Chapter 3 Certain transactions treated as transfers
This Chapter charges duty at the same rate as for a transfer of dutiable property under Chapter 2 on certain transactions which are not “dutiable transactions” under Chapter 2.
Part 2 Transactions involving put and call options
In this Part:assign or assignment includes transfer, and a reference to the assignment of a right under a call option includes a reference to a transfer of the call option.
call option means a right to require a person to sell dutiable property that is conferred by an agreement or arrangement (being an agreement or arrangement that is not a dutiable transaction).
put option means a right to require a person to purchase dutiable property that is conferred by an agreement or arrangement (being an agreement or arrangement that is not a dutiable transaction).
107 Assignment of rights under call option dutiable as transfer
(1) If a person (A) who has a right under a call option to require another person (B) to sell dutiable property assigns that right, so that the option is exerciseable by a third person (C), duty under Chapter 2 is chargeable on that assignment as if the assignment were a transfer of the dutiable property concerned.(2) For the purposes of this section:(a) if A enters into an agreement or arrangement under which A, for valuable consideration, relinquishes the right under a call option to require B to sell dutiable property and a call option to require B to sell the dutiable property is granted to a third person (C), A is to be treated as having assigned that right under the call option so that the option is exerciseable by C, and(b) if, on or in connection with the exercise of a call option, A, for valuable consideration, enters into an agreement or arrangement under which A nominates a third person (C) as the purchaser or transferee of dutiable property the subject of a call option, A is to be treated as having assigned the right under the call option to require B to sell the dutiable property so that the option is exerciseable by C.(3) An assignment is chargeable with duty as a consequence of this Part only if the person who may be required under the call option to sell the dutiable property (that is, B) has a right under a put option to require A, an associated person of A or an assignee of A to purchase the dutiable property.(4) If the assignment is chargeable with duty, Chapter 2 applies in respect of the assignment in the same way as it applies to other transfers of dutiable property, and a reference in this Act to a dutiable transaction includes such an assignment, subject to this Part.(5) For the purpose of Chapter 2, the transfer of dutiable property is taken to occur when the assignment is made.(6) This section applies regardless of when the call option or put option is exercisable.(7) An assignment of a right under a call option to purchase dutiable property, as referred to in subsection (1) or (2), is referred to in this Part as a call option assignment.
(1) The duty chargeable on a call option assignment is payable by the person who assigns the right under the call option to require another person to sell dutiable property (the option holder).(2) Accordingly, the option holder is taken, for the purpose of charging duty under Chapter 2, to be the transferee of the dutiable property.(3) The duty payable by the option holder is additional to the duty (if any) payable under Chapter 2 by a transferee on the transfer of an option to purchase land in New South Wales.(4) However, the duty payable by the option holder as a consequence of this Part is to be reduced by the amount of duty (if any) paid by the option holder under Chapter 2 on the transfer of the call option to the option holder.(5) The duty payable by the option holder on a call option assignment as a consequence of this Part is referred to as call option assignment duty.Note. The following is an example of how this Part operates:B grants A a call option that confers a right on A (or any assignee of A) to require B to sell land. A also grants B a put option that confers on B a right to require A (or any assignee of A) to purchase the land from B. No duty is payable at this point.
A then transfers the call option to C. Duty is payable as follows:
(a) A (as the option holder) must pay call option assignment duty, as a consequence of this Part, as if the transfer of the option were a transfer of the land. Duty is payable on the dutiable value of the land (determined as provided for by this Part),(b) C (as the transferee of the option) must pay duty under Chapter 2 on the transfer of the option. Duty is payable on the dutiable value of the option (determined as provided for by Chapter 2).C then transfers the option to D. C (as the option holder) is required to pay call option assignment duty as if the option were a transfer of the land. However, in this case C will receive a credit for the duty paid by C on the transfer of the option to C. D (as the transferee of the option) is required to pay duty under Chapter 2 on the transfer.
109 Determination of dutiable value of transfer
For the purposes of Chapter 2, the dutiable value of dutiable property that is subject to a call option assignment is taken to be the greater of:(a) the sum of the consideration for the assignment of the right under the call option and the consideration payable in the event that the call option is exercised (being in either case the amount of monetary consideration or the value of non-monetary consideration), and(b) the unencumbered value of the dutiable property.
110 Stamping or endorsement of transactions
(1) If an instrument that effects or evidences a transfer of an option to purchase land in New South Wales also effects or evidences a call option assignment, and it is stamped under this Act to indicate payment of duty, it must be stamped in a manner approved by the Chief Commissioner to indicate the type of duty (that is, purchaser duty or call option assignment duty) that has been paid.(2) If an instrument that effects or evidences a transfer of an option to purchase land in New South Wales also effects or evidences a call option assignment, and it is endorsed under this Act to indicate payment of duty, it must be endorsed in a manner approved by the Chief Commissioner to indicate the type of duty (that is, purchaser duty or call option assignment duty) that has been paid.(3) An instrument that effects or evidences a transfer of an option to purchase land in New South Wales and a call option assignment is not duly stamped unless it is stamped or endorsed in accordance with this section.(4) In this section:purchaser duty means the duty (if any) payable under Chapter 2 by a transferee on the transfer of an option to purchase land in New South Wales.
