WA Budget 2017-18

On 7 September 2017, the Western Australian (WA) Treasurer handed down the 2017-18 WA Budget. Key measures announced included:

  • A temporary progressive payroll tax scale for ‘large business’ to apply from 1 July 2018 to 20 June 2023.
  • A tiered gold royalty rate to be introduced from 1 January 2018.
  • A 4 per cent Foreign Owner Duty Surcharge to apply on purchases of certain residential property by foreign individuals, corporations and trusts with effect from 1 January 2019.

For further information, see the Employment Taxes Update section of this report.

NSW revenue ruling on the application of the foreign purchaser and land tax surcharge to discretionary trusts

Revenue NSW has issued Revenue Ruling No. G 010 v2which sets out circumstances when the Chief Commissioner of State Revenue will give retrospective effect to the amendments of trust deeds which remove the trustee’s power to make distributions to any person who is a foreign person, such that the trustee of the discretionary trust is not liable to the surcharge. The ruling also provides the Chief Commissioner of State Revenue with the discretion to exempt the trustee of a discretionary testamentary trust from the surcharge where the deceased was not a foreign person at the time of death. The ruling operates with retrospective effect from 21 June 2016, until retrospective legislation is passed.

Tasmanian revenue ruling on penalty tax on duty instruments

The Tasmanian Commissioner of State Revenue has released Revenue Ruling PUB-GEN-2017-2, which ensures that Tasmanian Revenue Online agents and their clients are placed in the same position with respect to the imposition of penalty tax as those who lodge duty instruments directly with the Commissioner of State Revenue for assessment.

Victorian State Revenue – smart forms update

The Victorian State Revenue Officehas replaced the following paper-based forms with online SmartForms:

Valuation of mining company for WA duty

In Placer Dome Inc v Commissioner of State Revenue [2017] WASCA 165, which concerned whether a gold mining company was a ‘listed landholder corporation’ for WA stamp duty purposes, the Supreme Court of WA (Court of Appeal) has allowed the taxpayer’s appeal, and remitted the matter to the State Administrative Tribunal for reconsideration. The case primarily concerned the valuation of the company and its land, with the Court finding the Tribunal (at first instance) adopted the incorrect valuation methodology, failing to distinguish between the value of the land held by the company and the value of the business which it conducted using that land. The Court also held that the Tribunal had erred in accepting the valuation evidence adduced by the Commissioner. Refer to our TaxTalk Alert which considers the case in further detail, including the broader implications on the identification and valuation of goodwill, particularly for mining companies.

NSW duties decisions

The following decisions concerning the application of NSW stamp duty were recently handed down by the NSW Civil and Administrative Tribunal:

·       Valencia v Chief Commissioner of State Revenue [2017] NSWCATAD 261. The Tribunal held that the Applicants were not entitled to the principal place of residence exemption as they failed to actually use and occupy the ‘unoccupied land’ as their principal place of residence within the relevant four-year period. The Tribunal also held that the Chief Commissioner of State Revenue did not have discretion to extend the period of non-use and occupation under the law.

·       Al-Jaafaria Society Incorporated v Chief Commissioner of State Revenue [2017] NSWCATAD 283. The Tribunal held that the Applicant was not entitled to an exemption from stamp duty as a charitable or benevolent body under section 275 (3)(b) of the Duties Act 1997 (NSW) in relation to the purchase of a property.

Victorian land tax decisions

The following cases were considered by the Victorian Civil and Administrative Tribunal in relation to Victorian land tax matters:

·       Carvalho v Commissioner of State Revenue (Review and Regulation) [2017] VCAT 1295. The Tribunal found that the Applicants were not exempt from land tax as they failed to discharge the onus of proof that the relevant property was their principal place of residence.

·       Australian Investment and Development Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2017] VCAT 1418. The Tribunal found that for one of the land tax assessments issued to the Applicant, substantial activities were conducted on one of the properties which qualified for the primary production exemption. However, in relation to the other land tax years, the Tribunal confirmed the land tax assessments as it was not satisfied that the property was used for primary production purposes.