Northern Territory Explanatory Statements

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REVENUE LEGISLATION AMENDMENT BILL 2009

30


2009

LEGISLATIVE ASSEMBLY OF THE
NORTHERN TERRITORY

TREASURER

REVENUE LEGISLATION AMENDMENT BILL 2009
SERIAL NO. 43

EXPLANATORY STATEMENT

GENERAL OUTLINE

This Bill amends various Acts within the Treasurer’s Portfolio. The changes made by the Bill form part of the 2009-10 Budget and take effect from 1 July 2009 unless otherwise indicated.

The First Home Owner Grant Act is amended to limit the eligibility for the first home owner grant to purchases of a home, or building costs plus land, to a price or value of no more than $750 000.

The Stamp Duty Act is amended to:

limit eligibility to the stamp duty first home owner concession to transfers of vacant land with a consideration or unencumbered value of $385 000 or less and homes, including off-the-plan contracts, with a consideration or unencumbered value of $750 000 or less; impose landholder stamp duty on the takeover (where a significant interest of 90 per cent or more is acquired) of corporations and unit trusts that are listed on a stock exchange, including imposing stamp duty on mergers; change the imposition of landholder stamp duty on other unit trusts to where 50 per cent or more is acquired; address a landholder stamp duty avoidance scheme that has been uncovered that enables a person to obtain control over the landholding entity without obtaining any entitlement to the property of the entity on its winding up;

allow a listed unit trust to ‘top hat’ a new parent entity without landholder stamp duty consequences;

extend the existing stamp duty exemptions for public benevolent institutions, religious institutions, public hospitals and schools so that they are also available to non-profit organisations that have a sole or dominant purpose that is benevolent, charitable, philanthropic or patriotic;

exempt non-motorised trailers, including caravans, from motor vehicle registration stamp duty;

allow a purchaser to nominate a related person prior to settlement to receive the property being purchased without double stamp duty consequences;

remove the requirement to lodge with the Territory Revenue Office, agreements to transfer property or grant a lease where the agreement is cancelled unless a sub-sale of the property has occurred;

remove the stamp duty exemption for residential leases;

exempt leases in retirement villages from stamp duty; and

exempt First Home Saver Accounts from life insurance duty.

The Taxation Administration Act is amended to rectify an oversight where a statutory charge can no longer be placed on land the subject of a pre-1 January 2008 landholder transaction.

NOTES ON CLAUSES

PART 1 – PRELIMINARY MATTERS

Clause 1. Short title

This is a formal clause which provides for the citation of the Act. When passed, the Act may be referred to as the Revenue Legislation Amendment Act 2009.

Clause 2. Commencement

This clause provides for various sections of the Bill commencing at different times.

Subclause (1) provides that this Part and Part 3, Divisions 1 and 2 (relating to exempting First Home Saver Accounts from life insurance duty) will commence on 1 October 2008.

Subclause (2) provides that Part 3, Division 3 (relating to landholder stamp duty on unlisted unit trusts where 50 per cent or more is acquired and stamp duty on takeovers and mergers) will commence on the day the Bill is introduced in the Legislative Assembly.

Subclause (3) provides that Part 2, Divisions 1 and 2 (relating to minor first home owner grant matters), Part 3, Division 4 (which addresses a landholder stamp duty avoidance scheme) and Parts 4 and 5 (relating to an amendment to the Taxation Administration Act and the expiry of the Revenue Legislation Amendment Act 2009 respectively) will commence on the date on which the Administrator’s assent to the Act is declared.

Subclause (4) provides that Part 3, Division 5 (relating to other stamp duty measures) will commence on 1 July 2009.

Subclause (5) provides that Part 2, Division 3 (which introduces the $750 000 first home owner grant cap) and Part 3, Division 6 (which introduces stamp duty first home owner concession capped amounts of $385 000 for vacant land and $750 000 for homes) will commence on a date fixed by the Administrator by Gazette notice. The date to be fixed will be no earlier than 1 July 2009.

Part 2 – Amendment of First Home Owner Grant Act

Division 1 – Preliminary matter

Clause 3. Act amended

The Act being amended by this Part is the First Home Owner Grant Act.

Division 2 – Amendment commencing on assent

Clause 4. Amendment of section 3 (Definitions)

This clause amends the definition of “Australian citizen” so that this term has the meaning provided in section 4 of the Australian Citizenship Act 2007 (Cth). This is a consequential amendment arising out of the repeal of the Australian Citizenship Act 1948.

An applicant for a first home owner grant must be an Australian citizen or a permanent resident at the time of applying for the grant.

Division 3 – Amendments commencing on future notification

Clause 5. Amendment of section 3 (Definitions)

Subclause (1) inserts definitions for the terms “GST” and “threshold amount” in section 3 of the First Home Owner Grant Act.

“GST” is defined to have the meaning as provided in section 195-1 of
A New Tax System (Goods and Services Tax) Act 1999 (Cth). This term is used in the definition of “consideration”, which is amended by clause 7 of the Bill, and the definition of “unencumbered value”, which is inserted by clause 8 of the Bill.

The term “threshold amount” is defined as the amount of $750 000. This definition is used to determine whether a transaction is an “eligible transaction” under new section 13AA, inserted by clause 8 of the Bill.

Subclause (2) makes a consequential amendment to the definition of “consideration” in section 3 of the First Home Owner Grant Act. This amendment is a result of new section 13(9) of the First Home Owner Grant Act, inserted by clause 7(2) of the Bill, which explains that the definition of “consideration” includes any GST payable in respect of the transaction.

Clause 6. New section 12A

This clause inserts new section 12A, which clarifies an applicant’s future entitlement to the first home owner grant.

