Rates Rebate (Retirement Village Residents) Amendment Bill. Response to Local Government and Environment Committee information requests

Transcription

1 Rates Rebate (Retirement Village Residents) Amendment Bill Response to Local Government and Environment Committee information requests 6 March 2017

2 On 9 February 2017 the Local Government and Environment Committee (the Committee) asked the Department of Internal Affairs (the Department) to provide advice on the following queries: 1. Eligibility of occupants of papakāinga and kaumatua housing on Māori owned land for rates rebates. 2. How the voluntary remission schemes run by some councils operate. 3. Following from the previous request (#2 above) broader advice about the powers of local authorities to address the problem the Rates Rebate (Retirement Village Residents) Amendment Bill (the Bill) aims to resolve within their existing powers. 4. Clarification of the differences between an occupation right agreement and a licence to occupy. Page 2 of 10

3 Papakāinga and kaumatua housing eligibility for rates rebates There are a variety of situations relating to papakāinga and kaumatua housing that may be relevant to the Committee s request. The first consideration is whether the land is Māori freehold land or general title land. Māori freehold land Māori freehold land is governed by Te Ture Whenua Māori Act This land is multiply owned, and may only be sold with the approval of the Māori Land Court. Parliament is currently considering Te Ture Whenua Māori Bill which seeks to update the current legislation. Because Māori freehold land has multiple owners, it may not fit comfortably within the rates rebate framework. There are two reasons for this: 1. The scheme of the Rates Rebate Act 1973 (the Rebate Act) is that only one rebate will be granted in respect of a residential property. A residential property is defined by the Local Government (Rating) Act 2002 as a rating unit which is the usual place of residence of the ratepayer. It is not currently lawful to attribute part of the rates assessed on a property (rating unit) to particular homes as there is no separate rate account for each home (or other use). 2. The Rebate Act requires, in assessing the entitlement to a rebate, that the income used in the calculation of the rebate entitlement is the income of all persons who were ordinarily resident on the property at the commencement of the rating year (section 4 of the Rebate Act). Hence, for a property consisting of Māori freehold land, if there were three or four permanently occupied homes on that property, the income of all of those occupants would need to be aggregated into one for the purposes of calculating the income figure used in the rebate calculation. General land owned by Māori On general land owned by Māori, some of these considerations may come into play also, but the owners may have more options to deal with those considerations. In particular, they may be more readily able to subdivide the land to create individual titles for individual homes. However, the occupant would need to meet the definition of owner in section 5 of the Local Government (Rating) Act 2002 i.e. owner means the person who, whether jointly or separately, is seized or possessed of, or entitled to, any estate or interest in land constituting a rating unit. If the land was owned by a Trust or Incorporation then, under current law, the occupant may not qualify as a ratepayer even if their occupation agreement requires them to contribute to rates payments. Page 3 of 10

4 Local Authority remission schemes Summary Auckland and Thames Coromandel District Councils voluntary remission schemes replicate central government s Rates Rebate Scheme in terms of eligibility criteria, income threshold and rebate amounts. New Plymouth District and Kāpiti Coast District Councils voluntary schemes are offered through their respective financial hardship policies. Income thresholds are restricted to only those who receive a government benefit as their sole source of income, or (for Kāpiti residents) a lesser amount. New Plymouth District Council requires an asset test, whilst Kāpiti Coast District Council requires the applicant s rates to be over five per cent of their net household income (after netting off any central government rates rebate). Maximum rebate amounts offered are significantly less than the central government s Rates Rebate Scheme (the maximum rebate is currently $610); New Plymouth District Council offers up to $322 per licensee and Kāpiti Coast District Council offers up to $150 per licensee. Table 1 outlines a summary of the local authorities that provide voluntary remissions schemes for retirement village residents with a licence to occupy. Table 1: Local authority voluntary remission policies - licence to occupy retirement village residents Council name Policy name Maximum rebate amount Income threshold limit Auckland Council Licence to occupy remission scheme Equal to central government Rates Rebate Scheme (currently $610) Equal to central government Rates Rebate Scheme Thames Coromandel District Council Remission for residents of licence to occupy retirement villages Equal to central government Rates Rebate Scheme (currently $610) Equal to central government Rates Rebate Scheme New Plymouth District Council Postponement or remission of rates for financial hardship Up to $322 per licensee Licensee s sole income is from government income benefits and a maximum of $10,000 savings for funeral costs Kāpiti Coast District Council Financial hardship policy Up to $150 per licensee A licensee is entitled to apply provided that their income is: solely from central government income benefits, or is at or below the equivalent central government benefit payment Page 4 of 10

