Australia

Details

  • Service: Tax, Indirect Tax
  • Industry: Real Estate & Construction
  • Type: Regulatory update
  • Date: 27/06/2013

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

Syndicators will be punished by landholder rules 

by Cullen Smythe, Indirect Tax Specialist

From a property syndicator’s perspective, paying duty on the acquisition of a property is one thing, but paying duty twice can kill the deal (especially with rates up to 5.75 percent). We are currently seeing increased State revenue investigation and compliance activity in this area across a number of jurisdictions.

Did you know that interests in a landholding entity acquired under a “single arrangement” will be included when determining whether the 50 percent landholder duty threshold has been met?

 

The rules around investments under “one arrangement” are extremely broad and can pose particular difficulties to syndicators looking for new investors.  In many cases, stamp duty can be triggered even though investors have no real relationship other than the fact that they are investing into the same vehicle!

 

With State budgets being squeezed by decreased GST revenues, and at the same time needing to fund infrastructure development, the State revenue authorities are looking closely at every possible means to increase revenue from enforcing the existing legislation.  Given the breadth of the one arrangement rules, in the absence of specialist advice these provisions can apply more broadly than intended, attracting unforeseen duty consequences (and un-modelled costs). 

 

There are opportunities to manage potential duty issues arising from holdings of “associates” and to ensure that there are no inadvertent “one arrangement” issues where there really is no single arrangement. Engaging duty specialists early is vital in ensuring that you are not caught out by these aggressive provisions.

 

If you would like to learn more please call me or contact your local KPMG indirect tax adviser.
 

 

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