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Explanatory note
This explanatory note relates to this Bill as introduced into Parliament.
a transfer duty on the transfer of, or on specified transactions that deal
with, property that is specifically identified in the Bill as dutiable
property (this duty being supported by special anti-avoidance
provisions)
*
marketable securities duty
*
lease duty
*
hire of goods duty
*
mortgage duty
*
insurance duty
*
motor vehicle registration duty
duty on duplicates or counterparts, and replicas.
The proposed Act will be a "taxation law" for the purposes of the Taxation
Administration Act 1996 and is to be read together with that Act.
Preliminary
Chapter 1 contains clauses 1-7. It sets out the name of the proposed Act,
provides for its commencement on 1 July 1998, explains its purpose,
provides for the definition of certain words and expressions used in the
proposed Act and contains other provisions of a general introductory nature.
Chapter 2
Transactions concerning dutiable property
Chapter 2 contains clauses 8-104. It charges duty on transfers of dutiable
property and on the following transactions:
*
an agreement for the sale or transfer of dutiable property
*
a declaration of trust over dutiable property
*
a surrender of an interest in land in New South Wales
*
a foreclosure of a mortgage over dutiable property
*
a vesting of dutiable property by or as a consequence of a statute or
court order.
Such transfers and transactions are called dutiable transactions for the
purposes of the proposed Act. They do not have to be effected by a written
instrument. The Chapter specifies the property that is dutiable property.
A liability for duty arises when a transfer of dutiable property occurs. The
duty will generally be payable by the transferee and is required to be paid
within 3 months after the liability to pay the duty arises.
The rate of duty is required to be paid on the dutiable value of the dutiable
property the subject of the dutiable transaction and the Chapter makes
provision for determining the dutiable value.
An object of the Chapter is to provide 3 schemes for the payment of duty on
the transfer of marketable securities, one relating to transfers made via
SCH-regulated transfers (CHESS), one relating to transfers made through the
London Stock Exchange and the other relating to transfers made by a person
who is approved by the Chief Commissioner to pay duty by periodic return.
These schemes provide alternative means for effecting the payment of duty
from those provided elsewhere in the proposed Act.
Explanatory note page 2
Concessional rates of duty are provided for certain transfers of trust property,
certain transactions relating to superannuation and certain transactions
relating to deceased estates and the conversion of lots to strata title.
The Chapter identifies a number of transactions that are exempt from duty
and also provides for discounts of duty and payment of duty by instalments
for certain housing schemes, such as the first home purchase scheme and the
scheme. flood-prone housing
Chapter 3 Certain transactions treated as transfers
Chapter 3 contains clauses 105-144. It contains provisions that are designed
to
2.
prevent avoidance of the duty charged by Chapter
Duty is charged by Part 2 of Chapter 3 on the acquisition by a person of an
interest consisting of certain shareholdings in a private company, or
unitholdings in a private unit trust scheme, whose property in either case
consists, to the prescribed extent, of land holdings. The duty is chargeable at
the general rate for a dutiable transaction under Chapter 2, rather than at the
rate applicable to transfers of shares and units. An acquisition statement must
be lodged when a majority interest is acquired or increased. Duty on an
acquisition statement is chargeable only on interests acquired within a 3-year
period. In certain cases the obligation to pay duty at the higher rate is phased
in (see proposed section 122).
Duty is chargeable:
*
under Part 3 of Chapter 3 on transactions by which corporate capital is
reduced by redemption, surrender or cancellation of shares or
reduction of share value or alteration of share rights
*
under Part 4 of Chapter 3 on the allotment of shares or units that confer
a land use entitlement
*
under Part 5 of Chapter 3 on the allotment of shares by direction.
Chapter 4
Marketable securities--on-market transfers
(Broker provisions)
Chapter 4 contains clauses 145-162. It imposes a liability for duty on
on-market sales and purchases, made through the agency of a broker, of
marketable securities, where the sale or purchase is sufficiently connected
with New South Wales. "Marketable securities" is defined to mean shares
(including rights to shares), units (including rights to units), CUFS and IRs.
The Chapter identifies a number of exempt transactions. The Chapter
specifies three different rates of duty and the various circumstances in which
those rates are applicable.
Explanatory note page 3
The Chapter imposes obligations on brokers with respect to the making of
records of sales and purchases of marketable securities, the lodgment of
periodic returns and the payment of duty.
Chapter 5
Lease instruments
Chapter 5 contains clauses 163-1 79. It charges duty on lease instruments,
being instruments that evidence or give effect to leases. "Lease" is defined to
include agreements for lease, agreements for rights to use land and franchise
arrangements. Duty is generally charged on the cost of the lease which is to
be ascertained in accordance with the provisions of the Chapter. Principles
are given for the determination and payment of duty where there are, at the
relevant times, unascertainable lease costs. The lessee is liable to pay the
duty. The Chapter sets out the rates of duty. It also charges duty on certain
variations of leases. It identifies leases that are exempt from duty.
Chapter 6
Hire of goods
Chapter 6 contains clauses 180-203. It charges duty on the hire of goods.
