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Legislative Assembly for the ACT: 2000 Week 7 Hansard (29 June) . . Page.. 2187 ..

MR HUMPHRIES (continuing):

jurisdictions to introduce the uniform legislation) have encountered difficulties with its operation.

This Bill amends the Duties Act to address a number of issues that have arisen within the ACT and, where desirable, adopt changes made in NSW legislation.

Mr Speaker, the current Duties Act provides relief from ad valorem duty on certain transfers of property when managed funds are converted to a "managed investment scheme" in accordance with the Commonwealth's Managed Investments Act 1998. However, representatives of the managed funds industry identified further circumstances where the legislation does not adequately apply. This is due to the possible combinations of transfers between trustees, managers, responsible entities and custodians, and the possible need to create new agreements, documents and arrangements to convert to a managed investments scheme.

Amendments included in this Bill will overcome these difficulties and bring the ACT into line with similar concessions provided under the NSW legislation.

The Duties Act also imposes duty on certain share transactions involving land-rich companies and unit trusts as if they were transactions over the land. These provisions apply when a majority interest in a company is acquired by one or more specified means, including the variation of rights attaching to shares and the redemption of shares.

A decision of the Queensland Supreme Court in December 1998 (MIM Holdings Limited v Commissioner of Stamp Duties), Mr Speaker, indicated that a potential loophole exists in the various jurisdictions' Duties legislation, where a majority interest is acquired by paying a call on partially paid shares. In this case, the Court held that the rights of the shareholders were varied, rather than the rights attaching to the shares, and that this was not a dutiable transaction. Amendments in the Bill remove this avoidance mechanism, making such changes liable to duty and bringing the ACT into line with changes made to the NSW legislation.

Mr Speaker, the redemption of shares in public companies is liable to duty under Part III of Chapter 3 of the Duties Act. No similar provision exists, however, for the redemption of shares in private companies. It is therefore quite possible for private companies to acquire property ownership through the redemption of shares, without payment of duty. Amendments in the Bill overcome this anomaly.

Mr Speaker, provisions in the Duties Act exempt from duty a transfer of marketable securities from a beneficial owner to a trustee or nominee, to hold for the beneficial owner, or from a trustee or nominee to the person from whom the securities were transferred, providing there has been no change in beneficial ownership. There is a range of situations, however, where the transaction does not directly involve the beneficial owner, but involves a nominee, trustee or custodian. As some of these transfers are technically liable to ad valorem duty, despite there being no change in beneficial ownership, the Bill provides for such transactions to also be exempted.

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