Corporate reconstruction concession

Key information

The corporate reconstruction concession reduces the duty payable on some transactions within an existing corporate group. It applies where transactions occur between members of the same corporate group as part of a corporate restructure.

Under this concession:

• duty on eligible transactions is charged at 10% of the duty otherwise payable
• a corporate group generally requires a parent entity with at least 90% ownership and voting control over its subsidiaries
• the concession can apply to a range of transactions, including transfers of dutiable property and relevant acquisitions in a landholder
• transactions between entities that are not part of a corporate group and transactions involving discretionary trusts and natural persons, are not eligible.

Corporate group

A corporate group means a parent corporation and all its subsidiaries. To be a subsidiary, the parent corporation must: 

• directly or indirectly hold at least 90% of the beneficial ownership of the subsidiary
• be able to cast, or control the casting of, at least 90% of the maximum number of votes that may be cast at the subsidiary's general meeting.

Members of a corporate group are not limited to companies. They can include unit trust schemes and certain public offer superannuation funds. However, discretionary trusts cannot be a member of a corporate group for the purpose of the concession. 

Natural person shareholders also do not qualify as members of a corporate group. This means 2 separate entities each having the same natural person shareholder(s) are not members of the same corporate group for the purpose of the concession.

Eligible transactions

An eligible transaction means any of the following transactions occurring between members of the same corporate group:

• A transfer of dutiable property.
• A vesting of dutiable property by, or because of, a court order.
• The granting of a lease defined by s7(1)(b)(v) of the Duties Act 2000 (the Act).
• A transfer or assignment of a lease defined by s7(1)(b)(v) of the Act.
• A dutiable transaction to which s14 of the Act applies.
• Any other transaction resulting in a change in beneficial ownership of dutiable property, other than an excluded transaction.
• A relevant acquisition in a landholder to which s83 of the Act applies.
• A declaration of trust relating to dutiable property.
• An application to register, or transfer the registration of a motor vehicle because of a transfer of the vehicle.

Concessional duty

Where there is an eligible transaction, the duty on the transaction is 10% of the duty otherwise chargeable (i.e. a 90% discount).

Once the concession is applied, there are no ongoing obligations on the members of the corporate group. 

Foreign purchaser additional duty

If foreign purchaser additional duty (FPAD) applies, the concession applies to the full duty amount, including any FPAD.

Subsequent eligible transactions

Corporate reconstruction arrangements can involve multiple steps. This may involve moving the same property more than once (either directly or indirectly) under separate eligible transactions.

When a subsequent eligible transaction involves the same property, the duty payable on the first eligible transaction can be deducted from the duty otherwise payable on the subsequent eligible transaction. This applies whether the property is transferred directly through a transfer of dutiable property or indirectly through a relevant acquisition. The deduction only applies to the extent that the same property is involved in the subsequent eligible transaction.

This effectively provides a credit for the duty paid (or chargeable) on the earlier eligible transaction, to the extent the same property is involved in the subsequent eligible transaction.

For this credit to apply, both the first eligible transaction (on which duty was paid or chargeable) and the subsequent eligible transaction must be:

• between members of the same corporate group
• within 30 days of each other.

Depending on the nature of the 2 eligible transactions, this can result in no further duty being charged on the subsequent eligible transaction. This is the case if there is no difference in the duty payable under the first and subsequent eligible transactions.

The credit is available to multiple subsequent eligible transactions if these transactions meet the corporate group and timing requirements. The ‘credit’ can also apply to subsequent eligible transactions which occur under an arrangement that continues beyond 30 days. In these circumstances, the first eligible transaction that occurs under the arrangement after the end of each 30-day period is treated as if it was the first eligible transaction in the arrangement. 

Apply for a concession

How you apply for the concession depends on the type of dutiable transaction.

Transactions involving dutiable property

Your application for the concession must be lodged (along with all supporting documentation) at the same time as the relevant transfer documents are lodged for assessment via Duties Online.

Relevant acquisitions

If the corporate reconstruction results in a relevant acquisition in a landholder, you must complete and lodge a section 83 landholder acquisition statement online.

Transfer of motor vehicles

If the corporate reconstruction results in a transfer of motor vehicles, you apply for this concession by writing to us either before or after you lodge your application to transfer the vehicle’s registration with VicRoads. You do not need to complete any particular form.

If you apply for the corporate reconstruction concession after transferring the vehicle’s registration and paying motor vehicle duty, we reassess the motor vehicle duty on the transfer and refund the duty paid.

Documents required

To receive the corporate reconstruction concession, regardless of the transaction type, your application must include:

• a diagram of the structure of the corporate group before and after the eligible transaction, showing the ownership structure and percentage holdings
• Australian Securities and Investments Commission (ASIC) extracts, or the foreign equivalent if the corporation is registered overseas, for all companies in the corporate group
• constitutions for all companies in the corporate group
• trust deeds, with all amendments, and the unit register for all unit trust schemes in the corporate group
• a copy of the most recent financial statements for the company transferring the property (i.e. the transferor)
• an estimate of the duty payable if the corporate reconstruction concession applies.

Transactions involving dutiable property

You must also provide:

• all contracts, transfers, court orders, declarations of trust, etc. relevant to the eligible transaction
• evidence of the value of the property (this usually requires a valuation from a certified practising valuer who is a member of the Australian Property Institute (API) or by a member of the Real Estate Institute of Victoria (REIV) with sworn valuer accreditation).

Relevant acquisitions

You must also provide all documents set out in the Document Checklist in Duties Form 58 – Section 83 Acquisition statement.

Transfers of motor vehicles

You must also provide:

• the year, make and model, registration number
• current market value for each vehicle.

You should lodge your application when you lodge the relevant transfer document for assessment via Duties Online.

Reassessment

If you didn’t claim the concession as part of your initial lodgement, you may apply for the concession as part of a refund request or an objection to the assessment.

If the concession has been wrongly claimed (i.e. the transaction was not an eligible transaction), the Commissioner may reassess the matter with any applicable penalties and interest pursuant to the Taxation Administration Act 1997.