"Goods" is defined to include all chattels personal and fixtures severable
from realty, but not to include money, livestock or things in action. "Hire of
goods" is defined to be an arrangement under which goods are or may be
used at any time by a person other than the person hiring out the goods,
unless the arrangement is excluded under the Chapter. Different provisions
apply to the imposition and payment of the duty according to whether the
hiring out of the goods is done by a person who is in the business of hiring
out goods (a "commercial hire business") or by another person. The rate of
duty is applied to the amount of hiring charges. Different rates of duty are
applied, depending on the kind of hire. There are two kinds of hire, namely,
an equipment financing arrangement and an ordinary hire of goods.
Chapter 7
Mortgages
Chapter 7 contains clauses 204-228. It charges duty on instruments that fall
within the definition of "mortgage" as set out in the Chapter. The duty
chargeable under the Chapter is called "mortgage duty". Mortgage duty is
calculated, in most cases, according to "the amount of advances secured by
the mortgage" which is to be determined in accordance with the provisions
of the Chapter. Contingent liabilities may also be included.
A liability for duty arises on the date of first execution of a mortgage and a
liability for additional duty arises on the making of advances under the
Explanatory note page 4
mortgage by which the amount secured by the mortgage exceeds the amount
secured by it at the time duty was last paid on it. The person liable to pay
mortgage duty is the mortgagor.
Ad valorem duty is only chargeable on one of a package of mortgages
securing the same advance. Provision is also made for the apportionment, for
duty purposes, of the amount secured by any mortgage over property in
different Australian jurisdictions.
The Chapter makes provision for certain duty concessions and specifies the
instruments that are exempt from mortgage duty.
Chapter 8
Insurance
Chapter 8 contains clauses 229-260. It makes provision with respect to both
general insurance and life insurance.
As to general insurance, the Chapter charges duty on the amount of the
premium paid in relation to a contract of general insurance and requires duty
to be paid each time a premium is paid. The Chapter defines "premium" and
specifies the time at which a premium is "paid". Generally, the insurer to
whom the premium is paid is the person liable to pay the duty, but there are
circumstances in which the person insured is liable to pay the duty. To
facilitate payment of duty, insurers are required to register themselves with
the Chief Commissioner, submit a monthly return showing the total amount
of premiums paid to them for general insurance during the preceding month
and pay the appropriate amount of duty when submitting the return.
to life insurance, the Chapter charges duty as follows:
*
on a policy of life insurance, other than a temporary or term insurance
policy--according to the sum insured
*
on a temporary or term insurance policy--according to the first year's
premium on the policy
*
on a life insurance rider--according to the first year's premium on the
life insurance rider
on a policy of disability income insurance--according to the premium
paid to effect the insurance.
Generally, the insurer with whom the policy is effected is the person liable to
pay the duty, but there are circumstances in which the person insured is liable
to pay the duty.
Explanatory note page 5
The Chapter makes provision with respect to the registration of insurers and
the payment of duty by registered insurers by monthly return.
The Chapter also provides for the apportionment of premiums and other
amounts between Australian jurisdictions and between different types of
insurance and identifies insurance that is exempt from duty for the purposes
of the Chapter.
Chapter 9
Motor vehicle registration
Chapter 9 contains clauses 261-270. It charges duty on applications to
register motor vehicles under the Traffic Act 1909. The Chapter specifies the
rate of duty which is payable according to the dutiable value of the motor
vehicle. The duty becomes payable when the motor vehicle is registered. It is
payable by the applicant for registration.
The Chapter also identifies circumstances in which duty is not chargeable.
Chapter 10 Miscellaneous duties
Chapter 1 0 contains clauses 27 1-273. It charges duty on duplicates or
counterparts, and replicas. It also provides for the charging of a minimum
amount of duty.
Chapter 11 General exemptions from duty
Chapter 1 1 contains clauses 274-284. It grants general exemptions from duty
for:
intergenerational rural transfers
a
charitable or benevolent societies or institutions
*
public hospitals
councils and electricity distributors
Department of Housing tenants
*
specialised agencies
Aboriginal land councils
members of a group of corporations
mortgage-backed securities
Explanatory note page 6
*
instruments issued for the purpose of creating, issuing or marketing
mortgage-backed securities
*
loan-backed securities.
Chapter 12 Miscellaneous
Chapter 12 contains clauses 285-3 17. It provides for the stamping of
instruments, makes provisions for the enforcement of the proposed Act,
continues the Public Equity Partnership and the Rent/Buy Scheme and
continues the Board of Review with its functions of enabling the waiver of
duty and the giving of directions to the Chief Commissioner concerning the
deferral and the writing off of duty. It repeals the Educational Institutions
(Stamp Duties Exemption) Act 1961. It also contains a number of other
miscellaneous provisions.
Schedule 1
Savings, transitional and other provisions
Schedule 1 contains provisions of a savings and transitional nature
consequent on the enactment of the proposed Act.
Schedule 2
Amendment of Acts
Schedule 2 contains consequential amendments to the following Acts:
Revenue Laws (Reciprocal Powers) Act 1987
*
Stamp Duties Act 1920
*
Taxation Administration Act 1996.
Explanatory note page 7