A Guide to the Law of Securitisation in Australia - Clayton Utz
A Guide to the Law of Securitisation in Australia - Clayton Utz A Guide to the Law of Securitisation in Australia - Clayton Utz
Note that paragraphs (a)(iii) and (b) are equivalents – one relatesto equity interests and the other to debt securities (whether ornot in writing). In practical terms, they both require a dedicationof the relevant income stream to meet the obligations under theinterests or securities, so that the derivation test is satisfied, butpermit an insubstantial amount of other income (ie. from anysource) to flow to investors. (Contrast them to paragraphs (a)(i)and (ii) where the derivation of the relevant income stream is notmentioned, presumably because the focus is on a pass-througharrangement).The concept of a “pool of mortgages” is central to both as itdetermines the source of the substantial income stream. It isdefined as:“A pool or collection of assets:(a) that is comprised solely of mortgages, or(b) that is comprised substantially or, if the regulations prescribethe extent, to the prescribed extent, of mortgages or ofmoney paid pursuant to mortgages (whether or not thatmoney has been invested in prescribed property) or of money(whether or not that money has been invested in prescribedproperty) if the primary investment policy is to invest inmortgages, but that may also contain either or both of thefollowing:(i) prescribed property,(ii) any other property that forms part of the pool or collection ofassets for the purpose of issuing or making a mortgagebackedsecurity in relation to the pool of mortgages.”“Mortgages” includes mortgages of all kinds of land (whereverlocated), both residential and non-residential, freehold andleasehold.Thus it remains the case under the Duties Act that theconcessions in sections 282 and 283 are principally aimed atsponsoring the securitisation of mortgages. Prima facie, assetbackedsecurities, such as those relating to credit card and leasereceivables, are not entitled to the benefit of the mortgagebackedsecurity concessions and duty may be payable on severalstages of their securitisation process. How much duty is payable(if any) will, of course, depend on the structure adopted.It is significant that the term “prescribed property” is used bothin the “pool of mortgages” definition and in the “mortgagebackedsecurity” definition itself (see paragraph (c)). The use inparagraph (c) of the definition of “mortgage-backed security” hasthe effect of broadening the definition beyond its naturalmeaning. An instrument will still qualify as a mortgage backedsecurity even though there are no supporting mortgages,provided the underlying pool is comprised of other “prescribedproperty”. In the case of paragraph (c)(ii), the income must bederived substantially from prescribed property, so that aninsubstantial part of the income can be derived from othersources. (Contrast paragraph (c)(i) which lacks this flexibility inrelation to the source of income.)“Prescribed property” means any of the following:“(a) cash,(b) bonds, debentures, stock or Treasury Bills of theCommonwealth or the Government of New South Wales orthe Government or Administration of another State orTerritory,(c) debentures or stock of any public statutory body constitutedunder the law of the Commonwealth or New South Wales oranother State or Territory,(d) notes or other securities of the Commonwealth or theGovernment of New South Wales or the Government orAdministration of another State or Territory,(e) deposits with, or the acquisition of certificates of deposits orany other security issued by, a bank or building society(whether expressed in Australian currency or otherwise),(f) bills of exchange, promissory notes or other negotiableinstruments accepted, drawn or endorsed by a bank (whetherexpressed in Australian currency or otherwise),(g) a guaranteed investment contract (expressed in Australiancurrency) of a type approved by the Chief Commissioner,(h) mortgage-backed securities, mortgage backed certificateswithin the meaning of Part 1B of the Trustee Act 1958 ofVictoria or marketable securities that are secondarymortgage market securities under section 29(1) of theMortgages (Secondary Market) Act 1984 of Queensland.”4.9 Relief in other StatesThere are equivalent, although not identical, mortgage-backedsecurity exemptions in Queensland, Victoria and Tasmania.Queensland has introduced asset backed securitisation relief,back-dated to 1 March 2002 (see the Revenue LegislationAmendment Act 2002). Perhaps the best feature of this relief isthat it overcomes transfer duty on a defined class of “financialassets”.27
4.10 ConclusionStamp duty is a very complicated and legalistic area. This sectionhighlights some of the principles that are relevant to thesecuritisation industry. Because of its importance, stamp duty hasand will continue, for the foreseeable future, to play a criticallyimportant role in the structuring of securitisation programs inAustralia.The next section of this publication examines some of thetaxation issues relevant to securitisations in Australia.28
- Page 6: 12.7.3 Euroentitlements............
- Page 9 and 10: 1 General overview of the nature of
- Page 12: An interest in a managed investment
- Page 15 and 16: 142.3.4 Provision of a financial se
- Page 17 and 18: 3 The disclosure and civil liabilit
- Page 19 and 20: 18The statutory source for this ste
- Page 21 and 22: The implication of this approach in
- Page 23 and 24: Interestingly, the majority then we
- Page 25 and 26: 4 Stamp duty and securitisation244.
- Page 27: 264.8 Relief for mortgage-backed se
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- Page 33 and 34: 32share of the profits of the compa
- Page 35 and 36: (d) before the issue:(i) the compan
- Page 37 and 38: 365.4 Debt/equity rulesDivision 974
- Page 39 and 40: Entities that make GST-free supplie
- Page 41 and 42: • “ enterprise” is defined in
- Page 43 and 44: 6 The Consumer Credit Code andsecur
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- Page 47 and 48: inclusion within the ELE depends on
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- Page 53 and 54: 9 Insolvency and securitisation529.
- Page 55 and 56: 54• if the trustee has not limite
- Page 57 and 58: Section 588FG provides a measure of
- Page 59 and 60: 10 Issues relating to debt securiti
- Page 61 and 62: 60indemnity existed) and had no han
- Page 63 and 64: The effect of the decision has been
- Page 65 and 66: the ASX has discretion to ask the e
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- Page 69 and 70: When Austraclear receives notificat
- Page 71 and 72: have been completed in relation to
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4.10 ConclusionStamp duty is a very complicated and legalistic area. This sectionhighlights some <strong>of</strong> <strong>the</strong> pr<strong>in</strong>ciples that are relevant <strong>to</strong> <strong>the</strong>securitisation <strong>in</strong>dustry. Because <strong>of</strong> its importance, stamp duty hasand will cont<strong>in</strong>ue, for <strong>the</strong> foreseeable future, <strong>to</strong> play a criticallyimportant role <strong>in</strong> <strong>the</strong> structur<strong>in</strong>g <strong>of</strong> securitisation programs <strong>in</strong><strong>Australia</strong>.The next section <strong>of</strong> this publication exam<strong>in</strong>es some <strong>of</strong> <strong>the</strong>taxation issues relevant <strong>to</strong> securitisations <strong>in</strong> <strong>Australia</strong>.28
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