The corporate consolidation exemption has been replaced with a concession (from 1 July 2019). Eligible transactions that effect consolidations now attract duty at the concessional rate of 10% of the duty otherwise payable.
For consolidations and transactions arising from an agreement or arrangement entered into before 1 July 2019, a full exemption under the former provisions may still apply.
Eligible consolidations and transactions
A corporate consolidation means the interposition of a head company between a corporation that is a member of a corporate group and the shareholders or unitholders of that corporation for the purposes of the formation or continuation of a consolidated group.
Unlike the former exemption, the concession operates more broadly and is not limited to consolidations made under section 703-50 of the Income Tax Assessment Act 1997 (Cth). However, like the former exemption, the concession does not apply where a corporate group did not exist immediately before the consolidation or the consolidation has the effect of merging 2 or more corporate groups.
Where a consolidation involves the interposition of a new head company above a corporation that is a member of a corporate group and a landholder for the purposes of the Duties Act 2000 (the Act), the consolidation will result in the acquisition of a landholder which is a transaction that is eligible for relief under the concession. In addition to this transaction, the concession may also provide relief to other eligible transactions effected as part of the consolidation.
There is no longer a requirement for corporate members to remain part of the corporate group following the consolidation. However, where the consolidation involves the interposition of a new head company above a private unit trust scheme, the special provisions set out in section 250DG of the Duties Act 2000 apply to treat the new head company as a private unit trust scheme for a period of 3 years after the consolidation.
For more information on corporate consolidations, refer to sections 250-250DG of the Act.
Subsequent eligible transactions
Corporate consolidations may involve multiple transactions undertaken as part of the same arrangement to effect the consolidation and/or subsequent reconstruction of the corporate group.
Where the subsequent transactions involve the transfer and/or acquisition of the same interest in property or the same underlying interest in the land holdings of a landholder, the duty payable on these transaction is reduced to the extent of the duty that is chargeable on any of the earlier eligible transactions.
For the above ‘credit’ to apply, both the earlier eligible transaction(s) (on which duty is chargeable) and the subsequent eligible transaction must be part of the same arrangement and occur within 30 days of the date of the first eligible transaction under the arrangement. Depending on the nature of the subsequent eligible transaction, this can result in no duty being charged on the transaction.
Lodging and paying concessional duty
Where a corporate consolidation involves the acquisition of a landholder, you must complete and lodge a section 83 landholder acquisition statement online.
To avoid penalty tax and interest, you must pay duty within 30 days of the date of the acquisition of the landholder.
You acquisition statement must include these documents:
- Constitutions and ASIC extracts, or the foreign equivalent if the corporation is registered overseas, for all relevant companies in the corporate group.
- Trust deeds, with all amending deeds, and unit registers for all relevant unit trust schemes in the corporate group.
- A diagram of the structure of the corporate group before and after the relevant acquisition showing the ownership structure and percentage holding of each relevant entity within the corporate group.
- Evidence of the ownership of interests in the former and new head entities immediately before and after the interposition of the new head company.
- A statutory declaration by the directors of the new head company attesting that the acquisition of the landholder was effected solely for the purposes of a corporate consolidation.