5 Auckland Council rates remission scheme Details of the Auckland Council s rates remissions scheme including the conditions and criteria are available on its website 1. The Auckland Council scheme is for residents of retirement villages who have a license to occupy agreement (and papakāinga housing residents) who would otherwise qualify for central government s Rates Rebate Scheme. The quantum of remission to the retirement village resident will be equal to the equivalent of the central government's Rates Rebate Scheme. Conditions and criteria The criteria are the same as the Department s Rates Rebate Scheme, which is income tested. To be eligible for a licence to occupy remission, the retirement village resident must meet the following criteria: a. be a resident of a retirement village under a licence to occupy agreement; b. reside in a unit or apartment that is identified by Auckland Council as a separately used or inhabited part of the retirement village to which a separate uniform annual general charge and transport levy is applied; c. reside in a retirement village that has entered into an agreement with Auckland Council to: i. identify the rates for applicants to the scheme; ii. pass the full benefit of any rates remission granted under this scheme to the successful applicant; d. have resided on the property at the beginning of the rating year (1 July); e. be an individual, rather than an organisation or trust; and f. only one application per unit or apartment will be accepted. The granting of a remission will depend on: a. the applicant s gross household income, including any overseas income (threshold for rating year is $24,470); b. the share of Auckland Council rates payable by the applicant to the retirement village in which the applicant resides; and c. the maximum rebate and threshold limits set by central government under its Rates Rebate Scheme. Central government updates thresholds for the Rates Rebate Scheme each year. The Auckland Council s remission for residents of a license to occupy within a retirement village is automatically updated to match new central government thresholds. 1 Page 5 of 10

6 Thames Coromandel District Council Details of the Thames Coromandel District Council s rates remissions scheme including the conditions and criteria are available on its website 2. This remission scheme allows Thames Coromandel District Council to remit rates for residents of retirement village residents who would otherwise qualify for central government s rate rebate scheme, except they occupy their property under a licence to occupy agreement. The quantum of remission to the retirement village resident will be equal to the equivalent of the central government's Rates Rebate Scheme. Conditions and criteria To be eligible for the top-up remission, the applicant must: a. reside in a retirement village registered under the Retirement Villages Act 2003; b. live in a retirement village under a licence to occupy agreement; c. reside in a unit or apartment that is identified by the Thames Coromandel District Council as a separately used or inhabited part of the retirement village to which a separate uniform annual general charge is applied; d. reside in a retirement village that has entered into an agreement with Thames Coromandel District Council to: i. identify the rates liability for applicants to the scheme; and ii. pass the full benefit of any rates remission granted under this scheme to the successful applicant; e. have resided on the property at the beginning of the rating year (from 1 July); f. be an individual, rather than an organisation or trust; and g. submit only one application per unit or apartment. Granting of a remission will depend on the: a. applicant s gross household income, including any overseas income; b. share of the Thames Coromandel District Council rates payable by the applicant to the retirement village in which the applicant resides; and c. maximum rebate and threshold limits set by central government under its Rates Rebate Scheme. Central government updates thresholds for the Rates Rebate Scheme each year. The Thames Coromandel District Council s remission for residents of a license to occupy within a retirement village is automatically updated to match new central government thresholds. 2 Page 6 of 10

7 New Plymouth District Council Details of the New Plymouth District Council s rates remissions scheme including the conditions and criteria are available on its website 3. Postponement or remission of rates for financial hardship policy The objective of this policy is to assist ratepayers experiencing extreme financial hardship affecting their ability to pay rates. Conditions and criteria To be eligible for a licence to occupy remission the retirement village resident (licensee) must meet the following criteria: a. the amount of the remission will be equal to the New Plymouth District Council s uniform annual general charge which is currently $322 per separately used or inhabited part of a rating unit (refer to New Plymouth District Council minutes dated 28 June 2016); b. the licensee must be the registered occupier and occupy the unit from 1 July (the beginning of the rating year); c. the licensee s sole income is from a central government benefit; d. the licensee may have savings up to a maximum of $10,000 for the purpose of funeral expenses; e. the licensee to provide proof of benefit; f. the licensee to provide proof of rates payable to the operator; g. the licensee to provide explanation and proof of hardship; h. the New Plymouth District Council will annually advise the operator of those licensees that have had the remission approved and the amount of the rates remission; i. the operator will credit without deduction the amount of the remission attributable to each such licensee against any amount payable by the licensee to the operator; j. the operator will provide proof to the New Plymouth District Council that the remissions have been applied to those licensees. 3 Page 7 of 10

