JIS News

Story Highlights

  • Legislation to amend the Transfer Tax Act was passed in the Senate on Thursday, December 18.
  • The Bill, piloted by Minister of Justice, Senator the Hon. Mark Golding, seeks to provide for the exemption of certain securities of Collective Investment Schemes (CIS) as defined in the Securities (Amendment) Act 2013.
  • A CIS may be defined as any system in which members of the public are invited or permitted to invest money, or any other property into a portfolio of assets managed as a whole, by or on behalf of the operator of the scheme, on agreed terms.

Legislation to amend the Transfer Tax Act was passed in the Senate on Thursday, December 18.

The Bill, piloted by Minister of Justice, Senator the Hon. Mark Golding, seeks to provide for the exemption of certain securities of Collective Investment Schemes (CIS) as defined in the Securities (Amendment) Act 2013.

A CIS may be defined as any system in which members of the public are invited or permitted to invest money, or any other property into a portfolio of assets managed as a whole, by or on behalf of the operator of the scheme, on agreed terms.

“The exemptions from transfer tax and stamp duties for CIS were first introduced by way of provisional orders in June 2014. We are now seeking to make permanent, in law, the transfer tax exemption. The corresponding exemption from stamp duties has already been done as this was by way of an order amending the schedule to the Stamp Duty Act, which was affirmed in the Lower House on December 2, 2014,” Senator Golding said.

The Justice Minister explained that the Government has given a commitment, as part of the Memorandum of Economic and Fiscal Policies to the International Monetary Fund (IMF), to formally introduce Collective Investment Schemes, while simultaneously phasing out retail repurchase and reverse purchase agreements (repos) over a four-year period.

He added that this particular structural benchmark was met when the Securities (Amendment) Act was passed in December 2013, thereby creating a modernised framework for the regulation of CIS.

Senator Golding noted that this commitment was made against the backdrop of the financial sector reform, pursuant to the common view shared by the IMF and the Financial Services Commission (FSC) that certain aspects of the retail repo model are undesirable and, as such, should be phased out in the near term.

“The legislation, which is proposed today, is intended to remove the transfer tax aspect of the transactional taxes that would attach to the trading of CIS units or shares, similarly to what obtained for unit trusts which is, itself, a subset of CIS,” Senator Golding pointed out.

“The Transfer Tax Act and the Stamp Duty Act were temporarily amended by Ministerial Order pursuant to the Provisional Collection of Tax Act. This was done in order to meet a structural benchmark at the end of June 2014. This Bill proposes the permanence of the transfer tax treatment of the CIS while the Stamp Duty (Amendment of Schedule) Order, already affirmed in the House, does likewise for the stamp duty treatment of CIS,” he added.

Opposition Senator Nigel Clarke voiced his support for the legislation.

The Bill was passed in the House of Representatives on December 2, 2014.