I REFER to the article entitled “Tax changes target land sales” in the August 16 edition of WA Business News. As you know, the government has just released an exposure draft of a duties bill to replace the Stamp Act 1921, an almost 90-year-old statute which is being significantly simplified and improved. I noted with some concern a quote in your article from Phil Renshaw of KPMG concerning the proposed entity restructuring provisions, where he expressed a view that these changes were “relatively minor”. In my time as state treasurer, the feedback from the business community is not consistent with this view. They tell me that while they reluctantly accept the need for stamp duty to be paid upon the acquisition of property, what they find particularly irksome is that a subsequent transfer of that property within their corporate group may result in further stamp duty being charged. Both small and large businesses have argued that this subsequent duty can be cost prohibitive and, as a result, is a major impediment to putting in place more efficient business structures, divesting non-performing assets and raising additional capital. The proposed entity restructuring regime contained in the duties bill addresses these issues by largely removing duty on the transfer of property between associated entities within a corporate group. This will include where unit trusts are involved, a significant broadening when compared with the current exemption, which applies only to companies. Furthermore, significant rigidities regarding pre and post association periods are proposed to be removed, which will make the exemption more accessible and provide greater flexibility in restructuring corporate groups. I am very keen to receive the comments of the Western Australian business community as to whether this proposal should be supported. Consultation on the exposure draft of the duties bill closes on September 21. Details of the consultation process are available on the Department of Treasury and Finance website at http://www.osr.wa.gov.au. By Eric Ripper - deputy premier, treasurer. Renshaw reply: WA Business News sought a comment from Mr Renshaw and received the following: I NOTE the comments from Mr Ripper and believe it appropriate to put my original comments in context. It is acknowledged that the changes to the corporate reconstruction provisions are extensive. My initial comments were specifically directed towards the impact of the removal of the three-year pre-association test, but also the extent of the inclusion of trusts within the provisions. It should be noted that the bill does not appear to extend corporate reconstruction to a unit trust scheme that is wholly or partly a discretionary trust. On this basis, the extent to which trusts may be affected could be limited. More importantly, the reforms to the corporate reconstruction provisions are dependent upon the adoption of the new landholder model, which the explanatory notes to the bill acknowledge will raise more revenue from a broader base. By Phil Renshaw - partner, KPMG
