The Bill includes some of the most significant changes to stamp duty in Australia since the commencement of the Duties Act in 2008. The Bill will have an important impact on the types of transactions subject to duty in WA, what is included in the duty base, and on transactions between members of a corporate group.

The Bill has had its Second Reading in the Legislative Assembly. If passed by Parliament, the amendments to the Duties Act will come into effect the day after Royal Assent, subject to the operation of other duties related amendment Acts. Given there are only 2 sitting days left for this year, it is not clear when the Bill will be passed.

Some of the more substantive changes to the Duties Act include:

New dutiable fixed infrastructure rights:

• Fixed infrastructure control rights, fixed infrastructure access rights, and fixed infrastructure statutory licences are now included as dutiable property, and fixed infrastructure control rights (and in more limited circumstances, fixed infrastructure access rights and fixed infrastructure statutory licence) are included as land assets for landholder duty purposes.
• By way of example, a fixed infrastructure control right is a lease, licence or other right that gives the holder day-to-day control, and the operation or use, of fixed infrastructure (being a thing fixed to land). Such a fixed infrastructure control right could be that held by an electricity generation company pursuant to a lease over land for which the permitted use under the lease is the operation of the power generating wind turbines.
• The transfer or grant or surrender of this right can be dutiable, and is included as a land asset for landholder duty purposes.
• Such rights to fixed infrastructure are similar to the Vic landholder duty provisions concerning 'economic entitlements'. That is, the Bill imposes duty on the acquisition of certain rights taken to constitute 'synthetic' direct and indirect acquisitions in land where the person effectively acquires ownership of the fixed infrastructure through the fixed infrastructure rights. Such rights could include, for example, those acquired under a derivative contract or a development agreement.

Reintroduction of derivative mining rights as dutiable assets:

• A derivative mining right is reintroduced as a new category of dutiable right for transfer duty purposes, and is included as a land asset for landholder duty purposes.
• Such rights arise where the holder of a prospecting licence, exploration licence or mining lease authorises another person to carry out mining of a kind authorised by the relevant tenement on the land the subject of the relevant tenement.
• The Commissioner may take into account the effect of the value of derivative mining rights on the value of the mining tenement in certain circumstances.

Fixed to land model:

• WA already has broad provisions which provide that 'land' includes anything fixed to land but this is limited to mining tenements.
• The Bill provides that transfer duty and landholder duty will apply on acquisitions of things fixed to land, regardless of whether they are common law fixtures or if they are being acquired independently from the underlying land.
• While there are circumstances where a thing is taken not to be fixed to land, these are limited, and the change to the fixed to land model represents a material expansion of the duty base for both transfer duty and landholder duty purposes.

Non-landholders' landholdings aggregated and each deemed a landholder:

• The new landholder provisions represent one of the most important policy changes in the Duties Act.
• The existing regime requires the entity to be a landholder (ie it directly or indirectly has landholdings valued at $2m or more) before a liability can arise on acquisitions of the entity.
• Under the Bill, where 2 entities is each not a landholder because each entity's landholdings is below the $2m land value threshold, the entities' landholdings can be aggregated so that together, their landholdings value meets or exceeds the land value threshold. Each entity is then be deemed to be a landholder and duty imposed on the aggregated landholdings value.
• Where an entity is already a landholder, and another entity only holds chattels (and so it is not a landholder), the entity holding only the chattels can be deemed to be a landholder and duty is assessed on the total value of the land and chattels of both entities.
• Revisions to the relevant acquisition rules also means that acquisitions made between group entities are more likely to be subject to landholder duty and require corporate reconstruction relief (if available).

Expansion of constructive ownership of property by unlisted entities:

• The Bill captures interests held by web-linked entities – that is, even if an entity is entitled to an interest of less than 50% through a linked entity or chain of linked entities, the interest is traced through to the entity as a result of all other linked entities or chains of entities being wound up. This is similar to Vic and NSW.

Corporate reconstruction relief – reintroduction post association period:

• The reintroduction of the post association period is another area of major policy change.
• Currently, there is a 3 year period during which, in certain circumstances, transactions have to be notified to the Commissioner, giving the Commissioner an opportunity to consider whether the obtaining of the exemption was part of a scheme or arrangement to avoid duty on another transaction or to avoid duty or tax.
• The post association clawback period will be reintroduced so that the transferee entity must remain a member of the family for 3 years after the exempt transaction. If it doesn't, and it still holds any of the dutiable property for which the exemption was received, there is an automatic revocation of the exemption and duty and penalties are imposed. The only exception applies in respect of a public float.

As shown above, the Bill adopts a fundamentally different approach to that adopted in the current Duties Act on some key transactions. Taxpayers who are contemplating entering into transactions in WA should seek stamp duty advice to determine whether the significantly broadened duty provisions will impact on their transactions.

Further to the above comments, the Duties Act key amendments are summarised in the table.