More Stamp Duty Relief in Victoria
February 2003
It's been a long time coming, but stamp duty in the State of Victoria on transfers of shares in companies or transfers of units in unit trusts has now been abolished whether public or private vehicles - with the exception of transfers in “land rich entities”, which can be liable to ad valorem conveyancing stamp duty rates on either sale or redemption in particular situations as alluded to below.
Stamp duty on listed marketable securities (shares or units listed on the Australian Stock Exchange or other recognised stock exchange) had already been excluded from the definition of dutiable property since 1 July 2001.
In amendments made to the Duties Act 2000 (Vic), duty on unlisted marketable securities was excluded from the definition of dutiable transaction from 1 July 2002. This includes shares in "mum and dad" family companies and units in family trusts.
However, the “land rich provisions” can still apply – and the abolition of stamp duty on marketable securities will not allow taxpayers to avoid stamp duty in property-rich companies by transferring the shares in the companies, rather than the real estate itself. In Victoria, a private corporation may be “land rich” if that corporation has unencumbered land holdings of AUD$1 million or more in Victoria and the land holdings of that private corporation in all places (whether within or outside Australia, and not just Victoria) comprise 80% or more of the unencumbered value of all of its assets, and if the transfer or redemption gives rise to a change in ownership beyond a prescribed threshold. Various anti-avoidance provisions co-exist with the legislation.
If a person (including a company) acquires a majority interest in a land rich private corporation, stamp duty may be imposed at conveyancing ad valorem rates on the transfer of interests in the private corporation. In Victoria, stamp duty is imposed at a “progressive” scale topping at 5.5% of the gross unencumbered value of the underlying real estate.
In recent years, the State of Victoria has created more stamp duty exemptions for various commercial and non-real estate related transactions, so as to attract more industry and jobs to Victoria. Currently, little or no stamp duty applies in Victoria for real estate leases (whether commercial or non-commercial) or business acquisitions or franchises or intellectual property licences – except in limited circumstances such as (typically) if associated with a real estate acquisition. The stamp duty rates on transfers of real estate, however, remain relatively high in Victoria when compared with stamp duty rates in other Australian States and Territories.
For further information, contact Joe Lederman at BALDWINS, Australian Lawyers & Consultants.
Return to the Corporations Law Archive or Australian Tax Law Archive.
