Corporate reconstruction and consolidation exemptions in Tasmania

Reconstruction and exemptions in Tasmania

Gary Chiert and Kevin Huynh look at the Tasmanian Government's plan to introduce stamp duty exemptions for certain corporate transactions.

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The Duties Act 2001 (Tas) does not provide an exemption for corporate restructures. At present, any relief from stamp duty is only granted on an ex gratia basis by the Treasurer and there is no certainty in this. The new statutory provisions replace the current administrative process and aim to provide greater certainty and transparency.

As part of the recent amendments to its duties legislation, the Tasmanian Government will introduce statutory exemptions for corporate reconstruction and corporate consolidation transactions. The proposed changes will bring Tasmania in line with the other seven States and Territories by allowing the Commissioner of State Revenue to grant a full exemption from duty for internal reorganisations.

The proposed exemption provisions adopt the concept of a ‘corporate group’. Members of a corporate group are established where a parent company owns 90 percent or more of the shares and control the voting of another company, being its subsidiary. Exempt transfers can occur between a parent and a subsidiary or two subsidiaries of a corporate group.

A key limitation is the inclusion of a pre and post association test. Parties are required to have been part of the same corporate group for at least 12 months before the day on which the transaction takes place, or in the case of a company or unit trust scheme that is less than 12 months old, since the date of incorporation or establishment.

Furthermore, the Commissioner can revoke the exemption where the parties involved in the exempted transaction do not remain in the corporate group for at least 12 months after the day on which the transaction occurs.

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