For the eighth year, we are delivering an interactive 5-part seminar series to aspiring and emerging leaders in the Property and Real Estate Credit Funds Management sectors, with direct access to leading industry experts and their experience, strategic industry insights and pitfalls, and key issues ranging from structuring, debt and equity through to legal and compliance.

Facilitated by our property funds specialists, featuring content developed alongside industry, each session featured practical working considerations and discussions with market leaders.

Series speakers

Industry speakers

• David Omond | KM Property Funds
• Charlie Renney | Hall & Wilcox
• Greg Sugars | Preston Rowe Paterson
• Bruce Corrin | CDC Property Consultancy
• Tim Slattery | ASA Real Estate Partners
• Adam Murchie | Forza Capital
• Georgia Liu | CBA
• Kevin Said | AUS Finance Group

SW speakers

Simon Tucker
Director, Tax 
SW

Rami Eltchelebi
Partner, Assurance and Advisory Services
SW 

Stephen O’Flynn
Director, Tax
SW

Abi Chellapen
Director, Tax 
SW

Sejla Kadric
Director, Business & Private Client Advisory 
SW

Luke Fernandes
Director, Tax
SW

Shaneel Kumar
Associate Director, Corporate Finance
SW

James Serpell
Associate Director, Assurance and Advisory Services 
SW

Contact us

If you have any queries or would like more information, please contact the Marketing team via marketing@sw-au.com.

The post Emerging Property Fund Managers’ Series appeared first on SW Accountants & Advisors.

The State Taxation Further Amendment Bill 2024 (the Bill) received Royal Assent on 3 December 2024.

The key changes proposed by the Bill include:

• further duty exemptions for land in the Commercial and Industrial Property Tax (CIPT) Scheme
• reinforcement of the existing Foreign Purchaser Additional Duty (FPAD) and Absentee Owner Surcharge (AOS) provisions and
• a new land tax exemption for charitable housing providers.

Other amendments to payroll tax and other minor exemptions have also been proposed. We have unpacked these major state taxation changes below.

Key changes explained

Further Commercial and Industrial Property Tax (CIPT) exemptions

The CIPT scheme was introduced to replace stamp duty for future transactions involving commercial and industrial properties that have entered and continue to qualify under the scheme (referred to as CIPT Land). For further details take a look at our webinar or article on CIPT.

Under the newly introduced framework, stamp duty is intended to be levied one last time when a property enters the CIPT scheme through an initial qualifying transaction (‘entry transaction’).  

Despite inclusion into the CIPT scheme, certain subsequent transactions (‘non standard transactions’) involving dutiable leases, fixtures and economic entitlements remain subject to duty.

The Bill introduces changes to provide upfront exemptions and concessions for ‘non-standard transactions’ which are defined as transactions such as the grant, transfer, or surrender of dutiable leases, or the acquisition of fixtures or economic entitlements related to CIPT Land.

Non-standard transaction exemptions

These ‘non-standard transactions’ will be exempt from duty if one of the following applies:

• at least three years have passed since the land entered the CIPT scheme, and the non-standard transaction agreement is made after this period or
• the entry transaction involved a 100% interest in the land, or the total interests transacted in the land amount to 100% and
• the value of the CIPT land when it entered the CIPT regime was not reduced by a lease over the land, economic entitlement in relation to the land and did not exclude the value of an interest in fixtures on the land.

The above upfront exemption is aimed at circumstances where appropriate duty has previously been paid as part of the land entering the CIPT.  

Where full duty has not been paid, the Commissioner may exercise discretion to waive or reduce the duty payable on these transactions. The Commissioner considers:

• the proportion of the initial interest acquired during the entry transaction and any additional interests subsequently acquired in the land
• the degree to which the land’s value was diminished by other interests, such as leases, economic entitlements, or excluded fixtures, at the time the entry transaction was assessed for duty
• the time interval between specific transactions related to the land
• any other factors the Commissioner deems relevant.

