Part 4Land holding entities

Part 4—Land holding entities Division 1—Preliminary 91—Interpretation (1) In this Part— asset includes any form of property; associate—see subsection (8); close personal relationship means the relationship between 2 adult persons (whether or not related by family and irrespective of their gender) who live together as a couple on a genuine domestic basis, but does not include— (a) the relationship between a legally married couple; or (b) a relationship where 1 of the persons provides the other with domestic support or personal care (or both) for fee or reward, or on behalf of some other person or an organisation of whatever kind; Two persons may live together as a couple on a genuine domestic basis whether or not a sexual relationship exists, or has ever existed, between them. constituent documents of a relevant entity means— (a) for a company—its constitution; or (b) for a unit trust scheme—the instruments constituting or governing the administration of the scheme; corresponding law means a law of another State, or a Territory, of the Commonwealth that imposes duties corresponding to those imposed by this Act; direct interest—see section 93(1); executive officer of a company means a person who is concerned in, or takes part in, the management of the company (regardless of the person's designation and whether or not the person is a director of the company); group means a group of associates; hold—a person "holds" a share or unit in a relevant entity if the person— (b) is beneficially entitled to the share or unit; or (c) controls the exercise of rights attached to the share or unit; indirect interest—see section 95; land asset and local land asset—see section 92; land holding entity—see section 98; listed company means a company that is limited by shares and some or all of those shares are quoted on a recognised financial market; listed trust means a unit trust scheme some or all of the units in which are quoted on a recognised financial market; motor vehicle and trailer have the same meanings as these expressions respectively have in the Motor Vehicles Act 1959; notional interest—see section 96; prescribed interest means— (a) in relation to a private company or a private unit trust scheme—a proportionate interest in the entity of 50% or more; and (b) in relation to a listed company or a public unit trust scheme—a proportionate interest of 90% or more; private company means— (a) a company that is limited by shares but whose shares are not quoted on a recognised financial market; or (b) a company that is not limited by shares, but does not include a company excluded from the ambit of this definition by the regulations; private unit trust scheme means a unit trust scheme other than a listed trust or a widely held trust, but does not include a unit trust scheme that is an approved deposit fund or a pooled superannuation trust within the meaning of the Superannuation Industry (Supervision) Act 1993 of the Commonwealth; proportionate interest in a relevant entity means— (a) for a person or group that has a direct or indirect interest in the entity—the percentage representing the extent of that interest; or (b) for a person or group that has both a direct and an indirect interest in the entity—an aggregate percentage representing the extent of both those interests; public unit trust scheme means a listed trust or a widely held trust; related—see section 94; relevant entity means— (a) a private company; or (b) a listed company; or (c) a private unit trust scheme; or (d) a public unit trust scheme; significant interest in a relevant entity means a proportionate interest in the entity of 50% or more; underlying—the underlying assets of a relevant entity include both the assets held beneficially by the entity and its notional interests in the assets of related entities; unit in a unit trust scheme means— (a) a right to participate in profits, income or distribution of assets under the scheme; or (b) a right to any such right of participation; unit trust scheme means an arrangement under which investors may acquire rights to participate, as beneficiaries under a trust, in profits, income or distribution of assets arising from the acquisition, holding, management, use or disposal of property; widely held trust—see section 97; winding up—a unit trust scheme is wound up if the assets subject to the scheme are distributed in their entirety. (2) Property is taken to be held beneficially by a unit trust scheme if it is held by the trustees of the scheme in trust for the unitholders. (3) A relevant entity or other person that is an object of a discretionary trust is to be regarded, for the purposes of this Part, as beneficially entitled to the trust property unless— (a) the relevant entity or other person satisfies the Commissioner that this subsection operates unreasonably in the circumstances of the particular case; and (b) the Commissioner determines that the relevant entity or other person is not, in the circumstance of the particular case, to be regarded as beneficially entitled to the trust property. (4) A relevant entity or other person that is a partner in a partnership is to be regarded, for the purposes of this Part, as beneficially entitled to a proportionate share in each and every asset of the partnership. (5) For the purposes of subsection (4) but subject to subsection (6), a proportionate share of a partner will be represented by the greater of the following: (a) the relative entitlement of the partner to participate in the surplus property of the partnership after the realisation of assets and the payment, satisfaction or discharge of debts and liabilities; (b) the relative capital contribution of the partner (being equity and any loan capital). (6) The Commissioner may— (a) if