On 6 June 2006, the Duties Amendment (Abolition of State
Taxes) Bill 2006 (Bill) was introduced into the New South Wales
(NSW) Parliament. This Bill provides for the repeal or
reduction of a number of state taxes and also makes significant
changes to the mortgage duty provisions.
Summary of changes to stamp duty rates
The grant of a lease with a premium will be a dutiable
transaction, subject to duty at 5.5 per cent.
Duty on the hire of goods will be abolished from 1 July
Duty on the rent component of leases will be abolished
from 1 July 2008.
Duty on NSW shares and units will be abolished from 1
January 2009 (although land rich duty will remain).
Mortgage duty will be halved from 1 January 2010 (from $4
per $1000 to $2 per $1000) and abolished on 1 January
Duty on the transfer of non-land business assets
including statutory licences will be abolished from 1 January
Details of changes to mortgage duty — for advances
made from 1 July 2006
After acquired property
Currently, a mortgage which does not secure property in NSW
when it is executed is chargeable with mortgage duty only if it
secures land within 12 months after it is signed.
Proposed change: In addition, a mortgage
which does not secure property in NSW when it is first
executed, but later attaches to any NSW property (other than
listed shares or units) will attract mortgage duty. However,
this only applies if the mortgage is part of an arrangement to
secure specific property. This will be same as in Queensland
and Western Australia.
Currently, the Duties Act does not distinguish between an
'all moneys mortgage' and a limited security. All
mortgages are subject to duty on the amount of advances secured
by the mortgage and recoverable under the mortgage. This means
that limited securities are only subject to duty on the lower
of the advances made, or the limit.
Proposed change: If the mortgage specifies
a limit on the secured money, duty will be payable on that
limit. Any increase in the limit will attract further duty.
A limit on the amount recoverable under a mortgage (as
opposed to the amount secured) does not have any stamp duty
Multi-state mortgages and mortgage
Currently, the Duties Act apportions the duty payable on
multi-state mortgages and mortgage packages. That apportionment
is based only on Australian assets.
The apportionment will include overseas assets as well as
Australian assets—except as outlined below.
Mortgage packages will initially include only mortgages
executed within a 28-day period. Later securities will be
treated as part of the package if a further advance is
A mortgage package may state a limit on the amount
secured over NSW property. Duty will be payable on the lesser
of that limit, or the NSW apportionment of the total advances
A mortgage package may state a single limit on the amount
secured over all Australian property. Duty will be payable on
a proportion of the Australian limit.
The proportion is: (NSW property) / (Australian property),
and excluding overseas property.
Currently, collateral mortgages are only subject to a
nominal duty of $10. A collateral mortgage must secure the same
money as a mortgage that has been stamped in NSW or another
The rate of mortgage duty in some states is being reduced
from 1 July 2006 (commencing with a halving of the rate in
Western Australia and Tasmania). If a security has been
stamped in one of those states, it will not be possible to
stamp a collateral security in NSW with only $10 duty.
Instead, the collateral mortgage and the existing stamped
instruments will be treated as a mortgage package.
However, the total amount of duty payable in NSW and
elsewhere is capped to the amount of duty that would have
been paid in NSW if there were no existing stamped
The content of this article is intended to provide a
general guide to the subject matter. Specialist advice should
be sought about your specific circumstances.
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The income tax treatment of any property lease incentive will vary, depending on the nature of the inducement provided.
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