Bills Digest 99 1995-96 Airports (Transitional) Bill 1996


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WARNING:
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

CONTENTS

Passage History

Airports (Transitional) Bill 1996

Date Introduced: 23 May 1996
House: House of Representatives
Portfolio: Finance
Commencement: Royal Assent

Purpose

The amendments contained in the Bill are consequential on the proposed lease of Commonwealth airports.

Background

Refer to the Digest for the Airports Bill 1996.

Main Provisions

'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 6).

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 companies

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 20).

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 23).

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 land.

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 Commonwealth

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 21;
  • the transfer of an asset to a company granted a lease under clause 21;
  • 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 22.

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 47).

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 Lessee Companies

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 60).

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.

Contact Officer and Copyright Details

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 amendments.

PRS staff are available to discuss the paper's contents with Senators and Members and their staff but not with members of the public.

ISSN 1323-9032
© Commonwealth of Australia 1996

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1996.

This page was prepared by the Parliamentary Library, Commonwealth of Australia
Last updated: 19 June 1996

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