Recent Changes to Stamp Duty legislation in New South Wales and Victoria

In recent months, there have been several significant changes to the stamp duty regimes in both Victoria and New South Wales .

In Victoria:

  • the due date for payment of duty has been reduced from three months to 30 days for transactions made on or after 1 April 2012; and
  • from 1 July 2012, the land rich regime for significant acquisitions of shares or units in land rich entities will be replaced with a land holder regime.

In New South Wales, the following duties will be abolished from 1 July 2012:

  • duty on transfers of shares in a NSW company;
  • duty on transfers of units in a NSW trust;
  • duty on transfers of NSW business assets (other than land); and
  • duty on mortgages over NSW property.
 

The abolition of NSW duties discussed in this article has been deferred until 1 July 2013. The deferral was announced in the NSW Government Budget delivered on 12 June 2012. You can access the Budget Papers here.

Reduction in the due date for payment of Victorian Duty

Victorian legislation imposes duty on dutiable transactions such as transfers of land and declarations of trusts, and on relevant acquisitions being significant acquisitions of shares or units in Victorian land rich entities (land holding entities from 1 July 2012).

The due date for payment of Victorian duty has been reduced from three months to 30 days for any dutiable transaction or relevant acquisition which occurred on or after 1 April 2012.

Transitional Provisions for payment of Victorian Duty

The State Revenue Office of Victoria (SRO) proposes to institute a transitional arrangement for the period 1 April 2012 to 30 June 2012.  During this transitional period:

  • if duty is not paid within 30 days of the dutiable transaction or relevant acquisition, the SRO has stated that it will not impose any penalty tax or premium interest,
  • however, any late payment of duty will continue to attract market interest unless you can show that there were circumstances beyond your control that led to the late payment.

The SRO will consider these situations on a case-by-case basis.

Proposed Land holder Duty Regime in Victoria

The Government has announced that Victoria will change from a land rich regime to a land holder regime from 1 July 2012, bringing it into line with all other Australian states and territories (except for Tasmania).

Victoria legislation currently imposes duty on relevant acquisitions being significant acquisitions of shares or units in Victorian land rich entities.

The land rich rules generally apply if the company or trust holds land in Victoria with an unencumbered value of $1,000,000 or more, and its landholdings in all places comprise 60% or more of the unencumbered value of its total assets.

Under the proposed model, the current 60% 'land rich' test will be abolished. The land holder regime will therefore apply to impose duty on significant acquisitions in a company or trust if that entity holds at least $1,000,000 worth of land in Victoria.

Abolition of certain New South Wales Duties

New South Wales will abolish the following duties for transactions made on or after 1 July 2012:

  • duty on transfers of shares and/or declaration of trusts over shares in a NSW company;
  • duty on transfers of units in a NSW unit trust;
  • duty on transfers of NSW business assets other than land and/or declaration of trusts over NSW business assets other than land; and
  • duty on mortgages over NSW property.

The abolition will bring the NSW duty regime into line with the Victorian duty regime where generally only land transfers, declarations of trusts and significant acquisitions of shares or units in NSW land holder entities will be subject to duty.

However, unlike Victoria, the due date for payment of NSW duty will remain at three months from the date of the dutiable transaction or relevant acquisition.

Anti-avoidance measures for NSW duty being abolished

The Government has implemented measures to prevent avoidance of duty arising from the abolition of the above duties

These measures provide that transfers of NSW business assets other than land and/or declaration of trusts over NSW business assets other than land entered into after 1 July 2012 will continue to be dutiable if the transaction was entered into pursuant to:

  • an option granted before 1 July 2012; or
  • another arrangement made before 1 July 2012 in which the main or only purpose of the arrangement was to defer the transaction until 1 July 2012.

More information from Maddocks

For more information, contact Maddocks on (03) 9288 0555 and ask to speak to a member of the Tax and Revenue Team.