satisfied that it would be reasonable and appropriate to do so in the circumstances of the particular case— (i) determine that the paragraph under subsection (5) that provides the lesser proportionate share (rather than the greater) will be the paragraph that applies; or (ii) determine that the proportionate share of a partner will be represented in some other manner; and (b) if paragraph (b) of subsection (5) applies, determine not to take loan capital into account if the Commissioner is satisfied that the loan was entered into as part of a genuine business arrangement and not as an arrangement to avoid or reduce duty under this Part. (7) Subsections (4) and (5) do not limit the operation of any other section of this Act (but not so as to impose double duty with respect to the same transaction). (8) A person is an associate of, or associated with, another if— (a) they are married or in a close personal relationship; or (b) 1 is the parent, child, brother or sister of the other; or (c) they are in partnership; or (d) they are companies which are related bodies corporate for the purposes of the Corporations Act 2001 of the Commonwealth; or (e) 1 is a company and the other is a director or executive officer of, or shareholder in, the company; or (f) they are both trustees of a trust or 1 is a trustee of a trust and the other is a beneficiary of the trust; or (g) a chain of relationships can be traced between them under 1 or more of the above paragraphs, (but a person is not to be regarded as an associate of another if the Commissioner is satisfied that the association has not arisen as a result of a common commercial interest or purpose and they will act entirely independently of each other). (9) An obligation or liability imposed under this Part on a unit trust scheme attaches to the trustees for the time being of the scheme jointly and severally. (10) An obligation or liability imposed under this Part on a group attaches to the members of the group jointly and severally. 92—Land assets (1) A land asset is land other than— (a) a mortgage, lien or charge; or (b) an interest under a warrant or writ. (2) A local land asset is a land asset constituted by land in South Australia. (3) A relevant entity's interest in land will be taken to include an interest in anything fixed to the land, including anything— (a) separately owned from the land other than where the separation of ownership occurs by virtue of or as a result of the operation of another Act or law; or (b) fixed to the land but notionally severed or considered to be legally separate to the land by virtue of or as a result of the operation of another Act or law (so that a separation by another Act for the purposes of that Act will not affect the operation of this paragraph for the purposes of the imposition and calculation of duty under this Part). (4) In connection with the operation of subsection (3)— (a) the subsection applies to all items fixed to the land whether or not they constitute fixtures at law; and (b) all fixtures at law will be taken to be within the application of the subsection. (5) In addition— (a) in connection with the operation of subsection (3)(a), if the Commissioner is satisfied that, at a relevant time, it was not part of an arrangement to avoid duty under this Part that an item was separately owned from the land, the Commissioner may determine that an entity's interest in land will not be taken to include an interest in the item; and (b) in connection with the operation of subsection (3)(b), an entity's interest in land will not be taken to include an interest in an item which is owned by another entity unless— (i) the relevant entity and the other entity are related entities and— (A) the relevant entity holds a significant interest in the other entity or vice versa; or (B) a chain of significant interest can be traced between the relevant entity and the other entity; or (ii) a person or group holds a significant interest in both the relevant entity and the other entity. 93—Direct interests (1) A person has a direct interest in a relevant entity if the person holds a share or unit in the entity. (2) A direct interest that a person or group has in a relevant entity is to be expressed as a proportionate interest. (3) The proportionate interest is the highest of the following: (a) a percentage representing the proportion of votes that the person or members of the group would be entitled to exercise (or control) at a general meeting of shareholders or unitholders assuming that all shareholders or unitholders exercised their voting rights; (b) a percentage representing the extent the person or members of the group are entitled to participate in dividends or distributions of income; (c) a percentage representing the extent to which the person or members of the group would be entitled to participate in the distribution of assets on a winding up of the relevant entity. (4) The proportionate interest of a person or group in a relevant entity is to be determined as if any power that the person has, or the members of the group or any of them have, to increase the extent of an interest (by varying the constituent documents of the relevant entity or in any other way) had been exercised so as to maximise the relevant interest in the relevant entity. 94—Related entities (1) Two relevant entities are related entities if— (a) 1 has a direct interest in the other; or (b) a series of such relationships can be traced between them through another or other related entities (intermediate entities). (2) If a relevant entity is related to another relevant entity by a relationship traced through an intermediate entity or intermediate entities, the relevant entity's proportionate interest in the other is calculated by multiplying the relevant fractions together and expressing the result as a percentage. Entity A (a listed company) holds a 75% proportionate interest in entity B (a private unit trust scheme) which in turn holds a 50% proportionate interest in entity C (a private company). In this case the proportionate interest of entity A in entity C (insofar as it is traced through entity B) is 37.5%. 