Jacqueline Wood and Adrian Ortisi discuss legislation to address the duty treatment of partnership interest acquisitions in Victoria.
Last year we saw the Victorian Court of Appeal uphold an important decision in Commissioner of State Revenue v Danvest Pty Ltd & Anor  VSCA 382 with respect to the duty treatment of partnership interest acquisitions in Victoria. In doing so, it confirmed the Commissioner is not entitled to assess duty on changes of partnership interests where a partnership holds Victorian land. As expected, the duty collection implications of the decision have now resulted in a legislative response.
Amongst other proposed amendments to the Duties Act 2000 (Vic), the State Taxation Acts Amendment Bill 2018 will overcome this restriction from date of Royal Assent, so transfer and landholder duty will be imposed as if the partners have a beneficial interest in the underlying partnership property.
There is one positive, being that the corporate reconstruction provisions are also amended to allow partnerships with partners who are part of a corporate group to satisfy the exemption requirements.
Another noteworthy change proposed by the Bill is the amendment to make it easier to fall within the ambit of the definition of “foreign corporation” or “foreign trust”. This is because the control test, or substantial interest test, has been widened such that there is an aggregation of all interests held by any other foreign natural person, foreign corporation, or foreign trust, regardless of whether they are associated persons or not.
Other proposed duty changes in the Bill relate to:
©2021 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation.
Liability limited by a scheme approved under Professional Standards Legislation.
For more detail about the structure of the KPMG global organisation please visit https://home.kpmg/governance.