The Full Court of the SA Supreme Court has affirmed an earlier decision, which had held that an instrument created proprietary rights in a taxpayer and that the instrument was a conveyance within the meaning of s 60 of the Stamp Duties Act 1923 (SA).
The matter concerned a trustee of a discretionary trust, which owned a commercial property. In December 2005, the owners and controllers of the trustee negotiated with the controller of the taxpayer to assume the effective ownership and control of the trust (and thereby the commercial property) in return for payment of $7m. In February 2006, settlement of the transactions to effect the change of ownership and control of the trust took place. One aspect of the settlement was the grant by the trustee to the taxpayer of an “equity bond” which gave to the taxpayer rights to distributions of income and capital by the trust subject to defined limits in return for payment of $3m.
The Commissioner assessed the “equity bond” to stamp duty as a conveyance based on a value of $7m. The taxpayer objected to the assessment contending that no duty was payable on the instrument or alternatively it was excessive.
The Full Court found the instrument did not vest all of the income or capital or the entire beneficial interest in the assets of the trust and accordingly held the Commissioner’s assessment of the value of the property be reconsidered. However, the Full Court held the trial judge was correct in upholding the Commissioner’s decision on penalty.
(Pharmos Nominees Pty Ltd v Comr of State Taxation [2012] SASCFC 89, SA Supreme Court, Full Court, Anderson, Blue, Stanley JJ, 27 July 2012.)
[LTN 145, 30/7]