Foreign Purchaser Additional Duty (FPAD) & Absentee Owner Surcharge (AOS) provisions

Under the Duties Act 2000 (Vic), FPAD applies extra taxes on the acquisition of residential land by foreign purchasers in Victoria. Similarly, under the Land Tax Act 2005 (Vic), the AOS imposes additional taxes on foreign owners holding land in Victoria.

The amendments are intended to address the risk that the existing provisions were invalid by reason of an inconsistency with theInternational Tax Agreements Act 1953 (Cth), which gives force to certain non-discrimination clauses in international tax treaties.

The Commonwealth Act was amended to explicitly state that state taxation laws override these international tax agreements in cases where these is an inconsistency. Despite this clarification, there remains a risk that courts could find the historical application of the FPAD and AOS invalid if they are deemed inconsistent with the Commonwealth law as it was at the time the alleged tax liabilities were incurred.

The new proposed provisions outline that if an FPAD or AOS liability is found to be invalid because of an inconsistency, a new replacement tax will be imposed which will mirror the original liability.

The proposed amendments will have the following practical effect, notwithstanding that the amendments will not apply if the liabilities are determined to be valid:

• if the FPAD or AOS liability between 1 January 2018 and 8 April 2024 are deemed invalid, the taxpayer will still owe the same equivalent amount under the new provisions and
• in circumstances where the taxpayer has paid the FPAD or AOS liability, the previous payment of the invalid tax will satisfy their liability under the replacement tax.

These proposed amendments ensure that the Victorian taxes are imposed as they were intended.

Exemption for charitable housing providers

The proposed changes under the Bill create a new exemption under section 78D of the Land Tax Act 2005 (Vic) (Housing provided for the relief of poverty) which applies to land owned, managed, or controlled by a charitable institution that is occupied, or available for occupation, by residents solely in connection with the institution’s charitable purpose of relieving poverty.

The new exemption is also available to vacant land owned by a charitable institution and declared to be held for such future use and occupation. However, the caveat to this is that the Commissioner must be satisfied that the land will be exempt land within 2 years, or a period longer as approved by the Commissioner.

As is the case with other land tax exemptions, the exemption may apply on a partial basis if the Commissioner is satisfied that only a part of land is land that meets the exemption requirements. Land tax will remain assessable on the part of the land that is not exempt.

How SW can help

Contact one of our state taxes experts to discuss how the proposed amendments may impact you.

Contributors

William Zhang  

Blake Trad 

Robert Parker

The post Key VIC changes introduced by the State Taxation Further Amendment Bill 2024 appeared first on SW Accountants & Advisors.

The 2024 Emerging Property Fund Managers series has now concluded. To register your interest for the next series, which will be announced in the coming months, please email marketing@sw-au.com.

For the seventh year, we delivered an interactive 5-part seminar series to aspiring and emerging leaders in the Property Fund Management sector, with direct access to leading industry experts and their experience, strategic industry insights and pitfalls, and key issues ranging from structuring, debt and equity through to legal and compliance.

Facilitated by our property funds specialists, featuring content developed alongside industry, each session featured practical working considerations and discussions with market leaders.

Series speakers

Industry speakers

• Howard Brenchley | APN Property Group
• David Omond | KM Property Funds
• Nick Klein | CyberCX
• Melissa Kingham | Haben Property Fund
• Chris Langford | Newmark Capital
• Emma Donaghue | Hall & Wilcox
• Georgia Liu | Commonwealth Bank of Australia

SW speakers

Simon Tucker
Director, Tax 
SW

Rami Eltchelebi
Partner, Assurance and Advisory Services
SW 

Stephen O’Flynn
Director, Tax
SW

Abi Chellapen
Director, Tax 
SW

Sejla Kadric
Director, Business & Private Client Advisory 
SW

Danny Armstrong
Director, Banking & International Business
SW

Contact us

If you have any queries or would like more information, please contact the Marketing team via marketing@sw-au.com.

The post Emerging Property Fund Managers series 2024 appeared first on SW Accountants & Advisors.

