Opinion Number. 746

Subject

COMMONWEALTH IMMUNITY FROM STATE LAWS: INCONSISTENCY WHETHER CONTRACT NOTES FOR SALE OF TREASURY BONDS ARE LIABLE TO STATE STAMP DUTY

Key Legislation

COMMONWEALTH INSCRIBED STOCK ACT 1911, s. 52A

Date
Client
The Secretary to the Treasury

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

Advice has been received that the New South Wales Commissioner of Stamps is insisting upon stamp duty being paid on contract notes (specimen attached) used by stockbrokers in connection with sales of War Loan Stock.

2. I am directed to ask that the Attorney-General will be good enough to give his opinion as to whether such stamp duty is legally payable.

Section 52A of the Commonwealth Inscribed Stock Act 1911-1915 provides (inter alia) that transfers of Treasury Bonds shall not be liable to stamp duty or other tax under any law of the Commonwealth or a State.

Treasury Bonds being transferable by delivery, the only documentary evidence of the transfer is the contract note.

The contract note being an essential part of the transfer transaction when the bonds are bought in the open market, a tax on the contract note amounts to a tax on the transfer of the bonds.

Stamp duty on a contract note in connection with the purchase of Treasury Bonds being in essence stamp duty on the transfer of Treasury Bonds within the meaning of section 52A of the Commonwealth Inscribed Stock Act 1911-1915, in my opinion, a State has no power to impose a stamp duty on these contract notes.

[Vol. 14, p. 452]