8 Kāpiti Coast District Council Details of the Kāpiti Coast District Council s rates remissions scheme including the conditions and criteria are available on its website 4. Rates remission financial hardship policy This policy provides the framework for partial remission of rates to ratepayers who need financial assistance on the basis of financial hardship. The Kāpiti Coast District Council will make available up to $150 per licence to occupy retirement village resident who meets the conditions criteria (see below). Funding will be available until such time as the rates remission fund for financial hardship is fully subscribed in each financial year. Conditions and criteria A retirement village owner (owner) with licence to occupy residents (licensee) may apply for a rates remission up to $150 per licensee property provided that: a. the sole income of the licensee is: i. from central government income benefits; or ii. at, or below, the equivalent central government benefit payment; b. expenditure on rates is more than five per cent of the licensee s net disposable income; c. the licensee provides: i. a joint application form, proof of income and explanation of hardship with appropriate support; ii. a copy of the licensee agreement; d. the owner provides: i. proof of the amount of rates charged to the licensee; and ii. iii. iv. a record of: the reduced monthly charge to be paid by the licensee; or payment from the owner to the licensee of the rates remission as a consequence of receiving the remission; proof that the licensee has been informed of any remission provided; proof at the end of the year that the full amount of rate remission has been provided to the licensee via the adjustment to their equivalent annual charge; e. should the owner receive the remission and then not continue to pass on the remission to the licensee the amount of remission would be subsequently charged back to the retirement village. 4 Page 8 of 10

9 Voluntary remissions processed by local authorities in the 2015/16 rating year In the 2015/16 rating year: a. Auckland Council provided 1,365 licence to occupy residents (includes retirement village and papakāinga residents) with a rates remission at a cost of $680,000 to Auckland ratepayers; b. New Plymouth District Council provided 34 eligible licence to occupy retirement village residents with a financial hardship rates remission (the Department was unable to obtain details of the financial cost to New Plymouth ratepayers); c. Thames Coromandel District Council processed and paid 115 rates remissions for licence to occupy retirement village residents at a cost of approximately $60,000 to Thames Coromandel ratepayers; and d. Kāpiti Coast District Council provided 30 rates remissions to licence to occupy retirement village residents at a cost of $4,500 to Kāpiti Coast ratepayers. Powers of local authorities Section 102 of the Local Government Act 2002 outlines a set of funding and financial policies that local authorities are required to develop and adopt to provide predictability and certainty about their sources and levels of funding. Rates remission policy A local authority may choose to adopt a rates remission policy under section 102(3)(a) of the Local Government Act Should a local authority seek to develop a rates remission policy, section 109 of the Local Government Act 2002 requires that it outline the objective, conditions and criteria in the policy. How local authorities can address the problem the Bill aims to resolve Local authorities could address the problem the Bill aims to resolve through the development and adoption of a rates remission policy that is applied in a consistent manner and adequately funded. Currently, if a local authority adopts a rates remission policy, remissions are funded by rate payers and not by the central government s Rates Rebate Scheme appropriation. Page 9 of 10

10 Occupation right agreement and how it differs from a licence to occupy In the context of the Retirement Villages Act 2003 there can be a difference between an occupation right agreement and a licence to occupy. Occupation right agreement The Retirement Villages Act 2003 defines an occupation right agreement as a written agreement or other document or combination of documents that: a. confers on any person the right to occupy a residential unit in a retirement village; and b. specifies any terms or conditions to which that right is subject. Types of occupation rights Section 6(1)(a) of the Retirement Villages Act 2003 outlines the possible types of occupation rights for retirement villages, they are: freehold or leasehold title, crosslease title, unit title, lease, licence to occupy, residential tenancy, or other form of assurance, for life or any other term. Licence to occupy A licence to occupy is a particular type of occupation right. The licence to occupy is the most common type of occupation right for retirement villages. There are other types of occupation rights, for example a unit title or cross-lease title. Page 10 of 10