Duties Amendment (Landholder) Act 2012

Duties Amendment (Landholder) Act 2012

No. 38 of 2012

table of provisions

SectionPage

Part 1—Preliminary

1Purposes

2Commencement

3Principal Act

Part 2—Amendments to the Duties Act 2000

Division 1—Definitions

4Definitions

Division 2—Amendments to Chapter 3 of the Duties Act2000

5New Parts 1 and 2 of Chapter 3 of the Principal Act substituted

PART 1—INTRODUCTION AND OVERVIEW

70Imposition of duty

Part 2—AcQuisition of Interests in Certain Landholders

Division 1—Landholders

71Meaning of landholder

72What are land holdings?

73What does land include?

74Effect of uncompleted agreements

75Constructive ownership of land holdings—linked
entities

76Constructive ownership of land holdings—
discretionary trusts

Division 2—Charging of duty

77When does a liability for duty arise?

78What is a relevant acquisition?

79What are interests and significant interests in landholders?

80How may an interest be acquired?

81Acquisition of economic entitlement

82Acquisition of control

83Acquisition statements

84When must duty be paid?

85Who is liable to pay the duty?

86How duty is charged on relevant acquisitions in
private landholders

87How duty is charged on relevant acquisitions in
public landholders—concessional rate

88How duty is charged on relevant acquisitions in
public landholders—nonconcessional rate

89Phasing-in of duty

89AReduction in marketable securities duty

89BConversion of a private unit trust scheme to a public
unit trust scheme

89CConversion of a private company to a listed company

Division 3—Exemptions and concessions

89DExemptions

89EDuty concession—anomalous duty outcome

89FDuty concession—acquisitions securing the provision
of finance

Division 4—Valuation and supplementary calculation provisions

89GValuation of land holdings

89HMaximisation of entitlements on distribution of land holdings

89IAgreements for sale, transfer or purchase of land

89JRe-purchase facilities—widely held trusts

89KRe-purchase facilities—wholesale unit trust schemes

Division 5—Tax avoidance schemes

89LImposition of duty

89MWhat is a tax avoidance scheme?

89NAnti-avoidance provision

89OMisleading information

Division 6—Registration of unit trust schemes

89PDefinitions

89QApplication for registration

89RRegistration of declared public unit trust schemes

89SRegistration of wholesale unit trust schemes

89TRegistration of imminent wholesale unit trust schemes

89URegistration of declared wholesale unit trust schemes

89VDuration of registration

89WReporting requirements

89XDisqualifying circumstances for certain unit trust schemes

89YCancellation of registration

Division 3—Consequential amendments

6Definitions

7Division 1 of Chapter 11—What is an eligible transaction?

8Division 1A of Chapter 11—What is an eligible transaction?

9Special provision in relation to duty for private unit trust
scheme consolidations

10Exemption for relevant acquisitions

11Liability for duty

Division 4—Transitional provisions

12New clause 31 in Schedule 2 inserted

31Duties Amendment (Landholder) Act2012

Division 5—Statute law revision

13Definitions

14Heading to Chapter 4

15Statute law revision

Part 3—Amendments to the Planning and Environment Act1987

Division 1—Consequential amendments

16Definitions

17Excluded events

18What is a significant acquisition?

19Imposition of growth areas infrastructure contribution

20Persons liable to pay GAIC

21Amount of GAIC

22Acquisition statement

23Liability to pay deferred GAIC in relation to subsequent
dutiable transactions

24Deferred GAIC and interest must be paid to Commissioner
by due date

Division 2—Transitional provisions

25New section 220 inserted

220Transitional provisions—Duties Amendment (Landholder) Act2012

Part 4—Amendments to the Financial Sector Reform (Victoria) Act1999

26Definitions

27Words defined in FS(BTGR) Act

28Voluntary transfers

29Compulsory transfers

Part 5—Repeal of Amending Act

30Repeal of amending Act

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Endnotes

SectionPage

Victoria

SectionPage

Duties Amendment (Landholder) Act 2012[†]

No. 38 of 2012

[Assented to 27 June 2012]

Duties Amendment (Landholder) Act 2012
No. 38 of 2012

The Parliament of Victoriaenacts:

Part 5—Repeal of Amending Act

Duties Amendment (Landholder) Act 2012
No. 38 of 2012

Part 1—Preliminary

1Purposes

The main purposes of this Act are—

(a)to amend the Duties Act 2000—

(i) tomake further provision for the imposition of duty on the acquisition of interests in certain land holding entities; and

(ii)to make other miscellaneous and consequential amendments; and

(b)toamend the Planning and Environment Act 1987 as a result of the changes to the Duties Act 2000; and

(c) to amend the Financial Sector Reform (Victoria) Act 1999 as a result of the change of name of the Financial Sector (Transfers of Business) Act 1999 of the Commonwealth.

