Page 1724 - Week 06 - Thursday, 19 May 1994
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Securities markets are rapidly becoming internationalised, and those which are not competitive will face the prospect of loss of participation by institutions. No country, including Australia, can isolate itself from these global market issues. The Australian market is heavily reliant on the participation of domestic and international institutions and therefore vulnerable to loss of business to competing markets. Australia must meet the challenge of competition by having a securities market that matches or exceeds the standards called for by industry participants. CHESS is a means to allow the securities industry to achieve this objective.
The achievement of reform of Australia's settlement system requires extensive changes in the laws relating to securities and associated matters, including stamp duty. Fortunately, the strong support for improved clearing and settlement by regulatory authorities and the collective concern of governments to promote micro-economic reform provide a strong impetus for initiatives for legislative change in this area. This Bill will provide the mechanism for share trading in the Territory, and, indeed, in Australia, to become more efficient and competitive with overseas markets.
Provisions in the Act currently require that share transfer documents are lodged with the Commissioner for ACT Revenue and that payment of the duty is represented by an impressed stamp on the share transfer document. This focus on lodgment of transfer forms is inappropriate, given the emphasis on paperless transfers that is vital to CHESS operations. This Bill introduces amendments to remove the requirement for stamping of transfer forms for CHESS transactions and to enable CHESS participants to pay stamp duty by way of a monthly return. The introduction of CHESS has also necessitated a change in the method of determining liability for duty between jurisdictions. Currently, duty is payable to the State or Territory in which the share register is located. This is inappropriate to shares transacted on CHESS which are deemed to be on the CHESS subregister located in New South Wales. A new framework has been created to more equitably distribute duty between jurisdictions.
The Bill also addresses a serious anomaly in the ACT. Duty is currently payable in the ACT only in respect of the transfer of legal ownership of marketable securities. It is possible, however, to acquire an equitable interest in marketable securities without a corresponding change in legal title. Other jurisdictions, including New South Wales, impose a liability for duty on the transfer of equitable interests in securities. In this Bill the Government is seeking to close off a potential avenue for tax avoidance by creating a liability to duty on the change in beneficial ownership of marketable securities.
This Bill largely involves introducing uniform provisions with other jurisdictions to allow the ASX to become more efficient. The detailed provisions are explained in the explanatory memorandum. The Bill has been developed in consultation with the Australian Stock Exchange and all other jurisdictions to ensure that, where possible, uniformity in legislation has been achieved. Given the nature of these amendments, it is necessary for the amendments to come into operation across Australia on the same day. The proposed date for introduction of the CHESS system and these amendments is 1 September 1994. I commend the Bill to the Assembly and present the explanatory memorandum for the Bill.
Debate (on motion by Mr Kaine) adjourned.
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