Despite the Government not having delivered its first Budget, the New South Wales Parliament has passed the Revenue Legislation Amendment Act 2023 (NSW), which has removed the concessional rate of duty that applied to relevant acquisitions in public landholders (ie a listed company, a listed unit trust or a widely held unit trust). Although not widely publicised, the change was announced in a Budget Paper in February 2023.6

Before the amendment, relevant acquisitions in a private landholder were subject to landholder duty at ad valorem rates up to 5.5% of the percentage interest acquired in the unencumbered value of all New South Wales land holdings and goods of the landholder.7 Relevant acquisitions in public landholders were subject to landholder duty of 10% of the general rates (ie 0.55%).8 Now, all relevant acquisitions in landholders are subject to landholder duty at ad valorem rates up to 5.5%.

The second reading speech to the Bill that became the Act indicates that the removal of the concessional rate is intended to ‘improve fiscal sustainability’, ‘provide fairness’, and introduce consistency with the duty treatment of public landholders in Western Australia and the Northern Territory, as well as private landholders in New South Wales. The amendment is said to ‘remove an incentive to hold land in a public landholder to reduce the duty payable when the land is transferred.’9

As most transfers of land are liable to transfer duty, this is presumably a reference to holding land in a public landholder, rather than a private landholder, to reduce landholder duty payable when shares or units in the landholder are transferred. It seems unlikely that shareholders in a private company or unitholders in a private unit trust would contrive to list the company or trust, or sell off their units, simply to obtain the future benefit of a New South Wales landholder duty concession.10

The Act will commence on 1 July 2023 and contains no transitional rules in relation to the removal of the public landholder concessional duty rate. This lack of transitional rules is unusual. It means that relevant acquisitions in public landholders (ie acquiring 90% or more of the units or shares) made after 1 July 2023 under agreements entered into before that date will not be eligible for the concessional rate of duty.