A taxpayer has been successful before the NSW Supreme Court in a matter concerning the Commissioner’s discretion to grant a full or partial exemption from landholder duty under s 163H of the Duties Act 1997 (NSW).
The matter concerned the Commissioner’s decision not to grant the taxpayer an exemption under s 163H of the Duties Act in respect of an acquisition by the taxpayer of shares in another company entity (“Enterprises”) on or about 23 December 2010 and 8 March 2011. The taxpayer acquired 8 of 9 issued shares in Enterprises. The Supreme Court noted that Enterprises was 1 of 8 discretionary objects of a discretionary trust established in 1982.
The trustee owned land holdings in NSW with a value of more than $2m. By reason of s 159 of the Duties Act, Enterprises was taken to own or to be otherwise entitled to the property the subject of the trust for the purposes of the landholder provisions contained in Ch 4 of the Duties Act. It followed that for the purposes of Ch 4, Enterprises was taken to be a private landholder and that by acquiring the shares, the taxpayer made a “relevant acquisition” of a “significant interest” in Enterprises for the purposes of the landholder provisions.
The Court considered that it was “not just and reasonable” that Ch 4 apply to the acquisition in the circumstances. In conclusion, the Supreme Court said the Commissioner’s decision refusing the exemption should be revoked and in its place “a decision should be made granting a partial exemption under s 163H(2) of the Duties Act and reducing the duty chargeable in respect of that acquisition by [the taxpayer] by an amount corresponding to the duty chargeable in respect of the property the subject of the [trust] which Enterprises is deemed to own or to be otherwise entitled to pursuant to Ch 4 of the Duties Act”.
(Milstern Nominees Pty Ltd v Chief Comr of State Revenue  NSWSC 68, NSW Supreme Court, White J, 18 February 2015)
[LTN 32, 18/2/15]