14 June 2012
New Amendments to the Duties Act - Impacts on Corporate Reconstructions: stamp duty relief
If you are planning a corporate reconstruction, then this Bulletin is relevant to you.
This bulletin focuses on the amendments to the Duties Act in relation to the exemption from stamp duty available in relation to a corporate reconstruction.
On 11 April 2012, the State Revenue Legislation Amendment Act 2012 No. 20 (Amending Act) was passed.
The provisions of the Amending Act take effect from 1 July 2012 and have the effect of amending certain sections of the Duties Act 1997, the Land Tax Management Act 1956 and the Payroll Tax Act 2007.
Currently, the rules for obtaining an exemption from stamp duty arising from a corporate reconstruction permit the transfer of property and other assets between entities that form part of the same ‘corporate group’ provided that certain conditions have been satisfied. These conditions include:
a Pre-Association Test – being the condition that entities participating in the transaction have to have been part of the same corporate group for at least 12 months prior to the date of the transaction; and
a Post-Association Test – being the condition that entities participating in the transaction have to remain part of the same corporate group for a period of 12 months after the transaction took place.
The Amending Act has the effect of:
abolishing the Pre-Association Test and the Post-Association Test; and
removing the requirement that the guidelines for corporate reconstruction exemption be approved by the Treasurer; and
incorporates the matters addressed by the previous guidelines into the Duties Act.
The Amending Act does grant the Commissioner broad powers to impose conditions on the relief from stamp duty it grants in respect of a corporate reconstruction. The impact of this power remains to be seen.
It should be noted that a corporate reconstruction is still subject to the requirement that it cannot be undertaken for the purpose of avoiding or reducing duty under the Duties Act on another transaction; or for the sole or dominant purpose of avoiding or reducing a liability for tax other than duty under the Duties Act.
Among other things, the Amending Act also:
introduces an exemption from stamp duty arising from a corporate consolidation;
limits the stamp duty relief available in respect of transfers to self-managed superannuation funds;
amends existing provisions in respect of transfers relating to deceased estates; and
introduces concessions from stamp duty in respect of transfers between married couples and de facto partners.
If you would like any further information in relation to the changes to the rules for obtaining relief from stamp duty in respect of a corporate reconstruction or in respect of any other matters raised in this bulletin please contact Bartier Perry.