8 April, 2016
In the previous instalment, we looked at the importance of considering any competing security interests in the receivables. In this final instalment, we examine the importance of considering the impact of stamp duty on any receivables financing transaction.
Stamp duty: the end of Clayton’s contracts?
Until recently, the only Australian state or territory in which stamp duty was likely to arise in connection with the transfer of unsecured receivables under a receivables nancing arrangement was South Australia1. In that jurisdiction, a written agreement, or written evidence of an agreement, to convey certain South Australian trade receivables could attract duty.
Often, therefore, receivables financing arrangements are carefully structured so that the financier’s acceptance of the seller’s offer is evidenced by the financier’s conduct (typically, by the payment of the purchase price into a designated account), rather than by written acceptance (thereby giving effect to a written “instrument” for South Australian stamp duty purposes). Although not bullet-proof, these structures – known as Clayton’s contracts – have been implemented over time as a safeguard against the arrangement attracting stamp duty in South Australia.2
However, legislation has recently been passed by the South Australian state government which marks a change in the landscape for receivables financiers. As a result, the previously broad stamp duty base has been significantly narrowed, one impact of which is that the transfer of receivables will no longer be dutiable in South Australia effective on and from 18 June 2015.3
This means that, for new receivables nancing transactions entered after 18 June 2015, the Clayton’s contract model should no longer be necessary for the transfer of trade receivables in South Australia. The impact on arrangements entered into prior to 18 June 2015 remains unclear and, as such, financers should consult with their tax advisers before departing from existing structures. We can assist with this.
1 In Queensland, an exemption applies if the arrangement comprises a debt factoring agreement (see s 149 Duties Act 2001 (QLD)). In the remaining Australian states and territories, unsecured trade receivables are not dutiable property.
2 RevenueSA has in the past accepted that these arrangements do not attract general anti-avoidance provisions.
3 The changes are included in the Statutes Amendment and Repeal (Budget 2015) Act 2015 which was passed on 26 November 2015.
For further information, please contact:
Graeme Tucker, Partner, Ashurst
graeme.tucker@ashurst.com
