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Legislative Assembly for the ACT: 2008 Week 5 Hansard (8 May) . . Page.. 1569..


MR STANHOPE (continuing):

Mr Speaker, the Duties (Landholders) Amendment Bill 2008 amends the Duties Act 1999 to tighten the current anti-avoidance provisions that impose duty at conveyance rates on certain transfers of units or shares. These units or shares are in unit trusts or private companies that own land in the ACT. Without these provisions, a significant transfer of interest in either a unit trust or a private company that owns land would only be assessed at the lower marketable securities rate. These provisions protect the territory's revenue base by capturing indirect transfers of interests in land.

To further protect the territory's revenue base, this bill changes the specified interest that can be acquired before a transfer is subject to duty as a land holder. Land holder duty will apply where a significant interest is acquired. This is 50 per cent or more in a private company or a wholesale unit trust scheme that holds land in the ACT or 20 per cent or more in a landholding private unit trust scheme.

Currently an acquisition of a majority interest in a landholding private company or unit trust triggers land holder duty. However, the new "significant interests"will align the ACT more closely with other jurisdictions, particularly New South Wales and Victoria, and provides greater protection for the territory's revenue base. This is particularly important as further duties are removed from the ACT tax base under the intergovernmental agreement on the reform of commonwealth-state financial relations.

Mr Speaker, currently a public unit trust scheme is not considered a land holder provided it is a managed investment scheme with 50 or more investors. This bill introduces the concept of a "widely held trust"where the required minimum number of investors is 300. This tightens these anti-avoidance provisions and aligns the ACT more closely with both New South Wales and Victoria.

Where possible, the ACT has aligned its land holder duty provisions with those of New South Wales; particularly the New South Wales provisions for registration of wholesale unit trust schemes with a significant interest being 50 per cent or more. However, like New South Wales, qualifying investors will be excluded from the association person provisions, thus preventing the usual aggregation of transactions in a wholesale unit trust involving trusts with common beneficiaries.

It is important at this stage to distinguish the ACT's land holder model from the land rich model of some other jurisdictions. A land rich model uses a percentage of landholdings to total assets test and only applies to land above a certain value. The ACT land holder model does not have a percentage of assets threshold; nor does it depend upon the value of the land held by the land holder.

The land holder model is preferred in the ACT as the commercial property market in the territory is significantly smaller in volume and value than other jurisdictions. Further, introducing a land value threshold and percentage of assets test would significantly increase current compliance costs for all parties. Like the ACT, the Northern Territory does not have a percentage of assets test, and Western Australia has recently adopted this approach in its Duties Bill 2007.

The bill also amends the definition of "stock exchange"so that entities listed only on the Australian Stock Exchange or any other exchange of the World Federation of


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