30 JUNE 2016
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NSW duties abolitions
The NSW Treasurer has confirmed the abolition of a number of duties from 1 July 2016 in her budget
mortgage duty will be abolished from 1 July 2016;
stamp duty on transfers of intangible business assets will be abolished from 1 July 2016; and
share transfer duty will be abolished from the same date on transfers of shares in companies
registered in NSW or unit trusts whose register is kept in NSW.
Mortgage duty levied before 1 July 2016 at the effective rate of 0.4% on mortgages will be abolished.
That abolition will apply to mortgages executed on or after that date as well as advances made on or
after that date. Where a mortgage was executed before 1 July 2016 and advances secured on the
mortgage are made on or after that date, no further duty will apply on the advances made after the
Fixed duties have not been abolished, such as those applying to security trust deeds of the usual kind
that do not identify any dutiable property and attach only to an initial settlement sum on the date of
Duty on business sale agreements and transfers dealing with intangible business assets will be
abolished with effect from 1 July 2016. Specifically, no duty will apply in respect of transfers of
goodwill, intellectual property and most statutory licences. This will apply to business sale agreements
executed on or after 1 July 2016. The relevant duties will however apply to business sale agreements
entered into before this date even if completed after 1 July 2016.
However, business sale agreements will continue to remain dutiable with respect to land interests in
NSW sold under the agreement. This will include estates in fee simple, leases, mining tenements and
fixtures upon land.
Where a land interest is sold under a business sale agreement, most types of goods (such as plant and
equipment) sold with the land interest will also remain dutiable (except categories of goods that are
already exempt such as stock in trade). For example, a sale agreement for a business comprising a
commercial lease, plant, goodwill, intellectual property and receivables will still need to be lodged for
stamping, even if duty is paid only on the land and plant but not intangibles. This means that there will
be a need to apportion the price between categories of assets that are dutiable property and other
assets in accordance with market value, so that duty can be returned on the amounts apportioned to
dutiable property. In other jurisdictions, disputes have arisen with the Revenue where the Revenue has
taken the view that too much of the consideration has been attached to non-dutiable assets such as
goodwill. Accordingly, apportionment needs to be made carefully.
Other jurisdictions, namely Queensland, Western Australia and the Northern Territory continue to levy
duty on transfers of intangible business assets such as goodwill and intellectual property. Business sale
agreements that deal with such assets only may no longer be required to be stamped in NSW but may
be required to stamped outside NSW. For example, an agreement for the sale of a business carried on
from premises in NSW that makes sales to customers in Queensland, will still need to be lodged for
stamping in Queensland in respect of Queensland goodwill.
Marketable security duty
Marketable security duty levied before 1 July 2016 on the greater of consideration and unencumbered
market value of relevant marketable securities will be abolished. This will apply to agreements for the
sale and transfer of shares in NSW registered companies and transfers of units in unit trust schemes
whose registers are kept in NSW.
However, where the target entity is a “landholder”, landholder duty will continue to apply. Landholdings
on which duty applies include fee simple estates, easements, leases and fixtures that have a value
above certain de minimis thresholds. For example, if shares in a company carrying on a business are
transferred, and that company holds a commercial lease and fixed plant with a value of $2,000,000 or
more in NSW, landholder duty will apply.
The abolition of the relevant duties in NSW completes certain obligations of the State to reform its tax
system under intergovernmental agreements between NSW and the Commonwealth and other States.
NSW was the last State to abolish mortgage duty and marketable securities duty so that this tax no
longer applies in any State or Territory of Australia.
For more information
Senior Tax Consultant
Lev el 8, 175 Eagle Street
Brisbane QLD 4000 Australia
Tel: +61 7 3069 6200
Lev el 19, 181 William Street
Melbourne VIC 3000 Australia
Tel: +61 3 9617 4200
Lev el 27, AMP Centre, 50 Bridge Street
Sy dney NSW 2000 Australia
Tel: +61 2 9225 0200
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