Victorian Revenue Ruling on grouping of related corporations for land tax

The Victorian State Revenue Office has issued Revenue Ruling LTA-008, which sets out the relevant factors the Commissioner of State Revenue may take into consideration when exercising the discretion to group related corporations, and their treatment as a single corporation for Victorian land tax purposes. The ruling, which applies retrospectively from the 2006 land tax year, replaces Revenue Ruling LT-002, which was withdrawn following the decision in Tadcaster Sorrento Pty Ltd v Commissioner of State Revenue [2015] VCAT 611.

Land tax legislative update

The following land tax legislative developments have occurred since the April edition of TaxTalk Monthly:

  • The Land Tax Amendment Bill 2018 (ACT), which proposes to amend the Land Tax Act 2004 (ACT) to extend land tax to all residential dwellings that are not an owner’s principal place of residence and introduce a foreign ownership surcharge, has been introduced into ACT Parliament. The amendments are proposed to commence on 1 July 2018.
  • The Land Tax Assessment Amendment Bill 2017 (WA), which amends the Land Tax Assessment Act 2002 (WA) to ensure that the land tax exemption is only available to organisations established for a public purpose and that perform a statutory function on behalf of the State. The Bill has passed through the WA Parliament and has been enacted.

Recent duty decisions

The following duty cases have been handed down since the April edition of TaxTalk Monthly:

  • The New South Wales Civil and Administrative Tribunal in Chrissie Group Pty Ltd atf All Angels Family Trust v Chief Commissioner of State Revenue [2018] NSWCATAD 77 has affirmed the Chief Commissioner’s assessment of duty on the transfer of land to a private company which acted as trustee of a family discretionary trust. The issue in this case was whether nominal stamp duty should apply to the transfer of land which was not in conformity with the agreement to purchase which was entered into by an individual in her own name. The Tribunal, in reaching its decision, considered the statutory interpretation approach to conflicting relieving provisions in section 18 of the Duties Act 1997 (NSW). It held that the general relieving provisions apply literally because the transferee was a private company and the person who entered into the agreement was the majority shareholder and director. The specific relieving provision did not apply because the transferee company was the trustee of a discretionary trust.
  • The Victorian Civil and Administrative Tribunal in Citera Investments Pty Ltd v Commissioner of State Revenue [2018] VCAT 519 has confirmed the decision of the Commissioner of State Revenue, finding that the taxpayer was not entitled to claim duty exemptions in relation to a land transfer as the requirements of section 36B and section 41 of the Duties Act 2000 (VIC) were not satisfied.
  • The Supreme Court of Victoria in Fagridas v Commissioner of State Revenue [2018] VSC 145 has refused the taxpayer’s leave to appeal the decision of the Victorian Civil and Administrative Tribunal. The Court found that the Tribunal did not make an error in identifying and applying the applicable legal test. The Tribunal had affirmed duty assessments issued by the Commissioner of State Revenue, finding that the transfer of land was not exempt from duty under section 36A of the Duties Act 2000 (Vic) as it was not transferred to the taxpayers as beneficiaries of the trust, but rather was found to be transferred to the taxpayers as purchasers pursuant to a contract of sale.

NSW - Increased interest rate on tax default

Revenue NSW has advised that the market rate of interest imposed on any tax default (failing to make a payment) committed under various taxation and revenue laws it administers changed on 1 April 2018 to 1.77 per cent. This means the total interest rate is set at 9.77 per cent.

Northern Territory tax changes

The Northern Territory Treasurer, Nicole Manison, has announced budget repair measures to address the fiscal challenges facing the NT, including:

  • A hybrid royalty scheme to ensure all operating mines in the NT pay a minimum royalty from 1 July 2019 equal to the greater of the existing 20 per cent profits-based scheme, or a valuebased royalty on their gross mineral production revenue.
  • Government fees and charges linked to revenue units will increase by a minimum of three per cent per annum or consumer price index (CPI) from 1 July 2018.
  • A Derelict and Vacant Property Levy to commence from 1 July 2019 at a rate of 1 per cent on buildings which have a 50 per cent vacancy rate or more; and a rate of two per cent to be levied on undeveloped land, based on the unimproved capital value.
  • Stamp duty exemptions have been abolished for the transfer of a petroleum lease, pipeline interest, licence, or permit. It is not yet clear whether the start date for this is from the date of announcement (e.g. 20 April 2018), or a later date. This will need to be confirmed once the amending legislation is introduced.
  • Delaying, for one year, the implementation of increases to community gaming machine tax currently legislated to take effect from 1 July 2018 in order to assess the capital investment by the hotel industry in 2018-19.