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Duties Amendment (Landholder) Bill
2012
Introduction Print
EXPLANATORY MEMORANDUM
General
The Bill amends the Duties Act 2000 to make further provision for the
imposition of duty on the acquisition of interests in certain land holding
entities and for other purposes.
The Bill makes consequential amendments to the Planning and
Environment Act 1987.
The Bill amends the Financial Sector Reform (Victoria) Act 1999 as a
result of the change of name of the Financial Sector (Transfers of Business)
Act 1999 of the Commonwealth and for other purposes.
PART 1--PRELIMINARY
Part 1 of the Bill outlines the purposes of the Bill and contains the
commencement provisions.
Clause 1 outlines the purposes of the Bill.
Clause 2 provides for the commencement of the provisions in the Bill.
All provisions come into operation on 1 July 2012.
Clause 3 provides that the Duties Act 2000 is the Principal Act for the
purposes of this Act.
571199 1 BILL LA INTRODUCTION 1/5/2012
PART 2--AMENDMENTS TO THE DUTIES ACT 2000
Part 2 of the Bill makes amendments to certain definitions in the Duties Act
2000 and other amendments relevant to Chapter 2 of the Duties Act 2000.
Division 1--Definitions
Clause 4 Subclause (1) amends current definitions and inserts new
definitions in section 3 of the Duties Act 2000. The definitions
amended or inserted by paragraph (a) are as follows--
associated transaction, in relation to the acquisition of an interest
in a landholder by a person, means an acquisition of an interest in
the landholder by another person in circumstances in which--
those persons are acting in concert; or
the acquisitions form, evidence, give effect to or arise
from substantially one arrangement, one transaction or
one series of transactions.
The definition of associated transaction was previously found in
section 79 of the Duties Act 2000 and has been moved to the
section 3 of the Duties Act 2000 without any amendments to its
content.
economic entitlement, in Part 2 of Chapter 3, has the meaning
given by new section 81(2).
equivalent exchange means a recognised stock exchange
operating in Australia which imposes the minimum requirements
set out in subsection (4A) on an entity applying for quotation of
its securities on the relevant market. This definition is
particularly relevant to the definitions of listed company and
listed trust as it clarifies one of the pre-conditions for being a
listed company or listed trust for the purposes of the Duties Act
2000 and the operation of the landholder duty provisions. New
section 3(4A) of the Duties Act 2000 outlines the minimum
requirements.
linked entity has the meaning given by new section 75.
listed company is defined by reference to quotation of a
corporation's shares on the ASX, or an equivalent exchange,
or on an exchange of the World Federation of Exchanges.
The definition is similar to that for listed trust and is necessary
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as listed entities may be landholders for the purposes of the
landholder provisions.
market capitalisation means the total market value of an entity's
issued securities, calculated by multiplying the number of the
entity's issued securities by the current market value of one of
those securities.
net tangible assets means the value determined by calculating the
value of the total assets of an entity, less the value of its total
liabilities and the value of any intangible assets.
The definitions of market capitalisation and net tangible
assets are relevant to the minimum requirements set out in
subsection (4A) that an exchange must meet in order to qualify
as an equivalent exchange.
Paragraph (b) inserts new paragraphs (j) and (k) into the
definition of associated person.
Paragraph (j) provides that trustees are associated persons if
one of the trustees is a beneficiary of the trust (not including a
public unit trust scheme) of which the other trustee is a trustee.
This ensures trustees of holding/subsidiary unit trust schemes are
treated as associated persons.
Paragraph (k) provides that persons are associated persons if one
of those persons is an associated person of a person of whom the
other of those persons is an associated person (including a person
that is an associated person of the other of those persons because
of one or more other applications of the paragraphs in this
definition). For example, Mr X is the sole director and
shareholder of Company A. Paragraph (k) ensures that
Company A and Mrs X will now be treated as associated persons.
Paragraphs (c) and (d) amend the definitions of listed trust and
private company due to the introduction of a definition of
equivalent exchange.
Paragraph (e) amends the definition of public unit trust scheme
to remove the reference to a registered imminent public unit trust
scheme.
Paragraph (f) repeals the definition of registered imminent
public unit trust scheme.
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Paragraph (g) inserts a new paragraph (f) into the definition of
related person. Paragraph (f) provides that persons are related
persons if one of those persons is a related person of a person of
whom the other of those persons is a related person (including a
person that is a related person of the other of those persons
because of one or more other applications of the paragraphs in
this definition). This mirrors paragraph (k) inserted into the
definition of associated person.
Paragraph (h) repeals paragraphs (a) and (c) of the definition of
widely held trust. This has removed the requirement that the unit
trust scheme must be a registered managed investment scheme, in
which units have been offered to the public under a prospectus or
product disclosure statement lodged with ASIC. Instead, the
definition now focuses on the number and spread of the public
unit holders in the trust.
Subclause (2) amends section 3(4) of the Duties Act 2000.
Paragraph (a) amends section 3(4)(a) to reflect the new definition
of equivalent exchange. It now requires the Commissioner to
make a declaration in regard to a unit trust listed on an exchange
of the World Federation of Exchanges (other than the ASX or an
equivalent exchange) for it to be considered a listed trust for the
purposes of the Act.
Paragraph (b) of subclause (2) inserts a new paragraph (ab) into
section 3(4) of the Duties Act 2000 on the basis that a listed
company may now be a landholder for the purposes of Chapter 3.
This allows the Commissioner to declare that a corporation
whose shares are quoted on an exchange of the World Federation
of Exchanges (other than the ASX or an equivalent exchange) is
to be considered a listed company for the purposes of the Act.
Subclause (3) inserts a new section 3(4A) after section 3(4) of the
Duties Act 2000 which sets out the minimum requirements to be
met by an exchange to qualify as an equivalent exchange for the
purposes of the Duties Act 2000. The requirements are--
the entity must lodge a prospectus or product disclosure
statement (or an equivalent document approved by the
exchange) with the Australian Securities and
Investments Commission; and
the entity must have at least 400 security holders each
having a parcel of the main class of securities on issue
with a value of at least $2000 and persons who are
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associated persons of the entity must hold no more than
25% of the total number of securities in the main class
of securities or alternatively, the entity must have at
least 500 security holders each having a parcel of the
main class of securities on issue with a value of at least
$2000; and
the entity must have net tangible assets of at least
$2 000 000 at the time of listing or a market
capitalisation of at least $10 000 000.
Division 2--Amendments to Chapter 3 of the Duties Act 2000
This section of the Bill makes amendments to the Duties Act 2000 to
introduce a landholder duty model in Victoria in place of the current land rich
duty model.
Clause 5 substitutes new Parts 1 and 2 into Chapter 3 of the Duties Act
2000.
The main function of this clause is to substitute the "land rich"
provisions in Chapter 3 of the Duties Act 2000, which impose
duty on the acquisition of interests in certain land rich companies
and unit trusts, with "landholder" provisions which impose duty
on certain acquisitions of interests in land holding private and
listed companies and trusts, and wholesale unit trust schemes.
The new Part 1 substitutes section 70 and provides for the
imposition of duty. New section 70 introduces and explains the
operation of Chapter 3. In particular, it notes that Chapter 3
charges duty at the same rate as for a transfer of dutiable property
under Chapter 2 on certain acquisitions of interests in
landholders.
A note to section 70 is inserted with a broad overview as to the
operation of Chapter 3, providing that--
duty is chargeable under Part 2 on the acquisition by a
person of certain interests in private landholders and
public landholders that have land holdings in Victoria
with an unencumbered value of $1 million or more;
the duty is chargeable at the general rate for a dutiable
transaction under Chapter 2;
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duty was chargeable under Parts 3 and 4 on certain
transactions occurring before 1 July 2002;
duty is charged under Part 5 on the allotment of units or
shares that confer a land use entitlement.
Part 2 of Chapter 3 is substituted with a new Part 2 which
contains the landholder provisions.
The structure of the landholder provisions is--
Division 1--Landholders--explains the type of
landholding structure targeted by the landholder
provisions and how to determine if a company or unit
trust owns or is entitled to the requisite $1 million land
holdings in Victoria.
