This Digest is prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments.
This Digest was available from 14 June 1996
Airports (Transitional) Bill 1996
Date Introduced: 23 May 1996
House: House of Representatives
Commencement: Royal Assent
The amendments contained in the Bill are consequential on the
proposed lease of Commonwealth airports.
Refer to the Digest for the Airports Bill 1996.
'Sale time' for a Commonwealth owned company is defined as the
particular time, in the opinion of the Minister for Finance, on
which a majority of the voting shares in the company are acquired
by a person or persons other than the Commonwealth or a nominee of
the Commonwealth. The Minister of Finance must then declare the
time to be sale time by a notice in the Gazette (clause
Sydney West Airport is defined as an airport even if it is still
a development site (clause 5).
Part 2 - Transfers from the Federal Airport Corporation
to the Commonwealth
Airport land and certain FAC assets and liabilities are to be
transferred from the FAC to the Commonwealth. The mechanism for the
transfer of land is statutory vesting and clause
11 provides that specified land in which the FAC has any
right, title or interest will vest in the Commonwealth upon the
publication in the Gazette by the Minister for Finance of a notice
to that effect, without any conveyance, transfer or assignment.
Other FAC assets can be vested in the Commonwealth by the same
procedure (clause 12), as can the liabilities of
the FAC, other than contractual liabilities. The transfer of
contractual rights and obligations is dealt with in clause
13, which provides that in relation to contracts, other
than contracts of employment, the Minister for Finance may declare
that the rights and obligations entered into by the FAC become
rights and obligations applying to the Commonwealth.
Clause 14 provides that rights and obligations
of the FAC, other than contract rights and obligations, may be
transferred to the Commonwealth by the Minister for Finance.
Once the FAC's interest in airport land vests in the
Commonwealth, the airport ceases to be a Federal airport for the
purposes of the FAC Act (clause 15).
Part 3 - Original grants of airport leases to
This Part applies to Kingsford-Smith, Sydney West, Tullamarine,
Brisbane, Perth and other airports specified in the regulations
where the site is owned by the Commonwealth (clause
Clauses 21 and 22 permit the Commonwealth to
grant an airport lease to a company if all of the company shares
are beneficially owned by the Commonwealth (clause
21) or if none of the company shares are beneficially
owned by the Commonwealth (clause 22). The
Commonwealth cannot grant an airport lease to a company if some of
the company shares are beneficially owned by the Commonwealth.
Where land or other assets has been transferred to the
Commonwealth from the FAC under clauses 11 or 12, the Minister for
Finance may declare that those assets vest in the relevant company
granted a lease under clauses 21 or 22 (clause
Similarly, clause 24 provides for any
contractual rights or obligations transferred to the Commonwealth
under clause 13 to be transferred by the Minister for Finance to a
company granted an airport lease, and clause 25
provides that any relevant liabilities undertaken by the
Commonwealth under clause 14 may be transferred to the company
granted an airport lease.
Under clause 26, an airport lease granted under
clause 21 or 22 is subject to all existing leases in relation to
the land and subject to all other existing interests in the
Part 4 - Transfer of the FAC's assets or contracts to
airport - lessee companies and Part 5 - Transfer of the FAC's
liabilities to airport-lessee companies
Those assets and contractual rights and obligations of the FAC
which are not vested in the Commonwealth under the above provisions
may be transferred from the FAC to airport-lessee companies
pursuant to clauses 30 to 33.
Part 6 - Treatment of sale of shares in an
airport-lessee company owned by the Commonwealth
Where an airport lease is granted to a Commonwealth owned
company under clause 21, Part 6 will apply. The measures contained
in Part 6 are largely for accounting purposes. Clause
36 provides that the Minister for Finance may pay an
amount, determined by the Minister, to the FAC between the time
when an airport is transferred under clause 21 and the sale of the
shares in the company to which it was transferred takes place.
