There has been a flurry of activity in stamp duty legislation recently announced as a result of Budgets in a number of states and territories, the need to tighten perceived loopholes and stakeholder group lobbying. We highlight a number of pertinent changes.
Northern Territory to impose duty on listed companies/trusts
The Northern Territory Budget for 2009–10 was handed down by the Northern Territory Treasurer on 5 May 2009.
One revenue measure introduced is a change to the Northern Territory landholder duty provisions with the effect (from 6 May 2009) that landholders will now include listed entities.
Under the new regime, stamp duty is payable for acquisitions of ‘significant interests’ in both listed and unlisted companies and trusts, being:
- acquisitions of 90 per cent or more in listed companies and trusts, and
- acquisitions of 50 per cent or more in unlisted companies and trusts.
This is in contrast to the current treatment which only applies landholder duty to acquisitions of significant interests in landholding private companies (acquisitions of 50 per cent or more) and private unit trusts (acquisitions of 20 per cent or more).
This measure aligns the Northern Territory treatment with that of Western Australia, the only other jurisdiction where landholder stamp duty applies to listed entities (as well as unlisted entities). The rationale provided by the Northern Territory Treasurer for the new regime is the equitable treatment of acquisitions between the two kinds of entities where there is a takeover of a listed entity.
In addition, the following other changes are made to the Northern Territory landholder provisions:
- (from assent) deem a person to have made a relevant acquisition where the person has acquired ‘control’ of a landholder. The only other jurisdiction with this sort of provision is Victoria, and
- (from 1 July 2009) insert an exemption from landholder duty for certain ‘top-hatting’ arrangements that would qualify for a capital gains tax roll-over under subdivision 124-Q (Exchange of stapled ownership interests for ownership in a unit trust) of the Income Tax Assessment Act 1997 (Cth) (Income Tax Assessment Act). A similar exemption is proposed for the Australian Capital Territory (see below). This means that Queensland and Tasmania will be the only jurisdictions without a ‘top-hatting’ exemption. In South Australia, the top-hatting exemption is by way of ex gratia relief.
Proposed shift to landholder model for New South Wales
It is proposed that the New South Wales duties legislation will move from a 'land rich' to a 'landholder' model effective from 1 July 2009.
Under the ‘landholder’ model, the acquisition of a significant interest in an entity that owns land having a value at or above a specified value threshold (yet to be determined) will be subject to transfer duty. The current 60 per cent ratio of land to total property test will be eliminated.
This change arises from the New South Wales Mini-Budget announcement of 11 November 2008. The amending Bill is yet to be released. The stated rationale for the change is to assist with taxation harmonisation with other jurisdictions (ie Western Australia, the Northern Territory and the Australian Capital Territory where the landholder model is in place). It is not known at this stage whether New South Wales will follow Western Australia and the Northern Territory to apply landholder duty to takeovers of listed companies and trusts.
‘Top-hatting’ relief for Australian Capital Territory
The Duties Amendment Bill 2009 (ACT) proposes to amend the Duties Act 1999 (ACT) as from 1 July 2009 to insert an exemption from landholder duty, and marketable securities duty, for certain ‘top-hatting’ arrangements that would qualify for a capital gains tax roll-over under subdivision 124-Q (Exchange of stapled ownership interests for ownership in a unit trust) of the Income Tax Assessment Act.
The Bill also proposes to close a perceived loophole in the landholder duty provisions by adding that a person ‘acquires’ an interest in a landholder if the capacity in which that person holds an interest changes, for example, following a declaration of trust.
Status of Victorian Duties Amendment Bill – any changes?
The Duties Amendment Bill 2008 (Vic) has received a second reading on 31 March 2009 by the Victorian Legislative Council. There have been some proposed amendments to the Bill since our previous article,1 being:
- an insertion of a definition of ‘rent reserved’ to be ‘the rent paid or payable during the term of the lease and any amount paid or payable for the right to use the land under the lease. The proposed definition includes an example: ‘Amounts paid under the lease for rates, charges, taxes, maintenance costs or utilities are payments for the right to use the land under the lease’, and
- Mr Peter Kavanagh of the Democratic Labor Party has moved amendments liability period reduction to be to “30 days (or if the dutiable transaction is a transfer of an estate or interest in land and the land or part of the land is outside a 150 kilometre radius of the intersection of Elizabeth and Bourke Streets in Melbourne, within 40 days)”, instead of their initially proposed 14 days.
This article was written by Steven Stevens, Partner, Melbourne
Endnotes
1. ‘Victorian Duties Amendment Bill’ article
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