A Guide to the Law of Securitisation in Australia - Clayton Utz

4 Stamp duty and securitisation244.1 IntroductionThere is a potential for stamp duty to be levied on several stagesof a typical securitisation. These include the declarations of trust(for trust securitisations) and the security trust, the transfer ofassets into the securitisation vehicle, the grant of a charge overthe assets of the securitisation vehicle in favour of the securitytrustee and the issue and transfer of the securitised instruments.Most securitisations would not be economically feasible if advalorem duty was imposed at any of these points. Accordingly, itis important to structure securitisations so that they do notattract duty at any stage of the process. This task is made morecomplex as stamp duty is a State-based tax and the relevantlegislation differs from jurisdiction to jurisdiction.Time and space do not permit a detailed analysis of the stampduty position as it applies throughout Australia.Given the central importance of the New South Wales DutiesAct, this section will concentrate on the New South Walesstamp duty position under that Act. One or two comments will,though, be made on the position in other States and Territories.4.2 Duties Act: General overviewThe underlying intention in drafting the Duties Act was torewrite the Stamp Duties Act 1920 (the 1920 Act) in a simpler,more contemporary style and to facilitate harmonisation with theother jurisdictions participating in the project.Various policy changes were also made. They included thefollowing which are relevant to securitisation:• “debentures” are no longer dutiable as loan securities. Loansecurities are only dutiable if they are mortgages or chargesover property and the property is located, or deemed to belocated, in New South Wales.• the conveyance head of duty, which applied to any property inNew South Wales, was replaced with a regime levying thesame rates of duty in respect of any “transfer of dutiableproperty”.A “transfer” is effectively defined in section 8 of the Duties Actto include “an agreement for sale, an agreement for transfer, adeclaration of trust or any one of certain limited classes oftransaction affecting dutiable property”.“Dutiable property” in turn is defined in section 11 to include thefollowing:– land, transferable floor space or a land use entitlement;– shares not quoted on the stock exchange;– units in a unit trust scheme;– good will, intellectual property and Commonwealth statutorylicences exploited within the 12 month period prior to thetransaction;– New South Wales statutory licences or permissions;– partnership interests;– goods, if those goods are subject to a dutiable transactionalong with any other dutiable property, other than intellectualproperty; there is a carve out for stock in trade;– an option to purchase land;– an interest in any dutiable property except to the extent that:– it arises as a consequence of the ownership of a unit in aunit trust scheme and is not a land use entitlement; or– it is attributable to an option over dutiable property.Significantly, most financial assets are not dutiable property andso fall outside the reach of the transfer head of duty. (In thisregard, section 65(1)(d) retains an express exemption fortransfers of mortgages or declarations of trust over mortgages ofdutiable property.)If a transfer of dutiable property occurs, it does not matterwhether or not that transfer is effected by a written instrument.If it is not effected by a written instrument, a statement must belodged and duty must be paid on that statement.4.3 Creation of a securitisation trustThe majority of securitised structures involve the creation of atrust.Declarations of trust, whether or not they are in writing, attractad valorem transfer duty of up to 5.5 percent of the value of thedutiable property the subject of the trust. For the reasonsreferred to in section 4.2, this duty will have little impact onsecuritisations as, generally speaking, the assets which are thesubject of the trust are not dutiable property.Nominal duty may still be payable on a declaration of trust for asecuritisation. If a declaration of trust is made in writing andsigned in New South Wales it will attract duty of $200 providedit declares a trust over property which is not dutiable property(see section 58(1)). Duty of $200 is also payable where noproperty is identified in the trust instrument, but the instrumentis executed in New South Wales (see section 58(2)).