Northern Territory Explanatory Statements

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STAMP DUTY AMENDMENT BILL (NO. 2) 2005

STAMP DUTY AMENDMENT BILL (NO.2) 2005
SERIAL NO. 5

EXPLANATORY STATEMENT

GENERAL OUTLINE

The purpose of this Bill is to put in place several stamp duty measures announced as part of the 2005-06 Budget and a pre-election commitment to increase stamp duty home buyer concessions. In particular, the Bill provides for:

· an increase in the stamp duty first home owner concession from the first $125 000 of a property’s value to:

(i) the first $200 000 of a property’s value from 3 May 2005; and (ii) the first $225 000 of a property’s value from 20 June 2005.

· an increase in the stamp duty principal place of residence rebate from a maximum of $1 500 to a maximum of $2 500 from 20 June 2005

· the broadening of the ‘family farm’ stamp duty exemption to primary production property generally, including conveyances either to or from certain closely held family companies and trusts;

· the extension of the stamp duty exemption for motor vehicles registered in the name of a totally and permanently incapacitated war veteran to include extreme disabled adjustment war veterans; and

· an amendment consequential to the proposed abolition of electronic debit transaction duty by the Taxation (Administration) Amendment Bill (No.2) 2005.

NOTES ON CLAUSES

PART 1 – PRELIMINARY MATTERS

Clause 1. Short Title

This is a formal clause that provides for the citation of the Bill. The Bill when passed may be cited as the Stamp Duty Amendment Act 2005.

Clause 2. Commencement

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

Subclause (1) provides that Part 1 of the Bill (containing the preliminary provisions), except section 3, commences on the Administrator’s assent being declared.

Subclause (2) provides that Parts 2, 3 and 8 (relating respectively to the increase in the concession for first home owners to the first $200 000 of the property’s value, the family farms exemption and other minor amendments) and section 3 commence on 3 May 2005.

Subclause (3) provides that Parts 4 and 5 (relating respectively to the increase in the concession for first home owners to the first $225 000 of the property’s value and the increase in the principal place of residence rebate to $2 500) commence from 20 June 2005.

Subclause (4) provides that Parts 6 and 7 (relating respectively to the abolition of duty on electronic debit transactions and to veterans’ motor vehicle certificates of registration) are taken to have commenced on 1 July 2005.

Clause 3. Principal Act amended

This clause provides that the Bill amends the Stamp Duty Act.

PART 2 – AMENDMENTS RELATING TO INCREASE IN CONCESSION FOR FIRST HOME OWNERS

Clause 4. Amendment of section 8B (Concession for first home owners)

This clause provides for the stamp duty concession for first home owners increasing from the first $125 000 of a property’s value to the first $200 000. This represents an increase in the maximum concession to $6 800 from a maximum of $3 640.60 previously.

Clause 5. New Part 4

This clause inserts a new Part into the Stamp Duty Act entitled “PART 4 – TRANSITIONAL MATTERS FOR STAMP DUTY AMENDMENT ACT 2005”.

A new section 10 entitled “Application of Act from 3 May to 19 June 2005 to concession for first home owners” is inserted. New section 10(1) provides that, subject to new section 10(2), the increased first home owner concession will only apply to a conveyance executed on or after 3 May 2005 and before 20 June 2005.

New section 10(2) ensures that the increased concession will not apply to a conveyance executed on or after 3 May 2005 where:

· it replaces a conveyance executed before 3 May 2005 for the same or substantially similar land;

· the conveyee had an option, granted before 3 May 2005, to purchase the land; or

· the conveyor had an option, granted before 3 May 2005, to require the conveyee to purchase the land.

PART 3 – AMENDMENTS RELATING TO EXTENSION OF EXEMPTION FROM STAMP DUTY ON CONVEYANCE OF PROPERTY USED FOR FAMILY FARMING

Clause 6. Amendment of section 8E (Exemption from duty on conveyance of family farming property to family members, family companies or family trusts)

This clause amends section 8E of the Stamp Duty Act by:

· extending the existing exemption for the conveyance of pastoral property between family members to primary production property generally; and

· broadening the exemption by allowing it to be claimed where this property is conveyed either to or from certain closely held family companies and trusts.