After the sale of the shares, the Commonwealth must pay to the FAC
an amount determined by the Minister (NB: while the 1995 Bill
provided for an amount equal to the consideration received by the
Commonwealth to be paid to FAC, this Bill allows that amount to be
determined by the Minister for Finance). After the sale of all of
the shares held in a company granted an airport lease under clause
21, clause 38 allows the Minister for Finance to
determine if extra capital is payable to FAC.
Clause 39 contains a standing appropriation
without a statutory cap.
Part 7 - Treatment of consideration payable by an
airport-lessee company that is not owned by the
The provisions in Part 7 mirror the provisions in Part 6, but
Part 7 applies to an airport-lessee company that is not owned by
the Commonwealth. Again, the Part contains a standing appropriation
without a statutory cap (clause 44).
Part 8 - Special tax rules
Some transactions are exempt from stamp duty and other taxes. By
clause 46, the following will be exempt:
- the grant of an airport lease under clause 21;
- an agreement relating to the transfer of a lease under clause
- the transfer of an asset to a company granted a lease under
- the grant of a lease of an asset under clause 23 to a company
granted an airport lease under clause 22; or
- an agreement relating to the grant of a lease of an asset under
clause 23 to a company granted an airport lease under clause
If the Commonwealth grants an airport lease under clause 22 to a
company that is not owned by the Commonwealth, the transactions,
agreements etc., other than those executed before transfer, are not
exempt from stamp duty and other taxes (clause
Clauses 49 to 51 relate to depreciation.
Clause 49 will allow a sub-lessee to continue to
depreciate property after the airport is leased. Clause
50 allows a company to which assets were transferred under
clause 23, to claim depreciation on those assets as if the company
had acquired the property from the FAC and not the Commonwealth.
The basic effect of the provisions relating to depreciation is to
set a depreciated value for income tax purposes that will be the
same as if the airport lessee held and depreciated the asset.
Clause 55 provides that the Income Tax
Assessment Act 1936 relating to depreciation and Part IIIA of
that Act which deals with Capital Gains Tax, can be modified by
regulations in relation to an airport lease transferred to a
Commonwealth owned company and the assets transferred or leased to
the company under clauses 23, 24, 30 or 31.
Part 9 - Transfer of Staff from the FAC to Airport
When an airport lease is granted to a company, those employees
of the FAC that are specified by notice in the Gazette, cease to be
employed by the FAC and are engaged as employees of the company
(clause 58). The terms and conditions of employees
are safeguarded (clause 59) but can later be
varied by law, award, determination or agreement (clause
Part 10 - FAC's debts
Division 2 applies to loans to the FAC by the Commonwealth and
Division 3 applies to non Commonwealth loans to the FAC. In
Division 2, clause 68, the Treasurer may declare
the principal and interest of a loan due and payable at a specified
time. If an amount becomes due and payable, the Minister for
Finance can determine that the Commonwealth is liable to pay the
FAC an amount equal to that amount.
Clause 70 contains a standing appropriation
power without statutory cap.
In relation to non Commonwealth loans, the Treasurer can
declare, by notice in the Gazette, that a FAC obligation becomes a
Commonwealth obligation, and authorise the payment of money by the
Commonwealth to discharge the loan (clause 73).
Alternatively, the Treasurer may enter into an agreement with the
FAC for the Commonwealth to take over FACs obligations under a loan
and authorise payment to discharge the obligation (clause
74). Finally, the Minister for Finance may determine that
there is payable to FAC an amount that the FAC is to use to
discharge a loan obligation (clause 77).
Clause 78 contains a standing appropriation
power without statutory cap.
Part 12 makes it clear that an airport lessee
company is not a Commonwealth agency, public authority, or an
instrumentality of the Crown.
Chris Field Ph. 06 277 2439
13 June 1996
Bills Digest Service
Parliamentary Research Service
This Digest does not have any official legal status. Other
sources should be consulted to determine whether the Bill has been
enacted and, if so, whether the subsequent Act reflects further
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© Commonwealth of Australia 1996
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Last updated: 19 June 1996
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