A public consultation exercise was held from 11 to 25 June 2010 to obtain feedback on the draft Property Tax (Amendment) Bill 2010.
2. The draft Bill covers the following tax changes:
(a) Align the time-bar for the Comptroller of Property Tax to recover outstanding property tax and refund excess property tax paid by taxpayers from six years to five years. This time bar also applies to income tax as well as goods and services tax;
(b) Clarify that the interest payable on the refund of excess property tax pursuant to a Court Order is to be computed from the date of the Order;
(c) Allow the Chief Assessor and Comptroller of Property Tax to cancel erroneous property tax notices from previous years and to replace them with amended notices, such as where the errors arose from clerical/arithmetical mistakes;
(d) Delegate from the Minister for Finance to the Comptroller of Property Tax the power to grant property tax exemption for land used for public religious worship, public schools, charitable, and social development purposes. Currently, the Comptroller can grant exemption for buildings used for these purposes;
(e) Streamline reporting requirements for property owners. The requirement for property owners to inform IRAS upon certain events (such as the completion, rebuilding, enlargement, alteration or improvement of a building) will be removed;
(f) Align the interest rates on late property tax payments by taxpayers and tax refunds by the Comptroller of Property Tax to the interest rate(s) as specified by the Ministry of Finance annually for Government refunds and arrears due to Government generally;
(g) Clarify the definition of “structural networks” to include any part of a structural network (which may be comprised of one or more pipelines, etc.);
(h) Clarify when the Valuation List (“VL”)1 can be deemed as inaccurate and hence allow the Chief Assessor to amend the VL;
(i) Clarify the start date of tax liability for properties owned by statutory boards and leased for more than three years;
(j) Clarify that the Comptroller of Property Tax can recover property tax on land on which demolition has taken place from the date of completion of demolition works;
(k) Allow the Comptroller of Property Tax to recover property tax for redevelopment sites prior to the current year. This is subject to a time-bar limit of five years; and
(l) Re-designate the Clerk to Valuation Review Board as “Secretary”.
3. The summary table lists all the tax changes and explains the amendments to the Property Tax Act.
Public Participation in the Consultation Exercise
4. Two comments on the proposed changes were received from the public and MOF has considered them carefully. The two suggestions were not accepted for implementation as they are inconsistent with the policy objectives of the proposed legislative changes.
5. A summary of the comments received and MOF’s responses to them are as follows:
Allow the Chief Assessor (CA) and Comptroller of Property Tax to cancel erroneous property tax notices from previous years and to replace them with amended notices, such as where the errors arose from clerical/arithmetical mistakes
a) Comment: The Property Tax Act already provides means to correct clerical and arithmetical errors, except that it is harder to do so. Let it remain hard to address such careless errors so that staff are compelled to be vigilant. Allowing the CA to cancel property tax notices and replace them will erode the confidence in the Valuation List, if correcting such errors in annual value is allowed to be done easily.
MOF’s response: The Act, including Sections 20(3) and 22(4), currently does not provide for the cancellation and replacement of Section 20(1) property tax notices from previous years owing to clerical/ arithmetic error. The Government should have the ability to do so.
As pointed out by the respondent, clerical and arithmetic errors are rare. The Government will continue to minimise such errors.
Clarify the definition of “structural networks” to include any part of a structural network (which may be comprised of one or more pipelines, etc.)
b) Comment: The proposed amendment introducing "a part of a network" is vague and may unintentionally appear to broaden the tax scope. It appears that the Government intends to tax entire networks as well as any part without a clear definition of what the "part" encompasses (e.g. uninstalled parts in a warehouse).
MOF’s response: The scope of property tax on structural networks is not broader than the policy intent. It has been the Government's intent to tax all structural networks, including any part thereof. The proposed legislative amendment seeks to make clear that any part of a structural network (which may comprise a single or more pipelines) may be regarded as a structural network for purposes of the Act.
To be held to property tax, an installation must fall within the definition of a structural network under Section 2 of the Property Tax Act, which lists out common parts (e.g. pipes, ducts, cables) and common purposes (e.g. for transmission, distribution, transportation). The network must also be an immoveable property as specified under the long title of the Act. Hence, network parts which have yet to be installed will not be liable for property tax. Lastly, Section 2(2) of the Property Tax Act provides that machinery used for making, altering, repairing, ornamenting or finishing, or adapting for sale of any article, would also not be liable to property tax.
6. MOF would like to thank all respondents for their comments.
1 The Valuation List, prepared by the Chief Assessor, states the list of properties liable for property tax, the names of their owners and their Annual Values.
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