Smaller States advancing with duty reform | KPMG | AU

Smaller States pushing ahead with duty reform

Smaller States advancing with duty reform

Michelle Bennett and Jacqueline Wood examine recent changes to duties laws in Tasmania and South Australia.

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The parliaments in Tasmania and South Australia both closed out 2016 by updating their duties legislation.

In Tasmania this included amendments, effective from 6 December 2016, which have brought its duties law into much closer alignment with the rest of Australia and delivered something for both the revenue and the taxpayer by:

  • replacing Australia’s last remaining ‘land rich’ regime with the simpler, more ‘modern’ (read simpler and more lucrative) landholder model that all other States and Territories have applied for several years; and
  • introducing long awaited ‘corporate reconstruction’ and ‘corporate consolidation’ exemptions broadly in line with those already operating in all other States and Territories.

Landholder duty will now apply to an acquisition which gives rise to (or increases) a significant interest in a company or unit trust that has landholdings in Tasmania valued at $500,000 or more. Previously land rich duty applied to private companies and trusts only, and only when the value of land to other assets of the entity exceeded ‘land rich’ ratio of 60 percent. The acquisition threshold of a 50 percent or greater interest continues to apply to private landholders. However, an acquisitions threshold of 90 percent applies to a public company or trust will now also be subject to landholder duty, but the landholder duty is at a reduced rate of 10 percent of the duty otherwise payable on the underlying land and goods.

The corporate reconstruction rules, which exempt otherwise dutiable transactions between members of a 90 percent owned group of companies and/or unit trusts, will be subject to 12 month ‘pre and post association’ requirements which also apply, with varying time periods, in most other jurisdictions with the notable exceptions of NSW and WA.

In South Australia, amendments announced in its 2016/2017 budget have now also been enacted with legislation receiving Royal Assent on 8 December 2016. Particularly welcome is confirmation of the abolition of duty on all transfers of goods from 1 July 2016

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