Page 387 - Week 03 - Thursday, 1 June 1989

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STAMP DUTY ON SALE OF LAND OWING COMPANIES AND UNIT TRUSTS

Background

Stamp duty in the ACT on the sale of realty is assessed on a graduated scale between 1.51 (on conveyances up to $14,000) and 5.5% (where the value exceeds $1 million).

However, land ownerships can be effectively transferred by way of sale of shares/units in predominantly land owning private companies and unit trusts. This has resulted in stamp duty being payable at the much lower marketable security rate of 0.6% with significant losses to the Territory revenue.

Victoria, NSW and WA introduced legislation in 1987 to close off this avenue of stamp duty avoidance by imposing stamp duty liability at conveyancing rates on the sale of shares/units in private companies/unit trusts where the company/unit trust has predominately realty based assets. Queeensland and the NT have since followed.

In late April 1989 media reports indicated that negotiations were underway in respect of a major real estate sale in the ACT. The Commonwealth Minister responsible for the ACT (Mr Holding) moved to bring the ACT into line with the States/NT to ensure that the revenue of the ACT was not disadvantaged by the lack of appropriate legislation.

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