On 14 October 2014 the NSW Government passed the State Revenue Legislation Further Amendment Bill 2014 (NSW). The Bill now awaits the formality of assent by the Governor to become law. This can be expected to occur within days.
The Bill will amend the stamp duty laws in relation to options to purchase land by treating the following transactions as dutiable assignments:
- where another person is nominated to exercise the option; or
- where another person is nominated as purchaser or transferee of the land; or
- where the option is novated, or otherwise relinquished, so that another person obtains a right to purchase the land.
The Bill also provides legislative support for the OSR’s existing practice of assessing duty on contracts completed by nominees by treating the nomination fee paid to the option holder as part of the purchase price for the land. But the good news is that if duty is paid on a nomination under an option, the nominee should be entitled to a credit against the liability for duty on the resulting contract or transfer.
These amendments will commence on the date of assent. But there may be transitional relief for existing option agreements.
The changes highlight the importance of thinking about stamp duty before taking an option to purchase land, and also whether other avenues may be available for existing option agreements.