Important changes to stamp duties

Stamp duty reform has featured prominently in this year's State and Territory budgets, which have been delivered in recent months. This article provides a general overview of the key stamp duty changes recently announced, insofar as they may be relevant to business.

New South Wales

The New South Wales Budget announcements featured a reduction in the stamp duty rate levied on certain general insurance, including public liability insurance, from 10 per cent to five per cent. The new rate applies to contracts of insurance and renewals that take effect on or after 1 August 2002, but only in respect of premiums paid on or after 4 June 2002 (being the date of the Budget announcement).

The New South Wales Treasurer has also recently announced a proposed exemption for mergers of trusts, however details of the scope of that exemption and the commencement date have yet to be finalised.

Victoria

The Victorian Budget delivered tax cuts that were previously announced in the Victorian Government's Building Tomorrow's Businesses Today Statement, released 22 April 2002. The tax cuts included bringing forward by one year to 1 July 2002 the abolition of stamp duty on transfers of unquoted marketable securities (note, however, that the 'land-rich' provisions still apply).

Queensland

No specific stamp duty measures were proposed in the Queensland Budget, although the Queensland Government is urgently considering how stamp duty relief on public liability insurance policies can be provided to non-profit community organisations. Consultations will commence with the insurance industry and relevant organisations to determine the most effective way to provide that relief.

South Australia

The South Australian Budget announced a selective increase in the rates of stamp duty levied on conveyances of property, with a maximum rate of 5.5 per cent. The new rates apply to instruments dated after 11 July 2002 (ie the date of the Budget announcement) which are lodged for stamping on or after 5 September 2002 (ie the date of assent of the relevant legislation implementing the rates increase). Instruments dated on or before 11 July 2002, and instruments dated after 11 July 2002 but lodged for stamping before 5 September 2002, however, will be chargeable with duty at the old rates.

It is also proposed that, with effect from 1 January 2003:

• the rental duty base will be broadened to include commercial hire purchase arrangements
• the calculation of rental duty will exclude amounts received in respect of GST
• the monthly rental threshold above which rental duty applies will increase from $2,000 to $6,000.

Western Australia

The West Australian Budget featured a number of new stamp duty measures, with effect from 1 July 2002. Those measures included:

• increasing the rates of stamp duty levied on conveyances of property to a maximum of 5.5 per cent
• increasing the rates of stamp duty on issues and transfers of motor vehicle licences (excluding licences for heavy vehicles), to a maximum of 6.5 per cent
• reducing the rate of stamp duty levied on issues of licences for new heavy vehicles to a flat three per cent and capping the amount of stamp duty payable on issues and transfers of heavy vehicle licences to, effectively, $12,000
• replacing the nominal $0.25 stamp duty for motor vehicle compulsory third party insurance policies with an ad valorem rate of eight per cent of the premium (being the same rate that applies to general insurance policies).

The West Australian Government also intends to legislate to provide relief from the private unit trust provisions of the Stamp Act 1921 for genuine 'wholesale' unit trusts. Details of this measure are being finalised in consultation with the Property Council of Australia.

As part of the Budget, the West Australian Government released for public comment a draft White Paper entitled Streamlining Western Australia's Tax System – Fewer, Fairer and Simpler. The paper proposes a package of tax reforms recommended by the Department of Treasury and Finance. The Department's recommendations resulted from its review of State Business Taxes in consultation with industry and community groups. Comments on the paper were to be received by 16 August 2002.

The paper proposes, among other things:

• changes to numerous heads of duty, including the abolition of a number of heads (such as share transfer duty and lease duty)
• the introduction of a number of anti-avoidance provisions
• a rewrite of the Stamp Act 1921.

Tasmania

The Tasmanian Budget announcements included the abolition of the following stamp duties with effect from 1 July 2002:

• duty on lease instruments and franchise arrangements
• duty on transfers of non-quoted marketable securities (note, however, that the 'land-rich' provisions still apply)
• duty on the hire of goods
• duty on public liability insurance premiums
• nominal duty on a range of miscellaneous instruments such as partnership agreements, property management agreements, performance guarantees, building agreements, loan agreements, consumer credit contracts, discharges of mortgage and deeds not otherwise subject to any other duty.

Australian Capital Territory

The ACT Budget announced increases in the stamp duty rates on conveyances of dutiable property with effect from 1 July 2002, with the maximum rate of 6.75 per cent. The rates increase was purportedly to bring ACT conveyance rates broadly in line with aggregate conveyance and mortgage duty rates levied in New South Wales.

The Budget also reiterated the ACT Government's initiative to exempt non-profit amateur sporting and community bodies from duty chargeable on premiums for public liability insurance and other general insurance. The exemption has effect from 1 July 2002 and is administered in accordance with Ministerial Guidelines.

Northern Territory

The key stamp duty measures proposed by the Northern Territory Budget included:

• reducing the stamp duty levied on a grant or renewal of a franchise by assessing the grant or renewal as though it were a lease instead of a conveyance. The rates applicable to leases (0.5 per cent for a lease with a definite term) are significantly lower than those applicable to conveyances (which can be as high as 5.4 per cent). The new assessment method will apply from 20 August 2002, being the date of the Budget announcement.
• excluding 'wet hires' (ie. arrangements involving the provision of an operator for the equipment being hired) from the hiring duty base with effect from 18 July 2002 (being the date on which the exclusion was first announced)
• introducing corporate reconstruction relief from stamp duty
• various anti-avoidance measures relating to the land-rich provisions. Those measures have effect from 20 August 2002
• various measures to enhance the simplicity, efficiency and equity of the stamp duty regime, including:
• providing a mechanism for valuing changes in partnership interests
• introducing nominal duty for certain transactions involving managed investment schemes
• exempting compulsory transfers under the Financial Sector (Transfer of Business) Act 1999 (Cth) and clarifying that stamp duty is payable on voluntary transfers of dutiable property under that Act.

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