WESTERN Australia’s miners and property players face one of Australia’s most onerous stamp duty regimes, according to a local accounting firm.
WESTERN Australia’s miners and property players face one of Australia’s most onerous stamp duty regimes, according to a local accounting firm.
The new tax laws introduced in July as part of the Gallop Government’s business tax review, mean stamp duty is now payable at a rate up to 5.4 per cent on acquisitions greater than $1 million, in which land or mining tenements represent 60 per cent of company assets.
Pitcher and Partners tax partner Mark Ceglinski said it was easier to be caught in WA under the laws than anywhere else in Australia because the threshold rate was the lowest, the duty rate one of the highest and it applied to both private and listed companies.
Mr Ceglinski said Queensland, while very similar to WA in terms of its strong mining industry and large land mass, had a stamp duty regime that was much more favourable than in WA.
“There appears to be no reasonable explanation as to why there is such a significant differential … [however] there is clearly the link to the fact that we are a mining based State and that it is probably seen as a soft target,” he said.
“I don’t think that is very pro-business – if anything it is quite an easy money grab.”
Mr Ceglinski said there were already views in the business community about the Gallop Government’s ability to balance a budget and the laws made WA strategically even less attractive for mining companies.
“We are looking at transactions at the moment with some local public companies and this is a big issue for them in that it changes the value that can be paid for the asset and that therefore means it is the shareholders of the target company who pay the price,” he said.
One of the biggest transactions currently looming in WA is the possibility of a $7.4 billion takeover of WMC by a number of international companies.
Under the new laws a takeover could mean a $180 million windfall to the WA Government, with analysts estimating WMC’s WA land assets to be worth between $2.5 billion and $3 billion.
So called “low ball” bids by Swiss-based miner Xstrata have so far been rejected by WMC management, however, there are rumoured to be up to 10 companies running the ruler over the historic Australian miner.
Opposition leader Colin Barnett has called the on the Gallop Government to review its much vaunted business tax reform package in wake of the evidence and said if there were anomalies with duty they needed to be corrected.
“Exploration and mining companies are being treated as property developers. They are not. They don’t own the land they just own the rights to explore,” he said.
A spokesman for Treasurer Eric Ripper said the Government, in devising the business tax review which had cleaned up and reduced taxes in WA, had taken into account the wider business community rather than what he called single interest accounting firms “pushing their own barrow”.
The spokesman said WA was a pioneer in implementing the duty in Australia.
He said one of the key differences WA faced was that it did not receive a huge revenue stream from gambling taxes compared to the other States. The spokesman said the Government would not be revisiting its review.
The Association of Mining and Exploration Companies, which is seeking a moratorium on the duty, met with representatives from the Treasurer’s office on December 14 to discuss the issue.
