Landholder duty changes – are you at risk?
If you take part in a transaction involving shares in a company, or units in a trust, and the company or trust owns NSW land, it is now more likely that you will need to pay duty because of the transaction.
While duty on most share or unit transactions ceased to apply from 1 July 2016, duty is still imposed on transactions involving 'landholders'. A company or trust under current law will be a landholder if the land tax value of land owned by it, and certain linked entities, is at least $2 million. The land tax value is the unimproved value of the land.
There is a proposal before the NSW Parliament contained in the State Revenue Legislation Further Amendment Bill 2019 (NSW) (the Bill) to change the threshold to $2 million in market value. As the land tax value of land is almost always less than the market value (because the land tax value ignores improvements) this will mean more transactions will be subject to duty.
The Bill increases the power of Revenue NSW to collect the duty by making the entity that owns the land jointly and severally liable for the duty. The Bill also makes liable any persons who have their interests aggregated for the purpose of working out whether a dutiable transaction has occurred. Revenue NSW will also be able to lodge a caveat over the land to recover the landholder's liability for the duty.
Should you wish to discuss the potential implications for you or your clients, please contact us.
The material in this article was correct at the time of publication and has been prepared for information purposes only. It should not be taken to be specific advice or be used in decision-making. All readers are advised to undertake their own research or to seek professional advice to keep abreast of any reforms and developments in the law. Brown Wright Stein Lawyers excludes all liability relating to relying on the information and ideas contained in this article.
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Matthew McKee
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E mpm@bwslawyers.com.au
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Andrew Noolan
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Gillian Tam
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P 02 9394 1056