Gary Chiert and Kevin Huynh advise taxpayers on Tasmania's plan to broaden its current model for duty charges on transfers of land.
Tasmania is about to broaden its current ‘land-rich’ model used for charging duty on direct and indirect transfers of land, to a landholder model, bringing itself in line with the other States and Territories.
The timing is uncertain as the new provisions will only come into effect once the Duties Amendment (Landholder and Corporate Reconstruction and Consolidation) Bill 2016 receives royal assent.
The most significant change is moving away from the 60 percent land to property ratio for determining whether duty will be triggered.
The following is a summary of the changes:
|Landholding||$500,000 + 60% of all property being land||$500,000|
|Duty charged on||Land||Land + Goods*|
|Entities affected||Private corporations
|Private and listed corporations and trusts|
|% acquisition triggering duty||Majority interest – 50%||Significant interest – 50% for private entities, 90% for listed entities|
|Rate of duty||4.50%||4.50% for private entities, 0.45% for listed entities|
*The value of goods will not be included in determining whether an entity breaches the $500,000 threshold.
The timing of acquisitions of companies and trusts that own land in Tasmania is now critical, as there are potential significant duty consequences if delayed.