Embark on a journey into the fundamentals of fund management as SW’s Director, Rick Hemphill and Polar 993 Founder, Adam Lindell share invaluable advice tailored for first-time fund managers. Uncover the key insights, strategies, and essential knowledge that lay the groundwork for a successful venture into the world of fund management.

In the second episode, SW’s Director, Rick Hemphill and Polar 993 Founder, Adam Lindell unravel the complexities of capital sourcing, focusing on the pivotal task of raising the initial $25 million. Discover proven strategies, actionable tips, and real-world experiences that illuminate the path for fund managers seeking to secure the crucial capital to kickstart their investment journey.

Join SW’s Director, Rick Hemphill and Polar 993 Founder, Adam Lindell in the final chapter of this enlightening series, where they explore the ever-evolving investment market trends. Delve into the realms of Build-to-Rent (B2R), Build-to-Sell (B2S), and Managed Investment Schemes (MIS). Gain a comprehensive understanding of these trends, empowering fund managers to navigate the dynamic landscape of investment opportunities.

The post Polar 993 Founder Adam Lindell talks fund management insights with SW’s Director Rick Hemphill appeared first on SW Accountants & Advisors.

This means that investors acquiring an interest in a Fund through the IM after the Fund has entered into a contract to acquire property may be subject to landholder duty, effectively imposing double duty on the transaction.  

The taxpayer is appealing the decision. In the meantime, capital raisings with respect to Victorian property will need to be more carefully managed. The State Revenue Office (SRO) is unlikely to provide a private ruling with respect to this issue until the appeal is determined. The SRO has stated in discussions that there were particular circumstances in the Oliver Hume case that led to this outcome. However, the relevant facts as referred by VCAT noted nothing significantly different from any other capital raising through an IM or Product Disclosure Statement (PDS). It seems that the 2 factors that the SRO and the court focused on were: 

1. in order for shares to be issued to investors, a minimum subscription needed to have been met 
2. there was a unity of investors, in that they were all joining together to acquire an interest for a common purpose, being a particular residential project.  

Both of these factors are common in most offers under an IM or PDS. SW is working with the Property Council of Australia and Law institute of Victoria to have further discussions with the SRO to get a better understanding of what made the facts and circumstances of the Oliver Hume case different, and to understand their position with respect to reviewing capital raising transactions in the past and in the future, as we await the court’s decision.  

As discussed below under Background, the legislation is drafted widely and we are of the view that the legislation needs to be amended to ensure that capital raises are not captured under the landholder duty provisions (regardless of the outcome of this Appeal). The outcome of double duty for funds trying to raise capital to acquire property in Victoria will be an inhibitor to property acquisitions in Victoria.  

The outcome in this case also raises uncertainty with respect to other States (except for NSW) that have similar provisions drafted for the aggregation of associated transactions.  

Background 

In Victoria, landholder duty only applies to investors who acquire a significant interest an interest of 20% or more if the landholder is a private unit trust, and 50% or more if the landholder is a private company.

In determining whether a landholder has acquired a significant interest, the interests of associated persons and interests acquired in associated transactions are aggregated and treated as a single acquisition.  

The term associated transaction is quite broadly drafted as an acquisition of an interest in a landholder by another person in circumstances which: 

• those persons are acting in concert, or 
• the acquisitions form, evidence, given effect to or arise from substantially one arrangement, one transaction or one series of transactions.  

Given the broad definition in the legislation, the Victorian State Revenue Office released Revenue Ruling DA.057 Meaning of Associated Transaction which stated that the Commissioner will not regard acquisitions of interests by independent members of the public as an associated transaction if the acquisitions are made in response to a genuine public offer under a product disclosure statement or prospectus lodged with the Australian Securities and Investments Commission. However, this will not apply if: 

• under the public offer, one person’s acquisition in a landholder is made subject to and conditional upon another person’s acquisition, or 
• the Commissioner considers that a person is taking advantage of this concession, particularly in cases where the public offer does not convert the landholder to either a listed company or public unit trust scheme.  

Example 2 of the ruling also provides an example where a private unit trust raises funds from 15 investors known to the responsible entity. In this example, the investors can apply for any number of units and their acquisition would not be conditional upon achieving a minimum level of subscription. The SRO’s view was that the investors’ acquisitions would not be considered associated transactions.  

