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A quick guide to the 2023 NSW State Budget revenue measures

Keshni Maharaj, David Wong and Michelle Pham
28 Sep 2023
Time to read: 3 minutes

The Treasury and Revenue Legislation Amendment Bill 2023 received asset on 27 September 2023 and these measures in the 2023 NSW State Budget are now law – get a snapshot here.

Linked entities

Commencement: 1 February 2024

Current provisions
Proposed provisions
Key observations
The threshold for entities to be linked entities for landholder duty purposes is 50%.
The threshold for entities to be linked entities for landholder duty purposes is 20%. 

A private company or private unit trust which holds a 20% interest in another private company or private unit trust (a "linked entity") will be imputed with any land or interests in land held by that linked entity.

Wholesale unit trusts

Commencement: 1 February 2024

Current provisions
Proposed provisions
Key observations
There is currently no concept of a wholesale unit trust in the New South Wales Duties Act 1997.

A unit trust scheme may be registered on application if the Chief Commissioner is satisfied that it is a wholesale unit trust scheme.

Registration as a wholesale unit trust scheme will mean that the applicable significant interest threshold will be 50% (as opposed to the 20% which will apply to private unit trusts).

A unit trust scheme will be a wholesale unit trust scheme if:

  • the scheme was not established for a particular investor;
  • at least 80% of all investors are qualified investors;
  • none of the qualified investors, either alone or together with associated persons, holds 50% or more of the units in the scheme; and
  • the scheme complies with any additional requirements specified by the Commissioner as published in the Gazette.

Although New South Wales is adopting a similar regime to Victoria, the qualified investor threshold of 80% is higher than the 70% required by Victoria.

This will make it more difficult for a unit trust to qualify as a wholesale unit trust in New South Wales.

Transitional provisions that apply to wholesale unit trusts

Commencement: 1 February 2024

Current provisions
Proposed provisions
Key observations
An acquisition in a unit trust scheme will be treated as a wholesale unit trust scheme if:
  • the acquisition occurs on or after 1 February 2024;
  • an application has been made with the Chief Commissioner to register the private unit trust as a wholesale unit trust before 1 May 2024; and
  • that application is approved.

Consider applying for registration as a wholesale unit trusts before 1 May 2024 to obtain the benefit of grandfathering.

Imminent unit trusts

Commencement: 1 February 2024

Current provisions
Proposed provisions
Key observations
A unit trust scheme may be registered if the Chief Commissioner is satisfied that it will be a wholesale unit trust scheme within 12 months the first units in the scheme are issued to a qualified investor.

Registration as an imminent wholesale unit trust will increase the significant interest acquisition threshold from 20% to 50%.

Corporate reconstruction relief

Commencement: 1 February 2024

Current provisions
Proposed provisions
Key observations

Duty is not chargeable on a transaction if the Chief Commissioner is satisfied that the transaction is a corporate reconstruction transaction between members of a corporate group.

The corporate restructure exemption is a full exemption.

If the transaction qualifies for a corporate reconstruction stamp duty exemption, duty will be charged at 10% of the amount which would have been payable had the exemption not applied.

The corporate restructure exemption will become a partial exemption and will reduce the duty payable on applicable transactions by 90%.

Unlike in Victoria multiple transaction steps in a restructure involving the same dutiable property will continue to attract the 10%. Victoria only levies one lot of duty, provided that those transactions occur within a 30-day period.

Transitional provisions that apply to corporate reconstruction relief

Commencement: 1 February 2024

Current provisions
Proposed provisions
Key observations

Transactions that occur on or after the changes come into force on 1 February 2024 but which occurred under an arrangement entered into before 19 September 2023 will get the full exemption provided that the application for the exemption is made on or before 1 April 2024.

Any transactions that occur before 1 February 2024 will continue to get the full exemption.

For transactions entered into on or after 19 September 2023, applications should be made before 1 April 2024.

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Disclaimer
Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.