New South Wales stamp duty changes

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An amending bill has been introduced into the New South Wales Parliament which will make significant changes to the corporate reconstruction exemption provisions. The amending bill will also introduce a specific anti-avoidance measure into the landholder duty provisions.

If you are undertaking an internal restructure which involves assets in New South Wales or a transaction which involves a landholder in New South Wales, then you should consider the potential impact of these proposed stamp duty changes.

If your restructure or transaction also involves assets located in the other States or Territories, then you should also be aware that there are stamp duty changes scheduled to commence in other States or Territories from 1 July 2012.  Please contact us for further details.

NEW CORPORATE RECONSTRUCTION EXEMPTION PROVISIONS

State Revenue Legislation Amendment Bill 2012 will repeal the current corporate reconstruction exemption and introduce a new exemption for corporate reconstructions and corporate consolidations.

Corporate reconstructions

Broadly, the current corporate reconstruction exemption provides an exemption from stamp duty for transfers of assets and certain other transactions between members of a corporate group.  Subject to certain exceptions, the current exemption requires the group members to have been related for at least 12 months prior to the transaction, and to remain related for at least 12 months after the transaction.

The new exemption will no longer have a 12 months pre-association requirement or a 12 months post-association requirement.  This means that a transaction between entities that are group members only at the time of the transaction will potentially qualify for the exemption.  There will be no subsequent clawback of the exemption solely by virtue of the group relationship being broken.

However, the Chief Commissioner will have the power to revoke the exemption if he subsequently becomes aware of information which would have prevented the exemption from being granted.

Corporate consolidations

The new concept of a corporate consolidation transaction will be introduced.  Broadly, a corporate consolidation transaction is the interposition of a corporation or unit trust between an existing corporation or unit trust and its members. 

The corporate consolidation exemption will apply to the landholder duty that would arise from the interposition.  As the new exemption will be broader than the current landholder duty exemption for top-hatting arrangements, the top-hatting exemption will be repealed.

Transitional provisions

The new exemption for corporate reconstructions and corporate consolidations will apply to transactions occurring on or after 1 July 2012.  Separate transitional rules will apply to transactions that have been approved in advance by the Chief Commissioner under the current exemption.

Landholder duty specific anti-avoidance measure

State Revenue Legislation Amendment Bill 2012 will also introduce a specific anti-avoidance measure into the landholder duty provisions.

For the purposes of determining whether a landholder duty liability is triggered, and the amount of that liability, the target landholder will be deemed to still hold (directly or indirectly) any land that was transferred to the acquirer (or their associate) within the 12 months prior to the acquisition of the interest in the target landholder.

The amount of the landholder duty payable by the acquirer on the acquisition of their interest in the target landholder will then be reduced by the amount of the transfer duty paid on the earlier land transfer/s.

This measure will apply to the acquisition of interests in unit trusts and companies on or after the date of assent to the amending Act.  However, the measure will not apply in respect of any transfers of land to the acquirer (or their associate) that occurred prior to the date of assent.


The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.


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Heran Kim

Special Counsel. Sydney
+61 2 9210 6200

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