Oliver Hume case 

In our view, the facts of the Oliver Hume case are no different from capital raises by other Funds through Information Memorandums (IMs). The facts were as follows: 

• a special purpose entity (SPV) was established to acquire a site for a resi development 
• the SPV was funded by debt and equity 
• the fund was marketed to sophisticated investors so it was not an ASIC regulated raising 
• the IM was distributed to investors appearing in Oliver Hume’s database. Oliver Hume held a database that had details of investors who had invested in their funds in the past 
• the IM was also distributed to third parties as part of consultancy and referral agreements 
• as soon as a target of $1.8 million is achieved, shares will be allotted to investors 
• $1.8 million shares were offered at $1 to some 18 investors 
• 14 of the 18 investors were from Oliver Hume’s database, 4 were external (2 were referred from the consultancy agreements and 2 were completely external).

The SRO commenced their investigation in 2017 and a decision was made in 2019 that the taxpayer was subject to landholder duty. As the SRO viewed the arrangement as substantially one arrangement, the interests acquired by the purchasers were aggregated and the landholder duty assessment was raised in 2020 for 99.99% of the land value in 2020. In 2021, the SRO made a determination confirming the assessment (but partially remitting penalties). Oliver Hume requested the decision be referred to VCAT.  

Court decision  

The court held that regard must be had to the actions and motives of both the transferor and transferee. The shareholders (although not associated with each other) each had a united purpose of becoming shareholders in the Company. The Commissioner outlined the following factors in support of the view that the transactions were related, connected and interdependent in a way that was integral to the circumstances: 

• transactions stemmed from the same offer and terms outlined in the IM 
• transactions were conditional on each other and interdependent, they would only occur if target subscriptions were met  
• purpose of the transactions were the same – raise $1.8M as part of a syndicated managed investment vehicle for a residential development project 
• investors applied to invest around the same time and under the same offer with documents defining the common purpose  
• possible to infer a unity of purpose for the investors, as they agreed on the terms based on the IM to support the development of the property and agreed to the constitution which established the management structure.  

The Court also held that the Commissioner’s concession provided in the Ruling has no force in law.  

How SW can help

The SW team has extensive experience assisting property fund managers across a broad range of accounting and advisory services.

We can provide you with expert advice across the lifecycle of your fund, from initial setup and structuring, to capital raising, compliance, risk management and more.

Should you have any questions on the implications of this decision on your individual business circumstances, please reach out to your SW contacts listed here.

Our team will closely monitor the case and provide further information if there are any updates.

Contributor

Robert Parker

The post Victorian capital raising | Risk of landholder duty and the Oliver Hume case appeared first on SW Accountants & Advisors.

The training session provided the opportunity to maintain and develop expertise in managing the compliance for property funds, and assist with processes when working with an accounting firm such as ours.

The session delivered a deeper insight into the technical and information requirements when preparing accounts, demonstrated how tax components are calculated and common accounting vs. tax differences.

Our property fund experts spent time running through the basic accounting and tax knowledge of property trusts, and extended across the following topics:

• Recent 2023-24 Federal Budget update
• Recent 2023-24 Victorian and WA State Budget update
• Key financial reporting requirements for funds
• Common issues for ordinary trusts, MITs and AMITs – including issues that also affect equity and debt funds

SW Speakers

René Muller
Partner, Assurance and Advisory Services
SW 

Luke Fernandes
Associate Director, Tax
SW 

The post Property funds | Tax & Accounting technical training appeared first on SW Accountants & Advisors.

For the sixth year, we deliver an interactive 5-part seminar series to aspiring and emerging leaders in the Property Fund Management sector, with direct access to leading industry experts and their experience, strategic industry insights and pitfalls, and key issues ranging from structuring, debt and equity through to legal and compliance.

Facilitated by our property funds specialists, featuring content developed alongside industry, each session features practical working considerations and discussions with market leaders.

