The State Revenue Legislation Amendment Act 2010, which received assent on 28 June 2010, contains amendments to State taxes and duties. This includes amendments to:
These amendments commence on 1 July 2010.
The NSW Home Builders Bonus (HBB) was introduced to stimulate the construction of new homes in NSW. HBB provides exemptions and concessions for certain purchases of new homes, homes off the plan and vacant land on which a new home will be built (New Housing Concession).
An amendment to section 12 clarifies that a transfer, or other transaction, in respect of dutiable property, is liable for duty even if the dutiable property is not in existence at the time that the transfer is taken to have occurred.
The Commonwealth Social Security Act 1991 allows for special disability trusts to be established by families who wish to provide for the care and accommodation needs of a family member with a severe disability.
New section 65 (22) provides exemptions:
Section 54(2A) provides for duty of $50 to be payable on a transfer of dutiable property to a trustee of a special disability trust, as a consequence of the retirement of a trustee or the appointment of a new trustee, subject to certain requirements.
Amendments to section 54 refine the circumstances in which certain transactions that are made as a consequence of the retirement of a trustee and the appointment of a new trustee are chargeable with nominal duty. Under the pre-amendment provisions, $50 is charged in such circumstances if the dutiable property concerned is transferred to a special trustee. The amendment limits the definition of special trustee, so that the concession applies only to a licensed trustee acting in its capacity as trustee or administrator of a deceased estate, or the trustee of a complying superannuation fund within the meaning of section 42 of the Superannuation Industry (Supervision) Act 1993, acting in its capacity as trustee of that fund. New section 54(2A) includes new requirements that must be met before a transfer of dutiable property to a licensed trustee company that is not acting in its capacity as trustee or administrator of a deceased estate will be chargeable with nominal duty.
Transfers to new trustees who are not ‘special trustees’ will continue to be eligible for the duty concession subject to the Chief Commissioner being satisfied that the new trustee is not and cannot become a beneficiary of the trust.
New section 62A provides that duty of $50 is payable on a transfer or an agreement to transfer dutiable property from a person to the trustee of a self managed superannuation fund, if:
Amendments to section 71(6) ensure that a person who owns property as an executor of an estate is not prevented from being eligible under the scheme if he or she decides to purchase the property.
New section 74A makes provision for the application of the First Home Plus scheme to multiple occupancy contracts. The object of the amendment is to ensure that the cap on the value of the dutiable transaction applies to that part of the land that is to be an exclusive occupancy under the contract, and not to the whole of the land.
The landholder duty provisions allow the tracing of interests through linked entities. Amendments to section 158 clarify that interests can be traced through trusts and partnerships. It also ensures that where a person holds property in different capacities, the property holdings will be treated as separate property holdings for the purposes of the tracing provisions.
The amendments clarify the method for determining the value of property secured by a mortgage (for mortgage duty) when the property relates to property that is partly within and partly outside New South Wales.
Amendments to section 216(3) make it clear that more than one relevant document can be used for the purpose of determining the value of property affected by the mortgage. The document or documents used must provide a value of all the property affected by the mortgage.
New section 216(6) provides that, for a mortgagor who is a member of a group, the consolidated accounts of the group (if available and relevant) are to be used for the purpose of calculating the dutiable proportion for the mortgage. In that case, the only debt or equity to be taken into account is the debt or equity as disclosed in the consolidated accounts. This last requirement prevents a practice of double counting which reduces the dutiable proportion of the mortgage.
New section 216A provides a method of calculating the value of the goodwill of a business or intellectual property in New South Wales, using a test similar to the test for business assets in Chapter 2 of the Duties Act 1997.
New section 59B provides for nominal duty on certain transfers of dutiable property that are made by the custodian for the trustee of a trust to another custodian of the trustee of the trust, where there is no change in the beneficial ownership of the dutiable property and certain other requirements are met.
