Australia

Details

  • Service: Tax, Indirect Tax
  • Type: Regulatory update
  • Date: 16/07/2014

Tax Insights

KPMG's analysis of tax issues and developments.

Cullen Smythe

Cullen Smythe
Director, Indirect Tax

+61 2 9455 9872

csmythe@kpmg.com.au

A debt transfer isn’t liable to stamp duty, is it? 

by Cullen Smythe, Indirect Tax Specialist

Over the last few years, there has been a growing misconception that there is no stamp duty on transferring a debt. However this is only true in some cases – the real position depends on a host of factors including the location of the debt, the nature of the instrument and the type of transaction. Sounds like a lot of bother doesn’t it? Well, it can be – but get it wrong and you could be looking at stamp duty of 5.75 percent of the value of the debt.

A number of Australian jurisdictions still impose duty on transfers of debts and, to keep things interesting, the rules governing the location of debts are a combination of long established common law and current statute.

 

What types of dealings in debts could attract a liability to duty?

 

  • distributing a debt to a shareholder/ beneficiary
  • transferring a debt within a group as part of a group restructure
  • pre-liquidation transfers
  • declaring that a debt will be held on trust for another party
  • sale of under performing debts.

 

Some states have exemptions for transfers within a group and securitisation transactions, but detailed conditions for these exemptions are interpreted strictly and may not be available for all transactions.

 

So, what should you do?

 

  • consider the transaction and documentation – are these the most appropriate way to deal with this asset?
  • where is the debt located? What compliance obligations flow from this?
  • if a liability arises, is any relief available?
  • seek expert advice.

 

As you can see, the stamp duty rules that apply to transfers of debts can be very complicated and carry a nasty sting if you get it wrong. For more information please contact me or a member of your Indirect Tax team.

 

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