95—Indirect interests (1) If a person or group has a direct interest in a private company or a private unit trust scheme (entity A) which is related to another private company or a private unit trust scheme (entity B), the person or group has an indirect interest in entity B. (2) An indirect interest that a person or group has in an entity is to be expressed as a proportionate interest. (3) The proportionate interest is calculated by multiplying together— (a) a fraction representing the proportionate interest of the person or group in entity A; and (b) a fraction representing entity A's proportionate interest in entity B, and expressing the result as a percentage. X holds a proportionate interest of 33⅓% in entity A which in turn holds a 75% proportionate interest in entity B which in turn holds a 50% proportionate interest in entity C. In this case the X's indirect interest in entity C is to be expressed as a proportionate interest of 12.5%. 96—Notional interest in assets of related entity (1) A relevant entity has a notional interest in an asset held beneficially by a private company or a private unit trust scheme if— (a) the relevant entity holds a significant interest in the private company or private unit trust scheme; or (b) a chain of significant interests can be traced between the relevant entity and the private company or private unit trust scheme. Entity A holds a 75% proportionate interest in entity B which in turn holds a 60% proportionate interest in entity C which in turn holds a 40% proportionate interest in entity D. In this case entity A has a notional interest in the assets held beneficially by entity B and entity C but not in the assets held by entity D. (2) The value of the notional interest is calculated as follows: V1 is the unencumbered value of the asset P is a fraction representing the proportionate interest of the relevant entity in the private company or private unit trust scheme. 97—Widely held trusts (1) For the purposes of this Part, a widely held trust is a unit trust scheme which has not less than 300 unitholders none of whom, individually or together with any associated person, is entitled to more than 20% of the units in the trust. (2) If a registered unitholder in a unit trust scheme holds units as a trustee for 2 or more trusts, the unitholder is to be treated as a separate registered unitholder in relation to each of those trusts and the units held under each trust are to be treated as a separate unit holding. (3) However, a trustee is not to be treated as a separate registered unitholder in relation to 2 or more trusts if, as separate unitholders in relation to those trusts, they would be associated with each other. 98—Land holding entity A relevant entity is a land holding entity if the relevant entity holds local land assets. 99—Determination of value (2) The value of underlying land assets under this Part is to be determined according to the market value of the asset at the time that the question of value falls to be determined. (3) Where no evidence of the value of an underlying land asset or interest acquired or held is furnished to the Commissioner for the purposes of this Part, or the evidence so furnished is, in the Commissioner's opinion, unsatisfactory, the Commissioner may cause a valuation of the asset or interest to be made by some person appointed by the Commissioner and may apply any such valuation for the purposes of this Part. (4) The Commissioner may, having regard to the merits of the case, charge the whole or a part of the expenses of, or incidental to, the making of a valuation pursuant to subsection (3) to any person liable to pay duty under this Part in relation to an acquisition of the underlying land asset or any interest. (5) A reference in this section to the acquisition of an asset or interest extends to a notional acquisition under this Part. (6) Any determination of market value under this Part must be based on the unencumbered value. (7) In addition, when determining the value of an asset or interest— (a) it is to be assumed that a hypothetical purchaser would, when negotiating the price for any asset or interest, have knowledge of all existing information relating to the asset or interest; and (b) no account is to be taken of any amount that a hypothetical purchaser would have to expend to reproduce, or otherwise acquire a permanent right of access to and use of, existing information relating to the asset or interest. Division 2—Dutiable transactions 100—General principle of liability to duty (1) A person or group that acquires a prescribed interest, or increases a prescribed interest, in a land holding entity notionally acquires an interest in the underlying local land assets of the entity and is liable to duty in respect of the notional acquisition. (2) The following transactions are therefore dutiable: (a) a transaction as a result of which a person or group acquires or has a prescribed interest in a land holding entity; or (b) a transaction as a result of which a person or group that has a prescribed interest in a land holding entity increases its prescribed interest in the entity. (3) A transaction is dutiable under this Part even though the person or group that has a prescribed interest, or increases a prescribed interest, in the land holding entity as a result of the transaction— (a) is not a party to the transaction; or (b) has a passive role in the transaction. (4) For