An amendment to section 61 extends an existing duty concession for certain transfers that are made in connection with a person changing superannuation funds. The concession is extended to a transfer of marketable securities from a life company or custodian for a life company to the trustee, or the custodian of the trustee, of a superannuation fund that is made in the consideration of the surrender or termination of a policy of life insurance issued by the life company.
New section 65(24) establishes a duty exemption for certain dutiable transactions that are made to rectify the consequences of fraudulent conduct or as a consequence of a court declaration that a registered transfer is void or voidable.
An amendment to section 274 makes it clear that an exemption for the transfer of land used for primary production between family members does not apply if the person acquiring the land does so as a trustee.
Amendments to sections 275 and 275A extend the exemption from transfer duty for charitable or benevolent bodies to transactions that occur by way of vesting or surrender of interests in property.
The amendments extend an existing exemption for securitisation arrangements so that it applies not only to loan-backed securities but to any asset-backed security. Asset-backed security is defined. The amendments also ensure that the exemption applies to transactions or instruments to the extent that they relate to securitisation only. A similar limitation for securitisation arrangements that relate to mortgage-backed securities is included. Sections 282 – 284 apply.
The amendments change the rates of gaming machine tax applicable to hotels in the year commencing 1 July 2010 and subsequent years.
Hotels will no longer be liable to pay gaming machine tax on the first $200,000 of annual gaming machine profits.
For profits exceeding $200,000 a year and up to $5,000,000 a year, the rates are increased.
For profits exceeding $5,000,000 the rate remains the same.
The amendments remove and update the names of health funds that are listed as prescribed organisations.
The amendments provide that a special disability trust is a concessional trust for the purposes of the Land Tax Management Act 1956 (the Act).
A special disability trust is a trust that is established for the purpose of making financial provision for people with disabilities and that complies with the requirements of the Commonwealth Social Security Act 1991. This enables the principal place of residence exemption to be claimed by the trustee of the trust.
The amendments relate to the land tax reduction that is applicable to mixed use or mixed development land where part of the land is used and occupied as a principal place of residence.
The amendments apply certain concessions that are available under the principal place of residence exemption for residential land, so that the land tax reduction can be applied in certain circumstances where the residence concerned is not actually being used and occupied by the owner of the land.
The concessions concerned are the concession for absences from a former residence, the concession on death of the owner, and the concession for a tenancy following the death of an owner. The last two concessions are already available in relation to mixed use and mixed development land, but the amendments restructure the relevant provisions so that they are all located in the one place.
The general rule for exemptions from land tax is that the exemption applies to the benefit of the owner of the land who is exempt, and not to any other owners. The amendments make it clear that this is subject to the principal place of residence exemption (that is, if one owner uses and occupies the land as a principal place of residence all owners receive the benefit of the principal place of residence exemption).
The amendments extend (from two to four years) the period during which the principal place of residence exemption can be claimed in respect of unoccupied land that is intended to be the owner’s principal place of residence. As a consequence of this amendment, the Chief Commissioner of State Revenue will no longer have the discretion to extend that period further.
The amendments make it clear that the concession under the principal place of residence exemption for the sale of a former principal place of residence can apply only for one tax year.
The amendments revise the conditions under which a person can claim the principal place of residence exemption during an extended absence. At present, the exemption can be claimed only if the residence is not rented for more than six months in a tax year. The amendments clarify that the residence also must not be rented for a total period in excess of 182 days in a tax year, with each overnight stay counting as one day.
The amendments further provide that the principal place of residence exemption ceases to have effect if the land ceases to be capable of being used and occupied as a principal place of residence and remains incapable of being so used and occupied for a period exceeding four years.
The amendments allow the principal place of residence exemption to be claimed in respect of land owned by a company in its capacity as the personal representative of a deceased person, where the existing principal place of residence concession for a continuing tenancy following the death of an owner of the land would apply.
The amendments clarify the circumstances in which the principal place of residence exemption can be claimed in respect of two adjoining lots of land where the lots are divided by a fence, wall or other structure. In order for the exemption to apply, access must be readily available between the lots by means of gates, doors, steps, stiles, elevators or openings, or by similar means. This requirement is additional to the other requirements applicable to adjoining lots of land (for instance, that the lots must be in the same ownership and occupied as the site of a single residence).
