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Australia: Proposed expanded land tax base, New South Wales

Australia: Expanded land tax base, New South Wales

Legislation in New South Wales (the state where Sydney is located) proposes changes relating to duties and land tax.


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Under the bill, anything “fixed to land” would be land for NSW landholder-duty (tax) purposes. Previously, only common law fixtures were included. Under the bill, anything fixed by more than its own weight would be included (e.g., office fit-outs, plant and equipment bolted to the floor, etc.).

Currently, the registered land tax value is used for freehold land in assessing whether or not an entity exceeds the $2 million* land value threshold. However, the bill would remove this concession, and the threshold would be based on unencumbered market value—with possible significant implications because the registered land tax value is the unimproved land value. The bill would make it easier for an entity to exceed the $2 million land-value threshold for duty to apply, making certain “goods/chattels” to be treated as land. This also would reduce the likelihood of obtaining a 90% or more goods concession which applies to reduce the duty. The amending bill could affect a broad range of industries such as the renewable energy sectors and infrastructure.

$ = Australian dollar

Target now jointly and severally liable for landholder duty

Previously, only the acquirer was liable to landholder duty. The bill would make a landholder (i.e., target entity being acquired), as well as the acquirer, jointly liable for the duty payable. The bill proposes for the liability of the target entity to be a charge on the land for which a caveat can be registered. A target entity would be entitled to recover as a debt for any duty paid from the acquirer—but if the acquirer cannot fund the duty, then there is a possibility of the charge being enforced or the target entity prevented from selling the land. This could be a key issue for external financiers and due diligence for any future acquisitions or sell down.

Duty on deemed assignment of put and call options extended

The bill would extend the stamp duty on call options to include an arrangement for the relinquishment of the call option with an agreement to sell to the third person without the option holder requiring the vendor to sell the land.

Surcharge duty and land tax exemption for discretionary trusts

The bill proposes an exemption from and refunds of surcharge purchaser duty and surcharge land tax payable in respect of residential land by the trustee of a discretionary trust if the trust prevents a foreign person from being a beneficiary of the trust. This would be intended to prevent a discretionary trust from inadvertently attracting liability for surcharge duty and land tax payable by a foreign trustee.

Transitional provisions

The bill would be effective on the date of Royal Assent, but there are transitional provisions generally for agreements entered into before that date. Timing of the existing transactions therefore could be critical.

Read an October 2019 report prepared by the KPMG member firm in Australia

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