A Bill to replace the existing land rich duty provisions with a landholder duty model in South Australia has been introduced into Parliament. The new provisions are proposed to commence on 1 July 2011.
Currently, the South Australian land rich duty provisions impose duty on certain acquisitions of interests in companies and unit trusts, where:
- the target entity has land in South Australia with a market value of $1 million or more, and
- the entity’s land, wherever located, comprises 60% or more of all its property by value.
The 60% threshold will be removed under the proposed landholder duty model.
Landholder duty will apply when a person or group of associates acquires 50% or more of the shares or units in a private company or unit trust and the company or trust owns land valued at $1 million or more in South Australia (ie a ‘landholder’).
Landholder duty will also apply where 90% or more of the shares or units of a listed 'landholder' company or trust are acquired. ‘Widely held unit trusts’ will be treated under the regime in the same way as listed trusts.
The duty will apply to the underlying South Australian land assets acquired by an entity as well as particular goods of the landholder which are used solely or predominantly in South Australia.
Duty for listed companies and trusts will be charged at a concessional rate of 10% of the amount of duty otherwise payable (ie an effective rate of 0.55%).
The removal of the 60% test, and the inclusion of listed entities does broaden the application of the provisions and more closely aligns the position to that of New South Wales.
This stamp duty update was written by Primrose Mroczkowski, Senior Associate, Melbourne.
More information
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