Month: December 2002

Major changes to dual occupancy

By allhomes staff

Major changes to the dual occupancy regime were announced today by Planning Minister Simon Corbell.

Under the new regime:

0 Dual occupancy will be allowed on any block throughout Canberra over 700 sq m.

0 Title can be divided.

0 Change of use charges (of 75 per cent of the change in value) will apply throughout Canberra. Previously there was no change of use charge in older areas where lease purposes were described as “residential” without stipulating how many dwellings.

0 Canberra suburbs will have “core residential areas” defined. They will be the areas within 200m of shops, give or take according to section, roads, paths and so on. The rest will be called suburban areas.
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Once again, the diagram illustrates three houses, but with land values now ranging from $0.25m to $5m. The real rate of growth in land values is now assumed to continue at historical rates of 3.5%. The tax liability will consequently be far greater than in the previous examples considered. Indeed, it will quite frequently exceed the property’s total land value. In such cases, optimising agents will presumably defer tax payment until death, at which time the government appropriates the entire land value, but (perhaps) not the liability in excess of the land’s value. This highlights an important difference between a wealth tax and a land tax. A wealth tax is a ‘stable’ tax instrument, whereas a land tax can be ‘explosive’. With a wealth tax, as the tax starts to bite, the level of wealth falls. This in turn induces lower average rates of tax, so that the level of wealth eventually stabilises at some lower equilibrium. With a land tax, as the tax starts to bite (eg $X per period), the level of wealth falls. But this time, even though the level of wealth is falling, required tax payments do not fall, because the land value is not falling! Eventually, real wealth can fall to zero, but the land tax keeps on biting: the same tax payment ($X) or more must still be paid each period.
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The sad case or Arkie Whiteley – daughter of the Australian painter Brett Whiteley — illustrates the need to keep an up-to-date will.

Maybe people do not because think they are immortal; don’t want to think about death; or think that because they will not be around it does not matter.

Arkie’s will has caused great uncertainty and friction. The only certainty is that lawyers will take a significant part of the estate. Arkie’s will was, in fact, up to date. It was made on the day she died. But the fact it had to be made in such a hurry meant it has had some odd results.

Arkie died aged 37 of adrenal cancer. It is incurable. Patients usually get about three months’ notice of death. Still Arkie left the will – literally – to the final hours. Her estate was valued at $14 million. Remarkably much of that was inherited from her father in the form of artworks after an expensive and protracted court battle over uncertainties surrounding the will. You would think a family would learn.
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The Minister for Revenue Senator Helen Coonan was in strife this week over property taxes.

Her strife highlights the illogical, haphazard tax base in Australia.

Coonan shares a house in Woollhara with her husband of 20 years, former NSW Supreme Court judge Andrew Rogers. Rogers had been married before and had property from that earlier married, including a house on the northern beaches which has been held in the name of a family trust/company and later in his name.
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Next week 400 or so faceless men (and women) of the ACT Liberal Party will determine who is to be Senator for the ACT to replace the retiring Margaret Reid.

It is not an open or broadly democratic process, despite it have the largest number of electors in any pre-selection in Australia. Usually, the major parties have smaller numbers in pre-selections for both House and Senate seats.

It is going to be a closed-door affair and the result will be the nomination of a person to represent us. Senate vacancies are filled upon the nomination of the Governor of the State (after a parliamentary vote) or on the nomination by a Territory Legislative Assembly. Before 1972 it was always the convention that the state would nominate a person of the same party as the departing senator. After the convention was flouted in 1974 and 1975, the convention was converted by referendum into a constitutional requirement.
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