example, any of the following is capable of being a dutiable transaction: (a) an allotment of shares in a company or units in a unit trust scheme; or (b) the variation or abrogation of rights attaching to shares in a company or units in a unit trust scheme; or (c) the redemption, surrender or cancellation of shares in a company or units in a unit trust scheme; or (d) the addition or retirement of a partner in a partnership with assets comprising shares in a company or units in a unit trust scheme. (5) However, if a relevant entity acquires a local land asset and, as a result of the acquisition, becomes a land holding entity, and conveyance duty is paid in respect of the transaction, the transaction is not dutiable under this Part. (6) If a person who acquires or holds an interest in a land holding entity is a trustee for 2 or more trusts, any interest in the entity acquired or held by the person for different trusts are to be treated as if they were acquired or held by separate persons. 101—Aggregation of interests (1) If a person or group acquires an interest in a land holding entity that, when aggregated with an interest in the entity acquired by another person as a result of an associated transaction on the same day or within the preceding 3 years, amounts to a prescribed interest in the entity, then for the purposes of this Part— (a) the person or group acquires that prescribed interest in the entity; and (b) the person or group and any other person acquiring an interest in the entity as a result of the associated transaction are jointly and severally liable for the payment of duty in respect of the acquisition. (2) In this section— associated transaction, in relation to the acquisition of an interest in a land holding entity by a person or associated person, means an acquisition of an interest in the entity by another person in circumstances in which— (a) those persons are acting in concert; or (b) the acquisitions form, evidence, give effect to or arise from substantially 1 arrangement, 1 transaction or 1 series of transactions. 102—Value of notional interest acquired as a result of dutiable transaction (1) If a person or group has, as a result of a dutiable transaction, a prescribed interest in a land holding entity, the value of the notional interest acquired in the entity's underlying local land assets is determined as follows: NV is the value to be of the notional interest acquired TV is the total unencumbered value of all the entity's underlying local land assets P is the fraction representing the proportionate interest of the person or group in the entity. 102A—Calculation of duty (1) The duty in respect of a transaction under which a person or group acquires a prescribed interest in a land holding entity is to be equivalent to— (a) in the case of an entity that is a private company or a private unit trust—the duty payable on a conveyance of land with an unencumbered value equivalent to the value of the acquirer's notional interest in the entity's underlying local land assets; and (b) in the case of an entity that is a listed company or a public unit trust scheme—10% of the duty payable on a conveyance of land with an unencumbered value equivalent to the value of the acquirer's notional interest in the entity's underlying local land assets. (2) Duty on a dutiable transaction under which a person or group increases its prescribed interest in a land holding entity is to be calculated as follows: D is the amount of the duty d1 is the amount that would have been payable if the person or group had acquired the whole of its interest in a single transaction at the time of the increase d2 is the amount that would have been payable if the person or group had acquired its pre-existing interest in a single transaction at the time of the increase. (4) If— (a) a person or group holds an interest in a relevant entity; and (b) the relevant entity then acquires land so as to become a land holding entity; and (c) the acquisition under paragraph (b) was subject to ad valorem duty that has been duly paid; and (d) the person or group acquires a prescribed interest in the entity as a land holding entity, the duty calculated under subsection (1) is to be reduced in accordance with the following formula: D is the amount of the duty to be paid on account of this subsection d1 is the amount that would have been payable if the person or group had acquired the whole of its interest in a single transaction at the time of the acquisition d2 is the amount that would be payable on a conveyance of an interest in the relevant land corresponding to the interest held by the person or group at the time of the acquisition under paragraph (b) relevant land is the total amount of land in South Australia that is held by the land holding entity at the time that the person or group acquires the prescribed interest under paragraph (d). (5) If any part of a prescribed interest in a land holding entity was acquired by the relevant person or group more than 3 years before the date of a dutiable transaction (the earlier acquisition), the duty calculated under subsection (1) is to be rebated by a percentage representing the extent of the earlier acquisition as a proportion of the prescribed interest as a whole. (6) Insofar as subsections (4) and (5) may both apply to the acquisition of a prescribed interest in a particular land holding entity by a person or group, the provision that provides the higher benefit to the person or group will apply. (7) If a person or group acquires or increases a prescribed interest in a land holding entity and duty has been paid under this Act in respect of the transaction for the acquisition of, or increase in, the interest, the duty calculated under this section is to be reduced by the amount