2Commencement

s. 2

This Act comes into operation on 1 July 2012.

3Principal Act

See:
Act No.
79/2000.
Reprint No. 8
as at
1 August 2011
and amending
Act Nos
67/2010, 61/2011 and 69/2011.
LawToday:
www.
legislation.
vic.gov.au

In this Act, the Duties Act 2000 is called the Principal Act.

______

Part 2—Amendments to the Duties Act 2000

Division 1—Definitions

4Definitions

s. 4

(1)In section 3(1) of the Principal Act—

(a)insert the following definitions—

"associated transaction, in relation to the acquisition of an interest in a landholder by a person, means an acquisition of an interest in the landholder by another person in circumstances in which—

(a)those persons are acting in concert; or

(b)the acquisitions form, evidence, give effect to or arise from substantially one arrangement, one transaction or one series of transactions;

economic entitlement, in Part 2 of Chapter 3, has the meaning given by section 81(2);

equivalent exchange means a recognised stock exchange operating in Australia which imposes, as a minimum, the requirements set out in subsection(4A) on an entity applying for quotation of its securities on the relevant market;

linked entity has the meaning given by section 75;

listed company means—

(a)a corporation all the shares in which are quoted on the ASX or an equivalent exchange; or

(b)a corporation—

(i) allthe shares in which are quoted on any exchange of the World Federation of Exchanges (other than the ASXor an equivalent exchange); and

(ii) that is declared by the Commissioner under subsection (4)(ab) to be a listed company;

market capitalisation means the total market value of an entity's issued securities, calculated by multiplying the number of the entity's issued securities by the current market value of one of those securities;

s. 4

net tangible assetsmeans the value determined by calculating the value of the total assets of an entity, less the value of its total liabilities and the value of any intangible assets;";

(b)in the definition of associated person, after paragraph (i) insert—

"(j) trustees are associated persons if one of the trustees is a beneficiary of the trust (not including a public unit trust scheme) of which the other trustee is a trustee;

(k)persons are associated persons if one of those persons is an associated person of a person of whom the other of those persons is an associated person(including a person that is an associated person of the other of those persons because of one or more other applications of the paragraphs in this definition);";

(d)in paragraph (b) of the definition of private company, after "ASX" insert "or an equivalent exchange";

(e) in the definition of public unit trust scheme, paragraph (c) is repealed;

(f) the definition of registered imminent public unit trust schemeis repealed;

(g)in the definition of related person, after paragraph (e) insert—

s. 4

"(f)persons are related persons if one of those persons is a related person of a person of whom the other of those persons is a related person(including a person that is a related person of the other of those persons because of one or more other applications of the paragraphs in this definition);";

(h) in the definition of widely held trust, paragraphs (a) and (c) are repealed.

(2) In section 3(4) of the Principal Act—

(a)in paragraph (a), after "ASX" insert "or an equivalent exchange";

(b)after paragraph (a) insert—

"(ab) declare that a corporation all the shares in which are quoted on any exchange of the World Federation of Exchanges (other than the ASX or an equivalent exchange) is a listed company for the purposes of this Act if the Commissioner is satisfied that the listing of the corporation was not for the purpose of, or as part of a scheme or arrangement with a collateral purpose of, avoiding or reducing duty otherwise chargeable under Part 2 of Chapter3;".

(3) After section 3(4) of the Principal Act insert—

"(4A) For the purposes of the definition of equivalent exchangein subsection (1), the requirements are—

s. 4

(a)the entity must lodge a prospectus orproduct disclosure statement (or an equivalent document approved by the exchange) with the Australian Securities and Investments Commission; and

(b) either—

(i) the following apply—

(A) the entity must have at least 400security holders each having a parcel of the main class of securities on issue with a value of at least $2000; and

(B)persons who are associated persons of the entity must hold no more than25% of the total number of securities in the main class of securities; or

(ii) the entity must have at least 500security holders each having a parcel of the main class of securities on issue with a value of at least $2000; and

(i) net tangible assets of at least $2000000 at the time of listing; or

(ii)a market capitalisation of at least $10000000.".

