12 December 2006
Key Points:
Care needs to be taken when acting for clients involved in the takeover of a listed company which holds land either directly or indirectly in Victoria, as stamp duty may now be payable on what would previously have been a stamp duty exempt transaction.
In November, the Victorian Commissioner of State Revenue published his views as to the stamp duty implications resulting from the takeover of a Victorian land rich listed company. These views indicate a change of policy.
Potential increase in scope
The Commissioner has indicated that in the event of a compulsory acquisition of quoted but suspended securities, the Commissioner will ordinarily regard the company as having been removed from the Official List (and the period of suspension from quotation as ended) three business days after the date on which the entity's securities were suspended from quotation. This position accords with the stated usual practice of the ASX as to when a company subject to compulsory acquisition will be removed from the Official List.
If the ASX departs from its usual practice, the Commissioner may continue to treat the suspension of the securities as temporary until such time as the ASX has removed the company from the Official List. However, this will only be the case where the departure is solely as a result of a unilateral decision made by the ASX and not at the request of any party associated with the takeover or as a consequence of any inaction by the ASX.
Accordingly, absent unilateral action by the ASX, the Commissioner will regard the suspension of securities as having come to an end and the company removed from the Official List of the ASX prior to the time the compulsory acquisition occurs. The effect of this is that the compulsorily acquired interest in the company would be considered by the Commissioner to have been acquired when the company was a "private company". In other words, the land rich provisions of the Victorian Duties Act 2000 would apply to that acquisition as the Commissioner, in determining whether a "relevant acquisition" has been made, will include any interest acquired by a person within a three year period (including interests acquired under the takeover at the time when the company was listed).
The Commissioner has indicated that despite this broad view, the liability to land rich duty will be limited by reference to the interests acquired at the time when the company is considered private (ie. in relation to that percentage of the target's land represented by the compulsory acquired interests only).
Conclusion
Care needs to be taken when acting for clients involved in the takeover of a listed company which holds land either directly or indirectly in Victoria, as stamp duty may now be payable on what would previously have been a stamp duty exempt transaction.
The New South Wales Commissioner has recently advised that he would not be adopting this approach in respect of the takeover of a New South Wales land rich listed company.
For further information, please contact David Klarich.
