• Northern Territory Property Activation Levy

As set out in last week’s update, the Northern Territory State Budget provided for the implementation of a new “Property Activation Levy” (previously announced as the Vacant and Derelict Property Levy). The Property Activation Bill 2019 (NT) (“Bill”) was tabled in the Legislative Assembly on 9 May 2019.

On tabling the Bill, the Treasurer provided that the levy is designed to assist revitalising the Darwin CBD and not to raise revenue: “Let me be clear, activated properties will not be liable for the levy. The purpose of the levy is not to raise revenue. As I said before, it is my hope that we do not raise a single cent from this levy, rather we want to activate our CBD to drive more foot traffic through our streets and into our businesses”.

The headline takeaways from the Bill are:

  • If passed, the levy commences on 1 July 2019 with the rates of 1% of unimproved capital value for unoccupied buildings and 2% for vacant land calculated by reference to each day that the lot is not “activated”, with the first payments due within 30 days of 30 June 2020 unless the lot is earlier transferred or ceases to exist.
  • An initial return is required to be lodged by 31 July 2019 regardless of whether the lot is “activated”, with an initial grace period if activation occurs by 30 September 2019.
  • In one of the shortest pieces of legislation to introduce a new tax, much of the guidance of the subjective parts of the tax (essentially the meaning of “activated”) will be set out in Guidelines yet to be published by the Commissioner. This is disappointing as there are examples of State Commissioners taking on more than an interpretive role in the application of new provisions, which have led to significant degrees of uncertainty for taxpayers (eg, the Victorian lease provisions).  Given the 31 July 2019 deadline for the initial return, one hopes that such Guidelines will be published shortly.
  • A lot inside a defined boundary of the Darwin CBD will be subject to the Property Activation Levy if:
    • It is vacant (being a lot that does not contain a building suitable for occupation) and not “activated”; or
    • It is another leviable lot (being a building at ground level with public frontage suitable for the occupation which is not a place of residence) which is unoccupied (less than 50% of the occupiable area) and not “activated”.
  • A lot is “activated” if the lot:
    • Is kept so that it does not detract from the amenity of any other part of the levy area; and
    • Is maintained to an adequate standard.
  • The Commissioner can give an opinion supporting a proposal to activate, in which case, the lot is taken to be activated as long as the proposal is implemented.
  • There is a concession for a period of unoccupancy of up to 4 months if wholly within the relevant financial year.

An annual return is required to be lodged regardless of whether the lot is activated and upon a transfer or upon the lot ceasing to exist, with each of these returns bringing an additional administrative burden on property owners in the Darwin CBD.