- A company or unit trust scheme with New South Wales landholdings of A$2 million or more will be a landholder.
- Landholder duty will be chargeable if a person acquires an interest of 90 per cent or more in a listed landholder. The amount of duty payable is approximately 0.55 per cent of the value of the New South Wales landholdings and goods of the landholder.
- The landholder model will apply to an acquisition in a listed landholder on and from 1 October 2009, unless the intention to make the acquisition had been announced to the market before 17 June 2009.
Significant changes will be made to the Duties Act 1997 (NSW) under the State Revenue Legislation Further Amendment Bill introduced into parliament on 17 June 2009 and currently awaiting assent.
Once enacted, the Bill will introduce a ‘landholder model’ to replace the existing land rich provisions. This will be accompanied by a broadly worded general anti-avoidance provision.
Importantly, duty may be imposed at land transfer rates (up to 5.5 per cent) on a takeover of a listed company.
Current land-rich provisions
The current land-rich provisions apply, broadly speaking, to an unlisted company or trust if the entity has New South Wales landholdings with an unencumbered value of at least A$2 million, and the entity’s landholdings comprise 60 per cent or more of its property.
New landholder regime – listed entities
On and from 1 October 2009, landholder duty will be payable if a person acquires an interest of 90 per cent or more in a listed company or listed trust, and the entity has landholdings in New South Wales of A$2 million or more. There will no longer be a requirement for an entity’s landholdings to comprise 60 per cent or more of its property.
A listed company or listed trust in this context refers to an entity any of the shares or units of which are quoted on the ASX or most recognised stock exchanges in the world. Therefore the rules would even apply to a takeover of a United States listed company by another United States company or a listed European company by a United States company, provided the target had significant landholdings in New South Wales.
Broad aggregation rules apply to determine whether a person acquires an interest of 90 per cent or more in the landholder. Additional rules apply to determine what counts as land and other property of the landholder.
The provisions will apply to an entity irrespective of where the company is registered or where the unit register is located.
How much duty?
The amount of duty payable when a person acquires an interest of 90 per cent or more in a listed landholder is calculated at approximately 0.55 per cent of the New South Wales landholdings and goods of the landholder. This is a concessional rate, because normally (i.e. for an acquisition in a private landholder) duty is chargeable by reference to the size of the interest acquired.
When will the new regime apply?
For an acquisition in a public landholder, the landholder model will apply on and from 1 October 2009, unless the intention to make the acquisition had been announced to the market before 17 June 2009 (in which case the new provisions do not apply to the acquisition).
Other Australian jurisdictions
Please note for completeness that listed landholder provisions also exist under the Western Australian duties legislation and will also be introduced in the Northern Territory with effect from 6 May 2009.