Division 2--Charging of Duty--explains what are
interests and significant interests in landholders, and
how an interest may be acquired. It also addresses
issues such as when a liability arises, what is a relevant
acquisition and how duty is charged on relevant
acquisitions in private and public landholders. It also
contains provisions dealing with the acquisition of an
economic entitlement or control for duty purposes.
Division 2 also contains provisions dealing with the
conversion of a private company to a listed company, or
a private unit trust scheme to a public unit trust scheme.
Division 3--Exemptions and concessions--lists the
types of acquisitions that are exempt. It also contains a
number of concessions.
Division 4--Valuation and supplementary
calculation provisions--This Division includes
miscellaneous provisions relevant to working out a
person's entitlement in respect of a landholder, valuation
of land holdings, and arrangements relating to
re-purchase facilities in widely held trusts and
wholesale unit trust schemes.
Division 5-- Tax avoidance schemes--contains an
anti-avoidance provision that applies generally across
the landholder provisions.
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Division 6--Registration of unit trust schemes--
contains the machinery provisions for registration of
certain unit trust schemes.
New Division 1 of Part 2 of Chapter 3 of the Duties
Act 2000--Landholder
This Division establishes the type of landholding structure
targeted by the landholder provisions and provides how to
determine if a company or unit trust owns or is entitled to the
requisite land holdings with an unencumbered value of
$1 000 000 or more in Victoria.
New section 71 inserts the meaning of landholder. A landholder
is any of the following that has land holdings in Victoria with a
total unencumbered value of $1 000 000 or more--
a private unit trust scheme;
a private company;
a wholesale unit trust scheme;
a listed company;
a public unit trust scheme.
Subsection (2) provides that for the purposes of this Part, a
landholder may hold land in accordance with section 72, under an
uncompleted agreement in accordance with section 74, through a
linked entity in accordance with section 75 and through a
discretionary trust in accordance with section 76.
Subsection (3) defines a private landholder to be a landholder
that is a private unit trust scheme, private company or wholesale
unit trust scheme.
Subsection (4) defines a public landholder to be a landholder
that is a listed company or a public unit trust scheme.
New section 72 defines a land holding as an interest in land, with
exclusions relevant to interests of creditors or the right to use the
land under a profit à prendre.
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Subsection (2) excludes non-beneficial interests in land from the
definition of land holding by requiring--
the interest be held by the trustee of a unit trust scheme
on trust for the scheme, or by a custodian or other agent
of the trustee of the scheme on trust for the trustee of the
scheme; or
a company to hold it beneficially.
New section 73 deals with the meaning of land for the purposes
of the landholder provisions.
Subsection (1) specifies that land includes anything fixed to the
land, whether or not the item--
constitutes a fixture at law; or
is owned separately from the land; or
is notionally severed or considered to be legally separate
to the land as a result of the operation of any other Act
or law.
This provision deems any item which is fixed to land to be
included within the definition of land and adopts the common
law relating to fixtures. It also brings within the meaning of land
those items which are owned separately from land, or which are
notionally severed from the land pursuant to statute.
Subsection (2) provides that a thing can be fixed to land by virtue
of a physical connection with that land. A physical connection to
land will ordinarily require something more than the item merely
resting on the land on its own weight. However, in some
circumstances, items resting by their own weight will be regarded
by the common law as being fixtures. Where this occurs,
paragraph (a) of the definition in subsection (1), will ensure that
these items will also be fixtures for the purposes of the
landholder provisions.
Subsection (3) clarifies the status of tenant's fixtures.
Section 22A of the Duties Act 2000 essentially provides that the
value of tenant's fixtures are included in the value of land unless
the Commissioner is satisfied the fixtures are not sold or
transferred to the purchaser, the transferee of the land or an
associated person of the purchaser or the transferee of the land.
Subsection (3) provides that items which are tenants fixtures
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within the meaning of section 22A are included within the
meaning of land for the purpose of the landholder provisions.
Subsection (4) provides an exclusion from the concept of fixtures
for items that are goods within the meaning of section 10(1)(d)
of the Duties Act 2000. This provides for consistency in the
treatment of goods in Chapter 2 of the Duties Act 2000 with the
treatment of goods under the landholder duty model.
Subsection (5) provides the Commissioner with a discretion to
determine that land does not include an item fixed to land in the
circumstances specified. This is directed at alleviating any harsh
consequences that might arise because of the potential breadth of
paragraphs (b) and (c) in the definition of land in subsection (1).
The Commissioner may determine that an item is not a fixture
where the item is owned by a person who is not the person who
owns the land, and the item is not used in connection with the
land. This exclusion does not apply where the item is owned by
an associated person of the person who owns the land.
Two examples relating to the operation of subsection (5) are set
out below--
Example 1:
Land owned by A has a silo fixed to it which is subject to a sale
and leaseback arrangement with D. As such, the silo is owned
separately from the land. A operates a farming business on the
land, and uses the silo in connection with that farming business.
In that case, the Commissioner would not exercise his discretion
under subsection (5), and the silo would be treated as a fixture for
the purposes of the landholder provisions even though it is
separately owned from the land.
Example 2:
Land owned by B has four wind turbines on it, which are
separately owned by C. B grazes cattle on the land for the
purpose of its grazing business but does not use the turbines.
B and C are not associated persons. In this situation, the
Commissioner would exercise his discretion and determine that
the wind turbines are not included as land for the purposes of the
landholder provisions.
New section 74 provides for the effect of an uncompleted
agreement. It is a revenue protection provision designed to
prevent an entity from defeating the landholder provisions by
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entering into an agreement to sell land so that, at the time of an
acquisition of an interest in that entity, it will not hold, or be
entitled to, $1 000 000 land in Victoria. This section must be
considered together with section 89I. On completion of the
agreement, the Commissioner may review its outcome and this
may result in a reassessment and refund depending on the effect
of completion.
Subsection (1) states that both the vendor and purchaser under an
uncompleted agreement for the sale of land are taken to be
entitled to the whole of the land.
Subsection (2) provides that, for the purposes of this Part--
a reference to a vendor includes a reference to the
grantee of a put option or the grantor of a call option;
a reference to a purchaser includes a reference to a
person who holds a transfer right within the meaning of
Part 4A of Chapter 2 or the grantor of a put option or
the grantee of a call option;
a reference to an uncompleted agreement includes a
reference to an arrangement that includes both a put and
a call option.
New section 75 provides for constructive ownership of land
holdings through linked entities.
This section is relevant for determining the land holdings to
which a landholder is entitled through linked entities. Duty is
imposed on the value of an entity's land holdings, being both the
land holdings an entity owns and land holdings an entity is
entitled to through linked entities.
The constructive ownership provisions are "tracing provisions"
aimed at addressing situations where a landholder has
entitlements to land through it being held in other entities.
These provisions are necessary to ensure that land holdings in
other entities are included as land holdings of the landholder.
This section facilitates a "look through" of any land holding
structures (linked entities), whether they be linked to the
landholder or to other entities linked to the landholder or to each
other. A notional winding up of all such entities is conducted and
land holdings are taken into account if 20% or more of the land
would ultimately be received by the landholder as a result.
10
In effect, the section requires the Commissioner to look at any
land held separately from the landholder and if 20% or more of it
would move up to the landholder if any holding structures were
wound up, it is to be included. The relevant entitlement of the
landholder is to the land, not necessarily to any linked entity.
Subsection (1) establishes that a landholder holds land if the
landholder is taken under this section to be entitled to land
through a linked entity.
Subsection (2) specifies that land held because of subsection (1)
is in addition to land (if any) that the landholder holds in its own
right.
Subsection (3) establishes the notional winding-up procedure
referred to above.
Subsection (4) specifies when a landholder is entitled to land
through linked entities. It is not necessary for the landholder to
have any interest in linked entities for it to be entitled to the land;
all that is required is that the landholder would receive a
distribution of any of the property held by any of the linked
entities.
Subsection (5) limits the extent to which land is traced up to the
landholder to 20% or more being ultimately received.
