Stamp duty update

There have been significant changes to the NSW Stamp Duty regime. This includes:

• The new landholder provisions
• The introduction of an anti-avoidance clause
• Changes to mortgage duty

Landholder regime
The change with the biggest impact is the change from a land rich regime to a landholder regime. Many transactions that are currently non-dutiable will be subject to duty. This will include duty being applied to listed entities (called a public landholder) and managed investment schemes.

From 1 July 2009 the current Land Rich regime is being abolished. This is being replaced by the landholder regime. The major points to note are:

• The 60% rule is removed, duty at land rates (5.5%) will be due on any transfers of land in NSW with a value of $2m or more
• The inclusion as landholders or potential landholders of companies (listed and unlisted) and unit trusts (and managed investment schemes and sub-trusts are deemed as unit trusts)
• The increase in acquisition threshold for private unit trusts is increased to 50% from 20%
• Landholder duty is due when a significant interest is acquired (that is 50% in a private landholder and 90% in a public landholder) and the aggregation rules continue to apply
• Landholder duty is charged on the market value of land and goods transferred (that is fixtures and fittings; stock and vehicles are excluded), and
• A public landholder will only be charged duty on 10% of the value of goods and land held

General anti-avoidance provision
A new general anti-avoidance provision has been introduced to counter artificial, blatant or contrived tax avoidance schemes. Duty is payable where the duty avoided arises due to a scheme being entered into. Interest and penalty tax will also be applied. The anti-avoidance provisions apply to transfers on or after 1 July 2009.

Mortgage Duty
Changes are also being introduced on 1 July 2009 to take into account that only NSW imposes Mortgage Duty, although it is scheduled to be abolished in 2012. Mortgage Duty is still imposed on the NSW portion of the advance and the changes are designed to capture changes to the proportion of NSW property that is secured. Where the proportion of property secured in NSW is increased more duty will be payable. Account is taken of the maximum duty payable and previous duty paid in NSW. In addition, the mortgage package rules have been altered. The 28 day rule has been abolished and a mortgage package has no time limit. A package is formed with each new advance. Finally, mortgage limits are now ignored, the Duty being on the amount that can be advanced under the agreement.

For more information on how the Stamp Duty changes might affect your organisation, contact your regular Grant Thornton adviser our indirect tax specialist John Davison via the details below.


Author: John Davison, June 2009

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