In 2005 the Duties Act 1998 was amended to provide that in the case of a Put & Call Option arrangement, if the holder of a Call Option over dutiable property assigns the Call Option to a third party, stamp duty is payable by the Grantee/Assignor on the ad valorem value of the property as if the assignment were a sale of the property. This applied to all assignments entered into after 27 June 2005.

The State Revenue Legislation Amendment Act 2010 amends section 102 (1) and (2) of the Duties Act so that a novation and nomination/direction will now also be treated as an assignment. For example:

(a) If A enters into an agreement or arrangement under which A for valuable consideration, relinquishes the right under a call option to require B to sell dutiable property and a call option to require B to sell the dutiable property is granted to a third person (C), A is to be treated as having assigned that right under the call option so that the call option is exercisable by C; and

(b) If, on or in connection with the exercise of a call option, A, for valuable consideration, enters into an agreement or arrangement under which A nominates a third person (C) as the purchaser or transferee of dutiable property the subject of a call option, A is to be treated as having assigned the right under the call option to require B to sell the dutiable property so that the option is exercisable by C.

These amendments do not apply in respect of an agreement or arrangement entered into before 1 July 2010 however, anybody seeking to rely on nomination or direction clauses in an existing Call Option that is a part of a Put and Call arrangement should review those arrangements to ensure that any future nominations will be protected after the amendments.

For any further information please contact Jennifer Graves.