NSW: Stamp duty avoidance scheme upheld by court

AAP General News (Australia)
12-23-1998
NSW: Stamp duty avoidance scheme upheld by court

SYDNEY, Dec 23 AAP - A structure set up to avoid paying more than $3 million in stamp duty
on two New South Wales property transfers was ruled valid in the state's Court of Appeal
today.

The court ruled, by a 2-1 majority, that the arrangement under which ISPT Pty Ltd (ISPT)
acquired the properties, at Forster in the state's north and at Bondi Junction in Sydney, from
Coles Myer Property Investments Pty Ltd (CMPI) had not transferred the beneficial ownership of
the land.

ISPT is a unit trust in which CMPI holds all the units.

Justice Roderick Meagher said he was unable to see how any transfer had been made.

"The legal estate resided in CMPI both before and after (two steps in the procedure under
which the properties were transferred)," he said.

Justice Meagher said either sections 23C and 54A of the Conveyancing Act applied to nullify
the ordinary effects of those steps, or they did not.

"If they did, the beneficial interest remained in CMPI," he said.

"If they did not, the beneficial interest also remained in CMPI, in its capacity as sole
unit holder in ISPT.

"In neither event is there any change of beneficial interest."

He said this meant the Taxation Commissioner's appeal against a single judge's ruling in
favour of ISPT must fail.

Acting Justice Tony Fitzgerald agreed with Justice Meagher.

The president of the Court of Appeal, Justice Keith Mason, dissented.

Lawyers for ISPT said the case was one of the most significant stamp duty rulings in NSW in
the past 10 years.

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KEYWORD: TRANSFERS

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