AUTHORS

Liam Telford
Liam Telford
Director, Tax Technical
Image of Sam Mohammad, Partner at RSM Brisbane, leading the National indirect tax practice. Specialises in GST, duty, payroll tax, and fuel tax credits for property, government, mining, and infrastructure sectors, including ASX-listed developers and multinational companies.
Sam Mohammad
Partner
Mira Brewster
Mira Brewster
State Tax Specialist

The Treasury and Revenue Legislation Amendment Bill 2023 was introduced into the NSW Legislative Assembly today as part of the NSW Budget 2023-24. 

The material amendments proposed, in addition to the proposed road user charge to be payable for electric vehicles from 1 January 2024, are:

  • Replacement of the corporate reconstruction and corporate consolidation exemption;
  • New significant interest acquisition threshold for private unit trusts;
  • Increase to the duty payable on certain transactions attracting fixed or nominal duty; and
  • Increase to the ownership threshold for claiming a principal place of residence for land tax purposes.

Collectively, the proposed amendments are forecast to deliver a staggering $958.5 million in additional receipts over four years, $111.1 million of which will be deployed to boost Revenue NSW’s compliance activities.

Replacement of the corporate reconstruction and corporate consolidation duty exemption 

In a move that achieves convergence with Victoria, the corporate reconstruction and corporation consolidation duty exemption will be removed and replaced with a 90% reduction in duty otherwise chargeable provision. 

When assets are moved between members of the same corporate group as part of a restructure, the duty will be reduced by 90%. 

The concession will apply to transactions that occur on or after 1 February 2024, meaning restructures under contemplation should be effected as soon as possible. There are transitional provisions that provide an exception for transactions that arise from an agreement or arrangement entered before the amending legislation was introduced to Parliament and for which an exemption application is lodged on or before 1 April 2024 and is approved.  In these circumstances, the full exemption will continue to be available.

100% duty exemption

The current full 100% duty exemption in New South Wales (NSW) will apply to the following:  

  • ‘corporate reconstruction transactions’ that occur before 1 February 2024;
  • ‘corporate reconstruction transactions’ that occur on or after the changes come in force on 1 February 2024, and the transaction occurred under an agreement or arrangement entered into before 19 September 2023 (being the introduction date of the Bill) provided that the application for duty exemption is lodged on or before 1 April 2024 with Revenue NSW. (Transitional corporate reconstruction relief).

90% duty concession

Any contemplated transactions will need to occur before 1 February 2024 for the existing 100% duty relief regime to apply. Otherwise, the new 90% concessional regime will apply. 

National exemptions:

  • NSW – No – 90% proposed change2023-24 NSW budget
  • VIC – No – 90% 
  • QLD – full exemption
  • WA – full exemption
  • SA – full exemption
  • TAS – full exemption
  • NT – full exemption 
  • ACT – full exemption

New significant interest acquisition threshold for private unit trusts - Landholder duty:

The landholder duty threshold will be reduced for the acquisition of a ‘significant interest’ in a landholder that is a private unit trust scheme from 50% down to 20%. This change, which is intended to discourage the use of private unit trusts for tax minimisation purposes, will again align NSW with Victoria.

The following thresholds will remain the same for landholder duty:

  • Threshold for private companies will remain at 50% 
  • Threshold for public companies will remain at 90% 
  • Threshold for listed trusts will remain at 90%
  • Threshold for widely held trusts will remain at 90%  
  • Threshold for wholesale unit trust or imminent wholesale unit trust will remain at 50%.

National thresholds for private trusts - Landholder duty:

  • NSW – 20% - proposed changeNSW budget ends corporate construction and consolidation exemption  
  • VIC – 20%  
  • QLD – Generally, 0% subject to some exceptions 
  • WA – 50%   
  • TAS – 50%   
  • SA – 50%  
  • ACT – 50%  
  • NT – 50%  

Tracing Provisions - Landholder duty

The threshold for the tracing of property through ‘linked entities’ of a landholder will decrease from 50% to 20%. 

Increase to the duty payable on certain transactions attracting fixed or nominal duty

From 1 February 2024, the applicable rates of fixed or nominal duty will increase as follows:

  • $10 is increased to $20;   
  • $50 is increased to $100 (except where relating to Managed Investment Schemes, which is increased to $500); and   
  • $500 is increased to $750.   

Increase to the ownership threshold for claiming a principal place of residence for land tax purposes 

The principal place of residence land tax exemption will only be available to a person occupying the property as their principal place of residence who owns an interest of at least 25% in the property. This will remove a loophole whereby persons with as little as a one percent stake in a property were able to claim the principal place of residence land tax exemption. 

Also, see NSW Budget 2023-24 Media Release here.

For more information

If you would like to discuss how the changes will impact you or your business, please contact Mira Brewster or Sam Mohammad.

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