Money
Issue No. 23 - June/Nuly 2005
Tax matters
by John Rawson
Stamp Duty debacle
State taxation can add significant costs (both compliance and direct financial) to business in South Australia. It can be argued that in relation to state taxation South Australia has fallen behind the other states when it comes to providing a competitive environment for business.
Over the next few months I will explore some potential changes that could be made to the state taxation system to make South Australia more competitive and to encourage both population and business growth. This article will focus on stamp duty.
Stamp duty applies to a wide range of transactions and has a significant impact on business acquisition and liquidity.
Corporate reconstruction relief
In practice, the relief provided in South Australia is limited compared to other States, and is difficult to obtain due to the costly and complex administrative requirement. In contrast to other jurisdictions the relief does not extend to provide relief where the land rich duty provisions apply.
Relief is generally only granted where:
- there is a significant benefit to South Australia; and
- entities within the corporate group have been associated for three years before the transfer, and remain associated for at least three years after the transfer.
It is questionable whether requiring significant benefit is appropriate where there is little or no change to the underlying beneficial ownership.
From a business efficiency perspective the requirement to be associated for three years prior to obtaining corporate reconstruction relief has the effect that corporate reconstructions cannot proceed until three years after the acquisition of a company.
In view of the fact that Victoria has recently removed this requirement it would seem appropriate for this requirement to be reviewed in South Australia.
In addition, the relief does not apply to non-corporate business structures....
