Transcript: IndirecTV™ video update – June 2011
Stamp duty base being broadened under the new landholder duty provisions in Vic, Qld and SA
Welcome back to Deloitte IndirecTV™.
In this episode, we look at recent stamp duty developments, in particular how the duty base is being broadened under the new landholder duty provisions in Victoria, Queensland and South Australia.
More share and unit dealings in Victoria, Queensland and South Australia will be caught under new landholder provisions which come into force on 1 July 2011 for Queensland and South Australia and a year later for Victoria.
Where there is downstream land, more transactions in shares and units are being caught due to additional States following New South Wales and Western Australia and adopting a landholder duty model. This model broadens the base in three ways:
- It removes the land to non land ratio making more entities subject to the provisions
- It allows taxing of takeovers of listed entities, and
- It taxes both goods and land (except in Queensland).
Landholder duty is a recent innovation and replaces land rich duty. Landholder duty now applies in New South Wales, Western Australia and both of the territories.
Landholder duty does away with the 60% land rich percentage threshold and only has a simple minimum land value threshold. This means as long as the land in a company or unit trust (or downstream if there is a multiple entity structure) exceeds a certain value, duty will have to be paid even if the land is relatively insignificant as a percentage of overall assets.
Under land rich duty, if there was a business in an entity you could be pretty sure that land rich duty did not apply, even if it owned some land. With landholder duty, any land holding is now probably enough to trigger duty when you buy the entity.
Remember, duty applies where the land is, so a takeover of a company can be subject to duty in multiple states, with different thresholds and duty rates.
Landholder duty applies to takeovers of listed entities. This means that when 90% or more of a listed company or unit trust is acquired, duty becomes payable even though the target remains listed.
The new Victorian, Queensland and South Australian provisions will however follow the concessional treatment in New South Wales and only require payment of 10% of the duty that would otherwise be payable.
Western Australia does not have this cap which means that the duty costs of takeovers can be substantial
Land rich duty was only payable on the land value. Landholder duty taxes goods as well as land. Strangely Queensland will not follow in this regard even though each of Victoria, Queensland and South Australia are seeking to harmonise their provisions.
The effect of this change can have a significant impact on the duty position for manufacturing or retail businesses where there is a mixture of leased and owned premises, in which case plant and equipment and other goods may be more valuable than the land holdings.
Landholder duty will come into force as follows:
- In Queensland and South Australia from 1 July 2011
- In Victoria from 1 July 2012.
This means that Tasmania will be the only jurisdiction without an announced landholder model.
As the changes in Queensland and South Australia are almost upon us, care will need to be taken as regards any agreements that are entered into now for completion post-1 July.
For more information, please speak to your usual Deloitte contact. Thanks for watching.