The State Revenue Legislation Further Amendment Act 2010 received assent on 29 November 2010.
The amendments commence on the date of assent unless otherwise indicated
An amendment to section 54 extends a duty concession that applies to certain transfers of dutiable property that are made as a consequence of the retirement of a trustee or the appointment of a new trustee. Duty of $50 will be charged on such a transfer that is made to a trustee of a self managed superannuation fund if the Chief Commissioner is satisfied that the transfer is not part of a scheme for conferring an interest on a new trustee or other person to the detriment of the beneficial interest or potential beneficial interest of any person. This amendment is taken to have commenced on 1 July 2010.
A definition of self managed superannuation fund is inserted in the Dictionary.
Amendments to section 61:
The amendments to section 61 commence on 1 January 2011.
An amendment to section 62A provides for a concession in respect of a transfer of, or an agreement to transfer, dutiable property that is made to the custodian of the trustee of a self managed superannuation fund by the sole member of that superannuation fund. Duty is charged at the concessional rate of $500. A further amendment provides that the concessional rate for transfers to a self managed superannuation fund does not apply if, as a result of the transfer, the fund ceases to be a complying superannuation fund. These amendments commence on 1 January 2011.
New section 267(7AA) extends a provision that exempts from duty an application to register a motor vehicle that is made by a war veteran entitled to a pension under the Veterans’ Entitlements Act 1986 of the Commonwealth, to other defence force officers entitled to similar benefits under the Military Rehabilitation and Compensation Act 2004 of the Commonwealth.
Amendments to section 150 clarify that debt interests are to be disregarded in determining whether a person has a significant interest in a landholder, in the same way as they are disregarding in determining whether a person has an interest in a landholder.
The definition of mortgage has been removed from the Dictionary to the Duties Act 1997 because it is inconsistent with changes made to the concessional provisions applying to mortgage-backed securities and asset-backed securities by the State Revenue Legislation Amendment Act 2010.
An amendment to section 59B ensures that a duty concession that applies when there is a change in custodians of a trust applies even if the trustee of the trust has changed since the retiring custodian was appointed. This amendment applies from 1 January 2011.
The amendments increase the eligibility cap for the first home owner grant from $750,000 to $835,000. The increase applies in respect of eligible transactions occurring on or after 1 January 2011.
Under the current land tax legislation, a trust established by will is assessed for land tax as if it were a fixed trust for the first year after the death of the testator, even if it is a special trust. The amendments extend this to 2 years after the testator’s death, and the Chief Commissioner’s discretion to approve an extension of time in particular cases has been removed.
An amendment to clause 9 of Schedule 1A extends the exemption for a deceased owner’s exempt residence, from 12 months to 2 years after the owner’s death.
These amendments apply for the 2011 and subsequent tax years, but only in respect of a person who dies on or after 1 January 2010.
The grant of shares and options to employees and directors are subject to payroll tax. Provisions of the Commonwealth Income Tax Assessment Act 1936 (ITAA 1936) are currently applied for the purposes of determining when a grant of shares and options becomes liable for payroll tax, and in determining their taxable value.
The Commonwealth Government announced changes to the method of taxing employee share schemes in the 2009 Budget, to take effect from 1 July 2009. Retrospective Commonwealth legislation was assented to on 14 Dec 2009, and included the transfer of the relevant provisions from the Income Tax Assessment Act 1936 to the Income Tax Assessment Act 1997 (ITAA 1997).
The Interpretation Act makes provision for the references in the New South Wales Payroll Tax Act to the ITAA 1936 to be read as references to the new provisions in the ITAA 1997. However, the retrospective effect of the Commonwealth legislation and changes in the way the new Commonwealth legislation taxes shares and options have made it necessary to amend the payroll tax provisions to reflect the Commonwealth changes.
Amendments to section 18(1) of the Payroll Tax Act provide that a grant of shares or options is liable for payroll tax in accordance with Division 4 of Part 3 of the Act only if the share or option is an ESS interest as defined in the ITAA 1997. An ESS interest is defined as shares or options in the employer company or its parent company. Other shares and options will be taxable as fringe benefits under Division 2 of Part 3 of the Act, which means the grossing up provisions apply for the purpose of determining their taxable value.
Amendments to section 24 make it clear that the grant of shares or options by a company to its directors are also taxed on the same basis as grants to employees
The amendments retain provisions in section 19 which allow employers to elect to pay payroll tax on shares or options at the time they are granted or when they vest. Amendments to section 19 set out the circumstances in which a share or option is taken to be granted. This provision replaces a reference to a repealed Commonwealth provisions. Other amendments to section 19 provide that shares or options are taken to vest at the end of 7 years after the grant of the share or option, if vesting has not occurred before that date. This is consistent with the new Commonwealth legislation.
The Payroll Tax Act currently provides that the value of shares or options is to be determined in accordance with repealed Commonwealth provisions. Amendments to section 23 maintain consistency with the valuation methods specified in the new Commonwealth legislation. That is, shares and options may be valued using an acceptable market value methodology, or a method specified in the Commonwealth Regulations. The employer may choose between these valuation methods. The taxable value of shares and options is the value less any consideration paid by the employee or director. Note that an employee includes a worker who is deemed to be an employee under the Payroll Tax Act.
Transitional provisions allow employers to pay tax on shares and options under the current provisions or under the new provisions.
These amendments commence on 1 July 2011.