NSW Landholder Provisions Finally Revealed

The State Revenue Legislation Further Amendment Bill 2009 introduces new landholder duty provisions which are likely to apply from 1 July 2009.

Under the current law, stamp duty, at the substantial conveyance rates, is payable on the sale of interests in 'land-rich' entities such as companies and trusts when the entity's land assets comprise a specified proportion of its total assets.

Under the new model, duty will be assessed on the acquisition of an interest in a landholder, whether or not the entity is 'land-rich'. The proportion of land assets will no longer be relevant to the imposition of the duty.

A liability for landholder duty will be assessed on the acquisition of a 'significant interest' in a landholder. A unit trust or company is a landholder if it has landholdings with an unencumbered value of at least $2million.

In relation to a private company or unit trust, a significant interest will be an acquisition of 50% or more. There is no longer a differentiation between private companies and private unit trusts.

The acquisition of 90% or more of public unit trusts and listed companies will also be a significant acquisition that may attract duty.

Duty under the landholder model will not only be assessed on the value of the landholding; it will also be charged by reference to the value of goods (including plant and equipment) of the landholder.

The new provisions will apply to share or unit acquisitions if the agreement for sale or issue is completed after 1 July 2009. However, transitional relief will be available for acquisitions made under options or agreements entered into before 11 November 2008.

Certain interests that are quarantined under the current 'land-rich' provisions may need to be counted for the purpose of determining whether there is an acquisition of a significant interest.

In the case of a public landholder, transitional relief will apply to the acquisition of a significant interest prior to 1 October 2009. There is also a concession where the acquisition of an interest in a public landholder has been announced to the market.

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