of duty paid under this Act. 102AB—Surcharge where foreign person or group acquires interest in residential land (1) This section applies to a transaction that is dutiable under this Part if the transaction was entered into on or after 1 January 2018. (2) If a foreign entity notionally acquires an interest in residential land as a result of a transaction to which this section applies, the entity is liable to pay a surcharge (a foreign ownership surcharge) to the Commissioner in addition to the duty payable on the transaction under this Part. (3) If a foreign entity is a member of a group that notionally acquires an interest in residential land as a result of a transaction to which this section applies, the entity is liable to pay a surcharge (a foreign ownership surcharge) to the Commissioner in addition to the duty payable on the transaction by the group. (4) The amount of the foreign ownership surcharge under subsection (2) is 7% of the value of the interest notionally acquired by the foreign entity in the residential land (as determined under section 99). (5) The amount of the foreign ownership surcharge under subsection (3) is 7% of the value of the foreign entity's interest in the interest notionally acquired by the group in the residential land (as determined under section 99). (6) The foreign ownership surcharge is to be taken for the purposes of this Act to be duty payable on the transaction. (7) If— (a) not more than 12 months after a notional acquisition of an interest in residential land as a result of a transaction to which this section applies, an entity that has paid a foreign ownership surcharge under this section on the transaction ceases to be a foreign entity; and (b) at the time the entity ceases to be a foreign entity— (i) the entity retains the interest notionally acquired; or (ii) in the case of an entity that paid the surcharge by virtue of being a member of a group that notionally acquired the interest—the group retains the interest notionally acquired, and the entity retains its interest in the interest notionally acquired by the group, the Commissioner must, on application by the entity, refund the amount of the foreign ownership surcharge to the entity. (8) If, not more than 3 years after the notional acquisition of an interest in residential land as a result of a transaction to which this section applies, the entity that notionally acquired the interest becomes a foreign entity, or, if the interest was notionally acquired by a group, an entity that is a member of the group (and was a member of the group at the time of the acquisition) becomes a foreign entity, the following provisions apply: (a) subject to paragraph (b)— (i) the entity must, within 28 days of becoming a foreign entity, notify the Commissioner in writing of that fact; and (ii) a foreign ownership surcharge is payable on the transaction; and (iii) for the purposes of section 102B, the surcharge is to be regarded as having become payable when the entity became a foreign entity; and (iv) the entity may, at the discretion of the Commissioner, be liable to pay interest and penalty tax as if the failure to pay the surcharge at the date of the transaction were a tax default under the Taxation Administration Act 1996; (b) paragraph (a) does not apply if— (i) the entity ceased to have a notional interest in the residential land before the entity became a foreign entity; or (ii) in the case of an entity that is (but for this subparagraph) liable to pay the surcharge by virtue of being a member of a group that notionally acquired the interest—the group ceased to have a notional interest in the residential land, or the entity ceased to have an interest in the interest notionally acquired by the group, before the entity became a foreign entity; or (iii) a foreign ownership surcharge has been paid, or is liable to be paid, in respect of the transaction by virtue of which the entity became a foreign entity; (c) however, if an entity referred to in paragraph (b)(iii) is a corporation or trust that is not a wholly foreign owned corporation or trust, then— (i) the entity is liable to pay a foreign ownership surcharge on the transaction; but (ii) the amount of the foreign ownership surcharge is to be reduced by the amount of the foreign ownership surcharge (if any) paid in respect of the transaction by virtue of which the entity became a foreign entity. (9) Land will be taken to be residential land for the purposes of this section if— (a) the Commissioner, after taking into account information provided by the Valuer‑General, determines that it is being predominantly used for residential purposes; or (b) the Commissioner, after taking into account information provided by the Valuer‑General, determines that although the land is not being used for any particular purpose at the relevant time the land should be taken to be used for residential purposes due to improvements that are residential in character having been made to the land; or (c) the Commissioner, after taking into account information provided by the Valuer‑General, determines that the land is vacant, or vacant with only minor improvements, that the land is within a zone established under the planning and development law of this State that envisages the use, or potential use, of the land as residential, and that the land should be taken to be used for residential purposes due to that zoning (subject to the qualification that if the zoning of the land indicates that the land could, in a manner consistent with the planning and development law, be used for some other purpose (other than for primary production) then the vacant land will not be taken to be used for residential purposes). (10) For the purposes of subsection (9), the date that is relevant to a determination