5 January, 2013

 

 

This Bulletin outlines Australian stamp duty developments in November 2012, which may impact your business, including:

 

Transfer duty 

 

  • Australian Capital Territory: ISPT Pty Ltd v Commissioner for ACT Revenue (Administrative Review) [2012] ACAT 70 – the ACAT has upheld the Commissioner’s lease duty assessment in relation to a lease instrument on the basis of the transitional provisions in section 421 Duties Act 1999 (ACT).
  • South Australia: Revenue Ruling SDA005 on calculation of life estates – RevenueSA has published a ruling setting out the factors that operate in circumstances where stamp duty is to be determined in respect of either a life estate or a remainder estate.
  • South Australia: Statutes Amendment and Repeal (Budget 2012) Bill 2012 – the Bill has passed through Parliament and now awaits Royal Assent. It provides concessional duty for off-the-plan apartments within the City of Adelaide, Bowden Village and at 45 Park Terrace, Gilberton.
  • Tasmania: Taxation Legislation (Miscellaneous Amendments) Act 2012 – the Act received Royal Assent on 22 November 2012. It makes several amendments to the Duties Act 2001 (Tas).
  • Victoria: Government to double the threshold for “young farmers” stamp duty concession – the Victorian Treasurer Kim Wells announced on 21 November 2012 that the threshold for the “young farmers” stamp duty concession will be doubled to $600,000.
  • Victoria: Floridia Enterprises Pty Ltd v Commissioner of State Revenue (Taxation) [2012] VCAT 1574 – the VCAT has endorsed the Commissioner’s stamp duty assessments in respect of real property transfers from several family members to the trustee company of a family trust.

 

Relevant area At a glance
Transfer duty

 

Australian Capital Territory : ISPT Pty Ltd v Commissioner for ACT Revenue (Administrative Review) [2012] ACAT 70

 

The ACT Civil and Administrative Tribunal (“ACAT“) in ISPT Pty Ltd v Commissioner for ACT Revenue (Administrative Review) [2012] ACAT 70 has upheld the Commissioner’s stamp duty assessment in respect of a lease agreement between the applicant and the Commonwealth of Australia (“the Commonwealth“).

 

Facts

 

In April 2006, the applicant and the Commonwealth executed an Agreement for Lease, to which was annexed a lease (“the original lease”) with a proposed commencement date of 6 April 2009. Construction was to occur in the intervening three-year period. The original lease was stamped for duty in mid-2007. During the construction process, the parties decided that the original lease was deficient and agreed to mutually release each other from their obligations arising under it. On 9 May 2010, a new lease was executed which rectified the deficiencies identified. The respondent assessed the new lease for stamp duty on 28 October 2010. The applicant objected to the assessment on 21 December 2010.

 

Held

 

While section 150A Duties Act 1999 (ACT) (“Act“) abolished duty on lease instruments in the ACT effective from 1 July 2009, as the original lease between the applicant and the respondent had been executed prior to 1 July 2009, the transitional provisions contained in section 421 of the Act were applicable. Under those provisions, if the ACAT determined that the new lease constituted a replacement for the original lease, the respondent’s duty assessment would be valid. After holding that the meaning of “replace” is synonymous with “to take the place of” or “to provide a substitute for” or “to fill the role of”, the ACAT found that the leases were sufficiently equivalent to conclude that the new lease was a replacement for the original lease. The ACAT rejected the applicant’s submission that it was also necessary for the respondent to establish that, in order for a replacement lease to be dutiable, its execution must have been accompanied by an avoidance purpose.

 

 

 

South Australia: Statutes Amendment and Repeal (Budget 2012) Bill 2012

 

Further to the September 2012 Stamp Duty Bulletin, the Statutes Amendment and Repeal (Budget 2012) Bill 2012 (“Bill“) has completed its passage through Parliament and now awaits Royal Assent.

