+ Landholder Duty

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A new era has begun in the taxation of acquisitions of equity in companies and trusts which hold land in NSW, with the introduction of landholder duty in the State Revenue Legislation Further Amendment Act 2009 which applies to acquisitions of private entities from 1 July 2009 and public entities from 1 October 2009.

It is now irrelevant what proportion of the value of the entity is comprised of land, provided that the entity holds $2m worth or more of land in NSW. Where full equity in such a landholder is acquired, duty at a top rate of 5.5 % now applies not only to the unencumbered value of all the NSW land held by the entity whose equity is being acquired, but also on the goods in NSW held by the entity as well. This represents an important and largely unheralded policy shift, which will expand the NSW tax base.

It is noted that the definition of 'goods' for these purposes does not include stock in trade, materials for use in manufacture or goods under manufacture, among other things.

Changes have also been made to stamp duty applicable to takeovers of public entities. From 1 October 2009, acquisitions of 90% or more of a public entity which has at least $2m or more of NSW land, bear stamp duty calculated at 10% of the full rate that would ordinarily be payable on the transfer of that land. Duty would not have been payable on such transactions prior to 1 October 2009.

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