Airport lands Canberra a surprise $400m tax bill
Mark Davis Political Correspondent at the Sydney Morning Herald reported today that more than four years after selling Sydney Airport to a Macquarie Bank-led consortium for $5.6 billion, the Federal Government is facing a surprise $401.5 million tax bill from the transaction.
The NSW Office of State Revenue has assessed stamp duty of $258.9 million on the sale, on the grounds that Sydney Airport is a “land rich” corporation, and has imposed a further $142.5 million interest charge. Stamp duty is normally paid by the buyer of a company.
But when the Federal Government privatised Sydney Airport Corporation in 2002, it indemnified the Macquarie consortium against the risk that stamp duty would be levied at “land rich” rates rather than the significantly lower rates applying to sales of shares in a company.
This means Canberra will have to foot the bill if the assessment stands.
The $401.5 million impost would represent nearly 10 per cent of the Federal Government’s $4.2 billion in net proceeds from the sale after repayment of Sydney Airport debt.
Last week’s budget papers reveal that the Government is disputing the assessment which was issued late last year, more than four years after the sale.
The Government has lodged an objection and asked NSW’s commissioner of revenue to determine that the assessment is not just or reasonable.
Canberra indemnified the Macquarie consortium because it believed there was only a remote risk that stamp duty would be levied at the land rich rate.
The higher rate applies to purchases of companies with land holdings worth more than 80% of their total assets.
Department of Finance and Administration officials have been taken aback by the NSW assessment.
It is understood the Office of State Revenue provided written advice to the Federal Government’s lawyers in 2001 that land rich duty would not apply to the Sydney Airport sale.
And a Sydney Airport land valuation in 2002, just before the privatisation, showed its land holdings were below the threshold for land rich duty.
A subsequent valuation by the NSW Valuer-General in 2003 is understood to have reached a similar conclusion.
The Office of State Revenue sought further information from the Federal Government last month, following the lodgement of the objection.
A report by the Mole from The Sydney Morning Herald
John Alwyn-Jones
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