DEPARTMENT OF

TREASURY AND FINANCE Territory Revenue Office

Conveyances and Stamp Duties: The Fundamentals

Kevin Phang Assistant Director Revenue Development Hilton Darwin October 2013 www.nt.gov.au

Taxpayers, Advisers and TRO

• Taxpayers and professional advisors / representatives must be upfront, honest and cooperative • Full and true disclosure • Service Charter – TRO Obligations to public DEPARTMENT OF

TREASURY AND FINANCE

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What we will cover

• Stamp duty – key concepts • Aggregation of instruments • Cancelling an agreement • Landholder duty provisions • Exemptions DEPARTMENT OF

TREASURY AND FINANCE

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Firstly …

SDA & TAA

DEPARTMENT OF

TREASURY AND FINANCE

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Key Concepts

• Duty payable on

dutiable instruments

and in respect of

dutiable transactions

• Dutiable instruments to be lodged with TRO and duty paid within 60 days of first execution – CG-SD-001: Document lodgement and payment periods • But Conveyance By Return or CG-SD-002: Eligible conditional agreements – extension of time to lodge instrument and pay duty (e.g. off the-plan purchases) DEPARTMENT OF

TREASURY AND FINANCE

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Conveyance Duty Calculation

•

Ad valorem

duty calculated and imposed on

dutiable value

(DV) of dutiable property DV < $525 000

PROGRESSIVE RATES

$525 000 < DV > $3 million

4.95% FLAT

DV $3 million +

5.45% FLAT

DEPARTMENT OF

TREASURY AND FINANCE

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Conveyance Duty Calculation

•

$600 000

dutiable value =

$29 700

stamp duty •

$1 million

dutiable value =

$49 500

duty •

TRO Stamp Duty calculator:

http://www.treasury.nt.gov.au/TaxesRoyaltiesAndGrants/StampDuty/ StampDutyCalculators/Pages/Conveyance-Calculator.aspx

DEPARTMENT OF

TREASURY AND FINANCE

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Dutiable Value – s4AB SDA • Dutiable value of

dutiable property

• Greater of

consideration

or

unencumbered value

DEPARTMENT OF

TREASURY AND FINANCE

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Determining consideration

• Consideration takes a wider meaning or operation that belongs in a conveyancing sense rather than simple contract sense: – money or value that passes –

Archibald Howie Pty Ltd v Commissioner of Stamp Duties

(1948) 77 CLR 143.

• Includes GST DEPARTMENT OF

TREASURY AND FINANCE

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Determining consideration

• Contingency principle • If consideration is to be increased depending on future contingencies it is assumed that contingencies will be realised to maximise the consideration. • Duty reduced on reassessment if no actual increase DEPARTMENT OF

TREASURY AND FINANCE

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Unencumbered value

• Unencumbered value - value of property free from encumbrances. • Encumbrances include: – Debt or liability that may give right of recourse against property – An agreement or arrangement that reduces value of property. – Mortgage or charge • Objective, hypothetical test (

Spencer test

) –

Spencer v The Commonwealth

(1907) 5 CLR 418 DEPARTMENT OF

TREASURY AND FINANCE

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What is subject to duty?

DEPARTMENT OF

TREASURY AND FINANCE

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What is a dutiable instrument?

• A conveyance of dutiable property is a dutiable instrument • Other dutiable instruments include: – Deeds relating to trusts – Counterpart or copy of duly stamped instrument – Lease, where instead of, or in addition to rent payable, valuable consideration is given DEPARTMENT OF

TREASURY AND FINANCE

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What is a conveyance?

• A conveyance is the passing of property or interests in property: – Grant of property or patent, but not grant of lease other than a convertible crown lease – Transfer or assignment of property – An instrument effecting or evidencing a conveyance – An agreement to make a conveyance – Vesting or accrual of property to a person DEPARTMENT OF

TREASURY AND FINANCE

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What constitutes dutiable property?

Land • An estate or interest in land • Lease • Mining tenement • Fixture Business Assets • Goodwill • Intellectual property rights • Patent, registered design or copyright • Statutory business licence • Plant & Equip.

Other • Option to purchase dutiable property • Chattels • An estate or interest in property DEPARTMENT OF

TREASURY AND FINANCE

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To aggregate or not to aggregate?

• Aggregation occurs when two or more instruments are: – substantially one transaction;

OR

– one series of transactions.

• Aggregated instruments treated as a single dutiable instrument for duty purposes. • Presumption of one transaction where: – instruments executed within 12 months; – parties are the same DEPARTMENT OF

TREASURY AND FINANCE

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To aggregate or not to aggregate?

• Onus on taxpayer to rebut presumption •

Papadakis Nominees Pty Ltd v Commissioner of Taxes

[2007] NTMC 050. • CG-SD-009 • Just and reasonable discretion DEPARTMENT OF

TREASURY AND FINANCE

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Landholder provisions

• Landholder is unit trust scheme, unlisted/ listed entity with land holdings ≥ $500 000 • Where landholder acquires a significant interest in property as may occur in a corporate reconstruction - duty is payable.

• Significant interest: – Unlisted entities - 50% or more – Listed entities - 90% or more – Merger vesting - 50% or more DEPARTMENT OF

TREASURY AND FINANCE

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Landholder provisions

• Acquisition includes : – Transfer of shares – Allotment or issue of share, not being the issue of a share to a member on registration of corporation – Redemption, cancellation or surrender of share – Variation, abrogation or alteration of a right pertaining to a share. DEPARTMENT OF

TREASURY AND FINANCE

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Exemptions – Schedule 2

Trustee to beneficiary Company winding up Change of Trustee Exempt entities Including: -public hospital -public education institution -charities Exemptions Corporate Reconstruction -stock in trade -livestock -work in progress DEPARTMENT OF

TREASURY AND FINANCE

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Cancelling an agreement –s 56A • A refund/remission of duty is available where conveyance does not proceed. • Taxpayer must apply: – 90 days after it became clear the conveyance would not proceed; and – Provide all documents and evidence relevant to application and required by the Commissioner. • Not available where subsequent sale occurs.

DEPARTMENT OF

TREASURY AND FINANCE

www.nt.gov.au

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Take back to the Office

• Tax – the price to pay for what you ultimately want to do • Stamp duty – key concepts e.g. conveyance, dutiable property, dutiable value • Other issues – aggregation, landholder, exemptions DEPARTMENT OF

TREASURY AND FINANCE

www.nt.gov.au

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For more information

• SD Lodgement Guide • TRO website • Guidelines/publications • PH: 1300 305 353 • Email : [email protected]

• Website: revenue.nt.gov.au

DEPARTMENT OF

TREASURY AND FINANCE

www.nt.gov.au

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Questions

DEPARTMENT OF

TREASURY AND FINANCE

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