Subsection (6) clarifies the value of the interest in land that a
landholder is taken to hold though a linked entity.
Subsection (7) defines linked entity, person and winding up.
New section 76 provides for constructive ownership of land
holdings through discretionary trusts.
If a landholder were a beneficiary under a discretionary trust,
it would have no present entitlement to any trust property.
The section deems a beneficiary to own or to be otherwise
entitled to all of the land the subject of the discretionary trust.
In matters where this would produce unjust results, the
Commissioner may determine the beneficiary has a lesser or
no interest.
Subsection (1) defines a beneficiary of a discretionary trust.
Subsection (2) deems a beneficiary of a discretionary trust to be
entitled to the land of the trust except to the extent (if any)
determined by the Commissioner.
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Subsection (3) deals with a trustee of a discretionary trust being a
beneficiary of another discretionary trust.
Subclauses (4) and (5) aid the operation of the section.
Subclause (6) defines a person to include a landholder and a
linked entity.
A note to new section 76 provides that a discretionary trust is
defined in section 3 of the Duties Act 2000.
New Division 2 of Part 2 of Chapter 3 of the Duties
Act 2000--Charging of Duty
This Division explains what are interests and significant
interests in landholders and how an interest may be acquired.
It addresses issues such as when a liability arises, what is a
relevant acquisition and how duty is charged on relevant
acquisitions in private and public landholders. It contains
provisions dealing with the acquisition of an economic
entitlement or control for duty purposes. Division 2 also
contains provisions dealing with the conversion of a private
company to a listed company or a private unit trust scheme to a
public unit trust scheme.
New section 77 provides that liability for duty arises when a
relevant acquisition (described in section 78) is made.
New section 78 defines the term relevant acquisition. It explains
when acquisitions in a landholder give rise to a relevant
acquisition, which is the acquisition of a significant interest (see
section 79) or a further interest. Not all interests acquired in a
landholder are relevant acquisitions. Subclause (1) sets out how
to determine if a person has made a relevant acquisition in a
landholder.
Subclause 78(1)(a) specifies how a significant interest may be
acquired, either by--
a single acquisition of an interest which itself is a
significant interest; or
the aggregation of interests acquired in the landholder
by all or any of the following--
the person; or
an associated person (see section 3 definition); or
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any other person in an associated transaction
(see section 3 definition).
A key change under the landholder provisions is the removal of
the three year aggregation rule. Consequently all acquisitions
(either by associated persons or in an associated transaction) are
to be aggregated and taken into account in determining whether a
person has acquired a significant interest and made a relevant
acquisition.
Example:
In Year 1, Person A acquires a 30% interest in a private
landholder (e.g. a private company). In Year 5, Person A
acquires another 30% interest in the private company. As a
result, Person A has acquired a significant interest in the private
landholder (60%) and made a relevant acquisition. Landholder
duty is payable on the relevant acquisition, however duty is only
calculated with reference to the interest(s) acquired in the three
year period prior to the relevant acquisition which occurred in
Year 5 (see section 86). Therefore duty would only be payable
on the 30% interest acquired by Person A in Year 5.
Subsection 78(1)(b) describes when a person acquires a further
interest. It specifies that, after an interest referred to in subclause
78(1)(a) was acquired, a subsequent interest acquired by the
person, an associated person or any other person whose interest
was aggregated with the interest under paragraph subclause
78(1)(a)(ii), is a further interest in the landholder which is also
a relevant acquisition.
A note to new section 78 provides that an associated person and
associated transaction are defined in section 3 of the Duties Act
2000.
Subsections (2) and (3) provide the Commissioner with a
discretion to not treat a person as an associated person of another
person in certain circumstances (for the purposes of acquisitions
which are aggregated under subclause 78(1)(a)(ii) or(b)).
An exception to this is if the persons are related bodies corporate.
Subsection (4) provides that, for the purposes of Part 2, persons
in their capacity as qualified investors of a wholesale unit trust
scheme are taken not to be associated persons of other qualified
investors in relation to acquisitions of interests in the scheme.
13
Subsection (5) provides that the interests specified are excluded
when determining if a relevant acquisition has been made.
New section 79 defines what type of interest in a landholder is
relevant for the landholder provisions, and what is required for
a person to hold a significant interest in a landholder.
Subsection (1) specifies that a person has an interest in a
landholder if the person has an entitlement, whether directly or
through another person, to a distribution of property from the
landholder on a winding up of the landholder.
Subsection (2) defines what a significant interest in a landholder
is. In the case of a landholder that is--
a private unit trust scheme, it is 20% or more;
a private company or a wholesale unit trust scheme, it is
50% or more; and
a listed company or public unit trust scheme, it is 90%
or more.
Subsection (3) provides that, for the purposes of section 79, a
person includes a landholder and the winding up of a landholder
that is a unit trust scheme means the vesting of the trust property
in the beneficiaries.
A note to new section 79 provides that section 89H of the Duties
Act 2000 is relevant to ascertaining a person's entitlements on a
distribution of property.
New section 80 describes how a person may acquire an interest
(as described in section 79).
Subsection (1) states the interest must be acquired beneficially
but can be acquired by any means.
Subsection (2) lists some means by which interests may be
acquired, but is not exhaustive.
Subsection (3) clarifies that where an interest in a land rich
landholder is acquired by a trustee, the trustee (in addition to the
beneficiaries) will be taken to have obtained an interest
beneficially.
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Subsection (4) specifies that a trustee who holds or acquires an
interest in a landholder is to be treated as a separate person in
respect of each trust of which the trustee is a trustee and the
personal capacity of the trustee, if any.
Subsection (5) clarifies that, in addition to subsection (1), a
person who holds an interest in a landholder acquires an interest
if the capacity in which the person holds the interest changes.
Subsection (6) provides that an acquisition of an interest referred
to in subsection (5) is to be treated as a separate acquisition from
existing interests held by the acquirer.
Subsection (7) is cautionary in specifying it is not necessary to
acquire units or shares by way of transfer to acquire an interest in
a landholder.
New section 81 provides for the acquisition of economic
entitlements.
Section 81 is a method by which a relevant acquisition can be
made and is anti-avoidance in nature. It operates to impose duty
on transactions where the economic benefit of the ownership of
land is acquired, whether directly or indirectly, other than by
means of a relevant acquisition of an interest dutiable under
Chapter 3. Section 81 applies in respect of private landholders.
It does not apply in respect of public landholders.
A person can acquire an economic entitlement through the
acquisition of shares or units in a landholder or as a result of an
arrangement in relation to a landholder under which the person is
entitled--
to participate in the dividends or the income of the
private landholder; or
to participate in the income, rents or profits derived
from the land holdings of the private landholder; or
to participate in the capital growth of the land holdings
of the private landholder; or
to participate in the proceeds of sale of the land holdings
of the private landholder; or
to receive any amount determined by reference to (a),
(b), (c) or (d); or
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to acquire any entitlement to receive any amount
determined by reference to any of the above in the
future.
The interest acquired under an economic entitlement is the
proportion of the economic benefit referred to in the subsections
above that the person is entitled to receive or acquire under the
economic entitlement. The interest acquired under an economic
entitlement that relates to 2 or more of the economic benefits
referred to above is the proportion of the total of those economic
benefits that the person is entitled to receive or acquire under the
economic entitlement.
The acquisition of an economic entitlement will give rise to a
liability for duty where the entitlement acquired amounts to an
interest of 50% or more in a private landholder. If the interest
acquired is 50% or more, the person is taken to have made a
relevant acquisition of that percentage or such other lesser
percentage which is determined by the Commissioner to be
appropriate in the circumstances.
Duty on a relevant acquisition of an economic entitlement is
calculated at the transfer rate of duty in accordance with
section 86, as if the landholder was a private landholder. Duty is
calculated on all acquisitions of economic entitlements made
by the person or associated persons (or both) within 3 years.
For calculation purposes, the reference in section 86 to all the
land holdings of the landholder in Victoria is a reference to the
land holdings of the landholder to which the economic
entitlement relates.
New section 82 provides for the acquisition of control.
