DEPARTMENT OF TREASURY AND FINANCE Territory Revenue Office Conveyances and Stamp Duties: The Fundamentals Kevin Phang Assistant Director Revenue Development Hilton Darwin October 2013

2 DEPARTMENT OF TREASURY AND FINANCEwww.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

3 DEPARTMENT OF TREASURY AND FINANCEwww.nt.gov.au What we will cover Stamp duty – key concepts Aggregation of instruments Cancelling an agreement Landholder duty provisions Exemptions

4 DEPARTMENT OF TREASURY AND FINANCEwww.nt.gov.au Firstly … SDA & TAA

5 DEPARTMENT OF TREASURY AND FINANCEwww.nt.gov.au 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)

6 DEPARTMENT OF TREASURY AND FINANCEwww.nt.gov.au Conveyance Duty Calculation Ad valorem duty calculated and imposed on dutiable value (DV) of dutiable property DV < $ PROGRESSIVE RATES $ $3 million 4.95% FLAT DV $3 million % FLAT

7 DEPARTMENT OF TREASURY AND FINANCEwww.nt.gov.au Conveyance Duty Calculation $ dutiable value = $ stamp duty $1 million dutiable value = $ duty TRO Stamp Duty calculator: StampDutyCalculators/Pages/Conveyance-Calculator.aspx

8 DEPARTMENT OF TREASURY AND FINANCEwww.nt.gov.au Dutiable Value – s4AB SDA Dutiable value of dutiable property Greater of consideration or unencumbered value

9 DEPARTMENT OF TREASURY AND FINANCEwww.nt.gov.au 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

10 DEPARTMENT OF TREASURY AND FINANCEwww.nt.gov.au 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

11 DEPARTMENT OF TREASURY AND FINANCEwww.nt.gov.au 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

12 DEPARTMENT OF TREASURY AND FINANCEwww.nt.gov.au What is subject to duty?

13 DEPARTMENT OF TREASURY AND FINANCEwww.nt.gov.au 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

14 DEPARTMENT OF TREASURY AND FINANCEwww.nt.gov.au 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

15 DEPARTMENT OF TREASURY AND FINANCEwww.nt.gov.au 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

16 DEPARTMENT OF TREASURY AND FINANCEwww.nt.gov.au 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

17 DEPARTMENT OF TREASURY AND FINANCEwww.nt.gov.au Onus on taxpayer to rebut presumption Papadakis Nominees Pty Ltd v Commissioner of Taxes [2007] NTMC 050. CG-SD-009 Just and reasonable discretion To aggregate or not to aggregate?

18 DEPARTMENT OF TREASURY AND FINANCEwww.nt.gov.au Landholder provisions Landholder is unit trust scheme, unlisted/ listed entity with land holdings ≥ $ 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

19 DEPARTMENT OF TREASURY AND FINANCEwww.nt.gov.au 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.

20 DEPARTMENT OF TREASURY AND FINANCEwww.nt.gov.au Exemptions – Schedule 2 Exemptions Company winding up Change of Trustee -stock in trade -livestock -work in progress Corporate Reconstruction Trustee to beneficiary Exempt entities Including: -public hospital -public education institution -charities

21 DEPARTMENT OF TREASURY AND FINANCEwww.nt.gov.au 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.

22 DEPARTMENT OF TREASURY AND FINANCEwww.nt.gov.au 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

23 DEPARTMENT OF TREASURY AND FINANCEwww.nt.gov.au For more information SD Lodgement Guide TRO website Guidelines/publications PH: Website: revenue.nt.gov.au

24 DEPARTMENT OF TREASURY AND FINANCEwww.nt.gov.au Questions