Part 1 - AL-Tax

Chapter 5it is the writing that evidences the sale, rather than the sale itself, that attractsstamp duty.The assets that are the subject of a securitization are ordinarily debts or otherintangibles (or choses in action). For instance, RMBS (Residential Mortgage-Backed Securities) and CMBS (Commercial Mortgage-Backed Securities) securitizationsboth involve the securitization of loans secured over real property,while CDOs (Collateralized Debt Obligations) typically involve the securitizationof corporate loans (and, less commonly, corporate bonds, the debt securitiesissued in other securitizations, project finance transactions and other structuredfinance transactions, sovereign debt, and municipal debt). Other important classesof assets that have been securitized include auto loans, credit card debts, and studentloans.In common-law jurisdictions such as Australia, an absolute assignment ofdebts or other intangibles can, as noted above, be effected at law or in equity. Asregards the first method, a debt can only be assigned at law if the assignmentcomplies with the statutory framework specifically established for legal assignmentsof intangibles (Ali, 2002). A key requirement is that the assignment of thedebt must be evidenced in writing. Accordingly, while a legal assignment willeffect a transfer to the securitization vehicle of legal title to the debt being securitizedand perfect the rights of the securitization vehicle in the debt at law, anysuch writing will attract the application of stamp duty (unless the assignmenthas the benefit of a statutory exemption). In addition, the legal assignment of theintangibles comprising the mortgages or other security interests that support therepayment of the securitized debts (as in the case of RMBS, CMBS, and auto loansecuritizations) may also constitute a dutiable transfer, as well as having tobe registered (and thus attracting a separate registration fee for each individualmortgage or security interest in the pool of securitized assets). This is relevant notonly to purely domestic securitizations, involving, for example, Australian assetsand an Australian securitization vehicle, but also to international securitizationswhere some or all of the securitized assets are situated in a different jurisdictionto the securitization vehicle. The securitized assets, as debts, will be taken to besituated in the jurisdiction in which legal action can be taken to enforce the debt –that is, the jurisdiction where the debtor is incorporated, has its principal placeof business, or is otherwise taken to be located.These shortcomings with legal assignments, when coupled with the requirementthat notice of the assignment, for that assignment to be effective at law,must be given to the underlying debtor (thus potentially disrupting the relationshipbetween the originator and the debtor) and the inability to assign future debts105