Stamp duty developments in Australia – August to October 2016 

Legislative Amendments

Taxation and Related Legislation (Miscellaneous Amendments) Act 2016 (Tas)

 The Taxation and Related Legislation (Miscellaneous Amendments) Act 2016 (Tas) received Royal Assent on 31 October. The Act makes a number of significant amendments to Tasmanian tax law, including:

• An amendment to the Duties Act 2001 to include the vesting of dutiable property transactions under statute or court order in the list of dutiable transactions to be treated as transfers.

• Amendments to the Taxation Administration Act 1997 to extend the standard reassessment timeframe from three to five years (or for four financial years where land tax was paid by instalments), to enable the Commissioner to remit unfair preference payments directly to a liquidator to the extent that he is lawfully required to do so, and to enable the Commissioner to offset refunds of overpaid tax (and interest payable on such refunds) against other tax liabilities of the taxpayer.

Revenue Legislation Amendment Act 2016 (ACT)

The Revenue Legislation Amendment Act 2016 (ACT) was notified on 22 August 2016, and includes measures that:

• make minor amendments to s 16A of the Duties Act 1999 (ACT), setting out timeframes for duty payments for 'off the plan' residences; and
• remove references to 'relevant date' in the Rates Act 2004 (ACT) and replace them with clear references to a 1 January base date for unimproved value determinations.

Duties Amendment (Landholder and Corporate Reconstruction and Consolidation) Bill 2016 (Tas)

The Duties Amendment (Landholder and Corporate Reconstruction and Consolidation) Bill 2016 (Tas) was introduced into the Tasmanian Parliament on 17 August 2016 and has passed the House of Assembly and is before the Legislative Council. The Bill includes measures that:

• Replace existing land rich duty provisions with landholder duty provisions to bring Tasmania into line with similar provisions applied in other jurisdictions. The amendments retain the landholding threshold of $500,000 as the test for determining whether an entity is a landholder and remove the land ratio test.

• Introduce new corporate and consolidation exemption provisions which enable the Commissioner of State Revenue to grant a full exemption from duty for an internal reorganisation of a corporate structure if satisfied that specified criteria are met, replacing the existing administrative process under which the Treasurer considers individual requests for a refund of duty for genuine internal corporate restructures.

Revenue office developments

QLD Public Ruling DA000.15.1

In Public Ruling DA000.15.1 the QLD Commissioner of State Revenue outlines the factors that will be taken into account when determining whether ex gratia relief from the additional duty should be given where residential land is acquired for development purposes, namely:

• whether the foreign entity is Australian-based;
• whether the foreign entity has complied with any FIRB requirements;
• whether the entity meets regulatory requirements, e.g. the extent to which the entity complied with the Corporations Act 2001 (Cth) or QLD taxation laws;
• the significance of the development; and
• whether the foreign entity primarily uses Australian goods, services and personnel.

QLD Public Ruling DA000.14.1

In Public Ruling DA000.14.1 the QLD Commissioner of State Revenue clarifies how interests of foreign persons and related persons will be considered when determining whether foreign persons have a controlling interest in a corporation or at least 50% of the trust interests in a trust. 

QLD Public Ruling DA232.1.1

In Public Ruling DA232.1.1 the QLD Commissioner of State Revenue provides guidance on the Commissioner's interpretation of the phrases 'solely or primarily used for residential purposes' and 'designed or approved by a local government for human habitation by a single family unit'.

VIC Draft Revenue Ruling TAA.004v03

The Victorian Office of State Revenue has released Draft Revenue Ruling TAA.004v03, an update to Revenue Ruling TAA.004v02, explaining how the Commissioner applies s 100 of the Taxation Administration Act 1997 (Vic), which provides the Commissioner with the discretion to permit a person to lodge an objection to an assessment (other than a compromise assessment) outside of the prescribed 60-day period for lodgement of objections.

Amendments to Revenue Ruling TAA.004v02 are minor. Most notably, prejudice to the Commissioner and to the taxpayer in granting permission to lodge an objection out of time are expressly included as relevant factors for the Commissioner's consideration.

NSW Revenue Ruling No. G 008

The NSW Office of State Revenue has released Revenue Ruling No. G 008 clarifying the meaning of 'foreign person' for the purposes of the Surcharge Purchaser Duty and Land Tax Surcharge, which apply from 21 June 2016. In the ruling, the Commissioner explains that the meaning of 'foreign person' is taken from s 4 of the Foreign Acquisitions and Takeovers Act 1975 (Cth) and that modifications to that definition in clauses 18, 46 and 47 of the Foreign Acquisitions and Takeovers Regulation 2015 apply to the meaning of 'foreign person' for the purposes of the Surcharge Purchaser Duty and Land Tax Surcharge.

NSW Revenue Ruling No. DUT 036v02

The NSW Office of State Revenue has issued a revised and updated Revenue Ruling No. DUT 036v02, explaining how the Commissioner will apply s 25 of the Duties Act 1997 (NSW), which provides that certain dutiable transactions relating to separate items of dutiable property will be aggregated and treated as a single dutiable transaction.