as to whether land is used for residential purposes is the date of the relevant transaction. (11) In this section— foreign entity means a foreign person or a foreign trust; residential land—see subsection (9). Division 3—Payment and recovery of duty 102B—Acquisition statement (1) If a dutiable transaction occurs, the person or group that acquires or increases its prescribed interest in the land holding entity must, within 2 months after the date of the dutiable transaction, or, if the transaction was an exempted transaction under Part 4AA but the exemption has been revoked by the Commissioner, within 2 months after receiving notification of the revocation— (a) lodge a return with the Commissioner in a manner and form determined by the Commissioner; and (b) pay the relevant amount of duty. (2) The return must contain the following information: (a) the name and address of the person, or the name and address of each member of the group, that has the prescribed interest or has increased its prescribed interest as a result of the transaction; and (b) the date of the transaction; and (c) particulars of— (i) the interest acquired as a result of the transaction; and (ii) any other interest held and the dates and circumstances of their acquisition; and (iii) the underlying land assets and the underlying local land assets of the land holding entity as at the date of the transaction; and (iv) the underlying assets of the land holding entity as at the date of the transaction; and (vi) amounts of duty paid under this Act or a corresponding law in relation to the acquisition of the prescribed interest in the land holding entity; and (d) other information required by the Commissioner. 102C—Recovery from entity (1) If a person or group fails to pay duty as required under this Part, the Commissioner may recover the duty, as a debt, from the relevant entity. (2) Instead of, or as well as, proceeding against the relevant entity for recovery of duty as a debt, the Commissioner may register a charge on any of its land for the amount of the unpaid duty. (3) The Commissioner must give written notice of the registration of a charge under this section to— (a) the registered proprietor of the land; and (b) the person in default, or each member of the group in default. (4) A charge under this section will rank as a first charge on the relevant land. (5) If the duty remains unpaid 6 months after the registration of the charge, the Commissioner may apply to the District Court for an order for the sale of the land. (6) On an application under subsection (5), the Court may make an order for sale of the land by public auction and, in that event, the proceeds of sale are to be applied as follows: (a) firstly—in payment of the costs of the sale and other costs of proceeding under this section; and (b) secondly—in discharging the liability to duty; and (c) thirdly—in discharging other liabilities secured by registered instrument; and (d) fourthly—in discharging other liabilities as directed by the Court; and (e) fifthly—in payment to the registered proprietor of the land immediately before the completion of the sale. (7) If the Commissioner recovers duty under this section, the relevant entity may recover the amount paid to, or recovered from, the entity from the person or persons principally liable for the payment of the duty. Division 4—Miscellaneous 102D—Valuation of interest under contract or option to purchase land If an interest in land consists of an interest arising under a contract or option to purchase the land, the interest is to be valued, for the purposes of this Part, by subtracting from the market value of the land the amount that the purchaser under the contract or the holder of the option would be required to pay in order to complete the purchase. 102E—Separation of statutory funds held by life companies (1) If a person who acquires an interest in a land holding entity is a life company, any interests in the land holding entity acquired or held by the life company for different statutory funds are to be treated as if they were acquired or held independently by separate persons. (2) If a life company acquires or holds an interest in a land holding entity otherwise than for a statutory fund, that interest is to be treated as if it were acquired or held independently of, and by a separate person to, any interest acquired or held by the life company for a statutory fund. (3) For the purposes of this Part, a life company, its statutory funds, and any trustee, are not to be treated as associates except in a case where the Commissioner determines that particular dealings between them (in any combination) form substantially 1 arrangement. (4) In this section— life company has the same meaning as in the Life Insurance Act 1995 of the Commonwealth; statutory fund has the same meaning as in the Life Insurance Act 1995 of the Commonwealth. 102F—Exempt transactions and related matters (1) A transaction under which a person or a group acquires an interest in a land holding entity is exempt from duty under this Part if it takes place in circumstances in which a conveyance of an interest in the underlying local land assets would not attract ad valorem duty. Suppose that A is entitled under the will of B to 60% of the shares in X Pty Ltd, a land holding entity, owning land in the State valued at $2m. A's acquisition of the shares on distribution of the estate is exempt from duty because a conveyance of the land itself would, if it occurred in these circumstances (ie on distribution of the estate), be exempt from ad valorem duty. (2) The following transactions are exempt from duty under this Part: (a) an acquisition of an interest in a land holding entity that takes place solely as a result of the making of a compromise or arrangement