MGS Private provides advice as to the consolidation and restructure provisions in the various states and the interaction with the income tax provisions.
This is especially important in NSW and Queensland.
It is important to know the history of reconstruction and consolidation duty schemes in Australia. These provisions have evolved over time, shaping corporate transactions and taxation strategies. Here’s a brief overview:
- Early Years:
- In the early years, Australian states and territories independently administered their own duty systems.
- Corporate transactions, including mergers, acquisitions, and reorganizations, were subject to varying duty rates and exemptions.
- Harmonization Efforts:
- Over time, there was a push for harmonization across states to simplify tax laws and create consistency.
- The Payroll Tax Harmonisation agreement saw the States and Territories agree to harmonise payroll tax legislation.
- New South Wales, Victoria, Tasmania, Northern Territory and South Australia have enacted identical payroll tax legislation, apart from minor differences identified in schedules to the legislation. Queensland has also passed legislation to establish harmonisation with those jurisdictions.
- Introduction of Consolidation:
- In the late 1990s and early 2000s, Australia introduced consolidation provisions for income tax purposes.
- Corporate groups could operate as a single entity, reducing compliance burdens.
- Corporate Reconstruction Relief:
- States like Victoria implemented corporate reconstruction and consolidation relief provisions.
- These exemptions allowed for the transfer of dutiable property (including landholder acquisitions) without incurring duty.
- All States except Queensland and the Northern Territory treat a corporation to include a unit trust scheme:
- Duties Act 2000 (Vic) s.250 ""corporation" includes— (a) a unit trust scheme;".
- Duties Act 2008 (WA) s.257 "entity means — (b) a unit trust scheme;".
- Duties Act 1997 (NSW) s.273A "corporation" includes a unit trust scheme.".
- Stamp Duties Act 1923 (SA) s.102H ""corporation" has the same meaning as in section 9 of the Corporations Act 2001 of the Commonwealth and includes a unit trust scheme;".
- Duties Act 2001 (TAS) s.266A "corporation includes a unit trust scheme;".
- Duties Act 2001 (QLD) s.399 "Company is body corporate”.
- Stamp Duty Act 1978 (NT) s.56C ""corporation" has the same meaning as in the Corporations Act 2001.".
- Recent Changes:
- In New South Wales (NSW), the 2023-24 budget marked significant changes.
- The corporate reconstruction and consolidation duty exemption was replaced with a 90% reduction in duty for eligible transactions within the same corporate group2.
- As of February 1, 2024, exemptions are replaced with a 10% concession on duty3.
In summary, Australia’s reconstruction and consolidation duty schemes have undergone significant transformations, reflecting the nation’s commitment to efficient tax administration and economic development.
Except for Queensland and the Northern Territory, the provisions extend to unit trust structures and not just consolidated corporate groups.
MGS Private advises on the various state and territories corporate consolidation and reconstruction provisions and the application of the income tax provisions.
