Article by Stephanie Barnes and Claire Falkner
As from 1 July 2009, the land-rich duty provisions were replaced with a new model landholder duty regime (see www.deacons.com.au/footprint/articles/0709-footprint-NSW-announces-major-land-rich-duty-changes.html).
Changes to the new regime have now been introduced by the State Revenue Legislation Further Amendment Bill (No 2) 2009, which at the time of writing has been passed by the NSW parliament and only awaits assent.
The changes will mostly take effect from 1 December 2009.
A brief summary is set out below:
Value of landholdings
Landholder duty applies to acquisitions of significant interests in landholders which hold NSW land with a "value" of $2 million or more.
Under the existing provisions, value for these purposes is the market value disregarding any encumbrance to which the property is subject.
Under the changes, where the landholding is a fee simple or interest in a fee simple, the value will be that appearing in the NSW Register of Land Values as at 1 July the previous year. However, for the purposes of determining the liability to landholder duty, the value of the NSW landholdings remains the unencumbered value.
Trustees
Under the existing provisions, a person who holds interests in a landholder as trustee for 2 or more trusts may be required to aggregate those interests when determining whether there has been an acquisition that triggers liability to landholder duty.
Under the changes, such trustees will be treated as a separate person in regards to each trust.
Also, where an interest is held in a landholder through a bare trust, it is now the ultimate beneficial owner and not the trustee who will be liable for the payment of any landholder duty arising.
Creditors of landholders
Under the existing provisions, creditors of landholders are not considered to have an interest in the landholder.
Under the changes, only creditor interests which qualify as debt under the income tax debt/equity rules (in Division 974 of the Income Tax Assessment Act 1997 (Cth)) will be disregarded. This means that equity-like debt may constitute an interest in a landholder.
Agreements for sale
Under the proposed changes, purchasers under an agreement for the sale or issue of shares or units in a landholder will be treated as having acquired the relevant interest in the landholder 12 months after the date the agreement is first executed, if it has not been completed before then.
This is an anti-avoidance measure to prevent taxpayers avoiding duty by relying on "terms contracts" and other types of contracts which delay completion indefinitely.
Mining interests in land
Under the proposed changes, mining leases and mining claims are to be regarded as an interest in land.
The amendments clarify that various other rights including (but not limited to) an assessment lease, exploration licence, a carbon sequestration right and a petroleum title are specifically excluded from being an interest in land.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.