Section 82 contains the control provision. This provision existed
under the former land rich duty provisions, and deals with
circumstances whereby, without acquiring a significant interest,
a person obtains control over a private landholder by another
means. For example, the holders of interests may cede control
to the person and make such arrangements in respect of their
interests that would allow the person to benefit or exercise rights
which could confer benefits similar to holding an interest. It does
not apply in respect of public landholders.
In such cases, the person is taken to have acquired a relevant
acquisition of 100% or a lesser percentage as determined by the
Commissioner to be appropriate in the circumstances.
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Control is defined as a capacity to determine or influence the
outcome of decisions about the landholder's financial and
operating policies.
New section 83 specifies that, if a relevant acquisition is made,
an acquisition statement must be prepared and lodged within 30
days of the relevant acquisition.
Subsection (1) imposes this requirement on either or both the
person who made the acquisition and the landholder, or if the
landholder is a unit trust scheme, on the trustee of the landholder.
Subsection (2) specifies the details to be included in the
statement.
Two notes are inserted at the foot of section 83 that provide--
In ascertaining whether or not a liability to lodge a
statement under this section exists, it is necessary to
have regard to provisions of this Part that deal with--
acquisitions generally (section 80); and
acquisitions that are exempt from the operation
of this Part (section 89D).
There is joint and several liability for the duty as
between the person lodging the acquisition statement
and others--see section 85.
New section 84 requires duty to be paid within 30 days after the
liability arises (being when a relevant acquisition is made
(see section 77)).
New section 85 provides for liability to pay the duty.
Under subsection (1), those liable to pay the duty are--
the person who made the relevant acquisition; and
the landholder; and
any person whose interests were aggregated in arriving
at a relevant acquisition (see section 78).
The liability is joint and several amongst those persons.
Subsection (2) allows for recovery of duty and any penalty from
the acquirer.
New section 86 provides how duty is charged on relevant
acquisitions in private landholders.
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Subsection (1) charges duty on a relevant acquisition in a private
landholder at the general transfer rate (see section 28) on a
proportion of the value of the landholder's land holdings in
Victoria which represents the same proportionate interest in the
landholder represented by the relevant acquisition.
Subsection (2) provides that if a relevant acquisition results from
the aggregation of an interest acquired by a person, associated
person or any person in an associated transaction, the reference to
interest acquired in the charging provision is a reference to any
interest acquired by those persons on the same day.
Subsection (3) provides that the charging provision applies to all
acquisitions made within the 3 years preceding the relevant
acquisition and on the date of the relevant acquisition.
Subsection (4) specifies how duty is charged if the relevant
acquisition is the acquisition of a further interest. In order to
impose duty on this interest at the duty rate applicable to the total
interest now held by the person, the formula is--
calculate duty on an aggregation of the further interest
and all prior interests by the person including associated
persons;
perform another calculation of duty on the prior
interests;
deduct (b) from (a) to arrive at the duty on the further
interest.
New section 87 outlines how a concessional rate of duty is
charged on relevant acquisitions in public landholders.
A duty liability arises if there is a relevant acquisition of 90% or
more in a listed entity, widely held trust or declared public unit
trust scheme. Duty on relevant acquisitions in these entities is
calculated differently from that for private entities. A significant
duty concession is provided in relation to relevant acquisitions in
public landholders. The duty chargeable is 10% of the duty that
would be chargeable, at the general transfer duty rate, on a
transfer of all the land holdings of the landholder in Victoria
(calculated as if the transfer had occurred at the date of relevant
acquisition).
all land holdings in
Duty = 10% × rate of duty × Victoria at date of
relevant acquisition
18
As a result, once duty has been charged on a relevant acquisition
in a public landholder, no duty is chargeable in respect of any
subsequent acquisitions (ie. further interests) made by that person
in that listed landholder (ie. the remaining 10% or less).
This provides administrative ease for taxpayers, in that they only
have to lodge one acquisition statement when making a relevant
acquisition in a public landholder. No further acquisition
statements need to be lodged when a person makes subsequent
acquisitions which take the person's total interest up to 100%.
Subsection (2) clarifies that the duty calculation in subsection (1)
applies regardless of whether or not the acquisition amounts to a
100% interest in the landholder. This is necessary as a person
only needs to acquire a 90% interest in the landholder to make a
relevant acquisition and be liable for duty. The manner in which
the duty concession operates in subsection (1) is to impose duty
at a concessional rate calculated on 100% of the land holdings of
the landholder (rather than the percentage interest actually
acquired by the person).
Subsection (3) complements subsection (1) and (2), and clarifies
the duty consequences when a person has made a relevant
acquisition in a public landholder. That is, when a person
acquires subsequent interests in the landholder (up to a maximum
interest of 100%) after making a relevant acquisition, no further
duty is chargeable.
New section 88 outlines how duty is charged on relevant
acquisitions in public landholders when certain requirements are
not met and the concessional rate of duty does not apply.
Section 88 is an anti-avoidance measure designed to prevent
manipulation of the significant duty concession being offered on
the takeover of listed companies and trusts, widely held trusts and
declared public unit trust schemes. Therefore, the concessional
rate of duty under section 87 will not be available when, at the
date of the relevant acquisition--
in the case of a listed trust or company, it has been listed
for less than 12 months; or
in the case of a registered declared public unit trust
scheme, it has been registered for less than 12 months;
or
19
in the case of a widely held trust, it has satisfied the
statutory definition for less than 12 months.
In any of these circumstances, the public landholder will be
treated as a private landholder and duty calculated in accordance
with section 86. As a result, full duty would be payable on the
acquisition of a 90% or more interest in the public landholder
(rather than the concessional 10% rate of duty).
New section 89 provides a concessional duty taper formula where
the value of the landholder's land holdings in Victoria is between
$1 000 000 and $2 000 000. It ameliorates the "sudden death"
impact of duty being charged on a land value of $1 000 000.
The effect is to charge no duty at $1 000 000, progressively
increasing to full duty as the value of $2 000 000 is reached.
New section 89A gives credit in respect of marketable security
duty, if paid to Victoria or another State or Territory in acquiring
the interest in the landholder by way of shares or units.
New section 89B provides for the duty treatment when a
conversion of a private unit trust scheme to a public unit trust
scheme occurs.
The former land rich duty provisions contained a conversion
provision which imposed duty on the conversion of a private unit
trust scheme to a public unit trust scheme. This provision, which
was an anti-avoidance measure, was intended to apply to
arrangements whereby the conversion of the scheme effectively
constituted a sale of the underlying property of the trust (the
existing unit holder(s) would get paid out and are substituted by
public unit holders).
One of the policy changes under the landholder model has been
to expressly bring listed entities within the tax base. This has
impacted on the policy underlying the conversion provisions (as
they existed under the former land rich model). The conversion
of a private unit trust or a private company to a public landholder
is no longer viewed as a duty avoidance practice. As a result, it
is intended that the conversion of a private unit trust or a private
company to a public landholder should be taxed on the same
basis as relevant acquisitions in public landholders under the
landholder model. Therefore, when a private unit trust or private
company converts to a public landholder, duty will be chargeable
at a concessional 10% rate of duty that is afforded to public
landholders.
20
A private unit trust converts to a public unit trust once it becomes
either a listed trust, a widely held trust or a registered declared
public unit trust scheme.
The conversion provision has been significantly simplified.
Under subsection (1), if under an agreement or arrangement a
private unit trust scheme becomes, through whatever means, a
public unit trust scheme, duty will be imposed.
When such a conversion occurs, subsection (2) provides that all
acquisitions of interests in the unit trust scheme under the
agreement or arrangement by which the conversion occurred are
together taken to have been a relevant acquisition of 100% in a
public unit trust scheme.
Subsection (3) states that for the purposes of subsection (2), a
relevant acquisition is taken to have been made on the acquisition
of the last interest under the agreement or arrangement.
