Australia: “Notifiable event” related to connected entities stamp duty exemption (Western Australia)

The change primarily affects post-transaction exemption applications.

Western Australia

RevenueWA released a revenue ruling (DA 19.2) that concerns the connected entities exemption (corporate reconstruction relief) that provides stamp duty relief on certain transactions between tightly controlled corporations and unit trust schemes that qualify as a family. This revenue ruling replaces the prior revenue ruling (DA 19.1).

The main difference between the rulings is that in DA 19.2, the tax authority has applied a narrow view as to when a “notifiable event” will affect the grant and revocation of duty relief.

The change primarily affects post-transaction exemption applications (as compared to pre-transaction exemption applications).

Now, when the tax authority is determining a post-transaction exemption application, the tax authority will not consider the influence of a proposed event (that may be a notifiable event that could trigger a revocation of the exemption) if the event has not occurred (i.e., completed) at the time of the tax authority’s decision.

KPMG observation

Under the new approach in DA 19.2, it appears that the only way for taxpayers to obtain stamp duty certainty (and reduce the risk of the imposition of potentially double duty arising upon a revocation of the exemption), is to seek pre-transaction relief (and not post-transaction relief), particularly when a notifiable event may occur within three years of the exemption.

Read an August 2022 report prepared by the KPMG member firm in Australia

 

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