Series speakers

Industry speakers

• David Southon | Aliro Group
• Howard Brenchley | APN Property Group
• David Omond | KM Property Funds
• Chris Langford | Newmark Capital
• Emma Donaghue | McMahon Clarke
• Georgia Liu | Commonwealth Bank of Australia

SW speakers

Simon Tucker
Director, Tax 
SW

Rami Eltchelebi
Partner, Assurance and Advisory Services
SW 

Stephen O’Flynn
Director, Tax
SW

Abi Chellapen
Director, Tax 
SW

Sejla Kadric
Director, Business & Private Client Advisory 
SW

Matthew Schofield
Director, Corporate Finance
SW

Contact us

If you have any queries or would like more information, please contact the Marketing team via marketing@sw-au.com.

The post Emerging Property Fund Managers series 2022 appeared first on SW Accountants & Advisors.

Sejla Kadric supports local and foreign owned businesses across a range of sectors, with particular focus on assisting property developers with all of their key requirements.

She brings a commercial pragmatism to all her client engagements, where she skilfully combines accounting and tax compliance advice with strategic and commercial consulting.

Sejla’s experience includes:

• advice and establishment of property ownership structures for private ownership, joint venture ownership, closely and widely held syndicated groups, development management agreements, development rights agreements, co-ownership agreements
• entity structuring for property acquisition, property development and disposal transactions
• GST advice on acquisition, development, leasing and disposal of property assets
• advice and reporting services during the application process for land acquisition and construction funding
• provision of tax advice in relation to all state and federal taxes including land tax, stamp duty, payroll tax and fringe benefits tax
• advice with respect to foreign owner property state and federal taxes and duties.

Sejla is also an active Committee member of the Property Council of Australia Academy for Property Developers. She is also a regular presenter in the SW flagship series, Emerging Property Developers that has been running for 8 years.

Sejla is a Partner of SW Audit and a Director of SW Accountants & Advisors Pty Ltd.

The post Sejla Kadric, Partner appeared first on SW Accountants & Advisors.

The training session provided the opportunity to maintain and develop expertise in managing the compliance for property funds, and assist with processes when working with an accounting firm such as ours.

The session delivered a deeper insight into the technical and information requirements when preparing accounts, demonstrated how tax components are calculated and common accounting vs. tax differences.

Our property fund experts spent time running through the basic tax knowledge of property trusts, and extended across the following topics:

• Removal of special purpose financial reporting
• Key financial reporting requirements for property funds
• Managed Investment Trusts and Attribution Managed Investment Trusts
• General taxation of trusts
• Calculation of taxable income and tax deferred income
• Accounting vs. tax differences and common adjustments

SW Speakers

René Muller
Partner, Assurance and Advisory Services
SW 

Luke Fernandes
Associate Director, Tax
SW 

Carmelin De Francesco
Senior Manager, Tax
SW 

The post Property funds | Tax & Accounting technical training appeared first on SW Accountants & Advisors.

She has strong technical and practical skills advising and assisting clients across a range of industries, but with particular emphasis on funds management and property. Abi’s clients include a number of ASX listed and wholesale property funds, equity funds, corporate entities and large complex private groups.

Abi has been actively involved in submissions to the ATO and the State Revenue Office on numerous land tax, stamp duty and Division 7A issues. She also advises a number of other accounting firms in a specialist capacity on issues affecting their clients.

Abi’s experience includes:

• Advising Funds on the appropriate structure to achieve optimal tax outcomes for investors including consideration of income tax, withholding tax and AMIT regime.
• Providing strategic tax advice for foreign multinationals looking to acquire businesses and properties in Australia.
• Providing income tax, GST and stamp duty advice on M&A transactions.
• Advising large private groups on various complex tax issues such as Division 7A, section 100A, income distributions, tax loss recoupment and management of tax audits.

In addition to her technical skills, Abi has outstanding client management and communication skills.

Abi is a Partner of SW Audit and a Director of SW Accountants & Advisors Pty Ltd.

The post Abi Chellapen, Partner appeared first on SW Accountants & Advisors.