 

The Bill amends the Stamp Duties Act 1923 (SA) to provide concessional duty for off-the-plan apartments within the City of Adelaide, Bowden Village and at 45 Park Terrace, Gilberton.

 

South Australia: Revenue Ruling SDA005 on calculation of life estates Revenue SA has published Revenue Ruling SDA005 (“Ruling“) which sets out the factors that operate in circumstances where stamp duty is to be determined in respect of either a life estate or a remainder estate.

The Ruling takes effect from 20 November 2012.

 

 

 

Tasmania: Taxation Legislation (Miscellaneous Amendments) Act 2012

 

Further to the October 2012 Stamp Duty Bulletin, the Taxation Legislation (Miscellaneous Amendments) Act 2012 (Tas) (“Amending Act“) received Royal Assent on 22 November 2012.

 

The Amending Act amends the Duties Act 2001 (Tas) (“Act“) to:

 

a) require duty to be paid on the transfer or surrender of a lease where a premium or consideration of more than $1,300 is paid;

b) enable duty to be apportioned by the Commissioner on transfers so that the portion of a property used for an exempt purpose is exempt and the portion used for other purposes is taxable; and

c) widen the scope of the definitions of matrimonial, de facto and relationship property. The amendments to the Act commenced on 22 November 2012.

 

The amendments to the Act commenced on 22 November 2012.

 

 

 

Victoria: Government to double the threshold for “young farmers” stamp duty concession

 

The Victorian Government announced on 21 November 2012 that it will double the threshold for the “young farmers” stamp duty concession to $600,000.

 

 

 

Victoria: Floridia Enterprises Pty Ltd v Commissioner of State Revenue (Taxation) [2012] VCAT 1574

 

The Victorian Civil and Administrative Tribunal (“VCAT“) in Floridia Enterprises Pty Ltd v Commissioner of State Revenue (Taxation) [2012] VCAT 1574 has upheld the Commissioner’s stamp duty assessments in respect of a series of transfers and reverse transfers involving a family trust that took place in the first half of 2010.

 

Facts

 

The background facts involved a legal dispute concerning a family trust, in an action brought by one of the sons of the family concerned. A settlement deed was entered into on November 2009 to settle the proceedings. The applicant in its capacity as trustee for a family trust executed three property transfers to beneficiaries of the trust in December 2009, to be held until settlement was complete on 30 June 2010. While registration of the transfers was purportedly intended to occur only once obligations arising out of the settlement deed had been performed by 30 June 2010, the lawyer acting for the applicant registered the transfers in early 2010.

 

It was decided that the properties should be transferred back to the trust (the “reverse transfers”) on the proviso that there would be little or no cost involved (including stamp duty). To that end, the applicant applied for a private ruling on the reverse transfers and provided signed transfers “solely for the purpose” of the ruling request. The respondent had not adjudicated the applicant’s request for a private ruling by 30 June 2010. Consequently, the applicant had by that stage managed to perform its obligations under the deed by obtaining finance through other avenues. It therefore sought to withdraw the private ruling request. The respondent declined to do so and instead assessed the reverse transfers as dutiable under section 7 of the Duties Act 2000 (Vic) (“Act“).

 

Held

 

VCAT rejected the applicant’s submission that the transfers were “failed instruments” within the meaning of section 260 of the Act. It was held that the original transfers had been intended to take effect upon execution with a resultant “immediate alteration in both the legal and beneficial interests in the property” the subject of the transfers. In VCAT’s view, the effect of this construction of the facts was that the reverse transfers must also be dutiable transactions. It was no answer for the applicant to claim that the transfers were executed solely for the purpose of obtaining a private ruling; the act of signing the reverse transfers created the obligation to duty. Additional submissions by the applicant concerning an exception under section 35 of the Act and escrow were also rejected by the VCAT.

 

 

 

 

For further information, please contact:

 

Geoffrey Mann, Partner, Ashurst

geoffrey.mann@ashurst.com

 

Nika Dharmadasa, Ashurst

nika.dharmadasa@ashurst.com

 

 

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