New section 12A(1) ensures that where an applicant receives the grant and is later found to be ineligible, based on the total value of the property exceeding the threshold amount, the applicant is also ineligible to receive the grant in respect of a future application for a home that would not be their first home. This also applies where the applicant received the first home owner grant in another state or territory for a home that exceeded the relevant threshold amount in that state or territory.

However, new section 12A would not preclude an applicant applying for the grant where they had previously purchased an investment property that exceeded the threshold amount and they did not reside in the property.

New section 12A also clarifies that this provision applies irrespective of sections 10(2) and 11(4) of the First Home Owner Grant Act.

New section 12A(2) clarifies that this provision extends to situations where an applicant’s spouse or de facto partner has received the grant on a previous application and has repaid the grant and any penalties and interest in relation to the earlier application.

Clause 7. Amendment of section 13 (Eligible transaction)

Subclause (1) removes sections 13(3) and (4) of the First Home Owner Grant Act, as a consequence of new section 13AA being inserted by clause 8 of this Bill. Old sections 13(3) and (4) of the First Home Owner Grant Act outlined transactions that did not qualify as eligible transactions. These sections have been incorporated in new section 13AA so that the provisions relating to whether a transaction is an eligible transaction are contained in the one location.

Subclause (2) inserts new section 13(9) which clarifies that the term “consideration”, as defined in section 13(8) of the First Home Owner Grant Act, includes any GST payable in respect of the transaction. The term “GST” is defined in clause 5 of the Bill.

Clause 8. New section 13AA

This clause inserts a new section 13AA, which relates to transactions that are not eligible transactions.

New section 13AA(1)(a) mirrors old section 13(3) of the First Home Owner Grant Act, which was removed by clause 7 of the Bill.

New section 13AA(1)(b) provides that a transaction is not an eligible transaction if:

the consideration for the transaction is more than $750 000; in relation to a contract to purchase a home, the total of the unencumbered value of the home and the unencumbered value of the relevant interest in the land at the date the contract is made is more than $750 000;

in relation to a comprehensive home building contract, the total of the consideration for the transaction and the unencumbered value of the relevant interest in the land at the date the contract is made is more than $750 000; and

in relation to the building of a home by an owner builder, the total unencumbered value of the home and the unencumbered value of the relevant interest in the land is more than $750 000 at the date the home is ready for occupation as a residence.

The terms “comprehensive home building contract”, “owner builder” and “relevant interest” are defined in section 3 of the First Home Owner Grant Act.

New sections 13AA(2) and (3) replace former sections 13(3) and (4) of the First Home Owner Grant Act. This amendment is necessary due to clause 7 of the Bill. Similar to former sections 13(3) and (4) of the First Home Owner Grant Act, new sections 13AA(2) and (3) provide that new section 13AA(1)(a) does not apply where the Commissioner declares the contract to be an eligible transaction.

New section 13AA(4) provides the meaning of the terms “encumbrances” and “unencumbered value”, which are relevant to new section 13AA(1)(c) to (e).

The term “encumbrances” is defined to include a debt or liability in relation to the property.

The “unencumbered value” of a home or relevant interest in land is the full value of the property including any GST payable in respect of the transaction. The full value of the property is determined without regard to any “encumbrances”, as defined above.

For example, the unencumbered value of a home held by a person on trust as guardian for another person who is under a legal disability must be determined without regard to the liabilities of the trust, including the liability to indemnify the trustee.

Clause 9. Amendment of section 17 (Commissioner to decide applications)

This clause amends section 17 of the First Home Owner Grant Act to clarify the circumstances in which the Commissioner is authorised to pay the first home owner grant.

New section 17(2A) allows the Commissioner to pay the first home owner grant prior to the completion of a transaction, provided the Commissioner is satisfied that the interests of the Territory can be adequately protected by requiring repayment of the grant should the transaction later be found to be an ineligible transaction under new sections 13AA(1)(b), (c), (d) or (e).

For example, this provision may apply where the consideration for a comprehensive home building contract is increased prior to completion due to variations made to the contract.

Clause 10. Amendment of section 41 (Power to recover amount paid in error etc.)

This clause omits and replaces former sections 41(1) and (2) of the First Home Owner Grant Act. This amendment is necessary to incorporate amendments inserted by new section 13AA.

New section 41(1) of the First Home Owner Grant Act largely mirrors former section 41(1) with an amendment to section 41(1)(a) to clarify its operation and the addition of a new section 41(1)(b).

New section 41(1)(a) provides that section 41 applies where a person was not entitled to the grant under section 7 of the First Home Owner Grant Act. Although similar to former section 41(1)(a) of the First Home Owner Grant Act, the provision is amended by replacing the word “ineligible” with “not entitled” and reference is made to section 7 of the Act. This includes where a person is ineligible because the threshold amount has been exceeded under new section 13AA(1)(c) or (e).

New section 41(1)(b) ensures that section 41 of the First Home Owner Grant Act also applies where a grant is paid before the completion of a transaction, and on completion the transaction no longer constitutes an eligible transaction under new section 13AA(1)(b) or (d) because the consideration paid results in the threshold amount being exceeded.

The insertion of new section 41(1)(b) also results in minor consequential amendments to the numbering of the existing subparagraphs in section 41(1) of the First Home Owner Grant Act.

New section 41(2) provides that a person must give written notice to the Commissioner of their non-entitlement, ineligibility, failure, breach or overpayment of the grant and must repay the amount of the grant or overpayment to the Commissioner within the time specified in new section 41(2A) of the First Home Owner Grant Act.

New section 41(2A) explains the period in which a person is to give the Commissioner written notice and repay the grant as required under new section 41(2) of the First Home Owner Grant Act. These provisions essentially mirror the requirements of former section 41(2) of the First Home Owner Grant Act, except for a new provision dealing with a person’s ineligibility under new section 13AA.