Division 2—Amendments to Chapter 3 of the Duties Act2000

5New Parts 1 and 2 of Chapter 3 of the Principal Act substituted

s. 5

For Parts 1 and 2 of Chapter 3 of the Principal Act substitute—

"PART 1—INTRODUCTION AND OVERVIEW

70Imposition of duty

This Chapter charges duty at the same rate as for a transfer of dutiable property under Chapter2 on certain acquisitions of interests in landholders.

Note

Duty is chargeable under Part 2 on the acquisition by a person of certain interests in private landholders and public landholders that have land holdings in Victoria with an unencumbered value of $1million or more.

The duty is chargeable at the general rate for a dutiable transaction under Chapter 2.

Duty was chargeable under Parts 3 and 4 on certain transactions occurring before 1 July 2002.

Duty is charged under Part 5 on the allotment of units or shares that confer a land use entitlement.

______

Part 2—AcQuisition of Interests in Certain Landholders

Division 1—Landholders

71Meaning of landholder

s. 5

(1)For the purposes of this Part, a landholderis any of the following that has land holdings in Victoria with a total unencumbered value of $1000000 or more—

(a)a private unit trust scheme;

(b)a private company;

(c)a wholesale unit trust scheme;

(d)a listed company;

(e)a public unit trust scheme.

(2)For the purposes of this Part, a landholder may hold land—

(a) in accordance with section 72;

(b)under an uncompleted agreement in accordance with section 74;

(c)through a linked entity in accordance with section 75;

(d)through a discretionary trust in accordance with section 76.

(3)A private landholderis a landholder that is a private unit trust scheme, private company or wholesale unit trust scheme.

(4)A public landholder is a landholder that is a listed company or a public unit trust scheme.

72What are land holdings?

s. 5

(1)For the purposes of this Part, a land holdingis an interest in land other than the estate or interest of a mortgagee, chargee or other secured creditor or a profit àprendre.

(2)An interest in land, however—

(a) is not a land holding of a unit trust scheme unless the interest is held by—

(i) a trustee of the scheme in the capacity of trustee; or

(ii)a custodian or other agent in the capacity as custodian or agent of the trustee of the scheme; and

(b) is not a land holding of a company unless the interest of the company in the land is a beneficial interest.

(3)This section is in aid of, but does not limit, the operation of any provision of this Part providing for constructive ownership of interests in land.

73What does land include?

(1)For the purposes of this Part, landincludes anything fixed to the land, whether or not the item—

(a)constitutes a fixture at law; or

(b)is owned separately from the land; or

(c)is notionally severed or considered to be legally separate to the land as a result of the operation of any other Act or law.

(2) For the purposes of subsection (1), a thing can be fixed to land by a physical connection to the land.

(3) For the avoidance of doubt, land includes tenant's fixtures within the meaning of section 22A.

(4) Despite anything in subsection (1), (2) or (3), land does not include goods that are excluded under section 10(1)(d) from the definition of dutiable property.

(5) Despite subsection (1)(b) or (c), the Commissioner may determine that land does not include a thing fixed to land if—

(a)the thing is owned by a person who is not the person who owns the land or an associated person of the person who owns the land; and

(b)the thing is not used in connection with the land.

74Effect of uncompleted agreements

s. 5

(1)For the purposes of this Part, the vendor and purchaser under an uncompleted agreement for the sale of land are taken to be separately entitled to the whole of the land.

(2)For the purposes of this Part—

(a)a reference to a vendor includes a reference to a person who, at the time of a relevant acquisition, was the grantee of a put option or grantor of a call option;

(b)a reference to a purchaser includes a reference to a person who, at the time of a relevant acquisition—

(i) held a transfer right (within the meaning of Part 4A of Chapter 2); or

(ii) was the grantor of a put option or grantee of a call option;

(c)a reference to an uncompleted agreement includes a reference to an arrangement that includes both a put option and a call option.

75Constructive ownership of land holdings—linked entities

s. 5

(1)For the purposes of this Part, a landholder holds land if the landholder is taken under this section to be entitled to land through a linked entity.

(2)Land held because of subsection(1) is in addition to land (if any) that the landholder holds in its own right.

(3)The interest the landholder is taken under this section to hold in land referred to in subsection (1) is the proportion of the land held by a linked entity equivalent to the proportion of the property of the linked entity that the landholder would be entitled to receive if all linked entities were to be wound up as provided in subsection(4).

(4)A landholder is taken to be entitled to land through linked entities, whether linked to the landholder or to other entities linked to the landholder or to each other, if, on the winding up of all linked entities and without having regard to any liabilities of the linked entities, the landholder would receive a distribution of any of the property held by any of the linked entities.