Subsection (4) provides that the trustee of the public unit trust
scheme must--
prepare an acquisition statement and lodge it with the
Commissioner within 30 days after the date of the
relevant acquisition; and
pay the duty chargeable (if any) on the relevant
acquisition, being 10% of the duty that would be
chargeable, at the rate specified under this Act for a
transfer of dutiable property, on a transfer of all the land
holdings of the landholder in Victoria (calculated on the
unencumbered value of the land holdings at the date of
the relevant acquisition).
Subsection (5) provides that a tax default occurs if the duty
assessed under subsection 3(b) is not paid within 30 days after
the liability arose. For administrative ease, and in recognition
that there are likely to be many acquirers, the duty is payable by
the trustee of the public unit trust scheme.
Subsection (6) prevents corporate reconstruction relief from
applying to this section.
New section 89C provides for the duty treatment when a
conversion of a private company to a listed company occurs.
21
As listed companies are now expressly within the tax base under
the landholder model, it is equitable to align the duty treatment
for the conversion of a private company to a listed company with
that for the conversion of a private unit trust scheme to a public
unit trust scheme.
Under subsection (1), if under an agreement or arrangement a
private company becomes, through whatever means, a listed
company, duty will be imposed.
When such a conversion occurs, subsection (2) provides that all
acquisitions of interests in the company under the agreement or
arrangement by which the conversion occurred, are together
taken to have been a relevant acquisition of 100% in a listed
company.
Subsection (3) states that for the purposes of subsection (2), a
relevant acquisition is taken to have been made on the acquisition
of the last interest under the agreement or arrangement.
Subsection (4) provides that the listed company must--
prepare an acquisition statement and lodge it with the
Commissioner within 30 days after the date of the
relevant acquisition; and
pay the duty chargeable (if any) on the relevant
acquisition, being 10% of the duty that would be
chargeable, at the rate specified under this Act for a
transfer of dutiable property, on a transfer of all the land
holdings of the landholder in Victoria (calculated on the
unencumbered value of the land holdings at the date of
the relevant acquisition).
Subsection (5) provides that a tax default occurs if the duty
assessed under subsection 3(b) is not paid within 30 days after
the liability arose. The duty is payable by the listed company.
Subsection (6) prevents corporate reconstruction relief from
applying to this section.
22
New Division 3 of Part 2 of Chapter 3 of the Duties
Act 2000--Exemptions and Concessions
Division 3 lists the types of acquisitions that are exempt. It also
contains a number of concessions.
New section 89D sets out the circumstances under which an
acquisition by a person of an interest in a landholder will be an
exempt acquisition as follows--
if the way the interest was acquired would have resulted
in no ad valorem duty under Chapter 2 had the
acquisition been of the landholder's land (e.g. by
distribution from a deceased person's estate (see
section 42));
if the interest was acquired by the person in the capacity
as trustee or receiver in bankruptcy, liquidator or an
executor or administrator of a deceased estate;
if the interest was acquired under a compromise or
arrangement (conditions apply);
if the interest was acquired as part of a pro rata
allocation to all unit holders or shareholders.
New section 89E provides a concession from duty in
circumstances where the Commissioner is satisfied that there is
an anomalous duty outcome arising from the application of Part 2
of Chapter 3 to a particular transaction and, because of that
anomaly, the duty payable under Chapter 3 is greater than the
duty that would have been payable under Chapter 2 if the subject
of the acquisition had been a direct transfer of the land. In these
circumstances, the Commissioner has a discretion to reduce the
duty payable on the acquisition under Chapter 3 to an amount
which is not less than the duty that would have been payable
under Chapter 2 had the subject of the acquisition been a direct
transfer of the land to the person. If a higher duty outcome is
intended from the operation of Chapter 3, then no concession is
available.
New section 89F provides a duty concession for acquisitions
made solely for the purpose of securing the provision of finance.
23
The scope and operation of the duty concession relating to
finance arrangements has been revised under the landholder
model. The focus of the concession is on a relevant acquisition
which is made solely for the purpose of the transferor
(as borrower) securing the repayment of finance which is
provided by the acquirer of the interest or economic entitlement
(in its capacity as lender).
The concession is available when the Commissioner is satisfied
that a relevant acquisition is made solely for the purpose of
securing the provision of finance and the person acquiring the
interest or economic entitlement is providing finance to the
person from whom the interest is acquired. In those
circumstances, the relevant acquisition is not chargeable with
duty.
Subsection (2) requires the person lodging the acquisition
statement to inform the Commissioner at the time of lodgement
that the acquisition is effected solely for the purpose of the
provision of finance by the person acquiring the interest to the
person from whom the interest is acquired.
Under subsection (3), the relevant acquisition is chargeable with
duty if the interest concerned is not re-acquired by the person
from whom it was acquired or, in the case of an acquisition by
way of mortgage, the interest is not conveyed by the mortgagee
to a third person in exercise of the mortgagee's power of sale.
Subsection (3) applies if the above transactions do not occur by
the end of a five year period after the date of the relevant
acquisition. The Commissioner has the authority to allow a
longer period in a particular case.
Subsection (4) confirms that a re-acquisition by a person of the
interest concerned is not a relevant acquisition.
New Division 4 of Part 2 of Chapter 3 of the Duties
Act 2000--Valuation and Supplementary Calculation
Provisions
This Division includes miscellaneous provisions relevant to
working out a person's entitlement in respect of a landholder,
valuation of land holdings, and arrangements relating to re-
purchase facilities in widely held trusts and wholesale unit trust
schemes.
New section 89G provides for the valuation of land holdings.
24
Subsection (1) states that the ordinary provisions of Chapter 2 for
valuing transfers of dutiable property apply in the same way to
valuing a land holding relating to a relevant acquisition.
Subsections (2) and (3) allow any arrangement designed to
reduce the value of a land holding to be disregarded unless the
Commissioner determines otherwise after being satisfied it was
not made to reduce the duty on a relevant acquisition.
Subsection (4) specifies matters to be taken into account in
making such a determination.
New section 89H addresses circumstances where a person who
has an interest in a landholder possesses rights that if utilised may
increase the person's entitlement to distribution on a winding up.
This entitlement is the basis for an interest in a landholder (see
section 79).
Such rights may include a power to change the voting rights such
that the person's entitlement may be enhanced. For the purposes
of determining the entitlement in a landholder for this Part, the
maximum entitlement capable of being acquired may be utilised.
Subsection (1) states the application of the section.
Subsections (2) to (4) establish the procedure for determining the
extent of the interest a person has in the winding up of a
landholder. First, a calculation is made of the entitlement based
on the rules of the landholder which apply to the interest held.
Next, another calculation is made after all rights available have
been exercised to maximise the entitlement. The results are
compared and whichever entitlement is the greater is the one
used for the purposes of this Part, unless the Commissioner
determines otherwise.
New section 89I is complementary to section 74, which deals
with uncompleted agreements for sale or purchase of land.
Section 74 deals with certain land which was under an
uncompleted agreement at the time a relevant acquisition
occurred. The operation of that section is relevant for the
calculation of duty on a relevant acquisition. This section
unwinds those provisions after the agreement is completed.
25
If, after considering the outcome, duty would not have been
payable, a reassessment is made.
Subsection (1) provides for a re-assessment if an agreement for
sale of land is subsequently completed and effectively disregards
the land which was included under section 74.
Subsection (2) provides for a re-assessment if an agreement for
purchase of land is subsequently rescinded, annulled or otherwise
terminated without completion, and effectively reduces the value
of land upon which duty was assessed.
Subsection (3) effectively provides the same provisions apply to
determining the land of a linked entity.
New section 89J provides a temporary concession for widely held
trusts in relation to the 20% test. This test operates to ensure a
sufficient spread of unit holdings in the scheme, and provides that
none of the registered unit holders, either individually or together
with associated persons, holds or is entitled to more than 20% of
the units in the scheme. The concession is provided in certain
circumstances when the trustee of a widely held trust redeems
units in the scheme, as a result of which a unit holder breaches
the 20% test. Effectively the concession allows the trust to retain
its status for 30 days (provided no unit holder exceeds a
substituted 30% threshold). At the end of the 30 day period, the
unit holding must revert to 20% or less.
