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Newsletter April 2005

The NSW Government has introduced yet another type of stamp duty.  From 10 November 2004, land rich vendor duty is payable on transactions relating to units and shares in private unit trusts, wholesale unit trusts, and private companies, who are considered 'land rich'. Land rich vendor duty is imposed on a relevant disposal at the flat rate of 2.25%.

To be liable for Land Rich Vendor Duty, three conditions must be met;

1. There must be a 'landholder' - either a private unit trust or wholesale unit trust that is not public or a listed unit trust, or a private company.

2. The landholder must be 'land rich', meaning;

• The land holder must have land holdings in NSW to the value of at least $2 million, and
• The land holdings must make up at 60% of the land holder's total asset value.

3. There must be a disposal of the units or shares.

There are however, some exemptions, being:

1. Exempt landholdings include

• primary production land
• new and substantially new buildings
• improved vacant land
• land subject to conservation instruments

2. Exempt transactions include

• certain transfers relating to deceased estates
• certain transfers relating to breakdown of a marriage or domestic relationship
• where the disposal is to secure financial accommodation
• passive disposals in which the person has no control and no consideration or benefit was received

Land rich vendor duty needs to be paid within 3 months of a relevant disposal being made.

FBT returns are due for lodgement on 21 May 2005.  Letters have been sent to relevant business clients in relation to completing the FBT return for the year ended 31 March 2005.  Please forward the relevant FBT information to our office as soon as possible, to allow the completion of the return by the due date.

From 1 July 2005, these regulations will allow a person who has reached their preservation age to access their superannuation through an income stream without having to retire permanently from the workforce.

In designing the regulations, the government aims to provide maximum flexibility while minimising complexity.  This includes:

• not imposing a work test
• not capping the amount of benefits a person could access
• allowing individuals to use existing pension products (for example allocated pensions or
• market linked pensions), rather than creating a new pension product
• allowing people who purchased an allocated pension to stop (or commute) their income
• stream and return the benefits to their super fund.  This would benefit people who choose to return to full time work.

Under the policy, allocated pensions cannot be commuted and cashed out as a lump sum while a person is still working.  However, once a person retires or reaches age 65, they will have the option to commute the allocated pension and access their full benefits.

The ATO has issued a ruling which sets out their views on when a person is an employee under the Superannuation Guarantee Act and therefore superannuation is required to be paid on their behalf.  Amongst a number of people now included, such as performers the ruling notes the following:

"The definition of the employee under the Superannuation Guarantee Administration Act includes common law employees and also extends to a person; who works under a contract that is wholly or principally for the labour of that person.  That is, the person is remunerated, wholly or principally, for their personal labours and skills; and must perform the contractual work personally (there is no right of delegation) and is not paid to achieve a result."

Employers need to review their payments to contractors to ensure that Superannuation Guarantee Levy is or is not payable on their behalf.