with the creditors of the land holding entity under Part 5.1 of the Corporations Act 2001 of the Commonwealth; (b) a transaction exempted by regulation from duty under this Part. 102G—Multiple incidences of duty (1) If it is possible under this Part to assess the incidence of duty in different ways in respect of the same transaction, duty will be assessed so as to maximise the return to the revenue but not so as to extend the incidence of duty beyond a single person or group identified in the assessment. (2) If a person or a group acquires a prescribed interest in a land holding entity, and another person or group later acquires a prescribed interest in the land holding entity without diminishing the former prescribed interest, the Commissioner may, if satisfied that it is just and equitable to do so, exempt the later acquisition, wholly or partly, from duty under this Part. Suppose the shares of X Pty Ltd, a land holding entity, are divided into Class A and Class B. The Class A shares confer rights to dividends but no rights to share in the distribution of assets on winding up of the company. The Class B shares confer no rights to dividends but do confer rights to share in the distribution of assets on the winding up of the company. Suppose that A acquires all the Class A shares and pays duty under this Part on the acquisition of a prescribed interest in the company. Suppose that B then acquires all the Class B shares. In this case, the Commissioner could, if satisfied that it would be just and equitable to do so, grant relief under the above subsection. 102GA—Operation of Part as in force after 1 July 2016 This Part as in force after 1 July 2016 does not apply in relation to an acquisition of a prescribed interest, or an increase of a prescribed interest, in a land holding entity that occurred before that date. Part 4AA—Corporate group exemptions 102H—Interpretation (1) In this Part— corporate group—see section 102J; corporation has the same meaning as in section 9 of the Corporations Act 2001 of the Commonwealth and includes a unit trust scheme; direct interest—see section 102I; exempted transaction means a transaction that is exempted from duty under section 102L; exemption application means an application to the Commissioner under section 102M; hold—a person holds property (including a security of a corporation) if the person— (b) is beneficially entitled to the property; or (c) controls the exercise of rights attached to the property; indirect interest—see section 102I; ineligible trust means a discretionary trust that is not a unit trust; security, of a corporation, includes— (a) an issued share of the corporation; and (b) if the corporation is a unit trust scheme—a unit issued under the scheme. (2) For the purposes of this Part— (a) a reference to anything done by or held by a unit trust scheme is to be taken to refer to the thing being done by or held by a trustee or custodian of the unit trust scheme as trustee or custodian of that unit trust scheme; and (b) a corporation that is a unit trust scheme is taken to be a party to a transaction if the trustee or custodian of the unit trust scheme enters into the transaction as trustee or custodian of the scheme; and (c) subject to subsection (3), a corporation that is a partner in a partnership is to be regarded as beneficially entitled to a proportionate share in each and every item of property of the partnership; and (d) a transfer of the registration of a motor vehicle will be taken to be a conveyance of the vehicle from the transferor to the transferee. (3) Subsection (2)(c) does not apply in relation to a corporation in a particular case if the Commissioner considers, having regard to the circumstances of the corporation and any relevant corporate group of which the corporation is a member, that the provision would operate unfairly in that case. 102I—Direct and indirect interests (1) If a corporation (A) holds securities of another corporation (B), A has a direct interest in B. (2) The direct interest that A has in B is to be expressed as a proportionate interest calculated by determining the percentage of B's total securities held by A. Corporation A holds 75% of corporation B's securities. In this case the proportionate interest of corporation A in corporation B is 75%. (3) Two corporations are related corporations if— (a) 1 has a direct interest in the other; or (b) a series of such relationships can be traced between them through another or other related corporations. (4) If a corporation (A) has a direct interest in a corporation (B) which is related to another corporation (C), A has an indirect interest in C. (5) The indirect interest that a corporation has in another corporation is to be expressed as a proportionate interest calculated by multiplying together— (a) a percentage representing the proportionate interest of A in B; and (b) a percentage representing B's proportionate interest in C, and expressing the result as a percentage. Corporation X holds a proportionate interest of 33⅓% in corporation A which in turn holds a 75% proportionate interest in corporation B which in turn holds a 50% proportionate interest in corporation C. In this case corporation X's indirect interest in corporation C is to be expressed as a proportionate interest of 12.5%. 102J—Parent corporations and corporate groups (1) If a corporation (A) has— (a) a direct or indirect interest in another corporation (B) that is a proportionate interest of 90% or more; or (b) a direct and indirect interest in another corporation (B) that, in combination, constitutes a proportionate interest of 90% or more, then, subject to subsection (2)— (c) A is the parent corporation of B; and (d) B is a subsidiary of A. (2) If, under subsection (1), corporation A is not entitled (whether directly or indirectly) to cast, or control the casting of, 90% or more of the maximum number of votes at a general meeting of corporation B, B is not a subsidiary of A. (3) A corporate group is comprised of— (a) a parent corporation; and (b) the subsidiaries of the parent corporation. 