Subsection (1) states that the section applies when a trustee
redeems any units in the scheme, and the redemption causes a
unit holder to exceed the 20% threshold.
Subsection (2) provides the threshold may be exceeded for
30 days, provided it does not exceed 30%.
Subsection (3) requires the unit holding to revert to 20% or less
within 30 days, otherwise the ordinary requirement for a widely
held trust is taken to apply during that period and the
Commissioner must determine if duty is chargeable and issue an
assessment of duty (if a relevant acquisition occurred in the unit
trust scheme during the period).
New section 89K provides a temporary concession for wholesale
unit trust schemes similar to that for widely held trusts under
section 89J.
26
Wholesale unit trusts are specific types of trusts recognised in
Victoria. They are mainly used by institutional investors with
large amounts of money to invest. The criteria for registration of
a trust as a wholesale unit trust scheme contain a number of
thresholds relating to the minimum percentage of units in the
scheme that must be held by qualified investors, and the
maximum percentage of units in the scheme that can be held by
an individual qualified investor. Due to the need to carefully
manage the interests of qualified investors in a wholesale unit
trust scheme in order to maintain its registration, section 89K
provides a temporary concession when a trustee redeems units in
the trust.
Subsection (1) states that the section applies if a trustee redeems
any units in a trust registered as a wholesale unit trust scheme
under section 89S, and as a result of the redemption the scheme
would cease to be registered under section 89S because either--
less than 70% of the units in the scheme are held by
qualified investors;
a qualified investor, either alone or together with
associated persons, holds 50% or more of the of the
units in the scheme.
Subsection (2) provides that for a period of 30 days beginning on
and including the day on which the redemption occurs, the
relevant registration criteria under section 89(2) apply to the
wholesale unit trust scheme as if--
a reference to 70% in paragraph (c) of that section
were 50%; and
a reference to 50% in paragraph (d) of that section
were 70%.
Under subsection (3), if the relevant percentages are not restored
by the end of the 30 day period, the registration criteria under
section 89(2) is taken to have applied to the wholesale unit trust
scheme during that period and the Commissioner must determine
if duty is chargeable and issue an assessment of duty (if a
relevant acquisition occurred in the unit trust scheme during the
period).
27
New Division 5 of Part 2 of Chapter 3 of the Duties
Act 2000--Tax Avoidance Schemes
This Division contains an anti-avoidance provision that applies
generally across, but exclusively to, the landholder provisions.
This Division performs two purposes in respect of the landholder
provisions as an aid to revenue protection--
to deter artificial and contrived schemes aimed at
avoiding duty. The Division will apply to any
arrangement, no matter what form it takes, where the
intent of its use is to eliminate or reduce tax which may
otherwise have been payable, without the scheme.
The provision impacts on all aspects of the landholder
provisions including avoidance activity designed to
counter tax imposts or to inappropriately seek to come
within criteria for exemptions. Rather than give specific
directions on each aspect of the landholder provisions or
describe any particular arrangement, the anti-avoidance
provision seeks to establish a policy permeating across
the landholder provisions that avoidance of tax is an
issue which must be considered in respect of every
acquisition or transaction and the provision will be
applied if tax would have been payable, but for the
scheme; and
to inhibit persons from preparing instruments where
factors crucial to the assessment of duty are omitted or
are misleading and to encourage advisers to include in
material lodged with the Commissioner all facts and
circumstances affecting a person's liability for duty
under the landholder provisions.
New section 89L imposes duty on an acquisition which would
have been dutiable but for a tax avoidance scheme, and specifies
the duty is payable when it would have been payable under the
landholder provisions had the scheme not existed.
New section 89M describes a tax avoidance scheme as any
contract, agreement, understanding, promise or undertaking
which has tax avoidance as its main purpose or one of its
purposes. Tax avoidance means an elimination, reduction or
postponement of a liability to pay duty under the landholder
provisions.
28
New section 89N provides that if the Commissioner considers a
person has participated in a tax avoidance scheme, the
Commissioner may disregard the scheme, determine what duty
would have been payable but for the scheme, and make an
assessment or re-assessment of the tax liability. For these
purposes, in order to overcome a scheme's impact on relevant
components of the landholder provisions, the Commissioner is
empowered to deem essential elements to exist, without which it
may be difficult to establish that a relevant acquisition occurred.
New section 89O addresses inappropriate activity which is
misleading in respect of determining a liability to duty.
It impacts on a person who is employed or concerned in
preparing an instrument relating to the acquisition of an interest
in a landholder or in providing advice or being involved in the
conduct of an acquisition. This applies to advisers such as
lawyers and other tax advisers. The person must not omit from,
or fail to include in, the instrument or material presented to the
Commissioner any fact or circumstance affecting the liability for
duty of a person under the landholder provisions. Otherwise, a
penalty applies.
New Division 6 of Part 2 of Chapter 3 of the Duties
Act 2000--Registration of Unit Trust Schemes
This Division contains the machinery provisions for registration
of certain unit trust schemes.
New section 89P contains the definitions for the Division.
The types of entities that will be treated as a qualified investor
are listed here. A qualified investor is permitted (by section 89S)
to be a unitholder in a wholesale unit trust scheme.
New section 89Q provides for application of registration of the
unit trust scheme. Subsection (1) specifies the trustee of a unit
trust scheme may apply for registration as--
a declared public unit trust scheme;
a wholesale unit trust scheme; or
an imminent wholesale unit trust scheme.
Subsections (2) and (3) set out how a trustee may make an
application for registration, and the matters the Commissioner
may take into account in considering the application.
29
New section 89R allows registration of schemes that do not quite
qualify as public unit trust schemes. It recognises that, in certain
circumstances, it is appropriate that some schemes be registered
as public. If registration as a declared public unit trust scheme
were not provided, those schemes would be treated as private unit
trust schemes (and duty would become payable on an acquisition
of 20% or more).
Subsection (1) allows the Commissioner to register a scheme as a
declared public unit trust scheme if satisfied that the scheme
meets the criteria for registration as such.
Subsection (2) sets out the criteria for registration in that--
the Commissioner considers the scheme should be so
registered; and
registration is not part of a duty avoidance arrangement.
New section 89S recognises schemes that operate in the funds
management industry, hold high-value multiple properties, and
provide investment services to numerous superannuation funds
and other institutions seeking investment into a land-backed
financial product. The schemes are not open to the public, as the
ingoing minimum investment requirement is high.
This type of scheme would not qualify as a widely held trust
(a form of public unit trust scheme) because it would not have
sufficient unit holders to meet the minimum 300 required. It is
considered inappropriate to treat this type of scheme as a public
unit trust. However it is also recognised that it would be harsh on
the institutional investors to treat this type of scheme as a private
unit trust scheme (due to the potential duty issue of dealing in
interests of 20% or more). The registration provisions for
wholesale unit trust schemes recognise the unique purpose and
structure of these schemes, and provide a concession whereby
duty only arises once a person acquires an interest of 50% or
more in the scheme.
Subsection (1) allows the Commissioner to register a scheme as a
wholesale unit trust scheme if satisfied that the scheme meets the
criteria for registration as such.
30
Subsection (2) sets out the criteria for registration, which are
that--
the scheme was not established for a particular investor;
and
to ensure the scheme is remote from a property-holding
private unit trust scheme prone to acquisition of units by
a few persons to acquire its property, either--
the scheme holds interests in not less than
3 parcels of land, 2 or more having a value each
of $10 000 000 or more; or
it has at least 6 unitholders who are not
associated and each holds a subscription of at
least $3 000 000; and
at least 70% of unitholders are qualified investors
(see section 89P); and
no qualified investor holds 50% or more of units, and
registration is not part of a duty avoidance arrangement.
Subsection (3) allows aggregation of parcels of land into one
"parcel" for the purposes of subsection (2). An example would
be a shopping centre built over a number of titles.
New section 89T applies to schemes which propose to become
wholesale unit trust schemes. It allows a scheme registered as an
imminent wholesale unit trust scheme 12 months from the first
issue of units to a qualified investor to meet the criteria for
registration as a wholesale unit trust scheme. The impact of
registration is that a scheme will be treated as if it was a
wholesale unit trust scheme, and the duty consequences for
wholesale unit trust schemes will apply. If this category of
registration were not recognised, this type of scheme would be
treated as a private unit trust scheme (and duty become payable
on an acquisition of 20% or more).