Subclause (1) inserts definitions for the terms “beneficiary”, “primary production” and “scheme”.

Subclause (2) makes a consequential amendment to the definition of “family member” as a result of subclause (5).

Subclause (3) amends the definition of “family member” to correct an error relating to siblings, lineal descendents and their spouses.

Subclause (4) amends the definition of “farming purposes” by extending it from pastoral property to the business of primary production generally. As a consequence, the definition of “prescribed property” is extended to include property used solely or principally in the business of primary production.

Subclause (5) replaces section 8E(2) of the Stamp Duty Act with new sections 8E(2), 8E(2A), 8E(2B) and 8E(2C).

New section 8E(2) broadens the exemption to a conveyance of primary production property either to or from certain closely held companies and discretionary trusts. This is regardless of whether consideration passes between the parties. Previously the exemption was limited to a conveyance of pastoral property from and to natural person family members for no monetary consideration.

New section 8E(2A) provides the circumstances when the exemption in new section 8E(2) will apply if the conveyance of prescribed property is from a natural person (the “conveyor”), who does not hold the property as trustee.

As a result of these circumstances, the conveyor cannot retain a direct or indirect interest in the prescribed property after it is conveyed by being a shareholder of the company or by being a beneficiary of the trust receiving the property. This is because where the conveyee is a company or a trustee of a trust, the respective shareholders or beneficiaries must all be natural person family members of the conveyor (or the conveyor’s shareholders or beneficiaries). In addition, the shareholders of the conveyee company cannot hold those shares on trust. Similarly, where the conveyee is a trust, the trust deed must include clauses (that cannot be amended) providing that only family members of the conveyor can be beneficiaries of the trust and that no beneficiary may be a beneficiary in the capacity of trustee of another trust.

New section 8E(2B) provides the circumstances when the exemption in new section 8E(2) will apply if the conveyance of prescribed property is from a company that is not a trustee company (the "conveyor company").

As a result of these circumstances, the shareholders of the conveyor company and, where applicable, the beneficiaries of the conveyee trust and the shareholders of the conveyee company must all be natural person family members. This, together with the fact that if the conveyee is a company that the shareholders cannot hold the shares on trust, means that the conveyor company cannot retain a direct or indirect interest in the prescribed property after it is conveyed. Similarly, no shareholder of the conveyor company can be a beneficiary or shareholder of the conveyee company or trust.

New section 8E(2C) provides the circumstances when the exemption in new section 8E(2) will apply if the conveyance of prescribed property is from a trustee of a trust (the "conveyor trust").

As a result of these circumstances, the beneficiaries of the conveyor trust and, where applicable, the beneficiaries of the conveyee trust and the shareholders of the conveyee company must all be natural person family members. This means that the trustee of the conveyor trust cannot retain a direct or indirect interest in the prescribed property. Similarly, no beneficiary of the conveyor trust can be a beneficiary or shareholder of the conveyee company or trust.

Subclause (6) omits section 8E(3)(a) and (b) of the Stamp Duty Act as a consequence of subclause (5). Subclause (6) also substitutes a new paragraph (a), which provides that the exemption will not apply if the Commissioner is satisfied that the conveyance has the principal purpose of taking advantage of the exemption.

Subclause (7) clarifies that the conveyee or conveyees must intend to use the prescribed property solely or principally for farming purposes.

Subclause (8) makes a consequential amendment to section 8E(4) of the Stamp Duty Act as a result of subclause (5) and also ensures that section 8E(4) applies where there is a conveyance of part of the same prescribed property. That section seeks to limit a possible avoidance opportunity of using a chain of otherwise exempt conveyances.