102K—Transactions to which this Part applies This Part applies to— (a) a transaction involving a conveyance of property, or an agreement to convey property, from a member of a corporate group to another member, or to other members, of the corporate group; and (b) a transaction whereby, under Part 4, a member of a corporate group notionally acquires from another member of the same corporate group an interest in the underlying local land assets of a land holding entity, if— (c) the corporate group's interest in the property the subject of the transaction is not diminished as a result of the transaction; and (d) the purpose, or 1 of the purposes, of the transaction is— (i) to change the structure of the corporate group; or (ii) to change the holding of property within the corporate group; and (e) the transaction does not result in property of the corporate group being held by a member of the corporate group as trustee of an ineligible trust; and (f) the transaction is not part of a tax avoidance scheme within the meaning of Part 6A of the Taxation Administration Act 1996. 102L—Exemption from duty (1) If the Commissioner is satisfied that this Part applies to a transaction, the Commissioner must exempt the transaction from duty. (2) If the Commissioner exempts a transaction from duty under subsection (1), the Commissioner must assess the transaction, and any instrument that gives effect to, acknowledges, evidences or records the transaction, as exempt from duty. 102M—Application for exemption (1) A member of a corporate group may apply to the Commissioner, in a manner and form determined by the Commissioner, for an exemption under section 102L at any time before, or within 5 years after, the completion of the transaction to which the application relates. (2) An application for an exemption under section 102L in relation to a proposed transaction must be accompanied by draft copies of all instruments that it is intended will give effect to, or acknowledge, evidence or record, the transaction. (3) The Commissioner may require a member of the corporate group applying for an exemption for a transaction under section 102L to provide such additional information or evidence as the Commissioner may require for the purpose of determining whether the transaction, or any instrument connected to the transaction, is exempt from duty under this Part. (5) If the Commissioner determines to exempt from duty a transaction, or a proposed transaction, in relation to which an application has been made under this section, the Commissioner must advise the applicant in writing that the transaction, and any instruments giving effect to, or acknowledging, evidencing or recording, the transaction, are exempt from duty. 102N—Conditions of exemption An exemption granted under section 102L in relation to a proposed transaction is subject to a condition that the applicant will, within 2 months after the transaction occurs, advise the Commissioner in writing if— (a) the actual transaction, or any circumstances relating to it, differs materially from the proposed transaction, or any circumstances of the proposed transaction, as specified in the exemption application; or (b) any information relevant to the transaction, or to any circumstances relating to it, differs materially from the information specified in the exemption application. 102O—Revocation of exemption The Commissioner may revoke an exemption granted under section 102L if— (a) the Commissioner ceases to be satisfied that this Part applies to the exempted transaction; or (b) a party to the exempted transaction fails to comply with a condition under section 102N; or (c) the Commissioner becomes aware that— (i) any draft copies of instruments accompanying the application for the exemption differ in a material particular from the corresponding instruments submitted for assessment by the Commissioner; or (ii) the applicant for the exemption provided false or misleading information, or failed to provide relevant information, in support of the application. 102P—Duty payable if transaction ceases to be exempt If the Commissioner determines to revoke an exemption granted under section 102L in relation to a transaction, the following provisions apply: (a) the Commissioner must give written notice of the determination to the parties to the transaction or to the parent corporation of the corporate group to which the parties belong; (b) if the exemption is revoked after the transaction takes place— (i) duty is payable in relation to the transaction from the date of the transaction; and (ii) the liability of the parties to pay duty is to be assessed in relation to the circumstances applying at the date of the transaction as if the transaction had not been an exempted transaction; and (iii) the duty chargeable on an instrument is to be calculated according to the rates in force as at the date of the instrument; and (iv) for the purposes of section 20, the duty is to be regarded as having become chargeable on any relevant instrument in consequence of the Commissioner's determination to revoke the exemption; and (v) the parties to the transaction may, at the discretion of the Commissioner, be liable to pay interest and penalty tax as if the failure to pay duty at the date of the transaction were a tax default under the Taxation Administration Act 1996; and (vi) the members of the corporate group to which the parties to the transaction belong are jointly and severally liable for payment of the duty.