|Ruling number||DUT 026|
|Date issued||5 December 2003|
|Issued by||Peter Achterstraat|
Chief Commissioner of State Revenue
|Effective from||1 January 2004|
|Effective to||30 June 2012|
|Status||Codified in Chapter 11 of the Duties Act 1997|
|Ruling number||DUT 020|
|Date issued||10 November 2000|
|Effective from||13 November 2000|
|Effective to||31 December 2003|
|Status||Replaced by DUT 026|
|Ruling number||DUT 009|
|Date issued||3 December 1998|
|Effective from||11 November 1998|
|Effective to||12 October 2000|
|Status||Replaced by DUT 020|
|Ruling number||DUT 003|
|Date issued||1 July 1998|
|Effective from||1 July 1998|
|Effective to||10 November 1998|
|Status||Replaced by DUT 009|
Section 281 of the Duties Act 1997 states that duty is not chargeable on certain transactions between the members of a group of corporations. Exemption may be approved by the Chief Commissioner in accordance with guidelines approved by the Treasurer.
The purpose of this exemption is to provide relief from duty on intragroup transactions, in the context that the efficient restructuring of corporate groups is to be encouraged, including for purposes such as:
to align business operations to the relevant legal entity;
to improve the balance sheet of a subsidiary seeking finance;
to respond to structural changes by a foreign parent;
to remove expensive, antiquated structures in complex groups; and
to merge business operations and legal entities following a takeover.
Earlier guidelines were published in revenue rulings DUT 003, DUT 009 and DUT 020. The Treasurer has approved new guidelines that clarify a number of aspects of the exemption, and include new requirements to limit the exemption to reconstructions involving internal adjustments or changes to the holding of assets within the group. Changes for the purpose of transferring a corporation out of the group, or where the consideration is provided from outside the group, are not eligible for exemption.
This ruling replaces revenue ruling DUT 020.
The attached guidelines apply to transactions effected on or after 1 January 2004.
If an application for exemption was made before the date of this ruling and is approved under the guidelines in DUT 020, a transaction entered into pursuant to that approval effected on or after 1 January 2004:
will be exempted if it occurs not more than 4 months after the date of approval, and
will be assessed in accordance with the guidelines in this ruling if it occurs more than 4 months after the date of approval.
Applications made after the date of this ruling will be assessed in accordance with DUT 020 only in respect of transactions effected before 1 January 2004.
These guidelines apply to:
a transfer of dutiable property between members of a corporate group;
an agreement for the sale or transfer of dutiable property between members of a corporate group;
a surrender of an interest in land in New South Wales by and to members of a corporate group;
a vesting of dutiable property by or as a consequence of a court order where the property was held before the vesting, and is held after the vesting, by members of a corporate group;
a vesting of land in New South Wales by, or expressly authorised by, statute law where the property was held before the vesting, and is held after the vesting, by members of a corporate group; and
an application to register a motor vehicle as a result of a transfer of the vehicle between members of a corporate group.
Despite paragraph (1), these guidelines do not apply to a transaction if the property the subject of the transaction was immediately before the transaction, or will be immediately after the transaction, held by a corporation:
as trustee of a discretionary trust, or
as trustee for any person who is not a member of the corporate group.
Note: discretionary trust is defined in the Dictionary to the Duties Act.
Despite paragraph (1), these guidelines do not apply to a transaction in respect of which the relevant members of the corporate group have not been members of that group for at least 12 months before the transaction, unless the dutiable property was acquired by the transferor (or corporation that held the dutiable property before the transaction) after it became a member of the corporate group.
For the purposes of paragraph (3), a company that became a member of the corporate group on its registration or that has been dormant since its registration is taken to have been a member of the corporate group for 12 months.
Despite paragraph (1), these guidelines do not apply to a transaction made under an arrangement under which:
part or all of the consideration for the transaction has been or will be provided or received, directly or indirectly, by a person other than a member of the corporate group, or
a member of the corporate group is to be enabled to provide any of the consideration by another person, other than:
by a financial institution by way of loan on ordinary commercial terms, or
by another member of the corporate group, or
under an offer and sale or issue of shares or units to the public in the circumstances mentioned in paragraph (11)(b).