Clause 11. New section 45A

This clause inserts new section 45A into the First Home Owner Grant Act. New section 45A outlines the Commissioner’s power to obtain a written valuation of a property to determine whether a transaction is or is not an eligible transaction under new section 13AA, inserted by clause 8 of this Bill. This provision is similar to valuation provisions contained in section 25 of the Taxation Administration Act.

New section 45A(1) allows the Commissioner to require a relevant person to provide a written valuation of the property. The Commissioner must give the person notice in writing and state the time in which the written valuation is to be provided. New section 45A(1) also specifies that the Commissioner may obtain a valuation from the Valuer-General or another valuer.

New section 45A(2) states that if the Commissioner is not satisfied with a valuation provided by the relevant person, the Commissioner may obtain a valuation from the Valuer-General or another valuer.

Any such valuation should reflect the value of the property at the relevant time under new section 13AA, inserted by clause 8 of this Bill.

New section 45A(3) provides that the Commissioner may recover the cost of obtaining a valuation as a debt due to the Territory by the relevant person.

New section 45A(4) defines the terms “property”, “relevant person” and “valuer” for the purpose of new section 45A. The definition of “valuer” is consistent with the definition of “valuer” contained in section 3 of the Taxation Administration Act.

Clause 12. New section 53

This clause explains when the $750 000 limit in respect of transactions under new section 13AA, inserted by clause 8 of this Bill, will commence.

Subclause (1) provides that the First Home Owner Grant Act will continue to apply to a “relevant application” as if the Act had not been amended by Part 2, Division 3 of the “amending Act”.

Subclause (2) defines the terms “amending Act”, “pre-amending Act transaction” and “relevant application”. These terms are used to explain that the $750 000 limit will commence on a date to be fixed by the Administrator by Gazette notice. It is proposed that the date to be fixed will be after the expiry of the Commonwealth’s first home owner boost scheme, which will be no earlier than 1 July 2009.

Part 3 – Amendment of Stamp Duty Act

Division 1 – Preliminary matter

Clause 13. Act amended

The Act being amended by this Part is the Stamp Duty Act.

Division 2 – Amendment commencing 1 October 2008

Clause 14. Amendment of Schedule 2 (Exemptions from duty)

This section inserts new item 22A into Schedule 2 to the Stamp Duty Act. This item exempts First Home Saver Accounts held with a life insurer from life insurance duty. Clause 2(1) of the Bill provides that this clause has retrospective effect from 1 October 2008, which aligns with the commencement of the Commonwealth’s First Home Saver Accounts Scheme.

This also provides for consistent treatment of First Home Saver Accounts as First Home Saver Accounts held with other institutions, such as banks, are not subject to stamp duty.

Division 3 – Amendments commencing on introduction day

Clause 15. Amendment of section 4 (Interpretation)

This section inserts definitions of the terms “entity A”, “entity B”, “listed corporation”, “listed unit trust scheme”, “merger vesting”, “merging entities”, “merging entity or entities”, “relevant entity” and “unlisted unit trust scheme” in section 4(1) of the Stamp Duty Act.

The definitions of “entity A”, “entity B”, “merger vesting”, “merging entities”, “merging entity or entities” and “relevant entity” act to ‘signpost’ the location of those definitions in new section 4E, inserted by clause 16 of the Bill.

The definitions for “listed corporation”, “listed unit trust scheme” and “unlisted unit trust scheme” act to ‘signpost’ the location of those definitions in section 56C, inserted by clause 17 of the Bill.

Clause 16. New section 4E

This clause inserts new section 4E into the Stamp Duty Act.

New section 4E(1) outlines that the purpose of section 4E is to prescribe the circumstances in which there is a merger vesting of property.

New section 4E(2) means that where there is a merger of two or more entities that results in a new entity being formed, the merger will be a merger vesting of all the property of all of the merging entities in the new entity.

New section 4E(3) means that where there is a merger of two or more entities with and into each other and both the merging entities continue to exist following the merger, albeit in a merged structure, the merger will be a merger vesting of 50 per cent of all of the property of each of the merging entities.

New section 4E(4) means that where there is a merger of one or more entities (“the merging entity or entities”) with and into another entity (“entity B”) and new section 4E(2) and (3) do not apply, the merger will be a merger vesting of all of the property of the merging entity or entities in entity B.

New section 4E(5) defines a “relevant entity” for the purpose of new section 4E to be a company or unit trust scheme. The terms “company” and “unit trust scheme” are defined in section 4(1) of the Stamp Duty Act.

A merger vesting will be a “conveyance” for stamp duty purposes (see clause 22 of this Bill). Similarly a merger vesting of shares will be an acquisition for the purpose of Part 3, Division 8A of the Stamp Duty Act (see clause 17 of this Bill).

Clause 17. Amendment of section 56C (Interpretation)

Subclause (1) makes a minor amendment to give effect to current drafting style. The words “unless the contrary intention appears” are unnecessary because of section 18 of the Interpretation Act.

Subclause (2) removes the definition of “private unit trust scheme”. This definition is redundant as a consequence of amendments made by clause 20 of this Bill.

Subclause (3) defines the terms “listed corporation”, “listed unit trust scheme” and “unlisted unit trust scheme” for the purpose of Part 3, Division 8A of the Stamp Duty Act.

Subclause (4) amends the definition of “acquire” in section 56C(1) of the Stamp Duty Act so that it specifically includes a “merger vesting of shares”. This ensures that a “merger vesting” (as outlined in new section 4E, inserted by clause 16 of this Bill) of shares will be an acquisition for the purpose of Part 3, Division 8A of the Stamp Duty Act.

