Substantially one arrangement: duty requirements

What you need to provide if you have more than one acquisition of interests, or an acquisition in more than one entity.

Under section 155 of the Duties Act 2008, an entity is a landholder if, immediately before the acquisition:

  • the entity or a linked entity is entitled to land in WA valued at $2 million or more or
  • the entity is not a landholder as described above, but the entity is entitled to land assets or chattels and the acquisition is part of a relevant arrangement.

An acquisition of an interest in an entity (the relevant entity) is part of a relevant arrangement if:

  • there are one or more acquisitions of interests in one or more other entities (the other entities), which may occur before or after the acquisition of the interest in the relevant entity and
  • the acquisition of the interest in the relevant entity and the acquisitions of the interests in the other entities together form, evidence, give effect to or arise from what is, substantially one arrangement.

Under section 156A of the Duties Act, the acquisitions in two or more unlisted entities will be linked to an unlisted relevant entity if:

  • the acquisitions arise from what is substantially one arrangement and
  • each of the unlisted entities has a direct or indirect interest in the unlisted relevant entity and
  • the aggregate interest in the unlisted relevant entity is at least 50%.

Section 14 (regarding chattels) and section 91C of the Duties Act also deem transactions to be dutiable transactions if they form, evidence, give effect to or arise from what is, substantially one arrangement with a relevant acquisition for the purposes of landholder duty.

Revenue Ruling DA 25 ‘Substantially One Arrangement’ provides information about the factors that will be considered when determining whether two or more acquisitions should be treated as substantially one arrangement.

What to provide

When there has been one or more acquisitions of interests in one or more other entities in addition to the relevant entity, provide:

  1. a written statement advising that either:
    • you believe the transactions together form, evidence, give effect to or arise from what is substantially one arrangement or
    • you believe the transactions do not together form, evidence, give effect to or arise from what is substantially one arrangement.
  2. If you believe the transactions do not form, evidence, give effect to or arise from what is substantially one arrangement, your written statement needs to include detailed answers to the following questions:
    • why were the interests in the other entities acquired?
    • were separate agreements prepared for each acquisition? If yes, why?
    • to what extent are the acquisitions conditional upon each other?
    • describe the entities for which interests were acquired in and any businesses they carry on.
    • is there an inherent connection between the entities for which interests were acquired? For example, one entity being financially reliant on the other, significant trade between entities, one business being complimentary to the other, etc.
    • is the land held between the entities in close proximity or adjoining?
    • if the acquirer(s) were not able to acquire one (or more) of the interests, would they have proceeded to acquire the others?
    • if the seller(s) were not able to sell one (or more) of the interests, would they have proceeded to sell the others?
    • were the acquisitions of all interests negotiated for a single price that was apportioned between the acquisitions, or were separate negotiations conducted for the sale of each interest?
    • is there any relationship between the purchaser(s) and vendor(s), e.g., by blood or marriage, business or legal (either currently or by prior arrangement), common directors or shareholders, etc.?
    • were the interests advertised or offered for sale as a total package or as separate interests?
    • who negotiated the sale of the interests on behalf of
      • the vendor(s)?
      • the acquirer(s)?
    • will the purchaser(s) finance the transactions by way of
      • cash?
      • vendor finance?
      • a single loan from a financial institution which will cover all interests? If so, why a single loan rather than individual loans?
      • individual loans from a financial institution for each interest?
    • documentary evidence showing how the interests were marketed for sale.
  3. any other relevant information that may assist in the assessment of duty.

An assessment of duty will not be issued until all required information is provided.

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