Removal of Concession
The Bill proposes to remove the existing concession, which reduces duty payable on the acquisition of a ‘public landholder’ to 10 per cent of the duty otherwise chargeable. The term ‘public landholder’ includes listed companies, listed trusts and certain widely held trusts which have landholdings in New South Wales with a value of $2m or more, and so can be expected to have far-reaching implications for share acquisitions in New South Wales.
The effect of the proposed change is that acquisitions in ‘public landholders’ will be subject to duty at the full rate of up to 5.5 per cent instead of the rate of 0.55 per cent that is currently legislated. The changes are proposed to take effect from 1 July 2023 and, unusually, there are no transitional provisions. This means that the changes, if passed, may impact transactions which have been entered into before the change but not yet completed.
The proposed change will bring New South Wales in line with Western Australian and the Northern Territory. All other jurisdictions provide a similar concession for listed landholders (other than the Australian Capital Territory which does not impose duty on ‘public landholders’).
Land Tax Concession
The Bill also proposes to amend the Land Tax Management Act 1956 to provide for an extension of time during which unoccupied land may be treated as a principal place of residence in relation to the payment of land tax.
Subject to certain conditions being satisfied, currently an exemption from land tax is available for the period during which an intended future principal place of residence is being constructed on the land. This is currently restricted to four years. The Bill proposes to give the Chief Commissioner of State Revenue a discretion to increase the time limit to six years if:
- There has been a delay in the completion of the building or other works;
- The delay is due primarily to exceptional circumstances beyond the control of the owner; and
- The delay could not reasonably have been avoided by the owner.
The proposed change will apply to tax periods commencing 31 December 2019.
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