Legislation has been introduced in New South Wales to amend the Duties Act 1997 (NSW) (Duties Act). Upon the State Revenue Legislation Amendment Bill 2013 (Amending Act) becoming law, the changes to the Duties Act will apply from the later of 1 July 2013 or the date of assent.
Currently, the Duties Act provides that a mining lease or mineral claim under the Mining Act 1992 (NSW) (Mining Act) is taken to give the holder an interest in land. An interest is land is dutiable property and a transfer of an interest in land is subject to duty. An interest in land is also treated as a land holding of a landholder for the purposes of landholder duty.
The effect of the Amending Act is that each of an assessment lease, exploration licence or opal prospecting licence under the Mining Act will now also constitute an interest in land including for landholder duty. This proposed change is significant particularly given that the Duties Act currently specifically excludes from the definition of 'interest in land' an assessment lease, exploration licence or opal prospecting licence under the Mining Act.
A mining lease and mineral claim are currently specifically incorporated in the definition of interest in land in section 4 of the dictionary in the Duties Act. A mineral claim is made with reference to the list of minerals specified in the Mining Regulation 2010 (NSW) which includes geothermal energy. Each of an assessment lease, exploration licence, opal prospecting licence, mining lease and mineral claim will now be grouped together and constitute a "mining tenement" under the Duties Act, and therefore an interest in land for landholder duty purposes.
Importantly, the following will continue to be specifically excluded from the definition of interest in land in the Duties Act:
- a carbon sequestration right within the meaning of Division 4 of Part 6 of the Conveyancing Act 1991 (NSW);
- a petroleum title within the meaning of the Petroleum (Onshore) Act 1991 (NSW); and
- a licence, permit, lease, access authority or special prospecting authority under the Petroleum (Offshore) Act 1982 (NSW).
Additionally, the unencumbered value of an interest in land arising because of a mining tenement will now also include the value of any information about the land.
Currently, the Chief Commissioner has a broad discretion to grant a full or partial exemption for landholder duty if the Chief Commissioner considers such an exemption to be just and reasonable. The Amending Act will repeal this general discretion to exempt an acquisition from landholder duty and in its place, provide the following limited exemptions:
- an exemption that applies when property is held for the benefit of a beneficiary of a discretionary trust. Generally, a beneficiary of a discretionary trust is taken to own or to be otherwise entitled to the property the subject of the trust; and
- an exemption that applies when an acquisition in a landholder is made as part of one arrangement involving several acquisitions of the same or part of the same landholding. The Chief Commissioner is given a discretion to exempt an acquisition if satisfied that to charge duty in the circumstances would result in double duty or multiple duty.
A further change under the Amending Act is the proposed repeal of a duty concession that applies when an acquisition is made in a landholder that holds land used for primary production. Currently, an acquisition of an interest in a landholder that is a primary producer will only be subject to duty if the primary producer is land rich. The proposed repeal of this concession will mean that the general rule that applies to all landholders, being that the landholder must own land holdings in New South Wales with a threshold value of $2 million or more, will now equally apply to primary producers.
These amendments will commence on the later of 1 July 2013 or the date of assent. However, the amendments will not apply to a transfer of dutiable property made in conformity with an agreement for sale or transfer of the dutiable property that was entered into before the commencement of the Amending Act.
Aggregation of interests
Section 25 of the Duties Act provides that dutiable transactions may be aggregated and treated as a single dutiable transaction in various circumstances including where the transferors are "associated persons" and the transferees are "associated persons". The Duties Act defines "associated persons" with reference to the concept of "related persons".
The Amending Act provides that a natural person, or a private company, and a trustee of a discretionary trust, will not automatically be related persons if the natural person or the private company is a beneficiary of a discretionary trust.
Transfers of options to purchase land
The Amending Act provides that a transfer of an option to purchase land in New South Wales will be deemed to have occurred if, for valuable consideration the option holder:
- nominates another person to exercise the option;
- nominates another person as purchaser or transferee of the land the subject of the option on or before the exercise of the option; or
- agrees to a novation of the option, or otherwise relinquishes his or her rights under the option, so that another person obtains a right to purchase the land.
The consideration for the transfer of land pursuant to an exercise of an option includes the consideration provided by the transferee of the option. However, the duty chargeable in respect of a transfer of land effected by the exercise of an option to purchase land, will be reduced by the amount of duty (if any) paid by the transferee on the transfer of the option to the transferee.
These changes will commence on the later of 1 July 2013 or the date of assent. However, the amendments will apply to an option granted or transferred before the commencement of the Amending Act and where consideration is provided for an option before the commencement date.
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