The State Taxation Acts Amendment Act 2019 replaced the exemptions for corporate reconstructions and consolidations in the Duties Act 2000 (the Act) with a corporate reconstruction concession and a corporate consolidation concession. From 1 July 2019, eligible transactions now attract duty at the concessional rate of 10 per cent of the duty otherwise payable.
However, the former exemptions still apply for eligible transactions effected on or after 1 July 2019 under agreements or arrangements entered into before this date.
Meaning of agreement or arrangement
For the purposes of the provisions that preserve the application of the former exemptions, an agreement or arrangement is considered to mean a concerted action or plan by the members of a corporate group to undertake specific transactions to effect either a corporate reconstruction or consolidation.
While an executed binding agreement is not required to show that there is concerted action or a plan between group members, the intended actions must be captured in writing in order to qualify as an arrangement. The written evidence needs to be sufficiently certain and must envisage each of the transactions for which an exemption is being sought. A commitment to undertake the reconstruction or consolidation transactions must be shown, rather than simply being an intention to investigate or consider the benefits of a reconstruction or consolidation of the corporate group.
An example of a non-binding document that would qualify as an agreement or arrangement for the purposes of the former exemptions is a signed Heads of Agreement setting out each of the contemplated transaction steps to reconstruct or consolidate the corporate group. A group may also be able to demonstrate sufficient commitment to the eligible transaction by showing company resolutions where the board has resolved to undertake the transaction as part of steps to reconstruct or consolidate the group.
Granted exemptions and ongoing obligations
If a corporate group is or was granted an exemption, the notification, revocation and reassessment provisions contained in Division 2 of Part 2 of Chapter 11 of the Act, as in force before 1 July 2019, will continue to apply. Generally, this means an exemption can be revoked for up to three years post the eligible transaction.