Subsection (1) allows the Commissioner to register a scheme as
an imminent wholesale unit trust scheme if satisfied that the
scheme meets the criteria for registration as such.
31
Subsection (2) sets out the criteria for registration, which are
that--
the unit trust scheme will become a wholesale unit trust
scheme within 12 months from the day the first units
were issued to a qualified investor; and
units issued until the scheme converts to a wholesale
unit trust scheme have been and will be issued only for
it to meet the relevant registration criteria; and
registration is not part of a duty avoidance arrangement.
New section 89U recognises that, in some circumstances, it is
appropriate that some schemes be treated as wholesale unit trust
schemes, even though they do not meet the criteria for
registration as wholesale or imminent wholesale unit trust
schemes. If this category of registration were not available, this
type of scheme would be treated as a private unit trust scheme
(and duty become payable on an acquisition of 20% or more).
Subsection (1) allows the Commissioner to register a scheme as a
declared wholesale unit trust scheme if satisfied that the scheme
meets the criteria for registration as such.
Subsection (2) sets out the criteria for registration, which are
that--
the scheme should be registered as a declared wholesale
unit trust scheme; and
registration is not being sought for the purpose of
avoiding or reducing duty.
New section 89V provides for the duration of registration of a
unit trust scheme.
Subsection (1) specifies that registration takes effect on the day
specified by the Commissioner, which may be before the
registration is granted.
Subsection (2) provides that the duration of registration is--
for a registered declared public unit trust scheme, a
registered wholesale unit trust scheme or a registered
declared wholesale unit trust scheme--3 years;
for a registered imminent wholesale unit trust scheme--
12 months.
32
Subsection (3) provides for renewal of registration.
New section 89W sets out the reporting requirements on the
trustee of a registered scheme. Under this section, the
Commissioner may place reporting requirements on any
registered scheme, at any time, to supply information about the
scheme.
New section 89X allows the Commissioner to register certain
unit trust schemes in a variety of categories. As a result of
registration, the schemes receive concessional duty treatment.
If a scheme ceases to meet the criteria for registration, a
disqualifying circumstance occurs.
Subsection (1) defines a disqualifying circumstance to be--
a circumstance that causes a unit trust scheme that is
registered under this Division to cease to meet the
relevant criteria for registration; or
subject to subsection (2), the failure by a unit trust
scheme that is registered under this Division to meet a
condition of registration, or the contravention of a
condition of registration by a unit trust scheme or the
trustee of the scheme.
Subsection (2) provides that a failure or contravention of
subsection (1)(b) is not a disqualifying circumstance if the
Commissioner so determines, being satisfied that the application
of this section to the unit trust scheme in the particular case
would not be just or reasonable.
Subsection (3) provides that, if a disqualifying circumstance
occurs, the trustee of the unit trust scheme must notify the
Commissioner. The unit trust scheme becomes a private unit
trust scheme from the relevant date and if a relevant acquisition
was made after that date, the Commissioner must assess the duty.
If the trustee fails to notify the Commissioner of a disqualifying
circumstance, subsections (4) provides that a penalty of up to
10 penalty units may be imposed on the trustee. Subsections (5)
to (7) provide that if, despite failure to notify, duty is assessed as
a result of the disqualifying circumstance, an additional penalty
of double the duty is imposed on the trustee (less any duty paid).
This penalty may be remitted in full or part.
33
Subsection (8) establishes that the relevant date means--
if the disqualifying circumstance is a circumstance that
causes a registered imminent wholesale unit trust
scheme to cease to meet the criteria set out in section
89T(2)(a)--the date on which the 12 month period
referred to in that section began;
in any other case--the date the disqualifying
circumstance occurred.
New section 89Y allows the Commissioner to cancel registration
if satisfied a disqualifying circumstance (see section 89X) has
occurred. Written notice of cancellation must be given.
Division 3--Consequential Amendments
Division 3 of the Bill makes consequential amendments to the Duties Act
2000 to reflect the change from a "land rich" to a "landholder" model in
Chapter 3.
Clause 6 amends various definitions in section 3(1) of the Duties Act 2000
to reflect the change to the landholder model as follows--
in the definition of acquisition statement, for "section
80(1)" substitute "section 83".
in the second definition of interest, for "section 76(1)"
substitute "section 79(1)".
in the definition of linked entity, for "section 74"
substitute "section 75".
in the definition of qualified investor, for "section 89K"
substitute "section 89P";
in the definition of registered declared public unit trust
scheme, for "Division 7" substitute "Division 6";
in the definition of wholesale unit trust scheme, for
"Division 7" substitute "Division 6".
Clause 7 amends paragraph (e) of the definition of eligible transaction in
section 250A of the Duties Act 2000 by substituting "section 80"
with "section 83".
34
Clause 8 amends section 250DC(1)(e) of the Duties Act 2000 by
substituting "section 80" with "section 83".
Clause 9 Subclause (1) substitutes "land-rich" with "landholder" in the
heading to section 250DG of the Duties Act 2000.
Subclause (2) amends section 250DG(2)(c) and (d) of the Duties
Act 2000 by substituting "section 79" with "section 80" in both
instances.
Clause 10 amends section 250DI(1) of the Duties Act 2000 by substituting
"section 80" with "section 83".
Clause 11 amends section 250G(1)(a) of the Duties Act 2000 by
substituting "dutiable transaction" with "eligible transaction".
Division 4--Transitional provisions
Clause 12 inserts a new clause 31 into Schedule 2 of the Duties Act 2000.
Subclause (1) provides that this clause applies despite anything to
the contrary in the Duties Act 2000.
Subclause (2) provides that an acquisition by a person before
1 July 2009 of an interest in a private unit trust scheme, private
company, wholesale unit trust scheme or public unit trust scheme
must not be aggregated under section 78(1)(a)(ii) with an
acquisition by the person, an associated person or any person in
an associated transaction on or after 1 July 2012 of an interest in
the scheme or company.
Subclause (3) provides that an acquisition by a person before
1 July 2012 of an interest in a listed company must not be
aggregated under section 78(1)(a)(ii) with an acquisition by the
person, an associated person or any person in an associated
transaction on or after 1 July 2012 of an interest in the company.
Subclause (4) provides that an acquisition by a person before
1 July 2012 of an economic entitlement must not be aggregated
under section 81 with an acquisition by the person or an
associated person on or after 1 July 2012 of an economic
entitlement.
35
Subclause (5) provides that duty is not chargeable under section
86 in respect of an interest acquired by a person in a private unit
trust scheme, private company or wholesale unit trust scheme on
or after 1 July 2009 and before 1 July 2012 if the scheme or
company was not a land rich landholder within the meaning of
section 71(2) as in force at the time the interest was acquired.
Subclause (6) provides that a unit trust scheme that, immediately
before the commencement day, was registered as a wholesale
unit trust scheme under Division 7 of Part 2 of Chapter 3, as in
force at that time, is taken to be registered under Division 6 of
Part 2 of Chapter 3 for the period ending on the date that
registration of the unit trust scheme would have expired under
section 89Q(2), as in force immediately before the
commencement day.
Subclause (7) provides that a public unit trust scheme that,
immediately before the commencement day, was registered as a
registered declared public unit trust scheme under section 89N, as
in force at that time, is taken to be registered under section 89R
for the period ending on the date that registration of the unit trust
scheme would have expired under section 89Q(2), as in force
immediately before the commencement day.
Subclause (8) clarifies that commencement day means the day on
which section 17 of the Duties Amendment (Landholder) Act
2012 comes into operation.
Division 5--Statute law revision
Clause 13 amends the definition of receiving body in section 3(1) of the
Duties Act 2000 by substituting "Transfers of Business" with
"Business Transfer and Group Restructure" and
"Commonwealth." with "Commonwealth;". These amendments
reflect the change in the name of the Financial Sector (Transfers
of Business) Act 1999 of the Commonwealth to the Financial
Sector (Business Transfer and Group Restructure) Act 1999 and
correct a punctuation error.