The amendments provide, in relation to the same exemption, that lots may be regarded as being in the same ownership if the lots are beneficially owned by the same person or persons.
Previously, the Act allowed the Chief Commissioner to classify a trust as a special trust either on the application of the trustee or by his or her own decision. Land that is the subject of a special trust does not receive the benefit of the tax-free threshold. Land that is the subject of a fixed trust does receive the benefit of the tax-free threshold.
The amendments make it clear that the fact that the Chief Commissioner does not classify a fixed trust as a special trust until a particular year does not prevent the Chief Commissioner from assessing or re-assessing the land tax liability in respect of land the subject of that trust for a previous year if that trust was not a fixed trust.
However, a classification of a fixed trust as a special trust that is made on the application of the trustee of the trust has a prospective application only.
The amendments repeal section 65A of the Act. This provision enables the Chief Commissioner to alter unit entitlements under a strata scheme for land tax purposes.
The amendments clarify the circumstances in which land the subject of a voluntary conservation agreement will be exempt from land tax. The requirement is that the agreement must be one that has effect in perpetuity. The amendment defines that to mean an agreement that remains in force for an indefinite period and which cannot be unilaterally terminated by the owner of the land.
The amendments clarify that a purchaser under an agreement for sale of land will be taken to be the owner of the land for land tax purposes (to the exclusion of the owner) if, under the terms of the agreement, the purchaser is entitled to receive any rents or profits derived from a tenancy of the land or the purchaser is entitled to exclusive possession of the land.
The amendments reduce the payroll tax rate payable for the period from 1 July 2010 to 31 December 2010 from 5.65% to 5.5%. This brings forward the payroll tax reduction that was due to occur on 1 January 2011. From 1 January 2011, the rate is further reduced to 5.45%.
The amendments exempt from payroll tax wages that are paid or payable to a male employee in respect of a maximum of 14 weeks paternity leave. This exemption is similar to the exemption that applies to maternity leave and adoption leave.
The amendment applies to wages paid or payable on or after 1 July 2010.
The amendments provide that the payroll tax rebate that an employer is entitled to in respect of apprentice/trainee wages does not apply to wages payable to a trainee who has been continuously employed by the employer for more than three months full-time or 12 months casual or part-time immediately before commencing work as a trainee.
This replaces an existing exclusion for wages payable to a trainee who was an employee of the employer within the period of three months before becoming a trainee. The amendment applies to wages paid or payable on or after 1 July 2010.
The amendments make it clear that the Chief Commissioner can issue a notice of assessment under the Taxation Administration Act 1996 of the liability of a person to pay tax or related charges for which the person is jointly and severally liable with another person, even if a notice of assessment has been issued to the other person. The provisions of the Act relating to assessments, and objections to assessments, will apply in respect of the notice.
The amendments also ensure certain provisions of the Petroleum Products Subsidy Act 1997 and the regulation under that Act continue to apply for investigation and enforcement purposes.
The amendments authorise the Chief Commissioner to process certain claims for the payment of unclaimed money on behalf of the Treasurer.
Unclaimed money in trust accounts and trust funds under the Legal Profession Act 2004 and the Trustee Companies Act 1964 was previously paid to the Treasurer, who processed claims for the money. The amendment allows claims for, and repayment of, unclaimed money under those Acts to be dealt with by the Chief Commissioner in the same way as claims for other unclaimed money are dealt with under the Unclaimed Money Act 1995.
The amendment enables the Chief Commissioner to publish details of these amounts of unclaimed money and the identity of the owners of the money (if known) in the same way as the Chief Commissioner publishes details of other unclaimed money received under the Act.
The amendments also enable an enterprise that has paid an amount of unclaimed money to the owner of the money, after having paid the same amount to the Chief Commissioner under the Act, to recover that amount from the Chief Commissioner.