The WA Court of Appeal has held that stamp duty was not payable on a transfer of shares between 2 companies involved in the privatisation of the WA rail freight system. The Court dismissed an appeal by the WA Commissioner of State Revenue against an earlier decision, which had held that the WA landholder provisions contained in the Stamp Act 1921 (WA) did not apply to a transfer of shares in the first taxpayer to the second taxpayer.
The background facts were complex and involved the WA Government’s decision to privatise its railway freight system, which was facilitated by the Rail Freight System Act 2000 (WA). In February 2006, the second taxpayer entered into a share sale agreement to purchase all of the shares in the first taxpayer.
The Commissioner assessed that transaction and issued a notice of assessment in January 2010 for some $71.3m. The assessment was made on the basis that the first taxpayer was a “land-holder”. The taxpayers objected to that assessment.
The parties disputed whether certain components of the relevant property constituted “land”. The components were broadly: (1) rights under “Land Use Agreements” to use “Corridor Land”; (2) “Leased Railway Infrastructure” leased under “Land Use Agreements” that constituted “Track Infrastructure”; and (3) other “Leased Railway Infrastructure” leased under “Land Use Agreements” which did not constitute “Track Infrastructure”. The value of the disputed property was around $922m and represented some 62% of the total value of all relevant property the second taxpayer was entitled to as at the date of the acquisition.
The Court of Appeal held the WA State Administrative Tribunal was correct in determining that stamp duty was not payable. It affirmed that the Land Use Agreements provided a contractual licence to use the corridor land and did not create a proprietary interest as contended by the Commissioner. Accordingly, as the rights under the Agreements did not constitute “land”, the Court said the first taxpayer was not a “land-holder”.
(Comr of State Revenue v Westnet Rail Holdings No 1 Pty Ltd & Anor [2013] WASCA 110, WA Court of Appeal, McLure P, Pullin JA, Newnes JA, 26 April 2013.)
[LTN 81, 1/5/13]