A WA Government tax loophole that enabled big business dodge millions of dollars in stamp duty on property deals has been closed.
Minister Assisting the Treasurer Graham Kierath said Cabinet had approved a number of amendments to the Stamp Act to counter avoidance arrangements not available to the wider community.
The arrangements involve avoiding stamp duty by using company structures to convey high value property to buyers.
Property Council of Australia WA CEO Joe Lenzo said he was not aware of council members using the loophole, although he expected some would.
“Stamp duty is a terrible indirect tax and it is one item that the PCA gets more phone calls from our members to try to abolish it – so obviously they are paying it,” he said.
“I do understand some mining companies with land tenure have gone down that path.”
He said the reason such a loophole existed was because of the disparity between what the property industry was penalised as opposed to securities.
“The property industry is getting penalised by a 5 per cent stamp duty while securities such as shares only have 0.6 per cent stamp duty.
“We would like it at 0 per cent but 0.6 is not bad for us.”.
He could not understand where the expected windfall for the Government would come from.
“He (Mr Kierath) has dumped commercial property with it, (its forecast stamp duty revenue) but a lot of deals I think are dealing with the energy and resource industry,” Mr Lenzo said.
“We don’t condone anything which is a rort but at the moment it is not a rort.”
Mr Kierath said such arrangements were particularly prevalent in high value commercial property and mining assets and cost WA millions of dollars in lost revenue.
The amendments follow similar provisions inserted in the Stamp Act in the late 1980s.
However, those provisions have lost their effectiveness as new avoidance techniques have been developed.
“Obviously those who are currently benefiting from the avoidance schemes will complain about the changes but I suggest the wider community will see it fair that if they have to pay, so should big business,” Mr Kierath.
“It is not fair that while families are paying stamp duty on the purchase of their homes, big business has found a way of acquiring high value assets and paying little or no duty.”
