STAMP DUTIES (PARTNERSHIP INTERESTS) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 1 July 2010.)

The Hon. I.F. EVANS (Davenport) (12:04): I rise to be the opposition's lead and only speaker on this matter, which is the Stamp Duties (Partnership Interests) Amendment Bill 2010. I indicate to the house that this will not be a long debate. There will be no need to go into committee, as the opposition has no amendments. We will be supporting the bill in its current form.

This bill arises out of a decision of the Full Court of the Supreme Court in the matter of Cyril Henschke Pty Ltd & Ors v the Commissioner of Taxation, commonly known as the Henschke case. At the outset, I thank the Treasurer, the Treasurer's staff and the departmental officers who gave the opposition a full briefing on this matter in a timely way so that we could debate this matter today. I thank all those involved for their briefing.

The Full Court found in the Henschke case that a partner's interest in partnership property is not an interest in the underlying assets held by the partnership but is rather a chose in action, entitling each partner to their share of the profits derived from the assets and the value of the partner's share of the assets upon dissolution. Therefore, although upon retirement a retiring partner may agree to sell his or her chose in action to the continuing partners, a retirement may also occur with no transfer, and it is the retirement with no transfer that I think is the issue that the court case was about and also that this legislation is about.

Essentially, without getting into the legal technicalities (which I know is my strength and that of the Treasurer), my understanding of the briefing is that if there is no transfer of property or an asset then, clearly, there is no stamp duty payable, because you only pay a duty on the transfer of the asset as such. So the question the court dealt with was: if people change their partnership arrangements using the same technique as occurred in the Henschke case, would there be a duty payable?

At this stage, the Full Court has decided that there is not a duty payable and the Commissioner of Taxation, through the government, is appealing that to the High Court, I understand. However, we want to give certainty to the legislation and we also want to give certainty to the revenue stream. The advice from the Commissioner of Taxation is that this would have a significant hit on the revenue stream of the state, and I think it is clear to the opposition that the type of actions that occurred in the Henschke case were clearly always intended to be caught by the legislation as it stood. So the opposition supports this particular piece of legislation because it closes that loophole, both retrospectively and prospectively.

My understanding of the briefing is that it will not impact on the Henschke case specifically. The government will wear whatever the High Court decides in relation to that individual case. The government has advised us that it has not been alerted to any other case where there is an attempt to claim a refund or exemption from the duty on the same basis as the Henschke matter. So, as far as the government's advice to the opposition is concerned, there is only the one matter, and that is the Henschke matter, that falls into that particular category at this point.

The legislation applies retrospectively, and I have sought further advice from the commissioner in relation to this matter. The opposition's understanding of the briefing is that the reason it applies retrospectively is so that if someone who has paid duty becomes aware of the Henschke matter and thinks they might not have to pay duty, then this legislation will clarify the fact that they do actually have to pay duty and Henschke's matter is a one-off, stand-alone case. That is my understanding as to why we are applying this retrospectively. I put that on the record for the sake of completeness.

This matter has the support of the opposition and we will not hold the house any longer. Again, I thank the Treasurer's personal staff, the Treasurer, and the commissioner and his staff for their briefings. The opposition supports the bill. We have no amendments and no questions. We are happy to go to the third reading.

Bill read a second time and taken through its remaining stages.