Client Update: Victoria introduces property-based fire services levy
17 October 2012
In brief: Victoria will introduce a new property-based fire services levy, which will replace the existing fire services levy imposed by insurance companies, next year. Partner Chris Schulz (view CV) and Law Graduate Tim Farhall provide an update.
We previously reported on the Victorian Government's proposed Fire Services Property Levy (the Levy), to replace the existing fire services levy imposed by insurance companies. The Fire Services Property Levy Act 2012 (the Act) received assent on 16 October, passing both houses with only minor amendments, and will come into force from 1 July 2013.
The main features of the new Levy are that:
- it is a charge on property collected by local councils, rather than the existing levy on insurance premiums collected by insurance companies;
- it comprises a fixed component, of $100 for residential and $200 for non-residential properties, and a variable component;
- the variable component is a percentage of the capital improved value of the property, and varies between types of property, such as residential, industrial, commercial and primary production; and
- the levy rates for the variable component will be set in next year's Budget.
The amendments dealt with three issues.
The first was how the fixed charge would apply to landholdings that cross local government area boundaries. In those circumstances, the Act now provides that the fixed charge will only be payable on the largest portion of the land, with the fixed charge for the other portions of the land being zero.
The second issue was how the fixed charge would apply to a single farming enterprise that took place on multiple separate properties, potentially across several local government areas. In those circumstances, the Act allows an owner to apply for exemptions such that they only pay the fixed charge once (rather than on each separate property).
The third issue related to the administrative burden on councils. The Act also removes the original requirement for councils, in their role as collection agencies, to keep Levy funds in a separate account.
Once the new Levy is implemented, insurance companies will no longer collect the old fire services levy through their premiums. The Act empowers the Essential Services Commission, at the direction of the Minister, to review insurance premiums following the introduction of the Levy.
Insurers should also note that the Government has said it will introduce two further consumer protection measures. They are:
- the creation of a 'Fire Services Levy Monitor' to oversee the transition to the new Levy; and
- new consumer protection provisions, including offences in relation to insurance premium prices.
However, legislation for these measures has not yet been introduced.
Property owners should remember that:
- the Levy applies not only to a person with a freehold estate in possession, but also to a person entitled to a parcel of land under a lease of Crown land, or a person entitled to a parcel of land under a Crown license with a right of acquiring the fee simple;
- a person who becomes the owner of land will be liable for any unpaid Levy charges; and
- if a landlord does not pay the Levy, a tenant may be required to pay rent to the collection agency until the Levy has been paid.
All property owners should be prepared for the Levy's introduction from 1 July 2013. Insurers should also be aware that they will no longer collect the old levy. We will continue to monitor the transition to the new scheme.
- Chris SchulzPartner,
Ph: +61 3 9613 8772
- Paul LalichPartner,
Ph: +61 2 9230 4026
- Jim ParkerPartner,
Ph: +61 2 9230 4362
- Bill McCrediePartner,
Ph: +61 7 3334 3049