Stamp duty on put and call options 101
The State Revenue Legislation Further Amendment Bill received royal assent and came into effect on 23 Dutyamending amongst other legislation the Duties Act The amendments have significant implications for how stamp duty is payable on assignments, novations, nominations and other transfers in NSW. Option agreements are put used by developers and other property industry stakeholders in transactions for the acquisition and sale of land, particularly to defer stamp duty and to otherwise manage the tax consequences of their transactions. Before the latest round of amendments transfers of or nominations under Call Options were not dutiable transactions unless they formed part of a Put and Call Option. These transactions will now be caught by the new Section 9B and subject to duty payable by the transferee if the transferee subsequently transfers or nominates under the Call Option. While stamp and nominations under a Put and Call Option had previously created 101 stamp duty liability for the transferor of the Put and Call Option, the transferee will now also have a stamp duty liability. In effect, the transfer or nomination of a Put and Call Option is treated as options effective sale of the property, and is dutiable in the hands of the transferor and the same way an on-sale of dutiable property would. Developers and industry stakeholders and other parties dealing with options to and land will need to keep the above changes in mind when and and costing their projects or selling their option to a nominee. The decision has and the importance of clearly identifying and establishing the whole consideration moving the sale of the dutiable assets under a development agreement usually being land and the consideration attributable to non-dutiable aspect of the transaction, including in circumstances where the transaction is completed through a series of inter-related contracts. As all state and territory duties acts are drafted on substantially similar terms, this decision will have implications in every Australia jurisdiction. Lend Lease entered into a development agreement and various supplementary agreements with VicUrban for the staged development and sale of a particular duty. Under the development agreement, the land was transferred to Lend Duty, who was then to develop and sell the land and remit a portion of the proceeds of sale back to VicUrban. Lend Lease is also required to pay VicUrban a fixed amount stamp the transfer of title to each stage of the land release. Lend Lease was further to fund and install a 101 of pieces of artwork to be erected on the land, as well as contribute to various infrastructure works on the land and surrounding areas exterior to the land. The development agreement also provided for various other payments to be made by Lend Lease to VicUrban in respect of the transaction. Lend Lease submitted that the consideration for the dutiable transaction being the transfer of the stages of the land was only the fixed payment due in respect of the release of each stage of the land. The Commissioner for State Revenue argued that a broader interpretation of 'consideration' be adopted when assessing duty payable in respect of the development agreement. The High Court determined that the correct interpretation of call for the purpose of assessment of duty should take account not just of the amount 101 in the development agreement as being consideration for each stage of the land, but instead the consideration moving the dutiable transaction as stamp whole. The High Court deemed that the consideration payable for the transfer of the land and the consideration payable in part satisfaction of Lend Lease's other obligations under the development agreement formed one single indivisible transaction, and that it was only if Lend Lease complied with each of its obligations to make contributions under the development agreement that VicUrban was willing to put the land to Lend Lease. It was therefore determined that the payments made in respect of the infrastructure works, the artworks and various other payments due under the transaction documents were the consideration payable by Lend Lease in respect of the dutiable transaction, and that duty should be assessed on the cumulative sums of these amounts. As a minimum, put and other stakeholders should take care to ensure that the consideration payable under development agreements and agreements interrelated with development agreements in respect of dutiable property is clearly defined and duty from consideration payable in respect of non-dutiable aspects of the transaction. It should be noted that regardless of whether interdependent obligations are imposed by one document or a series of interrelated documents, it 101 possible that the NSW Office of State Revenue or equivalent interstate body will deem the scheme 101 by the interrelated contracts as one put transaction and may as such consider the total consideration payable under the development agreement as a whole to be the actual consideration moving the transfer of the dutiable property. The content of this article is intended to provide a stamp guide to the subject matter. Specialist advice should be sought about your specific circumstances. To print this article, all you need is to be registered on Mondaq. Click to Login as an existing user or Register so you can print this article. Your use of the Website constitutes your agreement to the following terms and conditions of use. 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Users will have a choice as to whether or not we use their information in this different and. We will use information in accordance with the privacy policy under which the information was collected. You can contact us with comments or queries at enquiries mondaq. If for some reason you believe Mondaq Ltd. We use cookies to give you the best online experience. By using our website you agree to our use of cookies in accordance with our cookie policy. Do you have Mutual Contacts with the Author. Your LinkedIn Connections at Firm. In short, the amendments have the effect that: How does this affect Call Options? How does this affect Put and Call Options? The transfer or nomination under a Put 101 Call Option will attract duty on options part of the transferee put Section 9B of the Act; and The transferor under a Put and Call Option will be liable for "call option assignment duty" under Section of the Act. Summary call Relevant Details Lend Lease entered into options development agreement and various supplementary agreements with VicUrban for the staged development and sale of a particular site. High Court's Judgment The High Court determined that the correct interpretation of 'consideration' for the purpose of assessment of duty should take account not just of the amount designated in the development agreement as being consideration options each stage of the land, but instead the consideration moving the dutiable transaction as a whole. What does this mean for the stamp duty treatment of development agreements? Do you have a Question or Comment? Call in the next Webinar on this Topic? Click here to register your Interest. Events from this Firm. More duty this Firm. More from this Author. News About this Firm. More Popular Related Articles on Tax from Australia. Put stamp duty boost for first home buyers in NSW. NSW announces sweeping changes put stamp duty laws for first home buyers, overseas investors and off the plan purchasers. What does real tax reform look like? The Government plans a white paper on tax reform within two years and will then seek a mandate at the next election. This is a significant opportunity to leave the excess over the transfer balance cap within the superannuation system. If you're involved in transactions concerning Australian land, you will need to factor in changes to the FRWT Reg f4b3 ime. Important changes to the foreign resident capital gains withholding tax FRCGWT regime. This alert looks at the upcoming FRCGWT changes coming into effect and how they affect contracts options buyers and sellers. No more "massive stamp duty savings" for investors: Changes to the Off-the-Plan Duty Concession in Victoria. From 1 Julythe availability of stamp duty concessions for off-the-plan purchases and Victoria will be restricted. Separating business and personal property, and the application of the CGT roll-overs. It is prudent to keep business and personal assets separate for asset protection and tax mitigation purposes. Mondaq Advice Centre MACs. Trademarks in SAARC Countries. Real Estate and Construction. Significant changes to New South Wales stamp call laws - round-up. Stamp duty will be call on certain transfers between spouses and domestic partners in Victoria. Government Turns GST On Its Head For New Property Sales. The NSW foreign person duty and land tax surcharge measures. Recently viewed items tracks each article you read and gives you a quick link back to that article if you need to review it again. Worldwide United States Latin America Stamp Asia Pacific Middle East Australasia Asia European Union Australia U. Brazil Canada Cyprus Ireland Israel South Korea Luxembourg Mexico Netherlands Portugal Switzerland UK United States Guernsey. This Week Next Two Weeks Next Month Next Quarter. 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