The State Revenue Legislation Further Amendment Act 2014 (NSW) (Act) made important changes to stamp duty, payroll tax and land tax in New South Wales (NSW). These changes have a clear impact on NSW business owners, property developers, land owners and developers of SMSFs.

With an expanding tax base, risk identification and mitigation becomes crucial. This is especially the case with the recent NSW director penalty regime amendments, which solidify the personal liability of directors for corporate tax liabilities.


The Act amended the Duties Act 1997 (NSW) in a number of ways, including to prevent certain avoidance practices by imposing duty on

  • certain transactions involving options to purchase land; and
  • the novation of an agreement for the lease of land.


An option to purchase land affords the right (not obligation) to acquire or sell something for a fixed price at some future date. Certain transactions involving options to purchase land within NSW used to be capable of avoiding transfer duty. This includes, for example, use of a nomination or novating the option to a third party.

To prevent taxpayers avoiding duties in this way, the Act now guarantees that on or after 23 October 2014 a dutiable transfer of an option to purchase land in NSW will be taken to have occurred if, for valuable consideration, an option holder:

  • nominates another person to exercise an option;
  • nominates another person as purchaser or transferee of the land; or
  • agrees to a novation of an option, or otherwise relinquishes his / her rights under an option, so that another person obtains a right to purchase the property.

Duty is, as always, payable upon exercise of the option (i.e. upon transfer of land). However, the Act now stipulates that where an option holder is first nominated or agrees to novation, and then exercises the associated option, duty will be payable:

  • at nomination or novation, on the greater of:
    • the consideration provided for the nomination or novation; or
    • the value of the option; and
  • upon the exercise of an option, on the transfer of the land (with a credit available for the duty already paid on the nomination or novation).

Where an option holder is nominated or agrees to novation but subsequently does not exercise the option, duty will be payable at nomination or novation, but no credit or refund will be available.


For similar reasoning, a novation or nomination of an agreement for the lease of land in NSW arising on or after 23 October 2014 will have a duty imposed on it. The lessee’s interest in the agreement is taken to be “dutiable property” and the nomination or novation of the agreement is taken to be “transfer of that dutiable property”.

Again, this amendment effectively ensures taxpayers can no longer provide themselves a mechanism of avoiding paying duties on assignment of lease transactions.


Under the “relevant contract” provisions within the Payroll Tax Act 2007 (NSW), a contractual arrangement for the provision of services which is not exempt will be subject to payroll tax (as if the provider of the services is an employee and the remuneration for services is “employee wages”). The Act has clarified certain exemptions from payroll tax associated with “relevant contracts”.

The Act affords the Chief Commissioner of State Revenue a discretion that extends over a broader scope of arrangements that could attract an exemption. This discretion allows him/her to determine an exemption does not apply if he/she concludes that the contractual arrangement itself was entered into with an intention to directly or indirectly avoid or evade payment of payroll tax.

An exemption for a contract under which particular services are supplied will now not be afforded if “additional services or work” are supplied or performed under that same contract. This limits the exemption so as to not afford any additional exemption to “additional services or work” that would not normally be exempt. This issue was addressed in the case of Smith’s Snackfood Company Ltd v Chief Commissioner of State Revenue (NSW)



Previously, the Land Tax Management Act 1956 (NSW) allowed “related companies” to be grouped for land tax purposes. The Act now prevents each individual related company within a group of companies from taking advantage of these tax-free thresholds. This was accomplished by requiring the land tax-free threshold be applied only once to the land holdings of the related companies as a whole.


The Act now stipulates that two companies are not grouped for land tax purposes merely because the same person (or company) acting in a trustee or nominee capacity has a controlling interest in those two companies. The two persons (or companies) will be ‘grouped’ for land tax purposes only where the trusts concerned are both fixed trusts with the same beneficiaries.