Clause 7. New section 11

This clause inserts a new section 11 entitled “Application of Act from 3 May 2005 to conveyance of family farming property” into the Stamp Duty Act. New section 11 provides that the amendments to section 8E effected by the Bill (ie in respect of the ‘family farm’ exemption) only apply to instruments executed on or after 3 May 2005.

PART 4 – FURTHER AMENDMENTS RELATING TO INCREASE IN CONCESSION FOR FIRST HOME OWNERS

Clause 8. Amendment of section 8B (Concession for first home owners)

This clause provides for the stamp duty concession for first home owners increasing from the first $200 000 of a property’s value to the first $225 000. This represents an increase in the maximum concession to $8 015.60 from a maximum of $6 800 previously.

Clause 9. New section 12

A new section 12 entitled “Application of Act from 20 June 2005 to concession for first home owners” is inserted. New section 12(1) provides that, subject to new sections 12(2) and 12(3), the increased first home owner concession will only apply to a conveyance executed on or after 20 June 2005.

New sections 12(2) and 12(3) ensure that the increased concession will not apply to a conveyance executed on or after 20 June 2005 where:

· it replaces a conveyance executed before 20 June 2005 for the same or substantially similar land;

· the conveyee had an option, granted before 20 June 2005, to purchase the land; or

· the conveyor had an option, granted before 20 June 2005, to require the conveyee to purchase the land.

PART 5 – AMENDMENTS RELATING TO INCREASE IN REBATE FOR PRINCIPAL PLACE OF RESIDENCE

Clause 10. Amendment of section 8C (Rebate for principal place of residence)

This clause provides for the principal place of residence rebate (available to persons buying land on which there is or will be a home that they will live in) increasing from $1 500 to $2 500.

Clause 11. New section 13

A new section 13 entitled “Application of Act from 20 June 2005 to rebate for principal place of residence” is inserted. New section 13(1) provides that, subject to new section 13(2), the increased principal place of residence rebate will only apply to a conveyance executed on or after 20 June 2005.

New section 13(2) ensures that the increased rebate will not apply to a conveyance executed on or after 20 June 2005 where:

· it replaces a conveyance executed before 20 June 2005 for the same or substantially similar land;

· the conveyee had an option, granted before 20 June 2005, to purchase the land; or

· the conveyor had an option, granted before 20 June 2005, to require the conveyee to purchase the land.

PART 6 – AMENDMENT RELATING TO ABOLITION OF STAMP DUTY ON ELECTRONIC DEBIT TRANSACTIONS

Clause 12. Amendment of Schedule 1

This clause makes a consequential amendment to Schedule 1 to the Stamp Duty Act by omitting item 3B as a result of clause 7 of the Taxation (Administration) Amendment Bill (No.2) 2005 abolishing duty on electronic debit transactions. Accordingly, item 3B is no longer required as it specifies the rate of duty on liable debit transactions.

PART 7 – AMENDMENT RELATING TO EXTENSION OF EXEMPTION FROM STAMP DUTY ON VETERANS' MOTOR VEHICLE CERTIFICATES OF REGISTRATION

Clause 13. Amendment of Schedule 2

This clause extends the existing stamp duty exemption in item 37(m) of Schedule 2 to the Stamp Duty Act, for the registration or transfer of motor vehicle certificates of registration to totally and permanently incapacitated war veterans, by including extreme disabled adjustment war veterans.

PART 8 – OTHER AMENDMENTS

Clause 14. New Part 1 heading

This clause inserts a new Part heading entitled “PART 1 – PRELIMINARY MATTERS” before section 1 of the Stamp Duty Act.

Clause 15. New Part 2 heading

This clause inserts a new Part heading entitled “PART 2 – STAMP DUTY PROVISIONS” after section 3 of the Stamp Duty Act.

Clause 16. New Part 3 heading

This clause inserts a new Part heading entitled “PART 3 – MISCELLANEOUS MATTERS” after section 8H of the Stamp Duty Act.

 

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