Subclause (5) removes section 56C(1A) of the Stamp Duty Act as a consequential amendment due to the removal of the definition of “private unit trust scheme” from the Stamp Duty Act by subclause (2).

Subclause (6) inserts proposed new section 56C(14) which sets out the shareholding taken to have been acquired, the person(s) taken to have acquired the shareholding and the time that the acquisition is taken to occur, where there is a merger vesting of shares in a land-holding corporation or unit trust scheme.

Clause 18. Amendment of section 56K (When statement to be lodged)

This section removes section 56K(1A) of the Stamp Duty Act. Section 56K(1A) excluded a person from the requirements of section 56K(1) of the Stamp Duty Act where, by a relevant acquisition, a person acquired an interest in a corporation with shares quoted on a recognised financial market or an interest in a unit trust scheme that was not a private unit trust scheme.

This meant that, where by a relevant acquisition (as defined in section 56P of the Stamp Duty Act), a person acquired an interest in a corporation listed on a recognised financial market or an interest in a unit trust scheme that was not a private unit trust scheme, that person was not required to bring into existence a statement in an approved form.

The removal of section 56K(1A) of the Stamp Duty Act results in such a person being required to bring into existence such a statement. This amendment follows the amendments made by clause 20 of this Bill.

Clause 19. Amendment of section 56M (Statement chargeable
This clause removes the existing sections 56M(2)(c)(i), (ii) and (viii) of the Stamp Duty Act as a result of amendments made by clause 20 of this Bill.

Subclause (1) makes a minor amendment to section 56M(2)(a)(ii) of the Stamp Duty Act by inserting the word “and” at the end of this provision.

Subclause (2) removes the existing sections 56M(2)(c)(i), (ii) and (viii) of the Stamp Duty Act. Old sections 56M(2)(c)(i) and (ii) of the Stamp Duty Act meant that landholder stamp duty was not imposed on interests acquired in the three years prior to the relevant acquisition:

in a land-holding corporation while its shares were quoted on a recognised financial market; or

in a unit trust scheme while it was not a private unit trust scheme.

This was because prior to the amendments made by clause 20 of this Bill, landholder stamp duty did not apply where interests were acquired in corporations whose shares were quoted on a recognised financial market or in unit trust schemes other than private unit trust schemes.

These interests will now be taken into account when charging landholder duty.

Subclause (2) also removes existing section 56M(2)(c)(viii) from the Stamp Duty Act. This provision was originally included in the Stamp Duty Act as a result of the significant interest relevant acquisition threshold for a private unit trust scheme changing from 50 per cent to 20 per cent on 1 July 2006. However, this provision is no longer necessary as clause 20 of the Bill changes the significant interest relevant acquisition threshold for all unlisted unit trust schemes to 50 per cent.

Subclause (3) makes a minor consequential amendment to section 56M(2)(c)(x) of the Stamp Duty Act as a result of new section 56M(2)(d), which is inserted by subclause (4) below.

Subclause (4) inserts new section 56M(2)(d), which ensures that where an amount of duty has been paid under Part 3, Division 8B of the Stamp Duty Act by a merging entity, in relation to land held directly by the merging entity, this amount is to be deducted from the landholder stamp duty payable under Part 3, Division 8A of the Stamp Duty Act.

New section 56M(2)(d) ensures that there are no double taxation consequences under Part 3, Divisions 8A and 8B of the Stamp Duty Act.

Clause 20. Amendment of section 56Q (Interest and significant interest in corporation)

This clause omits and replaces section 56Q(4) of the Stamp Duty Act. New section 56Q(4) results in a person having a significant interest in a corporation or unit trust scheme if the person’s entitlement mentioned in section 56Q(3) is:

for a listed corporation or listed unit trust scheme for a merger vesting of shares – 50 per cent or more of all the property of the corporation or scheme; or

otherwise for a listed corporation or listed unit trust scheme – 90 per cent or more of all the property of the corporation or scheme;

for another corporation or unit trust scheme – 50 per cent or more of all the property of the corporation or scheme.

This results in landholder stamp duty being imposed where a person acquires a significant interest in a listed corporation or a listed unit trust scheme. This also results in landholder stamp duty being imposed on other public unit trust schemes in a manner consistent with private unit trust schemes.

Clause 21. Repeal and substitution of Part 3, Division 8B heading

This clause repeals and substitutes the heading of Part 3, Division 8B of the Stamp Duty Act. This is a consequential amendment following the insertion of proposed new section 4E by clause 16 of this Bill.

Clause 22. Amendment of section 56W (Duty on a statutory vesting of dutiable property)

Subclause (1) makes a consequential amendment to the heading of section 56W of the Stamp Duty Act following new section 4E being inserted by clause 16 of this Bill.

Subclause (2) also makes a consequential amendment to section 56W of the Stamp Duty Act following the insertion of new section 4E.

Subclause (3) makes a minor amendment to sections 56W(2) and (3) by replacing the words “body or person” with “relevant entity, person or body”. This amendment ensures that the term “relevant entity” used in new section 4E also applies to section 56W of the Stamp Duty Act.

Division 4 – Amendments commencing on assent

Clause 23. Amendment of section 4 (Interpretation)

This section makes a minor amendment to give effect to current drafting style. The words “unless the contrary intention appears” are unnecessary because of section 18 of the Interpretation Act.

Clause 24. Amendment of section 56C (Interpretation)

This section makes consequential amendments to section 56C of the Stamp Duty Act as a result of the insertion of new section 56CA by clause 25 of this Bill.

Subclause (1) amends section 56C(6) of the Stamp Duty Act to make it clear that the operation of this provision is subordinate to the operation of the new section 56CA that is inserted by clause 25 of this Bill.

