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The corporate reconstruction exemption from duty in the Duties Act 2000 (the Act) applies to eligible transactions which result from legitimate reconstructions of corporate groups.

Corporate reconstruction

A corporate reconstruction arises where a corporate group reorganises its business structure (e.g. transferring assets between corporations that are members of the corporate group).

Where a corporate group includes a 100 per cent owned partnership structure, the entities above and below that partnership structure may not constitute members of the same corporate group for the purposes of Part 2 of Chapter 11 of the Act. See Commissioner of State Revenue v Danvest Pty Ltd and Bullhusq Pty Ltd [2017] VSCA 382.

The corporate reconstruction exemption applies to an eligible transaction that arises as a consequence of a legitimate corporate reconstruction.

Eligible transactions

Under s250A of the Act, an eligible transaction is any of the following that occurs on or after 1 January 2004:

  • A transfer of dutiable property (as defined in s10(1)) from one member of a corporate group to another member of the group,
  • A vesting of dutiable property by, or as a consequence of, a court order where the property was held by one member of a corporate group and vested in another member of the group,
  • An application to register a motor vehicle as a result of a transfer of the vehicle from one member of a corporate group to another member of the corporate group,
  • A dutiable transaction to which s14 applies between members of a corporate group,
  • A relevant acquisition by a member of a corporate group from another member of the group to which s83 of the Act applies,
  • A declaration of trust relating to dutiable property the specification of which forms part of the declaration of trust or part of the transaction constituted by the declaration of trust by one member of a corporate group under which the dutiable property is held on trust for another member of the group, or
  • Any other transaction that results in the beneficial ownership of dutiable property (other than an excluded transaction) moving from one member of a corporate group to another member of the group

Apply for an exemption

An exemption application may be made:

  • At any time before the eligible transaction occurs, or
  • Within three years after the eligible transaction has occurred

The exemption will be granted if the Commissioner is satisfied that the:

  1. Instrument or transfer is, or arises out of, an eligible transaction, and
  2. Eligible transaction does not arise from arrangements or a scheme devised for the principal purpose of taking advantage of the benefit of the corporate reconstruction exemption, and
  3. Conditions of the exemption, if any, will be met by the applicant

As foreshadowed in (c), the exemption may be granted subject to conditions, which are binding on each member of the corporate group.

Furthermore, the exemption may be revoked in the circumstances described in s250D which include where members of the relevant corporate group do not remain members of the corporate group for at least three years from the date on which the eligible transaction occurred.