The Duties Amendment Bill 2008 (Vic) was introduced into Parliament on 4 December 2008 to make various amendments to the Duties Act 2000. The Bill proposes the following changes:

Period for Payment of duty

The period for payment of the stamp duty, and lodgement of the required forms will be reduced from three months to 14 days. For land purchasers, this means there will only be 14 days to pay duty from the date of settlement. Duty arising from the execution of a deed will also need to be paid within 14 days. This amendment will come into effect from the day the Bill receives Royal Assent.

Property leasing arrangements

Currently, certain lease arrangements allow purchasers to acquire rights which are equivalent to ownership without being liable to pay stamp duty. Anti-avoidance provisions will be introduced to close this loophole so that a transaction utilising leasing arrangements with certain characteristics will be subject to stamp duty. In particular, leasing arrangements which provide the purchaser rights equivalent to ownership of the land, will be subject to duty.

Broadly, the provisions will provide that a grant of a lease will be a dutiable transaction if consideration (other than rent) is paid or agreed to be paid either in respect of the lease or in respect of:

• A right to purchase or transfer the land;
• An option to purchase or transfer the land;
• A right of first refusal in respect of the sale or transfer of the land;
• An arrangement whereby the lessee or an associated person obtains any interest in the underlying land.

Duty will be payable on the greater of:

• The consideration (other than the rent reserved) that is paid or agreed to be paid; and
• The unencumbered value of the land the subject of the lease.

The changes will be applicable from 21 November 2008.

Beneficial ownership of dutiable property

The Supreme Court decision in Trust Company of Australia Ltd (atf the Clayton 3 Trust) v Commissioner [2007] created some ambiguities on whether changes in trust arrangements resulted in there being a change in beneficial ownership of the dutiable property. The proposed amendments will clarify:

• The term ‘beneficial ownership’ to include ownership of dutiable property by a person as trustee of a trust;
• The term ‘change in beneficial ownership’ to include the creation or extinguishment of dutiable property, changes in the equitable interests in dutiable property and dutiable property becoming the subject of a trust or ceasing to be the subject of a trust; and
• The definition of ‘dutiable property’ to include interest in any dutiable property.
• The amendments will come into effect from 21 November 2008.

If you have any further questions on these amendments, please do not hesitate to contact Tim Olynyk on 9614 1444.