Subclause (2) clarifies the mechanism applied by section 56C(6)(b) of the Stamp Duty Act in calculating a person’s entitlement to participate as a shareholder in the distribution of the property of a corporation on its winding up. In particular, references to a “person” in section 56C(6)(b) will be amended to include both that person and related persons (if any).

As a consequence, the calculation under section 56C(6)(b) will be determined as if the person, whether alone or together with related persons, had, immediately before the winding up, paid up any uncalled amount for the shares in the corporation and exercised all powers and discretions exercisable by the person by reason of having acquired an interest in the corporation.

The proposed amendment recognises, for example, that a person may not have the ability to exercise relevant powers and discretions on their own, but may have that ability when acting together with related persons who are also shareholders. This approach is consistent with other sections in the stamp duty landholder provisions which generally look to the actions of a person and related persons to determine whether a dutiable transaction has occurred. The types of persons who are “related” are provided for in section 56C(3) of the Stamp Duty Act.

Subclause (3) amends section 56C(7) of the Stamp Duty Act to also make it clear that the operation of this provision is subordinate to the operation of the new section 56CA that is inserted by clause 25 of this Bill.

Clause 25. New section 56CA

This clause inserts a new section 56CA, which is the provision that addresses a stamp duty avoidance scheme.

The existing landholder provisions rely on a person having an entitlement to the property of a land-holding corporation or trust on its winding up. The detected avoidance scheme is based on obtaining control of the corporation or trust without gaining an entitlement to the corporation’s or trust’s property (or by reducing that entitlement).

New section 56CA(1) sets out the circumstances where this provision takes effect. The circumstances are where the Commissioner of Territory Revenue is satisfied that:

a person would have had a greater entitlement to the distribution of property on the winding up of a corporation or the termination of a trust, if there had not been an arrangement that either directly or indirectly reduced that entitlement. This includes where the entitlement of a person is reduced to nil; and a relevant transaction occurs. A relevant transaction for the purposes of new section 56CA includes an acquisition of an interest, shareholding or unit holding by a person in a land-holding corporation or unit trust scheme (which may not necessarily be the corporation or trust in which the entitlement was reduced – the entitlement may have been reduced in a linked entity instead or an entity that would have been a linked entity but for the arrangement) as well as an event that would be such an acquisition if there had not been an arrangement to reduce the person’s entitlement.

The term “arrangement” is broadly defined in new section 56CA(4).

New section 56CA(2)(a) provides that unless the Commissioner is satisfied the arrangement by which the person’s entitlement was reduced is not a tax avoidance scheme or part of a tax avoidance scheme, then the arrangement is to be disregarded when assessing stamp duty.

The term “tax avoidance scheme” is broadly defined in section 4B of the Stamp Duty Act.

When a relevant transaction occurs in relation to a land-holding corporation or unit trust scheme, new section 56CA(2)(b)(i) provides that the Commissioner may then determine that the relevant person (referred to in new section 56CA(1)(b)) has made an acquisition of an interest, shareholding or unit holding in the corporation or unit trust scheme that is 100 per cent or a lesser specified percentage. The Commissioner will also determine the date of the acquisition. This allows the Commissioner to determine the interest that would have been acquired if the arrangement to reduce the entitlement to property had not occurred.

New section 56CA(2)(b)(ii) provides that the Commissioner may determine that a person, whose entitlement in a corporation or trust is reduced as a consequence of an arrangement referred to in new section 56CA(1)(a), has an entitlement to receive 100 per cent of the unencumbered value of the property of the corporation or trust the subject of that arrangement. The Commissioner is able to determine the entitlement that would have applied if the arrangement had not existed.

New section 56CA(2)(b)(ii) has application for section 56NA of the Stamp Duty Act, when determining whether a person is a linked entity, and to section 56NB of that Act when determining the portion of the unencumbered value of land to which a land-holding corporation or trust would be entitled if each of its linked entities were to be wound up.

An example of how new section 56CA(2)(a) and 56CA(2)(b)(i) may operate is also provided in new section 56CA.

New section 56CA(3) is an interpretative provision that confirms the operation of new section 56CA(2) in respect of the application of sections 56C(6) and (7) of the Stamp Duty Act.

New section 56CA(4) broadly defines an arrangement for the purposes of new section 56CA(1). It is a non-exclusive definition that provides that an arrangement includes:

a scheme as defined in section 4B(1) of the Stamp Duty Act; and all or part of the constitution or rules of a corporation, or of the constituent document of a trust; and

an amendment to the constitution, rules or constituent document.

Clause 26. Amendment of section 56P (Meaning of relevant acquisition)

A liability to duty arises if a person makes a relevant acquisition in a land-holding corporation. Section 56P of the Stamp Duty Act provides for the meaning of the term “relevant acquisition”.

Subclause (1) is a consequential amendment to convert the existing provisions in section 56P into subsection (1) as a result of the new subsections being inserted by subclause (2).

Subclause (2) inserts new subsections (2), (3) and (4) into section 56P of the Stamp Duty Act.

New subsection (2) deals with situations whereby, without making a relevant acquisition, a person acquires control of a corporation by another means. This provision is necessary because of an avoidance scheme under which the holders of interests in a corporation cede control of the corporation to a person (or a person and related persons) in a way that enables that person to benefit from the assets of the corporation as if they had made a relevant acquisition in the corporation covered by the existing section 56P (which is proposed to be renamed section 56P(1)). Importantly, this provision may apply even where a person has not obtained a shareholding or interest in the corporation, such as where control of the corporation is obtained by an agreement or other arrangement.

