The Queensland Duties Act 2001 (Duties Act) has been amended to include a new exemption from transfer duty and land rich duty to facilitate the restructuring by “top hatting” of certain stapled entities where the CGT roll-over relief requirement and other conditions are met.

By way of background, top hating restructures involve the holders of stapled entities (eg one or more companies and/ or one of more trusts) transferring their interest to a new entity in exchange for interests in the new entity.

Since top hatting involves the transfer of shares in a company or units in a trust, transfer duty or land rich duty may arise. The new exemption allows for the transfer to occur without transfer duty or land rich duty where the CGT roll-over relief under Division 124-Q of the 1997 Act apply and other conditions are met. The amendment to the Duties Act aligns the exemption provided in all other jurisdictions except for Tasmania.

Example

Public Company A, Unit Trust No 1 and Unit Trust No 2 are stapled entities. Each stapled entity has 4,000 ownership interests on issue. There are no ownership interests in any of the stapled entities other than shares in the company and units in the trusts.

Under a scheme for reorganising the stapled entities, Unit Trust No 3 is interposed between the stapled entities and the owners of the interests in those entities. Unit Trust No 3 (the interposed trust) becomes the owner of all of the interests in each of the three stapled entities. Exchanging members receive one unit in the interposed trust for each stapled security they owned. All units in the interposed trust are of the same class.

Naomi owned 200 shares in Public Company A, 200 units in Unit Trust No 1 and 200 units in Unit Trust No 2. Naomi therefore owned 5% of the ownership interests in each of the stapled entities. Under the scheme, Naomi receives 100 units in Unit Trust No 3 (out of a total of 2,000 units) in exchange for her ownership interests in the stapled entities. Naomi now owns 5% of the ownership interests in the interposed trust.

The transfer of Naomi’s 200 shares in Public Company A, 200 units in Unit Trust No 1 and 200 units in Unit Trust No 2 to the trustee of Unit Trust No 3 will not give rise to transfer duty for the trustee.