Explanatory note
This explanatory note relates to this Bill as introduced into Parliament.

Overview of Bill

The objects of this Bill are as follows:

(a) to amend the Duties Act 1997:

        (i) to extend certain duty concessions under that Act and to provide for new
concessions, and
        (ii) for law revision purposes,

(b) to amend the First Home Owner Grant Act 2000 to increase the first home
owner grant cap,

(c) to amend the Land Tax Management Act 1956 to extend certain land tax
concessions under that Act,

(d) to amend the Payroll Tax Act 2007 to make further provision with respect to
liability for payroll tax in respect of shares or options granted to employees by
employers.

Outline of provisions

Clause 1 sets out the name (also called the short title) of the proposed Act.

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State Revenue Legislation Further Amendment Bill 2010
Explanatory note
Clause 2 provides for the commencement of the proposed Act.

Schedule 1 Amendment of Duties Act 1997 No 123
Duties concessions
Schedule 1 [1] extends an existing duty concession that applies to certain transfers
of dutiable property that are made as a consequence of the retirement of a trustee or
the appointment of a new trustee. Duty of $50 will be charged on such a transfer that
is made to a trustee of a self managed superannuation fund if the Chief Commissioner
is satisfied that the transfer is not part of a scheme for conferring an interest on a new
trustee or other person to the detriment of the beneficial interest or potential
beneficial interest of any person. An existing duty concession does not apply to such
a transfer because generally in self managed superannuation funds the trustees will
be beneficiaries under the trust. Schedule 1 [15] inserts a definition of self managed
superannuation fund in the Dictionary.

Schedule 1 [4] extends an existing duty concession that applies to certain transfers
of dutiable property that are made in connection with a person changing
superannuation funds. The amendment provides for payment of duty at the
concessional rate of $500 on a transfer of marketable securities from the trustee of a
superannuation fund, or a custodian of the trustee of a superannuation fund, made in
exchange for the issue of units in a pooled superannuation trust to a trustee of the
pooled superannuation trust where the transfer is made in connection with changing
superannuation funds.

Schedule 1 [3] makes it clear that the same concessions that apply to a transfer made
in connection with a person changing superannuation funds also apply in respect of
an agreement to transfer that is made in that regard. Schedule 1 [6] makes it clear that
duty will be charged on both the agreement and the transfer at the concessional rate
of $500 (or the ad valorem rate, if lower). Schedule 1 [5] is a consequential
amendment.

Schedule 1 [7] provides for a concession in respect of a transfer of, or an agreement
to transfer, dutiable property that is made to the custodian of the trustee of a self
managed superannuation fund by the sole member of that superannuation fund. Duty
is charged at the concessional rate of $500.

Schedule 1 [7] also provides that the concessional rate for transfers to a self managed
superannuation fund does not apply if, as a result of the transfer, the fund ceases to
be a complying superannuation fund.

Schedule 1 [11] updates a provision that exempts from duty an application to register
a motor vehicle that is made by a war veteran entitled to a pension under the
Veterans' Entitlements Act 1986 of the Commonwealth, so that the provision extends
to other defence force officers entitled to similar benefits under the Military
Rehabilitation and Compensation Act 2004 of the Commonwealth.

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State Revenue Legislation Further Amendment Bill 2010
Explanatory note
Other amendments
Schedule 1 [10] clarifies that debt interests are to be disregarded in determining
whether a person has a significant interest in a landholder, in the same way as they
are disregarding in determining whether a person has an interest in a landholder.

Schedule 1 [9] is a consequential amendment.

Schedule 1 [14] removes the definition of mortgage from the Dictionary to the
Duties Act 1997 because it is inconsistent with changes made to the concessional
provisions applying to mortgage-backed securities and asset-backed securities by the
State Revenue Legislation Amendment Act 2010.

Schedule 1 [8] updates a reference to the Pharmacy Practice Act 2006, which has
been replaced by the Health Practitioner Regulation National Law (NSW).

Schedule 1 [2] ensures that a duty concession that applies when there is a change in
custodians of a trust applies even if the trustee of the trust has changed since the
retiring custodian was appointed.

Schedule 1 [12] enables savings and transitional regulations to be made as a
consequence of the proposed amendments.

Schedule 1 [13] provides for transitional matters.

