Nominations under options to change the transferee of land will now attract transfer duty.
The State Revenue Legislation Further Amendment Bill 2014 was finally passed by both Houses of the New South Wales Parliament earlier this month and has now received Royal Assent.
Importantly, these amendments mean that nominations under options can no longer be used by practitioners as a tool to change the transferee of land in a transaction without attracting duty in New South Wales.
The relevant amendments to the Duties Act 1997 (NSW) effected by the now State Revenue Legislation Further Amendment Act 2014 (NSW) are:
On and from 23 October 2014, the following will be deemed to be a transfer of an option to purchase land in New South Wales and will attract transfer duty accordingly:
- nominations under options to purchase land in New South Wales, if the nomination has been made for valuable consideration;
- nominating another person as the purchaser or transferee of land the subject of an option, prior to the exercise of the option, if valuable consideration has been provided by or on behalf of the nominee for the nomination; and
- an option holder agreeing, for valuable consideration, to a novation of the option, or otherwise relinquishing rights under the option, so that another person is able to obtain a right to exercise the option or is able to purchase the land.
Similarly, a novation of an agreement for lease of land in New South Wales will also be taken to be a transfer of dutiable property, being a transfer of the lessee's interest in the leased property and will attract transfer duty in New South Wales.