:

(a) any unpaid vacancy fees;

(b) any unpaid vacancy penalties;

(c) any costs incurred by the Commonwealth in relation to recovering unpaid vacancy fees and any unpaid vacancy penalties.

(3) To avoid doubt, the charge on the land is not affected by any change in ownership of the land.

Powers of Treasurer

(4) The Treasurer has power, on behalf of the Commonwealth, to do, or authorise the doing of, anything necessary or convenient to obtain the registration of the charge on a land register.

(5) The Treasurer's powers under subsection (4) include:

(a) executing any instrument required to be executed; and

(b) signing any certificate that:

(i) states that a charge is created on land under section 115K; and

(ii) specifies the land on which the charge is created.

115N Vacancy fee recovery - court order authorising vesting of interest in Commonwealth

Court order

(1) The Treasurer or the Commissioner of Taxation may apply to a court of competent jurisdiction for an order authorising the vesting of an interest in Australian land in the Commonwealth under section 115P.

Note: For service of notices or other documents relating to the application, see section 135A.

(2) On application under subsection (1), a court may make the order sought if:

(a) the Australian land is charged under section 115K to secure the payment of unpaid vacancy fees and any unpaid vacancy penalties; and

(b) the court is satisfied that it is necessary to make the order to recover the amount of the unpaid vacancy fees and any unpaid vacancy penalties; and

(c) the Australian land is not charged under section 104 (which provides for the creation of charges to secure the payment of pecuniary penalties for the contravention of civil penalty provisions); and

(d) an order covered by subsection (3) is not in force in relation to the land.

Exception in relation to proceeds of crime orders

(3) This section covers the following orders:

(a) a restraining order in force in relation to the Australian land under Part 2-1 of the Proceeds of Crime Act 2002;

(b) a forfeiture order in force in relation to the land under Part 2-2 of that Act;

(c) an order (however described) of a kind prescribed by the regulations in force in relation to the land under a law of the Commonwealth, a State or a Territory.

115P Vacancy fee recovery - vesting of interest in land

(1) This section applies in relation to a person's interest in Australian land if:

(a) a court makes an order under section 115N authorising the vesting of an interest in Australian land under this section; and

(b) the interest is an estate in fee simple in the land or an interest in a long term lease; and

(c) the person holds the interest alone.

(2) When the order is made, or at a later time provided by the order:

(a) the interest in the land vests in equity in the Commonwealth but does not vest in the Commonwealth at law until the applicable registration requirements have been complied with; and

(b) the Treasurer has power, on behalf of the Commonwealth, to do anything necessary or convenient to give notice of, or otherwise protect, the Commonwealth's equitable interest in the land; and

(c) the Commonwealth is entitled to be registered on a land register as the owner of that property; and

(d) the Treasurer has power, on behalf of the Commonwealth, to do, or authorise the doing of, anything necessary or convenient to obtain the registration of the Commonwealth as the owner.

(3) The Treasurer's powers under paragraph (2)(d) include:

(a) executing any instrument required to be executed; and

(b) signing any certificate that:

(i) states that land has vested in the Commonwealth under this section; and

(ii) specifies the land that has so vested.

115Q When the Commonwealth can begin dealing with interests in land

(1) The Treasurer, and persons acting on the Commonwealth's behalf, can dispose of, or otherwise deal with, a person's interest in Australian land that vests under section 115P as authorised by a court order under section 115N only after the later of the following times:

(a) if the period provided for lodging an appeal against the order has ended without such an appeal having been lodged - the end of that period;

(b) if an appeal against the order has been lodged - the appeal lapses or is finally determined.

(2) However, such disposals and dealings may occur earlier with the leave of a court and in accordance with any directions of a court.

115R Vacancy fee recovery - disposing of interests in land

(1) The Treasurermust, on behalf of the Commonwealth, dispose of an interest in a person's (the owner's ) land that vests in the Commonwealth under section 115P as soon as practicable after the time to which section 115Q applies.

(2) The Treasurer may give full and effective title to the land free of all other interests, which are extinguished at the time title is given.

Dealing with the proceeds of sale

(3) The Treasurer must apply the proceeds of the disposal of the interest in the land against:

(a) any unpaid vacancy fees the person remains liable to pay;

(b) any unpaid vacancy penalties the person remains liable to pay;

(c) any costs incurred by the Commonwealth in relation to recovering the unpaid vacancy fees and any unpaid vacancy penalties; and

(d) any costs incurred by the Commonwealth in relation to the disposal.

(4) The Treasurermust pay the remainder of the proceeds, if any, to the persons mentioned in subsection (6) in the order in which they appear in that subsection.

Note: Not all of the persons mentioned in subsection (6) may be paid if the proceeds are insufficient.

(5) If the remainder of the proceeds is insufficient to pay all of the persons mentioned in paragraph (6)(a), the Treasurer must pay each person mentioned in that paragraph proportionately.

(6) The persons are as follows:

(a) a person holding a mortgage, charge or other interest over the land if the mortgage, charge or interest:

(i) relates to a debt due by the owner; and

(ii) has been registered on a land register;

(b) the Commonwealth in relation to any other penalty or debt that is due and payable to the Commonwealth by the owner;

(c) the owner.

(7) Nothing in this section affects the right of the Commonwealth to recover debts or penalties by other means.

115S Vacancy fee recovery - exemption from stamp duty and other State or Territory taxes and fees

No stamp duty or other tax or fee is payable under a law of a State or a Territory in respect of the vesting of an interest in Australian land under section 115P, or anything connected with the vesting of the interest, if the Treasurer, by notifiable instrument:

(a) declares that the interest in the land has vested under that section; and

(b) specifies the interest in the land.

115T Vacancy fee recovery - compensation for acquisition of property

(1) If the operation of this Division would result in an acquisition of property from a person otherwise than on just terms, the Commonwealth is liable to pay a reasonable amount of compensation to the person.

Note: For the definitions of acquisition of property and just terms , see section 4.

(2) If the Commonwealth and the person do not agree on the amount of the compensation, the person may institute proceedings in a court of competent jurisdiction for the recovery from the Commonwealth of such reasonable amount of compensation as the court determines.