As predicted in our 1 May article ' Is mortgage duty here to stay in NSW?', yesterday's release of the NSW State Budget has confirmed that mortgage duty in NSW will remain for the foreseeable future.
Readers have probably lost count of how many times the abolition date for mortgage duty has been deferred, and it seems that the NSW Government has realised that any new fixed date for abolition now, will lack credibility. This time around, the NSW Government has avoided a fixed date and now proposes to amend section 203A of the Duties Act 1997 (NSW) so that the Governor is able to proclaim an abolition date in the future. Some might consider this a deft move by the NSW Government since it is not possible to fail to meet a target that does not exist.
While the NSW Treasury has stated that the abolition of mortgage duty will be "reassessed when the low value GST import threshold is lowered", if past conduct gives us a glimpse of the future, it would seem that mortgage duty is here to stay, at least for the time being, especially given that the NSW Treasury needs to find $1.7 billion in the coffers to fund the Gonski education reforms.
Duty on the transfers of non-land business assets and securities in unlisted entities is also to remain a "nuisance" until further notice.
Secured lenders will need to continue to carefully assess the mortgage duty implications for new advances and new securities as well as further advances in the context of existing facilities. Parties will still need to approach amendments to no-advance type duty structures with caution and parties that are deferring transactions until the NSW mortgage duty is abolished may need to reconsider their strategy.
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