One of the deficiencies of the current NSW corporate reconstruction relief is that it does not apply where the corporate reconstruction involves an interposed entity. This means that a transfer of shares by the shareholders of company 1 to the interposed company in exchange for shares in the interposed company are subject to stamp duty if the shares in company 1 are not listed (although this share duty is due for abolition on 1 July, 2012). Although rollover is available for CGT purposes there is no relief for stamp duty purposes.

Recent amendments to the NSW Duties Act will permit reconstruction relief to apply to corporate reconstructions involving an interposed entity provided certain conditions are met. Thus if a roll-over is available for CGT purposes under Subdivision 124-G of the Income Tax Assessment Act, 1997, there will also be stamp duty relief available.

While this might seem not to be too much of an issue given the proximity of the abolition of duty on non-listed company shares, it will still be important for reconstructions involving land rich entities after that abolition date.