17 August 2023

The appeal by Edge Developments Pty Ltd (“Edge”) and Others against the decision of an Honourable Auxiliary Justice of the Supreme Court of South Australia was dismissed by a majority (2-1) of the Court of Appeal of the Supreme Court of South Australia (the “Court”).

In dismissing the appeal, the majority of the Court (i.e. the Honourable Justice Bleby, with the Honourable Justice Doyle agreeing) found:

1. Sections 2(2) and 92 of the Stamp Duties Act 1923 (the “SDA”) operate in combination such that a legal or equitable interest (not being a mortgage, lien or charge) in the proceeds of sale of a land asset is taken to be an interest of the same kind in that land asset.
2. The interest that was taken to be an interest in the land under section 2(2) of the SDA, and which was thereby taken to be a land asset under section 92 of the SDA, was the contingent, potential beneficial interest in the proceeds of sale created by clause 3.1.1.3 of the Performance Charge.
3. The interest created by clause 5 of the Performance Charge was a charge.  By reason of section 92(1)(a) of the SDA, that was not an interest in the land.  The interest created by clause 3.1.1.3 of the Performance Charge was separate from that charge, and as deemed by the SDA, an interest in the land.
4. The calculation of duty under section 102A(2) of the SDA attached, relevantly, to a hypothetical conveyance of the underlying assets of the Edge land as a consequence of the Redemption Transaction, not the Performance Charge.  The relevant increased prescribed interest (as defined in section 91(1) of the SDA) in the underlying land assets (that being the deemed interest by operation of section 2(2) of the SDA), was the unitholding in the Unit Trust.  It was not the charge created by clause 5 of the Performance Charge.
5. Section 102F of the SDA had no application.  The Redemption Transaction caused Adabco Pty Ltd and Tabco Pty Ltd to increase their prescribed interest in a land holding entity.

In allowing the appeal, the minority of the Court (i.e. the Honourable Acting Justice Nicholson) found:

1. The contractual arrangement between Edge and Adabco and Tabco as at the time of Redemption Transaction was not captured by section 2(2) of the SDA, and Edge was not a land holding entity at that time.

STAMP DUTIES – Exemptions

Edge Developments Pty Ltd & Ors v Commissioner of State Taxation [2023] SASCA 88

7 December 2020

The appeal against the decision of the Treasurer to disallow the objection by Consolidated Mining & Civil Pty Ltd (“CMC”) to a Notice of Reassessment made by the Commissioner of State Taxation on 15 October 2018 was dismissed.

In dismissing CMC’s appeal, the Honourable Justice Parker held:

1. The purpose of section 105A(4) of the Stamp Duties Act 1923 (the "SDA”) is to serve as a transitional provision to determine questions of timing that will arise from the implementation of the legislative policy that duty will no longer be payable in specified instances.
2. The words “conveyance or transfer” have the same meaning in subsections 105A(3), 105A(4) and 105A(5) on the basis that Parliament could not have possibly intended that those words operate to remove liability for duty where there has been a notional acquisition under section 100(1) in subsections 105A(3) and 105(5) but have a different and narrower meaning under the transitional provision in section 105A(4) so as to exclude cases that are subjected to duty under section 100(1) on the basis that there has been a notional acquisition.
3. The words “conveyance or transfer” in section 105A(4) must be broadly construed on a purposive basis so as to include a transaction, including a notional acquisition under section 100(1).

STAMP DUTIES – Stamp Duties Act 1923 – conveyance or transfer – notional acquisition

Consolidated Mining & Civil Pty Ltd v Commissioner of State Taxation [2020] SASC 233

10 November 2022

The appeal by the Commissioner of State Taxation (the “Commissioner”) against the decision of a judge of the Supreme Court of South Australia was dismissed.

In dismissing the appeal by the Commissioner, the Honourable President Livesey, the Honourable Justice Doyle and the Honourable Justice Bleby held:

1. Whether land fits within the exception in section 105A(2)(a) of the Stamp Duties Act 1923 (the “SDA”) will require a characterisation, on all the facts, of the purposes for which the land is taken to be used.  The business incentivisation purpose of the abolition of stamp duty and the foreign ownership surcharge contributes an important dimension to the interpretation of the ‘residential purposes’ exception.  The primary judge was correct to conclude that the word ‘residential’ in these exceptions implies a permanent or long-term commitment to living in a particular place.
2. The matters relied on by the Commissioner, to show the land was being used for residential purposes, do not detract from the conclusion of the primary judge.  They confirm that the property was occupied by (mainly) students as intended, that is, as a short-term place to live.
3. The property was designed and deployed as a form of accommodation that does not lend itself easily to the characterisation of long-term or permanent residence that is connoted by the term ‘residential purposes’ in section 105A of the SDA.
4. The nature and purpose of the business transaction do not form part of the factual matrix relevant to determining whether the property was, at the date of transfer, taken to be used for residential purposes.
5. On the complaint of inadequacy of reasons, the judge’s use of occupancy statistics was directed to the nature of the commitment made by students by reference to semester periods.  The matters said to inform whether the land should be taken to be used for ‘residential purposes’ do not warrant a different conclusion from that reached by the primary judge.

STAMP DUTIES – exemptions – conveyance or transfer on sale of real property

Commissioner of State Taxation v Perpetual Corporate Trust Limited [2022] SASCA 117

25 January 2022

The appeal against the decision of the Treasurer to disallow the objection by Perpetual Corporate Trust Limited (the “Appellant”) in respect of an assessment of stamp duty and the foreign ownership surcharge in relation to the transfer of a property situated at 231 Waymouth Street, Adelaide (the “Property”) on the grounds that the land was exempt from stamp duty as qualifying land under the Stamp Duties Act 1923 (the “Act”) was allowed.

In September 2016, a developer obtained final approval from the Development Assessment Commission to build a 17-level purpose built student accommodation facility on the Property. Following its completion, the building was leased to Excel Leasing Pty Ltd, an operator of purpose-built student accommodation facilities, which operated the business from 1 February 2019 until 30 September 2019.

On 30 September 2019, the Appellant, as trustee of the Scape Australia (Waymouth) Trust acquired the Property. The lease and all business agreements in respect of the business were assigned to Scape Waymouth Operator Pty Ltd by the sale agreement. Since that date, Scape Waymouth Operator Pty Ltd has operated the purpose-built student accommodation facility at the Property. The facility is operated under the Atira brand.

Following the transfer of the Property, the Appellant received a stamp duty notice of assessment, dated 17 October 2019, in the sum of $6,868,830, which included a foreign ownership surcharge in the sum of $3,850,000.

On 18 November 2019, the Appellant objected to the assessment, on the basis that the Property is not used predominantly for residential purposes, as a result of which it qualified for an exemption from both stamp duty and the foreign ownership surcharge, pursuant to section 105A of the Act.

On 7 June 2020, the Treasurer affirmed the decision of the Commissioner, determining that the Property was used for residential purposes, rather than for commercial purposes, as a result of which it was subject to both stamp duty and the foreign ownership surcharge.

In allowing the appeal, the Honourable Auxiliary Justice Bochner held that the Property is qualifying land for the purpose of section 105A of the Act.

STAMP DUTY – Stamp Duties Act 1923 – Conveyance or Transfer on Sale of Real Property – Foreign Ownership Surcharge - Exemptions – Qualifying Land

Perpetual Corporate Trust Limited v Commissioner of State Taxation [2022] SASC 7 (25 January 2022)