On 17 June 2009, the NSW Government released draft legislation
giving effect to the major changes to land rich duty announced in
the NSW mini-budget of 11 November 2008. The changes, which are
contained in the State Revenue Legislation Further Amendment
Bill 2009 (Bill) and which will mostly apply from 1 July 2009,
may significantly impact both existing and new transactions,
including potentially imposing duty on dealings in entities with
modest land holdings.
Move from "land-rich" to "landholder"
model
Under the existing provisions, land-rich duty applies to
acquisitions of "significant interests" in private
companies and private unit trusts (landholders)
that are "land-rich". These transactions are called
"relevant acquisitions". A landholder is
"land-rich" if it holds NSW land with an unencumbered
value of $2m or more (land value test) and
landholdings (wherever located) represent 60% or more of its total
property (land ratio test).