Schedule 2 Amendment of First Home Owner Grant
Act 2000 No 21
Schedule 2 [1] increases the eligibility cap for the first home owner grant from
$750,000 to $835,000. The increase applies in respect of eligible transactions
occurring on or after 1 January 2011 (see Schedule 2 [3]). Schedule 2 [2] enables
savings and transitional regulations to be made as a consequence of the amendment.

Schedule 3 Amendment of Land Tax Management
Act 1956 No 26
Currently, a trust established by will is not a special trust for land tax purposes for
the period of 12 months after the death of the testator. Schedule 3 [1] extends that
period to 2 years and removes the Chief Commissioner's discretion to approve longer
periods in particular cases.

Schedule 3 [2] extends the period during which land used as a principal place of
residence by the owner of the land continues, after the death of the owner, to be
exempt from land tax from 12 months to 2 years.

Schedule 3 [3] enables savings and transitional regulations to be made as a
consequence of the enactment of the proposed Act.

Schedule 3 [4] provides that the amendments apply only in respect of a death
occurring on or after 1 January 2010 and to the assessment of land tax liability in
respect of the 2011 land tax year and subsequent land tax years.

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State Revenue Legislation Further Amendment Bill 2010
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Schedule 4 Amendment of Payroll Tax Act 2007
No 21
Schedule 4 [2] provides that a grant of a share or an option to an employee by an
employer, in respect of services performed by the employee, constitutes wages for
the purposes of Division 4 of Part 3 of the Payroll Tax Act 2007 (the principal Act)
only if the share or option is an ESS interest and is granted to the employee under an
employee share scheme (within the meaning of section 83A-10 of the Income Tax
Assessment Act 1997 of the Commonwealth). A grant of a share or an option to an
employee by an employer that is not an ESS interest under an employee share scheme
will be taxable as a fringe benefit under Division 2 of Part 3 of the principal Act.

Schedule 4 [7] and [8] make consequential amendments to make it clear that the
grant of a share or option by a company to one of its directors (who is not an
employee of the company) is to be taxed under Division 4 of Part 3 of the principal
Act, or as a fringe benefit, even if it is not an ESS interest granted under an employee
share scheme.

An employer can elect to treat either the date on which a share or an option is granted
to an employee or the vesting date for the share or option as the date on which the
wages are taken to be paid for the purposes of payroll tax. Schedule 4 [3] sets out the
circumstances in which a share or option is taken to be granted to a person for the
purpose of determining when payroll tax is payable. The provision replaces a
reference to a repealed provision of the Income Tax Assessment Act 1936 of the
Commonwealth which set out those circumstances. Schedule 4 [4] provides that the
vesting date of a share or option is taken to be the date at the end of 7 years after the
grant of the share or option, if it has not occurred before that date.

The principal Act currently provides that the value of shares or options is to be
determined in accordance with provisions of the Income Tax Assessment Act 1936 of
the Commonwealth that have been repealed. Schedule 4 [6] provides that the value
of shares or options is either the market value or the amount determined in
accordance with new provisions in the Income Tax Assessment Act 1997 of the
Commonwealth. The employer may elect the method by which the value of the share
or option is determined in any return lodged by the employer. Schedule 4 [5] is a
consequential amendment.

Schedule 4 [1] removes a reference in the definition of share in the principal Act to
a provision of the Income Tax Assessment Act 1936 of the Commonwealth that has
been repealed. As a result, a "stapled security" will have its ordinary meaning for the
purposes of the definition, as it does in other legislation.

Schedule 4 [9] enables savings and transitional provisions to be made as a
consequence of the proposed amendments.

Schedule 4 [10] inserts savings and transitional provisions that:

(a) validate any decision made by an employer before the commencement of the
proposed amendments to treat the grant of a share or an option as a fringe
benefit for the purposes of payroll tax (rather than as a share or option under

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State Revenue Legislation Further Amendment Bill 2010
Explanatory note
Division 4 of Part 3 of the principal Act) if that decision would have been
validly made had the proposed amendments been in force, and

(b) allow for certain shares or options to continue to be treated as shares or options
to which Division 4 of Part 3 (as amended by the proposed Act) applies, even
if, as a result of the amendments, the shares or options should be treated as
fringe benefits under Division 2 of that Part, if the shares or options were
granted before 1 July 2011 (the commencement date for the proposed
amendments).

Note: If this Bill is not modified, these Explanatory Notes would reflect the Bill as passed in the House. If the Bill has been amended by Committee, these Explanatory Notes may not necessarily reflect the Bill as passed.

 

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