Duty is not chargeable on a transaction to which these guidelines apply if the Chief Commissioner is satisfied that:
the transaction is, or is one of a series of transactions, undertaken for the purpose of changing a corporate structure to make internal adjustments to corporate arrangements, or changing the holding of assets within the corporate group, or both, and
the transaction or each transaction is necessary to give effect to that purpose and is not undertaken for a purpose of avoiding any Commonwealth, State or Territory taxation, and
the transaction is not part of an arrangement under which any corporation involved with any of the transactions ceases to belong to the same corporate group other than in the circumstances mentioned in paragraph (11).
If a transaction to which these guidelines apply is not chargeable with duty under these guidelines, and results in an acquisition of an interest in a land rich landholder that is a relevant acquisition, the Chief Commissioner will determine the acquisition to be an exempt acquisition under section 119 (2) of the Duties Act if:
the corporation that held the interest before the relevant acquisition has been a member of the corporate group for at least 12 months before the transaction, or
the interest was acquired by the corporation that held the interest before the relevant acquisition after it became a member of the corporate group.
Note: relevant acquisition is defined in section 114 of the Duties Act.
Application is to be made in the approved form. The application must contain a written undertaking to notify the Chief Commissioner if, within 12 months from the date of the relevant transaction, any of the parties to the transaction has ceased to remain a member of the corporate group other than in circumstances mentioned in paragraph (11).
Application may be made at any time prior to the relevant transaction, or within 5 years of the date of assessment of the transaction in respect of which exemption is sought. Where approval is granted prior to the transaction occurring, the applicant must, on entering into the transaction, notify the Chief Commissioner in writing of any material changes to the facts and circumstances disclosed in the application.
Approval is granted on condition that every party to the transaction remains a member of the corporate group for 12 months after the transaction, subject to paragraph (11). If a corporation fails to satisfy this condition, the Chief Commissioner will reassess the transaction to duty as if the exemption from duty had never applied.
Note: interest and penalty tax may be payable under Part 5 of the Taxation Administration Act 1996.
The condition in paragraph (10) does not apply to a corporation that ceases to remain a member of the corporate group because:
it ceases to exist (including by reason of the deregistration of a company that was registered under the Corporations Act), other than under an arrangement, a significant purpose of which was to avoid the condition imposed under paragraph (10), or
the transaction is part of an arrangement under which:
shares or units of the corporation, or shares or units of a parent corporation, are offered and sold or issued to the public for the purpose of listing the corporation on the Australian Stock Exchange, and
the shares or units are quoted on the market operated by the Australian Stock Exchange within 12 months after the offer to the public.
In these guidelines, corporate group means a parent corporation and a subsidiary of that parent corporation, and includes stapled corporations. However, a subsidiary that is trustee of a unit trust scheme is not a member of a corporate group unless one or more members of the corporate group directly own, other than as trustee, at least 90% of the units and have voting control over the unit trust scheme.
The relevant members of the corporate group for the purposes of these guidelines are the parties to the transaction and every other corporation necessary to establish the connection between the parties as parent corporation and subsidiary, or as subsidiaries of the same parent corporation.
In these guidelines:
corporation includes a unit trust scheme (see section 281 (4)).
issued shares means all the shares issued by a corporation that carry the right to unlimited participation in the distribution of income and capital of the corporation.
parent corporation means a corporation that directly owns, other than as trustee, at least 90% of the issued shares, or at least 90% of the units, in another corporation, and has voting control over the other corporation.
stapled corporations means 2 or more corporations, the issued shares or units of which are stapled and quoted on the Australian Stock Exchange, and includes subsidiaries of those corporations.
subsidiary means a corporation in which at least 90% of the issued shares, or at least 90% of the units, are owned, other than as trustee, and over which voting control is held, by a parent corporation, or by one or more subsidiaries of a parent corporation, or by a parent corporation and one or more subsidiaries of that corporation.
voting control means being in a position to cast, or control the casting of, 90% or more of the maximum number of votes that can be cast at a general meeting of a corporation (other than votes to which a person is entitled under the provisions of a debenture or trust deed securing the issue of a debenture).