Reforms to stamp duty levies on landholders designed to boost investment in the Australian Capital Territory (ACT) have been welcomed by the property and construction industries.
The Property Council of Australia says the Duties (Landholder) Amendment Bill 2012, passed by the ACT Parliament earlier this month, will strip away crucial barriers for investors looking to buy property in the territory.
“The ACT government’s simple and intelligent approach has solved a raft of problems that were holding back investment,” says Property Council executive director of international and capital markets Andrew Mihno. “We are aware of property investments worth hundreds of millions of dollars that are now going ahead as a direct result of this measure.”
Under current rules, investors who acquire a majority stake in a company that owns land anywhere in the territory are subject to pay landholder duty on that land.
By contrast, investors who acquire units in a trust that owns land are subject to the tax if their share of the trust entitles them to 20 per cent or more of the property in the event of a distribution. An exception to this is made for ‘wholesale’ trusts, which often have a mix of national and international investors.
Under the new rules, however, investors in a trust will be treated consistently with investors in companies, and would only be subject to landholder tax where their share of the trust entitles them to 50 percent or more of the property in question in the event of a distribution.
The new laws are designed to bring ACT rules in this area in line with rules in New South Wales.
Property Council ACT executive director Catherine Carter says the changes will allow unit trusts to invest on a level playing field with companies and will enable investors in trusts to increase their portfolio investment in ACT property by up to 30 per cent, thus ideally prompting more property investment in the territory.
“This is a striking example of government and industry working together to boost prosperity in the ACT,” Carter says. “The industry applauds the ACT Government’s policy initiative and decisive action.”