New subsection (2) provides that where the Commissioner considers a person to have acquired control of a corporation, the Commissioner can determine that at a given date the person has made a relevant acquisition of a 100 per cent interest in the corporation or some lesser percentage. However, new subsection (2) does not apply where the person who acquired control of the corporation has made a relevant acquisition covered by new section 56P(1). This is because it is intended that such relevant acquisitions should remain dutiable in line with the existing provisions contained in Part 3, Division 8A of the Stamp Duty Act.

An example of where the Commissioner may determine a lesser percentage is where a shareholder, with a 10 per cent minority interest in a corporation that has been held for several years, subsequently acquires control of the corporation without making a relevant acquisition. In this example, it may be appropriate for the Commissioner to determine that the minority shareholder has made a relevant acquisition of an interest of 90 per cent in the corporation rather than 100 per cent.

New subsection (3) defines when a person has acquired control of a corporation for the purpose of new section 56P(2). A person has acquired control of a corporation where the person acquires the capacity, directly or indirectly, to determine or influence the outcome of decisions about any of the corporation’s financial and operating policies.

In determining whether a person has acquired the capacity to determine or influence the outcome of decisions about such policies, the subsection directs the Commissioner to take into account the following non-exclusive factors:

any enforceable rights the person has; any practical influence the person can exert; and

any other practice or behaviour of the person that might affect those policies. Of note, the Commissioner is able to take the practice or behaviour into account even where they would involve a breach of an agreement (such as a contract or shareholder agreement) or of a trust.

New subsection (4) provides that a reference to a person in new subsections (2) and (3) also includes a reference to the person acting together with “related persons”. The types of persons who are related are provided for in section 56C(3) of the Stamp Duty Act.

The amendments inserted by this clause apply to unit trust schemes in the same way that they apply to corporations. The clause does not specifically refer to these trusts as section 56T of the Stamp Duty Act provides that Part 3, Division 8A of the Stamp Duty Act applies to a unit trust scheme as if it were a corporation.

Clause 27. New Part 7

This clause inserts a new Part 7 into the Stamp Duty Act, comprising a new section 99 that provides for the transitional matters arising from the amendments to be made by this Bill.

New section 99(1) provides that the amendment in the Bill relating to calculating an entitlement to an amount in such a manner as to maximise that amount under section 56C(6)(b) of the Stamp Duty Act, only applies to an entitlement calculated for an acquisition of an interest that occurs after the commencement of the amendment, which is on the day that the Bill is introduced in the Legislative Assembly. This calculation may occur in relation to:

a corporation in which an interest is acquired; and a corporation that is a linked entity of a corporation or unit trust scheme in which an interest is acquired.

New section 99(2) provides for how the amendments in this Bill relating to arrangements described in the new section 56CA and to section 56C(6) and (7) of the Stamp Duty Act apply.

New section 99(2)(a) provides that the Commissioner can make a determination under new section 56CA that takes effect on or after the day that this Bill is introduced in the Legislative Assembly.

New section 99(2)(b) provides that such a determination can only relate to a relevant transaction that occurs on or after the day that this Bill is introduced in the Legislative Assembly.

As new section 56CA is limited to relevant transactions that occur on or after the date of this Bill’s introduction, new section 99(2)(c) clarifies that such a determination can be made in relation to an arrangement regardless of when the arrangement is made or when it has effect from.

New section 99(3) provides that the amendment to section 56P only applies to an acquisition of control that occurs on or after the day that this Bill is introduced in the Legislative Assembly.

New section 99(4) provides definitions for the terms “amending Act” and “introduction day”. These terms are used in new section 99.

Clause 28. Amendment of Schedule 2 (Exemptions from duty)

Subclause (1) amends item 3 of Schedule 2 to the Stamp Duty Act. This is a minor consequential amendment that is necessary due to the Financial Sector (Transfer of Business) Act 1999 (Cth) being renamed the Financial Sector (Business Transfer and Group Restructure) Act 1999 (Cth).

Subclause (2) amends item 22 of Schedule 2 to the Stamp Duty Act, which exempts policies of insurance issued in the course of a health insurance business. This is a consequential amendment that is necessary due to the repeal of Part VI of the National Health Insurance Act 1953 (Cth) and introduction of the Private Health Insurance Act 2007 (Cth).

Subclause (3) amends item 23(j)(iv) of Schedule 2 to the Stamp Duty Act by replacing the term “a classic, veteran or vintage vehicle” with the term “an enthusiast vehicle”. This is a consequential amendment following recent changes to the Motor Vehicle (Fees and Charges) Regulations.

Division 5 – Amendments commencing on 1 July 2009

Clause 29. Amendment of section 4 (Interpretation)

This section inserts definitions for the terms “exempt entity”, “exempt use” and “interposed trust” into section 4(1) of the Stamp Duty Act.

The definitions of “exempt entity” and “exempt use” in section 4(1) of the Stamp Duty Act ‘signpost’ the location of those definitions in new section 4F of the Stamp Duty Act, inserted by clause 30 of the Bill.

The definition of “interposed trust” in section 4(1) of the Stamp Duty Act acts to ‘signpost’ the location of that definition in section 56C of the Stamp Duty Act.

Clause 30. New section 4F

This clause inserts new section 4F into the Stamp Duty Act. New section 4F defines the terms “exempt entity” and “exempt use”. These terms will be used in items 14, 18 and 23(h) of Schedule 2 to the Stamp Duty Act.

New section 4F(1) defines an “exempt entity” to be a:

public hospital;

public benevolent institution;

religious institution;

public education institution;

council, society, organisation or other body established or carried on exclusively or principally for promoting the interests of a school (other than a school carried on for profit); or

non-profit organisation that has a sole or dominant purpose that is charitable, benevolent, philanthropic or patriotic.

