- The South Australian Government has announced that from 1 July 2011, it will replace the existing land rich duty provisions with a ‘landholder model’ which will also apply to listed companies and listed unit trust schemes.
- Draft legislation to implement the changes should be introduced into parliament in the first half of calendar year 2011.
The South Australian Government has announced that from 1 July 2011, it will replace the existing land rich duty provisions with a ‘landholder model’ which will also apply to listed companies and listed unit trust schemes. The proposed changes reflect the recent trends, firstly towards a landholder model and secondly to impose duty on takeovers of listed landholder entities. Currently, New South Wales, Western Australia, the ACT and the Northern Territory have landholder duty provisions, including (with the exception of the ACT) listed landholder duty provisions.
Currently, the South Australian land rich provisions impose duty on certain acquisitions of interests (50% or more, and also further acquisitions above this threshold) in unlisted companies and certain unit trust schemes at rates of up to 5.5%. Generally, the provisions apply if:
- the target entity has land assets with an unencumbered value of $1 million or more in South Australia, and
- the entity’s land assets, wherever located, comprise 60% or more of the unencumbered value of all its property.
Under the current South Australian land rich provisions, a ‘land asset’ includes a right to explore for minerals or a right to recover minerals from land. An entity’s interest in land also includes an interest in anything fixed to the land.
Under the proposed landholder model, the 60% threshold will be removed. That is, a target entity with land assets of $1 million or more in South Australia will be subject to the landholder duty provisions, with landholder duty being payable if, broadly speaking, control of the entity changes.
Listed landholder duty
The proposed changes will also bring listed entities within the landholder duty net. Currently, the transfer of quoted securities in a listed entity is not subject to land rich duty in South Australia. With effect from 1 July 2011, it is proposed that landholder duty will apply to an acquisition of 90% or more in a listed entity (ie a higher threshold than for acquisitions in private entities). Listed landholder duty will be charged at a concessional rate of 10% of the amount of duty otherwise payable.
Draft legislation to implement the changes should be introduced into parliament in the first half of calendar year 2011, and we expect a draft bill to be circulated to industry bodies for comment in due course.