Opinion Number. 1448

Subject

State stamp duty whether transfers of Commonwealth Inscribed Stock subject to state stamp duty: inconsistency with Commonwealth Inscribed Stock Act

Key Legislation

Commonwealth Inscribed Stock Act 1927 s 4: Commonwealth Inscribed Stock Act 1911 s 52A

Date
Client
The Secretary to the Treasury

The Secretary to the Treasury has forwarded to me the following memorandum for advice:

  • The following is copy of a letter addressed by the Manager, Perpetual Trustee Company (Limited) Sydney, to the Registrar of Inscribed Stock, Commonwealth Bank, Sydney:
  • We have been under the impression that all transfers of Commonwealth Inscribed Stock, whether by way of sale or otherwise, are, under section 4 of the Commonwealth Inscribed Stock Act No. 2 of 1927, free from Stamp Duty. We now find that the Stamp Commissioner is requiring all transfers which are not by way of sale to be stamped. We should feel greatly obliged if you would be good enough to let us know whether in your opinion he is correct in his contention.

  1. Section 52A of the Commonwealth Inscribed Stock Act 1911–27 reads as follows:
  2. Stock certificates, stock certificates to bearer, scrip certificates to bearer, Treasury Bonds and coupons, transfers of stock or Treasury Bonds and documents relating to the purchase or sale of stock or Treasury Bonds shall not be liable to stamp duty or other tax under any law of the Commonwealth or a State unless they are declared to be so liable by the prospectus relating to the loan in respect of which they are issued or used.

  3. It is stated that the document on which the New South Wales Stamp Commissioner has recently levied stamp duty is Form No. 18 (Request for Transmission) prescribed under the Commonwealth Government Inscribed Stock Regulations.
  4. I shall be glad if you will favour this Department with early advice as to whether these documents are exempt from stamp duty under the section of the Act quoted above.

In my opinion, transfers of Commonwealth Inscribed Stock are not liable to be stamped as required by the New South Wales Stamp Commissioner.

On 9 November 1916,(1) I advised that a State had no power to impose stamp duty on contract notes for the sale of Treasury Bonds.

It is not stated under what authority stamp duty is being claimed by the State, but any such authority would be inconsistent with section 52A of the Commonwealth Inscribed Stock Act 1911–1927, and therefore inoperative with respect to the imposition of stamp duty on the document referred to.

I would point out that, although the transfers in this case are not effected by way of sale, the imposition of stamp duty would in substance be a tax on the transfer of the Stock, and therefore invalid.

[Vol. 24, p. 173]

(1) Opinion [Vol. 14, p. 452] not published.