New section 4F(2) defines an “exempt use” of property by an exempt entity to be a use that is not the carrying on of a commercial activity by or on behalf of the entity.

New section 4F(3) makes it clear that a use that competes with another entity’s business undertaking is not an exempt use irrespective of how the funds received by the exempt entity are used.

Clause 31. Amendment of section 9 (Time for lodgement of instrument etc.)

This clause inserts new section 9(3A) into the Stamp Duty Act. New section 9(3A) provides that a person is not required to lodge and pay duty on a dutiable instrument where the conveyance or grant of a lease is cancelled.

For example, this clause would apply in situations where the person’s finance is not approved or a condition to the contract, such as the provision of a satisfactory pest or building inspection report, is not complied with.

However, new section 9(3A) will not apply:

to conveyances that fall within the ambit of Part 3, Division 8AB of the Stamp Duty Act; or

if the conveyance was cancelled to give effect to a sub-sale or is the result of a conveyance by direction.

The sub-sale and conveyance by direction exceptions to new section 9(3A) are consistent with section 56A(4) of the Stamp Duty Act. Section 56A of the Stamp Duty Act provides for a refund or remission of duty in certain circumstances if a transaction does not proceed.

Clause 32. Amendment of section 17A (Stamp duty on related instruments)

This clause inserts new sections 17A(2A) and (2B) into the Stamp Duty Act. These new provisions allow a purchaser to nominate a related person, prior to settlement, to receive the property being purchased without double stamp duty consequences.

New section 17A(2A) is conditional upon the duty on the original agreement being paid, the parties being related at the commencement and completion of the agreement, the parties not holding the property as trustee (with an exception for the trustee of a family trust), no valuable consideration passing and the transfer to the substituted purchaser occurring at the same time or near completion of the agreement.

New section 17A(2B) explains that for the purpose of this clause, a purchaser and a transferee are related if:

they are in a “family relationship”; or one of them is an individual who is a shareholder of a “family company” and the other is the “family company”; or

one of them is an individual who is a beneficiary in a “family trust” and the other is a trustee of the “family trust”; or

they are “related corporations”. That is, they are related bodies corporate as defined in the Corporations Act 2001 (Cth).

The terms “family relationship”, “family company”, “family trust” and “related corporations” are defined in section 4(1) of the Stamp Duty Act.

The transfer of dutiable property to a transferee in accordance with new section 17A(2A) will be stamped for nominal duty of $5 as outlined in clause 37 of this Bill.

Clause 33. Amendment of section 56A (Refund or remission of duty if transaction does not proceed etc.)

Subclause (1) omits the words “, subject to subsection (2),” as these words are superfluous.

Subclause (2) inserts new section 56A(1B). New section 56A(1B) clarifies the operation of new section 9(3A), inserted by clause 31 above. It ensures that the Commissioner is only obligated to remit duty on an agreement for a transaction that does not proceed if the agreement has been lodged and duty has been assessed but not paid.

The Commissioner will remit the duty payable provided an application is made in accordance with section 56A(2) of the Stamp Duty Act.

Subclause (3) is a consequential amendment to ensure that if duty has been remitted under new section 56A(1B), and the Commissioner subsequently forms the opinion that there has been a subsequent sale or other disposition of the dutiable property, the instruments evidencing the transaction remain liable to duty.

Clause 34. Amendment of section 56C (Interpretation)

This section defines the term “interposed trust” for the purpose of Part 3, Division 8A of the Stamp Duty Act. An “interposed trust” has the same meaning as in section 124-1045 of the Income Tax Assessment Act 1997 (Cth).

Clause 35. Amendment of section 56K (When statement to be lodged)

Subclause (1) inserts new subsections (5A) and (5B) into section 56K of the Stamp Duty Act. New sections 56K(5A) and (5B) make it clear that a person will not retain the benefit of a deduction from landholder stamp duty under proposed new section 56M(2)(c)(i) of the Stamp Duty Act (see clause 36 of this Bill), if the interposed trust becomes an unlisted unit trust scheme within 3 years of the scheme being completed.

New sections 56K(5A) and (5B) also mean that where a person is no longer entitled to a deduction under proposed new section 56M(2)(c)(i) of the Stamp Duty Act, because the interposed trust became an unlisted unit trust scheme, a person must relodge the statement lodged under section 56K(1) of Stamp Duty Act and pay duty within 60 days of the interposed trust becoming an unlisted unit trust scheme.

If the person relodges this statement and pays the duty within 60 days after the interposed trust becomes an unlisted unit trust scheme, interest and penalty tax will not be imposed. However, where a person fails to relodge the statement lodged under section 56K(1) of the Stamp Duty Act and pay the duty within 60 days after the interposed trust becomes an unlisted unit trust scheme, interest and penalty tax will be imposed from the date the relevant acquisition occurred.

Subclause (2) makes a consequential amendment to section 56K(6) of the Stamp Duty Act so that a person who fails to comply with new section 56K(5B) commits an offence. The maximum penalty for this offence has been revised to 100 penalty units.

Clause 36. Amendment of section 56M (Statement chargeable with duty)

Proposed new section 56M(2)(c)(i) of the Stamp Duty Act allows a deduction from the duty chargeable on a statement lodged under section 56K of the Stamp Duty Act in respect of an acquisition where:

the acquisition is made for the purpose of giving effect to a scheme that would qualify as a roll-over under Subdivision 124-Q of the Income Tax Assessment Act 1997 (Cth); and

when the scheme is completed, the interposed trust will not be an unlisted unit trust scheme; and

the acquisition is not a tax avoidance scheme or part of a tax avoidance scheme.

This allows a listed unit trust to “top hat” a new parent entity without landholder stamp duty consequences. However, where such a scheme becomes an unlisted unit trust scheme at any time within 3 years of the completion of the scheme, the deduction will not apply (see clause 35 of this Bill).

