Duties Alert: Reform to NSW Landholder Duty for Listed Landholders and Widely Held Trusts

By Jinny Chaimungkalanont and Mark Peters

Update: Reforms commence 1 July 2023

On 23 and 25 May 2023 the Revenue Legislation Amendment Bill 2023 (NSW) was passed by the Lower and Upper Houses of the New South Wales Parliament respectively without amendment. As no amendments were made the new regime will commence without any transitional rules which means that the changes could impact transactions that bidders have committed to and which are yet to complete (as NSW landholder duty is generally imposed on completion).

The Royal Assent was given on 31 May 2023 and new regime will come into force on 1 July 2023.

Reform to NSW Landholder Duty

The New South Wales Government has introduced today (11 May 2023) the Revenue Legislation Amendment Bill 2023 (NSW) which proposes to introduce a significant change to the duty implications of acquiring a “public landholder”. The reforms will see the abolition of an existing concession which provides that the duty payable on the acquisition of a “public landholder” is 10% of the duty which would otherwise be chargeable.

If the Bill is passed:

• The acquisition of a “public landholder”, which includes listed companies, listed trusts and certain widely held trusts which hold landholdings in NSW with a value of $2m or more, will be chargeable with duty at full rates up to 5.5%. Currently, the rate is 0.55%.
• The changes are proposed to take effect from 1 July 2023 and there is presently no transitional provision. The absence of a transitional rule is highly unusual. Previous changes to the rules affecting “public landholders” have provided for transitional arrangements, for example:

“Duty is not chargeable under new Chapter 4 on a relevant acquisition made by a person in a public landholder if the person’s intention to make the acquisition was announced to the market before the date on which the Bill for the State Revenue Legislation Further Amendment Act 2009 was introduced into the Legislative Assembly”

The lack of a transitional rule means that the changes could impact transactions that bidders have committed to and which are yet to complete (as NSW landholder duty is generally imposed on completion).

• There is no change to the existing requirement that in order for duty to be payable on the acquisition of a “public landholder”, the acquirer must acquire an interest of 90% or more (subject to the usual aggregation rules).
• This change will bring NSW in line with Western Australia and the Northern Territory, but will be out of step with the balance of the Australian States and Territories (aside from the ACT which does not impose duty on “public landholders”) – these other jurisdictions recognise the policy, consistent with the longstanding historical position, that takeovers of listed entities should benefit from a duty concession/exemption.

The changes introduced today are hugely significant and will impact the landscape of M&A transactions involving public landholders with significant landholdings in NSW.