(1) No duty is chargeable as a consequence of this Part on a call option assignment if the Chief Commissioner is satisfied that:(a) the call option and put option were granted by the parties concerned for the sole purpose of obtaining finance, or(aa) the call option is assigned to a body established solely for the purpose of raising funds in relation to an investment scheme promoted by the person who assigns the call option, or(b) the call option and the put option form part of a scheme of call options and put options granted by proprietors of a business that:(i) were granted for the sole purpose of facilitating the continuation of the business by one or more of the proprietors (the continuing proprietors), and(ii) are not exercisable except on the occurrence of a specified event that would cause the continuing proprietors to seek to acquire the interest of one or more of the other proprietors of the business, or(c) the dutiable property the subject of the call option is land and the call option is assigned by a person authorised to contract to do residential building work under the Home Building Act 1989 who:(i) has built or is building residential premises on the land for the purposes of sale, or(ii) has an agreement with the person to whom the call option is assigned to build residential premises on the land, or(d) the call option is assigned by a corporation that is a member of a group of corporations to another corporation that is a member of the same group.(2) This section does not affect the duty payable under Chapter 2 (if any) by the transferee on a transfer of an option to purchase land in New South Wales.(2A) For the purposes of this section, corporations are members of the same group of corporations if:(a) one corporation is a wholly owned subsidiary of the other corporation (that is, the other corporation holds, otherwise than as trustee, not less than 90% of the issued share capital of the first corporation and is in a position to control not less than 50% of the maximum number of votes that might be cast at a general meeting of the first corporation), or(b) the corporations are wholly owned subsidiaries (within the meaning of paragraph (a)) of the same corporation.(2B) If a corporation that is a wholly owned subsidiary (within the meaning of subsection (2A) (a)) of another corporation (the parent corporation) holds shares, otherwise than as trustee, in a third corporation, then, for the purposes of determining whether the parent corporation and the third corporation are members of the same group of corporations, the shares held by the wholly owned subsidiary in the third corporation are taken also to be shares held by the parent corporation in the third corporation.Note. The effect of subsection (2B) is that the third corporation will be considered to be a wholly owned subsidiary of the parent corporation if the shareholdings of the parent corporation in the third corporation (if any) together with the shareholdings of any wholly owned subsidiary in the third corporation are sufficient to satisfy subsection (2A) (a).(3) In this section:proprietor of a business means:
(a) in the case of a business carried on by a partnership, a partner, or(b) in the case of a business carried on by a company, a shareholder, or(c) in the case of a business carried on by a unit trust scheme, a unit holder, or(d) in any other case, a person the Chief Commissioner determines to be a proprietor of the business.
Part 3 Entitlements arising from capital reductions or rights alterations
124 Abolition of duty charged by this Part—effective 1 July 2013
(1) The duty charged by this Part is abolished on and from 1 July 2013.(2) The duty charged by this Part remains chargeable on a dutiable entitlement that is acquired before 1 July 2013.
(1) In this Part:capital reduction means:
(a) the redemption, surrender or cancellation of a share (including cancellation as part of a buy-back of shares in accordance with Division 2 of Part 2J.1 of the Corporations Act 2001 of the Commonwealth), or(b) a reduction in the paid up value of a share.company means a NSW company that is:
(a) a public company within the meaning of the Corporations Act 2001 of the Commonwealth, and(b) not listed on the Australian Securities Exchange or a recognised stock exchange.dutiable entitlement means a voting share entitlement in respect of whose acquisition a statement is required, under section 129, to be lodged.
person includes persons who are associated persons.
Note.Associated person is defined in the Dictionary.
rights alteration, in relation to voting shares, means a variation, abrogation or alteration of rights relating to the shares.
voting shares has the same meaning as in section 9 of the Corporations Act 2001 of the Commonwealth.
(2) For the purposes of this Part, if voting shares acquired by associated persons severally do not, but taken in the aggregate would, confer an entitlement to which this Part applies, the voting shares acquired by the associated persons are taken to be aggregated and are taken to confer the entitlement on the associated person who last acquired any of those voting shares.(3) If, by subsection (2), an entitlement to voting shares is taken to exist as the aggregate of voting shares of associated persons, the associated persons are jointly and severally liable for payment of the duty chargeable on the statement required to be lodged under this Part.(4) Voting shares are not to be aggregated in accordance with subsection (2) if the Chief Commissioner is satisfied that the associated persons concerned acquired their several shares independently and for no common purpose.