Clause 14 substitutes "TRANSFERS OF BUSINESS" with "BUSINESS
TRANSFER AND GROUP RESTRUCTURE" in the heading
to Chapter 4 of the Duties Act 2000.
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Clause 15 This amendment is a statute law revision and substitutes
"Transfers of Business" (wherever occurring) with "Business
Transfer and Group Restructure" in sections 104, 107(1) and
234B of the Duties Act 2000 to reflect the change to the title of
the Financial Sector (Transfers of Business) Act 1999 of the
Commonwealth to the Financial Sector (Business Transfer and
Group Restructure) Act 1999 and in the heading to section 234B
of the Duties Act 2000, for "(transfers of business)" substitutes
"(business transfer and group restructure)".
PART 3--AMENDMENTS TO THE PLANNING AND
ENVIRONMENT ACT 1987
Division 1--Consequential amendments
Part 3 of the Bill makes amendments to the Planning and Environment Act
1987. Division 1 contains amendments which are consequential to the
change from "land rich" to a "landholder" model under the Duties Act 2000.
Clause 16 substitutes the definition of land rich landholder in section 201R
of the Planning and Environment Act 1987 with a definition
of landholder which means a landholder for the purposes of
section 71 of the Duties Act 2000.
Paragraph (b) provides that a private landholder has the same
meaning as in section 71(3) of the Duties Act 2000 and that
public landholder has the same meaning as in section 71(4) of
the Duties Act 2000.
Clause 17 amends section 201RB(d)(iv) of the Planning and Environment
Act 1987 relating to excluded events by omitting "land rich".
Clause 18 amends section 201RE of the Planning and Environment Act
1987 in relation to the meaning of significant acquisition.
Subclause (1) amends section 201RE(1) of the Planning and
Environment Act 1987 by omitting "land rich" where twice
occurring.
Subclause (2) inserts new section 201RE(1A) into the Planning
and Environment Act 1987 which provides that subsection
(1)(b) does not apply to a landholder that is a public landholder.
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Subclause (3)(a) makes amendments to the definition of acquire
in section 201RE(2) of the Planning and Environments Act
1987 by omitting "land rich" and for "section 77" substituting
"section 80".
Subclause (3)(b) makes amendments to the definition of interest
in section 201RE(2) of the Planning and Environment Act
1987 by omitting "land rich" and for "section 76(1)" substituting
"section 79(1)".
Subclause (3)(c) makes an amendment to the definition of
relevant acquisition in section 201RE(2) of the Planning and
Environment Act 1987 by substituting "section 79 (other than
subsection (1)(b))" with "section 78 (other than subsection (1)(b),
81 or 82".
Subclause (4) amends section 201RE of the Planning and
Environment Act 1987 by omitting "land rich" from the first
example to its foot and substituting "private" and for "section
79(1)(a)" substituting "section 78(1)(a)(i)".
Subclause (5) repeals the second example at the foot of section
201RE of the Planning and Environment Act 1987 and inserts
the following example--
"Example
RST Pty Ltd is a company that is a public landholder. In October
2012, Y acquires a 70% interest in RST. This is not a significant
acquisition. In 2017, T obtains a 25% interest in RST. As Y and
T are associated persons there has now been a significant
acquisition made up of 95% of the interest in RST, therefore Y
and T are jointly and severally liable to pay 95% of the indexed
amount of GAIC payable in relation to land subject to GAIC
owned by RST.".
Clause 19 amends section 201S of the Planning and Environment Act
1987 in relation to the imposition of the growth areas
infrastructure contribution.
Subclause (1) makes amendments to section 201S(3) by
substituting "land rich landholder" where twice occurring with
"landholder".
Subclause (2) amends section 201S of the Planning and
Environment Act 1987 by substituting "land rich" in the second
example at its foot with "private".
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Clause 20 amends section 201SF(4)(b) of the Planning and Environment
Act 1987 in relation to the person liable to pay GAIC by omitting
"land rich".
Clause 21 amends the third example at the food of section 201SG(3) of the
Planning and Environment Act 1987 by substituting "land
rich" with "private".
Clause 22 amends section 201SK of the Planning and Environment Act
1987 in relation to acquisition statements.
Subclause (1) makes amendments to section 201SK(1) and (2) of
the Planning and Environment Act 1987 by omitting "land
rich".
Subclause (2) amends section 201SK(3)(e) of the Planning and
Environment Act 1987 by omitting "on the date of the
acquisition and within 3 years before that date".
Clause 23 amends section 201SMAA of the Planning and Environment
Act 1987 in relation to liability to pay deferred GAIC in relation
to subsequent dutiable transactions.
Subclause (1) amends section 201SMAA(2)(c)(ii) of the
Planning and Environment Act 1987 by omitting "land rich".
Subclause (2) amends section 201SMAA(4) of the Planning and
Environment Act 1987 by substituting "land rich landholder"
where twice occurring with "landholder".
Clause 24 amends section 201SP(2) of the Planning and Environment Act
1987 in relation to deferred GAIC.
Subclause (1) amends section 201SP(2) of the Planning and
Environment Act 1987 by omitting "land rich" wherever
occurring.
Subclause (2) amends the example at the foot of section
201SP(2) of the Planning and Environment Act 1987 by
substituting "land rich" with "private".
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Division 2--Transitional provisions
Division 2 contains transitional provisions for the Planning and
Environment Act 1987 due to the change from a "land rich" to a
"landholder" model under the Duties Act 2000.
Clause 25 amends the Planning and Environment Act 1987 by inserting
a new section 220 regarding transitional provisions as a
consequence of the Duties Amendment (Landholder) Act
2012.
Subsection (1) provides that, for the purposes of the definition of
relevant acquisition in section 201RE(2) of the Planning and
Environment Act 1987, an interest within the meaning of that
section must not be aggregated with any other interest acquired in
a landholder if the interest is excluded from the application of
section 78(1)(a)(ii) of the Duties Act 2000 because of the
application of clause 31 of Schedule 2 of that Act.
Subsection (2) provides that section 201S does not apply in
respect of any land or part of land that is the subject of an interest
within the meaning of section 201RE(2) if the interest is not
chargeable with duty under the Duties Act 2000 because of the
application of clause 31 of Schedule 2 of that Act.
PART 4--AMENDMENTS TO THE FINANCIAL SECTOR
REFORM (VICTORIA) ACT 1999
Part 4 of the Bill makes amendments to the Financial Sector Reform
(Victoria) Act 1999.
Clause 26 amends section 3 of the Financial Sector Reform (Victoria) Act
1999 by substituting the definition of FS(TB) Act with the new
definition of FS(BTGR) Act which means the Financial Sector
(Business Transfer and Group Restructure) Act 1999 of the
Commonwealth.
Clause 27 amends words defined in FS(BTGR) Act in section 8 of the
Financial Sector Reform (Victoria) Act 1999.
Subclause 1 amends the heading to section 8 of the Financial
Sector Reform (Victoria) Act 1999 by substituting "FS(TB)
Act" with "FS(BTGR) Act".
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Subclause 2 amends section 8 of the Financial Sector Reform
(Victoria) Act 1999 by substituting "FS(TB) Act" with
"FS(BTGR) Act".
Clause 28 amends section 10(1) and (2) of the Financial Sector Reform
(Victoria) Act 1999 by substituting "FS(TB) Act" with
"FS(BTGR) Act" with regard to voluntary transfers.
Clause 29 amends section 11(1),(2),(4)(b) and (5) of the Financial Sector
Reform (Victoria) Act 1999 by substituting "FS(TB) Act" with
"FS(BTGR) Act" with regard to compulsory transfers.
PART 5--REPEAL OF AMENDING ACT
Clause 30 provides for the automatic repeal of this Act on 1 July 2013.
The repeal of this Act does not affect in any way the operation of
the amendments and repeals made by the Act (see section 15(1)
of the Interpretation of Legislation Act 1984).
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