Clause 37. Amendment of Schedule 1 (Dutiable instruments and rates of duty)

This clause inserts new item 1(6A) to Schedule 1 of the Stamp Duty Act.

New item 1(6A) states that the transfer of dutiable property in accordance with new section 17A(2A), as inserted by clause 32 of the Bill, is subject to nominal duty of $5. This is similar to the treatment of other transfers that are stamped for nominal duty of $5 when the original agreement and the transfer are in conformity.

Clause 38. Amendment of Schedule 2 (Exemptions from duty)

This clause outlines amendments to stamp duty exemptions provided under Schedule 2 to the Stamp Duty Act.

Subclause (1) amends item 14 to Schedule 2 of the Stamp Duty Act so that the stamp duty exemption for the conveyance of dutiable property applies to an “exempt entity”, as defined in clause 30 above. This amendment extends the former exemption to include a non-profit organisation having as its sole or dominant purpose a charitable, benevolent, philanthropic or patriotic purpose. However, an “exempt entity” will only be entitled to the exemption if the property is used solely for an “exempt use”, as defined in new sections 4F(2) and (3). That is, the property being conveyed must not be used for the carrying on of a commercial activity by or on behalf of the entity.

Subclause (2) omits existing item 15 of Schedule 2 to the Stamp Duty Act, which exempts a lease of a building or part of a building to be used for residential purposes. This exemption is technically unnecessary following the abolition of lease duty on rent from 1 July 2006. Further, omitting this item clarifies that all leases granted for valuable consideration in addition to or instead of rent, remain liable to stamp duty.

Subclause (2) replaces item 15 of Schedule 2 to the Stamp Duty with a specific stamp duty exemption for a lease of a residential premises in a retirement village within the meaning of the Retirement Villages Act.

Subclause (3) amends item 18 of Schedule 2 to the Stamp Duty Act so that the stamp duty exemption for the transfer of a lease applies to an “exempt entity”, as defined in clause 30 above. This amendment extends the former exemption to include a non-profit organisation having as its sole or dominant purpose a charitable, benevolent, philanthropic or patriotic purpose. However, an “exempt entity” will only be entitled to the exemption if the property is used solely for an “exempt use”, as defined in new section 4F(2) and (3). That is, the property the subject of the lease must not be used to carrying on a commercial activity by or on behalf of the entity.

Subclause (4) amends item 23(h) of Schedule 2 to the Stamp Duty Act so that the stamp duty exemption for motor vehicle certificates of registration is available to an “exempt entity”. This amendment extends the existing exemption to include a non-profit organisation having as its sole or dominant purpose a charitable, benevolent, philanthropic or patriotic purpose.

Subclause (5) makes a consequential amendment to item 23 of Schedule 2 to the Stamp Duty Act as a result of new item 23(j)(v) inserted by subclause (6) below.

Subclause (6) inserts new item 23(j)(v) into Schedule 2 to the Stamp Duty Act to exempt trailers that have a gross vehicle mass of not more than 4.5 tonnes, from motor vehicle registration stamp duty. The exemption also includes caravans, which fall within the definition of trailer under the Motor Vehicles Act.

The gross vehicle mass of a trailer, as provided in section 5(1) of the Motor Vehicles Act, is the mass recorded by the Registrar of Motor Vehicles as the maximum laden mass at which a trailer should be operated. Accordingly, this will include the load on the trailer.

The gross vehicle mass for trailers recorded by the Registrar is also known as the aggregate trailer mass. The aggregate trailer mass is the maximum mass, specified by the manufacturer, for the loaded trailer, including any mass imposed on the vehicle towing the trailer when they are on a horizontal surface.

Division 6 – Amendments commencing on future notification

Clause 39. Amendment of section 88 (Interpretation)

This clause inserts a definition of “off-the-plan contract” in section 88 of the Stamp Duty Act based on section 13B of the First Home Owner Grant Act.

Accordingly, an off-the-plan contract is a contract for the purchase of a new home on a proposed lot on a plan of subdivision, whether the plan of subdivision is registered or not. This definition is utilised in section 89 of the Stamp Duty Act as amended.

Clause 40. Amendment of section 89 (First home owner concession)

Subclause (1) makes a minor consequential amendment to section 89(1)(i) of the Stamp Duty Act to allow for the insertion of new section 89(1)(j), provided by subclause (2) below.

Subclause (2) inserts a new provision which provides a further condition to a conveyee’s entitlement to the first home owner concession. For a person to be eligible for a first home owner concession, a condition will be that the dutiable value of the land is not more than:

$750 000 (which comprises the dutiable value of the land itself and the home built or to be built on the land), if at the relevant time there is a home on the land or the conveyance is an off-the-plan contract; or $385 000 if at the relevant time there is a conveyance of vacant land.

The term “relevant time” is defined in section 88 of the Stamp Duty Act.

Part 4 – Amendment of Taxation Administration Act

Clause 41. Act amended

The Act being amended by this Part is the Taxation Administration Act.

Clause 42. Amendment of section 158 (Collection and recovery of tax)

This clause ensures that the Commissioner can lodge a statutory charge on land the subject of a relevant acquisition prior to 1 January 2008, where a stamp duty liability is still outstanding.

This clause is necessary to rectify an oversight where the Commissioner’s power to place a statutory charge on land the subject of a pre-1 January 2008 landholder transaction had been effected by provisions introduced by the Taxation Administration Act on 1 January 2008.

Part 5 – Expiry of Act

Clause 43 provides that this Act will expire on the day after which it commences. As a result of the Interpretation Act, the day after which this Act commences is the day after which the last provision of this Act commences.

 


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