The State Taxation Acts (General Amendment) Bill 2005 is currently before the Lower House of the Victorian State Parliament. If passed, the Bill will amend a number of Victorian Acts. In particular, the Bill will remove the exemptions from duty for transfers consequent on reductions of capital and on the winding up of companies.

The government’s justification for this move is that most other jurisdictions do not offer these concessions, they are rarely used, they are inconsistent with the fundamental principle that duty is payable where a change in beneficial ownership occurs and that they are prone to abuse.

Certain transitional provisions are intended to apply.

For capital reductions, the exemption will continue for those transactions which have been commenced before the Commenced Date of the proposed amending Act (by lodgment of the relevant documents with the Australian Securities and Investments Commission under the Corporations Act 2001).

For a winding up, the exemption will be available if:

(a) in the case of a voluntary winding up – the resolution for the company’s winding up is passed in compliance with the Corporations Act 2001 before the commencement date;

(b) in the case of a winding up by the Court – the order for the winding up is made before the commencement date.

In the case of a members’ voluntary winding, 21 days notice of the meeting to propose the special resolution is required but this can be abridged with the approval of at least 95% of a company’s shareholders.

We think it is likely that the State Revenue Office would take upon itself an examination of the company to ensure there has been strict compliance with the Corporations Act 2001.

The Commencement Date is the day after the proposed amending Act receives Royal Assent. While we cannot say when the proposed amending Act will be passed and become operative, legislative changes which emerged from last year’s state budget became operative very quickly.

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