NSW Revenue Ruling No. DUT 045

The NSW Office of State Revenue has released Revenue Ruling No. DUT 045 clarifying its position on the role that GST plays in determining the market value of property where duty is payable on the market value of the property. The question arises because the inclusion or exclusion of GST can make 1/11th of a difference in the value upon which duty is calculated, and therefore in the duty calculated.

In the ruling, the Commissioner outlines his position that liability to pay GST upon sale of property is a factor in the market for the property which is embedded into the value of the property and not a separate amount to be deducted. The market value of property is determined by reference to the price negotiated between a hypothetical willing purchaser and hypothetical willing vendor with access to all relevant information. As the impact of GST upon each of the vendor and purchaser depends on their individual circumstances, the hypothetical vendor and purchaser cannot be assumed to have any particular characteristics, meaning the impact of GST cannot be presumed. For this reason, the value of property is the amount expected to be received on the sale of the property, including any GST which the vendor may be liable to pay. The conclusion as to how GST is expected to impact on the market value and be reflected in the valuation is a little unclear.

Vasiliades v Commissioner of State Revenue (Vic)

Summary

In Vasiliades v Commissioner of State Revenue (Vic) [2016] VSC 544 the Supreme Court of Victoria has denied an application for judicial review of assessments made by the Commissioner of State Revenue where the taxpayer argued that the Commissioner did not have the power to reissue a land tax assessment which had been withdrawn earlier by agreement between the Commissioner and the taxpayer. 

Background

In 2002 the taxpayer acquired property and lived in it until 2008 or 2009, when she moved to Europe. In 2011 she was issued land tax assessments in respect of the property for the 2009 to 2011 assessment years and promptly lodged an objection against those assessments on the grounds that she was exempt from land tax because the property was her principle place of residence. She claimed that the property remained her principle place of residence because she had left the property reluctantly and intended to return to it, and maintained familial connections to Melbourne.

The Commissioner disallowed the objection and in response the taxpayer requested that the Commissioner refer the matter to VCAT. The Commissioner replied to this request by offering to withdraw the 2009-2011 assessments in return for the taxpayer withdrawing the referral request and the taxpayer accepted this offer.

In August 2015, the Commissioner issued three reassessments to the taxpayer in respect of the 2009 to 2011 assessment years for the same sums previously assessed in 2011. The Commissioner reissued the assessments on the basis that the taxpayer's 2011 claims were inconsistent with evidence she later gave in a 2014 Federal Court proceeding. The taxpayer sought judicial review of the reassessments, arguing that the Commissioner did not have the power to reissue assessments which it had earlier agreed to withdraw.

Decision

While the Commissioner had agreed to withdraw the assessment issued under s 8 of the Taxation Assessment Act 1997 (Vic), this did not extinguish the Commissioner's power to issue a reassessment under s 9 of the Act as there was no promise or agreement not to exercise this power. The Court considered that there may be circumstances in which the making of reassessments is an abuse of the Commissioner's statutory power, such as where the reassessment is based entirely on the same factual foundation as the original assessments. It was not, however, contended by the taxpayer that there was an abuse of statutory power and the Court found that the Commissioner had the power to make the reassessment.

Vikpro Pty Ltd v Wyuna Court Pty Ltd ATF Wyuna Court Unit Trust

Summary

 In Vikpro Pty Ltd v Wyuna Court Pty Ltd ATF Wyuna Court Unit Trust [2016] QCA 225 the Supreme Court of Queensland – Court of Appeal has confirmed that a lessee was liable to pay land tax in accordance with a clause in the lease agreement following the repeal of legislation prohibiting such clauses. 

Background

Section 44A of the Land Tax Act 1915 (Qld) (the 1915 Act) rendered unenforceable any provision in a lease requiring a lessee to pay land tax or reimburse the lessor for land tax. In 2009, the 1915 Act was amended to repeal s 44A, however two transitional provisions provided that s 44A continued to apply to pre-existing leases. In 2010, the Land Tax Act 2010 (Qld) (the 2010 Act) was enacted, repealing and replacing the 1915 Act. The 2010 Act expressly applied only to 'post-commencement liabilities' (defined as liabilities for land tax arising after 30 June 2010) and acts done or omitted to be done for the Act after 30 June 2010, with the 1915 Act applying to pre-commencement liabilities and acts done or omitted to be done for the Act before 30 June 2010.

The Appellant was the lessee under a sub-lease of property entered into in August 2006 for a 70 year term. A clause in the lease provided that the lessee must pay all taxes and rates in respect of the land. The Appellant argued that the clause was unenforceable for the entirety of the term of the lease insofar as it required the lessee to pay land tax.

Decision

The Court of Appeal, by a 2:1 majority, upheld the primary judge's findings that entering into the lease in 2006 was not an act done "for" the Act, and further that s 44A of the 1915 Act applied only to the extent that a lease required reimbursement of land tax imposed by the 1915 Act, and did not apply to land tax imposed by the 2010 Act. Accordingly, the clause is enforceable to require the lessee to reimburse the lessor for land tax payable after 30 June 2010.