While there has been a trend in recent years for the stamp duty levied by the various States and Territories to be removed from particular categories of transactions, such as transfers of unlisted shares in companies and unlisted units in trusts, there has also been a corresponding move by most Australian States and Territories to widen the scope of duty on dealings in interests in companies or trusts that hold land in the State or Territory.
In most States and Territories, this move has been a change from
a "land rich" model to a "landholder" model.
Under a "land rich" model, duty is only imposed on
a dealing in an interest in a company or trust where a certain
proportion of the assets of the relevant company or trust comprise
land. Under a "landholder" model, duty is imposed on a
dealing in an interest in a company or trust that holds land,
irrespective of what proportion of the entity's assets comprise
land, although in most cases the land held needs to be in excess of
a certain value.
Queensland and South Australia, with effect from 1 July 2011, have
introduced amendments to their respective stamp duties legislation
to move to the landholder model. Victoria has announced it
will move to a "landholder" model from 1 July 2012
(see:
Changes to Victorian land rich duty announced in State
Budget).
Queensland "landholder" duty
Under the new Queensland landholder provisions, a landholder is
an entity that has landholdings in Queensland with an unencumbered
value of AUD$2 million or more. In common with the landholder
model, it does not matter what proportion of the assets of the
entity comprises land.
For this purpose, interests in landholdings will include interests
held by subsidiaries.
The provisions have application to "private landholders",
being defined as unlisted corporations, and "public
landholders", which are defined as listed corporations and
listed unit trusts. Unlike the corresponding provisions in
various other States and Territories, unlisted unit trusts are not
"private landholders". The
Queensland Duties Act has provisions which can
apply to dealings in unlisted unit trusts and in respect of which
care should be exercised.
The acquisition of a "significant interest" in a
landholder will give rise to duty.
This is:
- for a private landholder - an interest of 50 per cent or more; and
- for a public landholder – an interest of 90 per cent or more.
Duty is imposed (at rates of up to 5.25 per cent):
- in the case of an acquisition of a significant interest in a private landholder, based on the proportionate interest in the Queensland landholdings of the landholder; and
- in the case of an acquisition of a significant interest in a public landholder, 10 per cent of the amount of transfer duty that would have been imposed on a transfer of all the Queensland landholdings of the landholder.
One difference in the application of landholding duty in Queensland as compared to some other States is that duty is not imposed on goods held by the landholder. However, landholdings will include anything fixed to the land, so determining whether an asset held by a landholder is a good or is a fixture will be important in determining the duty payable.
South Australian "landholder" duty
Under the new South Australian landholder provisions, a
landholder is an entity that has landholdings in South Australia
with an unencumbered value of AUD$1 million or more, and again it
does not matter what proportion of the assets of the entity
comprise land.
Under the former South Australian land rich provisions, duty was
payable when a person acquired 50 per cent or more of the shares or
units in a private company or trust which owned South Australian
land valued at AUD$1 million or more and where 60 per cent or more
of the value of the total assets of the private company or trust
was land (or 80 per cent in the case of a primary production
entity). Listed companies and unit trusts were not subject to
the duty, other than listed unit trusts which fell within the
definition of a "private unit trust scheme".
In addition to the removal of the land rich requirement, the new
landholder provisions differ in the following key ways:
- public entities, ie listed companies, listed trusts and certain
widely-held non-listed trusts, are now subject to the duty, but the
rules apply differently so that:
- duty only applies to an acquisition of a 90 per cent or greater interest in a public entity (for private entities, the acquisition threshold of 50 per cent or more remains);
- duty is charged at a concessional rate of only 10 per cent of the general rate; and - the former provisions charged duty by reference to the value of the underlying land assets. Now, duty will be charged by reference to the value of all assets owned by the landholder entity which are located in South Australia; and
- the definition of "land asset" has been expanded to
expressly include:
- all fixtures in law;
- things which are fixed to the land notwithstanding they are not fixtures in law;
- things which are fixed to the land even where they are separately owned, except where the separate ownership occurs by virtue of statute or law, or where the Commissioner is satisfied it is not part of an arrangement to avoid duty; and
- leases and licences granted under the Mining Act 1971, the Offshore Minerals Act 2000, the Petroleum and Geothermal Energy Act 2000, the Aquaculture Act 2001, and forestry property (vegetation) agreements under the Forest Property Act 2000; and - new valuation provisions have been introduced which, among other things, provide that the value of property is to be ascertained on the assumption that the hypothetical purchaser would have knowledge of all existing information relating to the property and would not have to expend to acquire a permanent use of such information. This will be of particular relevance to the mining industry, as mining information is generally considered to be separate from the mining tenement to which it relates and its inclusion may greatly increase the value of the tenement.
The duty is payable at rates of up to 5.5 per cent. The new
provisions apply to acquisitions occurring on or after 1 July 2011,
except where an agreement or option was entered into before 1 July
2011.
Please contact any of the partners listed in the article should you
have any questions concerning these stamp duty changes.
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.