There have been a number of changes to the laws in regarding
what stamp duty and taxes are payable on land sales and business
sales. These changes will make some transactions cheaper, but will
make others more expensive. The changes are at both the State and
Stamp duty has gone down....
Stamp duty changes will make the process cheaper for some
transactions. Stamp duty on the following transactions have been
sale and purchase of businesses
transfer of shares
These changes are effective for any transfer that takes place
after 1 July 2016. Any transfer that is dated prior to 1 July 2016
will still attract stamp duty at the old rates. If purchase of land
takes place, together with a purchase of a business operated from
that land, then stamp duty is still payable on the purchase of land
portion of the transaction. An apportionment is required in the
price to work out what portion of the sale price is subject to
stamp duty. Stamp duty may still apply to other business sale
related documents such as transfers of leases.
Stamp duty has gone up...
There have also been stamp duty changes in NSW which increase
the amount payable on purchases of residential real estate. If the
purchaser is a foreign person, a 4% stamp duty surcharge will apply
to the transaction. This applies even if only one of the purchasers
is a foreign person. The surcharge will be payable on the
proportion of the property that the foreign person will hold after
the transfer. For example if a husband and wife are purchasing a
unit together as tenants in common in equal shares, and one of them
is a foreign person for the purposes of stamp duty, they will pay
the surcharge on 50% of the value. A foreign person will include
someone on a bridging visa notwithstanding that they are married to
an Australian citizen. The surcharge can result in substantial
additional duty being paid on a purchase. These changes are
effective for any transfer that takes place after 21 June 2016.
Stamp Duty Generally....
Documents to be stamped or marked exempt from stamp duty may
generally be stamped by agents on behalf of the Office of State
Revenue. This is a process that we have been involved in as agent
for the Office of State Revenue for over five years. The Office of
State Revenue also now requires a Statutory Declaration to be
completed as part of the stamping of any land purchase. This must
be completed by each of the Purchasers.
Withholding Taxes – Where the price is greater than
Another change to the process involves the sales of land, shares
or businesses where the price is $2,000,000.00 or more. If a sale
of $2,000,000 or more is to take place, then the vendors must each
obtain a clearance from the ATO stating that they are not a foreign
resident. If they obtain the clearance from the ATO and provide a
copy to the purchaser then the transaction proceeds as normal. If
they do not obtain the clearance then the Purchaser at completion
must pay 10% of the price to the ATO. This obligation to pay 10% of
the price is pursuant to the ATO requirements.
It is important to consider this when entering into contracts.
For example, the right to reduce the price by 10% is in the 2016
form of standard contract. If a previous form of contract is used
then the right to reduce the price is not included. The obligation
on the purchaser to the ATO still exists. This can then create
problems for both vendor and purchaser if the Vendor does not
obtain the ATO clearance. Buying or selling land, a business or
shares is a complicated process, and you should ensure that you are
getting the right advice. If you have a question about buying or
selling real estate, shares or a business asset, contact our
commercial property and business lawyers....
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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Exemptions or concessions on stamp duty could apply when contemplating the purchase or transfer of NSW real estate.
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