The ACT Civil and Administrative Tribunal has found that a taxpayer (an individual) was not liable to pay duty on the acquisition of an interest in a landholding entity in the ACT.

  • On 14 December 2007, the taxpayer entered into a Purchase Option Agreement with her brother-in-law for the right to purchase the shares in his company for which he was the sole director.
  • On 14 January 2008, the company purchased a property for id=”mce_marker”.05m and stamp duty on that transaction was paid.
  • On 16 August 2011, the taxpayer exercised her option under the Agreement and 59,999 shares in the company were transferred to her for id=”mce_marker”.

The Commissioner decided the taxpayer was liable to duty on the share transfer on the basis that she had acquired a significant interest in a landholding entity. The original assessment was based on the property value of id=”mce_marker”.15m. A reassessment was then issued reducing the property value to id=”mce_marker”.08m.

However, the taxpayer argued that she was not liable and sought remission of duty, penalty and interest paid (some $70,000). The taxpayer argued she was the beneficial owner of the company and the property, the property and the company shares were held for her benefit on a constructive trust, and therefore, there was no liability on the transfer of the shares. The taxpayer explained the difficulties she encountered at the time of purchasing the property (and business), which included needing to satisfy certain bank requirements to obtain finance to purchase the property, and the need to satisfy a restraint condition imposed by another business that she was involved in at the time.

The Tribunal held the taxpayer was not liable for duty on the transfer of the shares on 16 August 2011. The Tribunal was persuaded that, at all relevant times, the company shares were beneficially held for the taxpayer. It was also satisfied that a constructive trust arose no later than 14 January 2008. Accordingly, the decision under review was set aside and the Commissioner was ordered to refund the taxpayer the duty, penalty and interest paid.

(Francey v Comr for ACT Revenue (Administrative Review) [2013] ACAT 84, ACT Civil and Administrative Tribunal, Symons PM, 24 December 2013.)

[LTN 11, 17/1/14]