Stamp and Cheque Duties Amendment Act, Supplement 1, 1983

This commentary item was published in Public Information Bulletin Volume 126, Supplement 1, September 1984.

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Section 1 - Short Title, Commencement and Application

Subsection 1 provides that this Amendment Act is to be read with, and is part of, the Stamp and Cheque Duties Act 1971.

Subsection 2 provides that, with the exception of sections 5 and 6, the Amendment Act came into force on the day the Act received the Governor General's assent, that is the 23rd day of November 1983.

Section 5 is deemed to have come into force on 18 July 1983, while section 6 is deemed to have come into force on 1 April 1983.

Sections 2, 3 and 4

Background

Sections 2, 3 and 4 make amendments to sections 24, 24A and 35 of the principal Act respectively.

The amendments are, in the main, a consequence of the judgment of Thorp, J. in Dempster and Attwell v Commissioner of Inland Revenue. The judgment held that the reduction in duty given by section 24A of the principal Act in respect of the conveyance of certain dwellinghouses used as residences should be given irrespective of the fact that the dwellinghouse conveyed would be used as a holiday home.

As this was not the intention of section 24A when it was enacted in 1981, the deficiency has been corrected in this Act by providing that the dwellinghouse concerned must be for use not only as a residence but also as a principal place of abode. As the same possible loophole existed in sections 24 and 35 of the principal Act each of those sections has also been amended in a similar manner. (Sections 24 and 35 relate to a reduction of conveyance duty on, respectively, the first conveyance of land with a new dwellinghouse and on the first lease of a new dwellinghouse.)

As stated above, sections 2, 3 and 4 apply from the date the Bill received the Governor General's assent, that is 23 November 1983.

Section 2 - Conveyance Duty Reduced on First Conveyance of Land with New Dwellinghouse

This section amends section 24 of the principal Act. It repeals the definition of the term "dwellinghouse" in subsection (3) and substitutes a new definition. The important words in the new definition are "a building erected or to be erected solely as a residence for the exclusive occupation, as the principal place of abode".

The insertion of these words will ensure that the relief from conveyance duty provided by section 24 cannot be extended to holiday homes.

Section 3 - Conveyance Duty Reduced on Instrument of Conveyance of Dwellinghouse

This section amends section 24A of the principal Act. Subsection (1) amends section 24A(2)(a) by adding, after the words in the subsection "be occupied primarily or principally as a residence", the words "and principal place of abode".

This removes the former deficiency revealed by Dempster and Attwell v. C.I.R inasmuch as a holiday home will now be excluded because it will be unable to satisfy the "principal place of abode" test.

Subsection (2) amends section 24A(3) to specify in clearer manner the provision relating to the area of land which, when it exceeds 4,500m2, will qualify as being necesssary for the reasonable occupation of the land. The circumstances to which the Commissioner may have regard when determining the area that is "reasonable" have been expanded to include the natureof the land concerned; previously regard could be had to only the size and character of the dwellinghouse erected or to be erected on the land.

Section 4 - Lease Duty Reduced on First Lease of New Dwellinghouse

This section amends section 35 of the principal Act. The amendment repeals and substiutes the definition of the term "dwellinghouse" in subsection (3), by adding the requirement that the dwellinghouse concerned be erected as a principal place of abode. It thus ensures that section 35 does not apply to holiday homes.

Section 5 - Composition by the NZ Stock Exchange in Respect of Stamp Duty on Shares

Section 5 amends 51A of the principal Act which authorises members of stock exchanges to pay the stamp duty on sharemarket transactions directly to the Department each month.

The existing provisions of section 51A refer to the former Stock Exchange Association of New Zealand and its affiliates, namely, the Auckland, Wellington, Christchurch/Invercargill and Dunedin stock exchanges.

The Sharebrokers Amendment Act 1981 was brought into force by the Sharebrokers Amendment Act Commencement Order 1983 on 18 July 1983. The effect of that 1981 Act is to establish the New Zealand Stock Exchange and regional stock exchanges which are the successors to the Stock Exchange Association of New Zealand and its affiliates. It was therefore necessary to amend section 51A to reflect the change of name to the New Zealand Stock Exchange.

The change of name is reflected in the amendments to subsections (1), (3) and (5) of section 51A which are provided by subsections (1), (2) and (3) of this section.

Subsection (4) deems this section to have come into force on 18 July 1983, which is the date of commencement of the provisions of the Sharebrokers Amendment Act 1981. It also ensures that the agreement between the Commissioner and the Stock Exchange Association of New Zealand will remain in force, and provides that that agreement is deemed (from 18 July 1983) to have been made with the New Zealand Stock Exchange.

Section 6 - No Cheque Duty Payable on Certain Bills

This section amends section 79(1)(g) of the principal Act.

The amendment merely continues the exemption from Cheque Duty which Credit Unions had enjoyed in the past. This was made necessary as a result of the enactment of the Friendly Societies and Credt Unions Act 1982 which introduced a separatedefintion of "Credit Union" which had not existed in the previous legislation governing those organisations.

This section has effect from 1 April 1983, which is the commencement date of the Friendly Societies and Credit Unions Act 1982.