(5)However, land of linked entities is not counted for the purposes of this Part unless at least 20% of the land would be received by the landholder ultimately from linked entities as provided by subsection (4).

(6)The value, for duty purposes, of the interest in land that a landholder is taken to hold through a linked entity under this section is the portion of the unencumbered value of the land of the linked entity which is equivalent to the portion of the unencumbered value of the property of the linked entity to which the landholder would be entitled (without regard to any liabilities of the linked entities) if each linked entity were to be wound up.

(7)In this section—

linked entity means any person or body, corporate or unincorporated, that may hold property in its own right or for the benefit of any person, and includes a trust but does not includea natural person;

personincludes a landholder and a linked entity;

winding up of a linked entity includes any means by which the entity's property is divested in favour of the persons entitled to it and, in the case of a linked entity that is a trust, includes the vesting of the trust property in the beneficiaries.

76Constructive ownership of land holdings—discretionary trusts

s. 5

(1)A person or a member of a class of persons in whose favour, by the terms of a discretionary trust, capital the subject of the trust may be applied—

(a)in the event of the exercise of a power or discretion in favour of the person or class; or

(b)in the event that a discretion conferred under the trust is not exercised—

is, for the purposes of this section, a beneficiaryof the trust.

(2)A beneficiary of a discretionary trust is taken to own or to be otherwise entitled to land the subject of the trust, except to the extent (ifany) determined by the Commissioner.

s. 5

(3)For the purposes of this Part, any land that is the subject of a discretionary trust is taken to be the subject of any other discretionary trust—

(a)that is; or

(b)any trustee of which (in the capacity of trustee) is—

a beneficiary of it.

(4)Subsection (3) extends to apply to land that is the subject of a discretionary trust only by the operation of that subsection.

(5)Nothing in this section applies so that a person is taken to own or be entitled to more than 100% of the land the subject of a trust.

(6)In this section—

personincludes a landholder and a linked entity.

Note

Discretionary trustis defined in section 3(1).

Division 2—Charging of duty

77When does a liability for duty arise?

s. 5

A liability for duty charged by this Part arises when a relevant acquisition is made.

78What is a relevant acquisition?

(1)For the purposes of this Part, a person makes a relevant acquisition if—

(a)the person acquires an interest in a landholder—

(i) that is of itself a significant interest in the landholder; or

(ii)that amounts to a significant interest in the landholder when aggregated with other interests in the landholder acquired by all or any of the following—

(A)the person; or

(B)an associated person; or

(C)any other person in an associated transaction; or

(b)after an interest referred to in paragraph(a) was acquired, the person, an associated person or any other person whose interest was aggregated with the interest under paragraph(a)(ii), acquires a further interest in the landholder.

Note

Associated personandassociated transactionaredefined in section 3(1).

(2)For the purposes of subsection(1)(a)(ii) or(b), a person is not an associated person of another person if the Commissioner is satisfied that the interests of the persons—

(a)were acquired, and will be used, independently; and

(b)were not acquired, and will not be used, for a common purpose.

(3)Subsection (2) does not apply if the persons are associated persons because they are related bodies corporate.

(4)For the purposes of this Part, persons in their capacity as qualified investors of a wholesale unit trust scheme are taken not to be associated persons of other qualified investors in relation to acquisitions of interests in the scheme.

(5)An interest in a landholder is not counted for the purposes of this section if—

(a)the interest was acquired before 15November 1987; or

(b)the interest was acquired at a time when the landholder did not hold land in Victoria.

79What are interests and significant interests in landholders?

s. 5

(1)A person has an interestin a landholder if the person has an entitlement (otherwise than as a creditor or other person to whom the landholder is liable), whether directly or through another person, to a distribution of property from the landholder on a winding up of the landholder.

(2)A person who, by virtue of subsection (1), has an interest in a landholder has a significant interestin the landholder if the person, in the event of a distribution of all the property of the landholder immediately after the interest was acquired, would be entitled to—

(a)in the case of a landholder that is a private unit trust scheme—20% or more of the property distributed; or

(b)in the case of a landholder that is a private company or wholesale unit trust scheme—50% or more of the property distributed; or

(c)in the case of a landholder that is a listed company or public unit trust scheme—90% or more of the property distributed.

(3)In this section—

personincludes a landholder;

winding up of a landholder that is a unit trust scheme means the vesting of the trust property in the beneficiaries.

Note

Section 89H is relevant to ascertaining a person's entitlements on a distribution of property.