126 When does a liability for duty arise?
A liability for duty charged by this Part arises when a dutiable entitlement is acquired.
A tax default does not occur for the purposes of the Taxation Administration Act 1996 if duty is paid within 3 months after the liability to pay the duty arises.
128 Who is liable to pay the duty?
(1) Duty chargeable under this Part is payable by the person who acquires a dutiable entitlement.(2) If the dutiable entitlement results from an aggregation of the voting share entitlements of associated persons, the associated persons are jointly and severally liable for payment of the duty.
129 Entitlement to voting shares arising from capital reduction or rights alteration
(1) If:(a) a person becomes entitled to at least 50% of the voting shares of a company by means of capital reduction or rights alteration, or both, or(b) a person who is entitled to at least 50% of the voting shares of a company becomes entitled to at least 10% more of the voting shares over a period of not more than 12 months by means of capital reduction or rights alteration, or both,the person must lodge a statement with the Chief Commissioner in respect of the entitlement.(2) The statement must be lodged within 3 months after the entitlement arises.
The statement required to be lodged under this Part by a person is to be in an approved form and is to contain the following information:(a) the name and address of the person,(b) the name of the company,(c) the date on which each relevant capital reduction or rights alteration, or both, occurred,(d) if the person’s entitlement has arisen:(i) from capital reduction—the total of the unencumbered value, immediately prior to each relevant capital reduction, of the shares the subject of the capital reduction, or(ii) from rights alteration—the total of the unencumbered value, immediately prior to each relevant rights alteration, of the shares the subject of the rights alteration, or(iii) from capital reduction and rights alteration—the aggregate of the totals under subparagraphs (i) and (ii),(e) the total consideration paid to the person in relation to all relevant capital reductions or rights alterations, or both,(f) such other information as may be required by the Chief Commissioner.
A statement required to be lodged under this Part by a person is chargeable with duty of 60 cents for every $100, or part, of the higher of:(a) the total or aggregate obtained under section 130 (d), and(b) the total obtained under section 130 (e).
Part 4 Acquisition of land use entitlements by allotment of shares or issue of units
132 When does a liability for duty arise?
A liability for duty charged by this Part arises when a land use entitlement is acquired by an allotment of shares or an issue of units to any person otherwise than in circumstances to which Part 5 applies.
A tax default does not occur for the purposes of the Taxation Administration Act 1996 if duty is paid within 3 months after the liability to pay the duty arises.
134 Who is liable to pay the duty?
Duty chargeable under this Part is payable by the person who acquires the land use entitlement.
135 Acquisition of land use entitlement
(1) A person who acquires a land use entitlement by an allotment of shares or an issue of units must lodge a statement (an acquisition statement) with the Chief Commissioner in respect of the entitlement.(2) The statement must be lodged within 3 months after the entitlement is so acquired.
An acquisition statement required to be lodged by a person is to be in an approved form and is to contain the following information:(a) the name and address of the person,(b) the name of the relevant company or unit trust,(c) the date on which the land use entitlement was acquired,(d) the consideration paid by the person for the relevant shares or units,(e) such other information as may be required by the Chief Commissioner.
The share allotment or unit issue by which a person acquires a land use entitlement is chargeable with duty at the general rate of duty set out in section 32 on the dutiable value of the land use entitlement.
Part 5 Allotment of shares by direction
137A Abolition of duty charged by this Part—effective 1 July 2013
(1) The duty charged by this Part is abolished on and from 1 July 2013.(2) The duty charged by this Part remains chargeable on an allotment of shares referred to in section 138 that occurs before 1 July 2013.
This Part applies to an allotment of shares to any person by a NSW company that is not listed on the Australian Securities Exchange or a recognised stock exchange at another person’s direction, in discharge of an obligation to that other person, whether that obligation arises as consideration for the purchase of property by the company or otherwise.
139 When does a liability for duty arise?
A liability for duty charged by this Part arises when the relevant shares are allotted.
A tax default does not occur for the purposes of the Taxation Administration Act 1996 if duty is paid within 3 months after the liability to pay the duty arises.
141 Who is liable to pay the duty?
Duty chargeable under this Part is payable by the person to whom the relevant shares are allotted.
142 Acquisition of shares by allotment
(1) A person to whom any shares are allotted in an allotment to which this Part applies must lodge a statement (an allotment statement) with the Chief Commissioner in respect of the allotment.(2) The statement must be lodged within 3 months after the shares are allotted.
An allotment statement required to be lodged by a person is to be in an approved form and is to contain the following information:(a) the name and address of the person,(b) the name of the relevant company,(c) the date on which the shares were allotted to the person,(d) such other information as may be required by the Chief Commissioner.
An allotment to which this Part applies is chargeable with duty at the rate of duty set out in section 33 in respect of a transfer of marketable securities on the dutiable value of the shares.