Duties Act 1997
For the Duties Act these changes effect:
- Partitions of land
- Deceased estates
- Enlargement of term in land into fee simple
- Incorporation of pharmacists
- First Home Plus
- Acquisitions of interests in land rich landholders
- Modifications to motor vehicles
- Exemptions for charities
- Stamping of documents
- Extension of the meaning of 'quoted securities'
- Removal of obsolete provisions
- Other amendments
Partitions of land
At present the Duties Act 1997 provides for a duty concession on a transfer of land that is jointly owned where the land is transferred to one or more of the joint owners (referred to as a partition).
The amendment provides that the concession does not apply in cases where the Chief Commissioner of State Revenue is satisfied that the partition is part of a scheme to avoid duty on an exchange of land between parties who are not joint owners.
Concessions for deceased estates
At present, the Duties Act 1997 provides for a duty concession on a transfer of dutiable property by the legal personal representative of a deceased person if the transfer is made under and in conformity with the trusts contained in the will of the deceased person or arising on intestacy. Duty on such a transfer is charged at a flat rate of $10, rather than ad valorem. The amendment extends this concession to the following cases:
an appropriation of the property of the deceased person in or towards satisfaction of a beneficiary's entitlement under the trusts contained in the will of the deceased person or arising on intestacy,
a transfer of dutiable property of a deceased person to a beneficiary of the estate by agreement between 2 or more beneficiaries to vary the trusts contained in the will or arising on intestacy. In the second case, the concession will only apply to that part of the dutiable value of the property transferred which is dutiable property to which the beneficiary was entitled under the will or on intestacy. Ad valorem duty will remain chargeable on the transfer to the extent that it varies the trusts contained in the will or arising on intestacy.
Enlargement of term in land into fee simple
Under section 134 of the Conveyancing Act 1919 a term in land of not less than 300 years may be enlarged (or converted) in certain circumstances to an estate in fee simple in the land. Under the Duties Act 1997, such an enlargement of a term in land is chargeable with duty in the same way as a transfer of the land.
The amendment provides that such an enlargement is chargeable with duty of $10 if ad valorem duty was paid on the transaction by which the term in land was acquired and the Chief Commissioner of State Revenue is satisfied that the term in land was not granted, and subsequently enlarged, for the purpose of avoiding duty.
Incorporation of pharmacists
Under the Pharmacy Practice Act 2006 it is permissible for a pharmacy business to be carried on by a pharmacist's body corporate. Previously, a corporation was prohibited from having a pecuniary interest in the business of a pharmacist (under section 25 of the Pharmacy Act 1964).
The amendment provides for a duty exemption for any pharmacist, or partnership of pharmacists, that becomes a body corporate. A transfer of dutiable property of the pharmacist or partnership to the incorporated body will be exempt from duty. This is similar to the exemption that applies to lawyers who incorporate.
First Home Plus
The First Home Plus scheme under the Duties Act 1997 allows first home owners to obtain a duty exemption or concession when they build or purchase their first home. At present, the scheme requires that an application for a concession under the Act relate to the whole property.
The amendment will allow an application to be made under the scheme where the property concerned is a land on which 2 or more homes are built or are to be built, if the Chief Commissioner of State Revenue is satisfied that the first home owner will be entitled to occupy the home that the first home owner is acquiring to the exclusion of the persons who occupy other homes on the land.
Acquisition of interests in land rich landholders
An acquisition of an interest in a land rich landholder (a company or unit trust with significant land holdings) is chargeable with duty under the Duties Act 1997 in a similar manner to a purchase of land.
The amendment extends the situations in which an acquisition will be dutiable under the land rich duty provisions. The amendment provides that a change in the capacity in which the person holds an interest in a land rich landholder is to be regarded as an acquisition of an interest in a land rich landholder. An example is if a person who holds a unit or share in a land rich landholder declares a trust in respect of the unit or share. This amendment is intended as an anti-avoidance measure.
A related amendment ensures that an exemption provision does not operate to permit the practice of using declarations of trust to avoid land rich duty.
These amendments are taken to have commenced on 2 April 2008.
Modifications to vehicles
The amendment introduces a duty concession in respect of the duty chargeable on an application to register a motor vehicle. The amendment allows the value of any modifications to the vehicle that have been made to a vehicle to enable a person with a disability to drive the vehicle or to enable someone else to use the vehicle to transport a person with a disability to be disregarded in determining the dutiable value of the motor vehicle.
Exemptions for charities
The amendment extends the duty exemption that applies to charities to persons acting in their capacity as a trustee for a charity.
The amendment also makes it clear that the charity exemption extends to any body established for charitable purposes (including a body corporate).
Stamping of documents
The amendment clarifies the interaction between the assessment provisions under the Duties Act 1997 and the Taxation Administration Act 1996. The amendment provides that the stamping of a document is taken to constitute an assessment under the Taxation Administration Act 1996 and that the stamped instrument is a notice of assessment (unless a separate notice is issued). This means that the period for making an objection to the assessment will start to run from the date the stamped instrument is given to the taxpayer.
Extension of meaning of 'quoted' securities
The amendment extends the meaning of 'quoted', to shares, units in a unit trust scheme or interests in shares or units that comprise a stapled security that is quoted on a stock exchange. Accordingly, those securities will be considered to be a quoted marketable security (and not subject to duty under Chapter 2) if transferred. The amendment also clarifies that a reference to a quoted security can include a reference to a security that is not a marketable security (accordingly it is not necessary for the security to have a nexus with New South Wales, in the manner required of marketable securities).
Other amendments make the use of the expression “quoted” more consistent in the Act.
Removal of obsolete provisions
The amendments remove provisions in the Act that are now obsolete. These provisions relate to:
vendor duty and duty on the disposal interests in land rich landholders, and
use of adhesive stamps, and
duty on hire of goods.
The amending Act:
clarifies the application of a concession under section 64 of the Act where ad valorem duty has previously been paid.
updates a reference to the Legal Profession Act 1987 (which has been replaced by the Legal Profession Act 2004).
updates Section 275A of the Act where as a consequence of the abolition of the general duty on leases and its replacement with a more limited duty on leases (leases in respect of which a premium is paid or agreed to be paid).
enables savings and transitional regulations to be made as a consequence of the amendments.
provides for savings and transitional matters, including by providing for the final determination of the duty chargeable under the Stamp Duties Act 1920 in connection with leases entered into before the Duties Act 1997 took effect.
updates a reference to the Newcastle stock exchange.