NSW Stamp Duty Changes

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The NSW Government recently passed the State Revenue and Fines Legislation Amendment (Miscellaneous) Act 2022. This Act made a raft of changes to various pieces of legislation that affect stamp duty and dealings with land.

These amendments have made changes that affect farmers and primary producers, Australian Defence Force personnel and first home buyers. Revenue NSW have released a Guide to the amendments.

Intergenerational transfers of farm / primary production land

Section 274 of the Duties Act 1997 enables land used for primary production to be transferred between family members with no duty payable. This has been a critical feature of succession planning for farming families for many years. However, before the recent changes were made, the exemption only applied where the property was being transferred to an individual.
The changes have extended the operation of the exemption so that it can apply where the transferee is:

• An executor of a deceased estate
• The trustee of a self-managed superannuation fund;
• The trustee of a fixed or bare trust;
• The trustee of a discretionary or unit trust; and
• A proprietary limited company.

Depending on the type of transferee, the “person directing the transferee” must meet certain requirements. For executors and trustees of self-managed superannuation funds, fixed and bare trusts, they must be a family member of the transferor (or “person directing the transferor”). In addition, for proprietary limited companies or trustees of a discretionary trust or private unit trust scheme, they have a minimum 25% interest in the transferee which has continues for at least three years after the transfer.

The requirements can be complex to assess particularly with trusts. Care should be taken to ensure they’re met before attempting a transfer.

Defence Personnel

Normally stamp duty on a purchase of residential property is due the earlier of completion of the purchase contract or 3 months after the date of the contract. For off the plan purchases, the duty can be deferred to the earlier of completion of the purchase contract or 12 months after the date of the contract.

To be eligible for the 12 month timeframe for paying duty, the property must be used by the purchaser (or at least one of them where there is more than one purchaser) as their principal place of residence for a continuous period of at least 6 months, with occupation commencing no later than 12 months (or such longer period as the Chief Commissioner may approve) after completion of the agreement for the sale or transfer. This requirement is referred to as the residence requirement.

The Duties Act 1974 has been amended to provide that if the purchaser (or if there are 2 or more of them, at least 1 of the purchasers) are:

• a permanent member of the Australian Defence Force, and
• enrolled to vote in NSW,

the residence requirement does not apply.

This change provides greater certainty to Defence Force personnel that they can access the deferred stamp duty regime, even if they are unable to live in the property and satisfy the residence requirement.

Stamp duty on the grant of an option

The Duties Act 1997 has been amended to provide that duty will now be payable on the option fee paid for the grant of an option. The duty paid on the call option fee is not credited towards the duty payable when the option is exercised. If the option is not exercised, a refund of duty will not be issued for duty paid on the grant of an option.

Put option fees will not be liable to duty and will not form part of the consideration.

New evidence requirements need to be met for assessment of call options for duty, including:

• the original call option document
• a declaration for the grant of the option (form ODA 081)
• identification

Change in beneficial ownership of dutiable property

A key change made by the amending Act is that duty will now be payable on certain transactions where the effect of the transaction is a change in the beneficial ownership of dutiable property.

This includes:

• the creation of dutiable property
• extinguishment of dutiable property
• a change in equitable interests in dutiable property
• dutiable property becoming the subject of a trust
• dutiable property ceasing to be the subject of a trust

This new provision is very broad in its potential effect. This may have significant consequences for land dealings using trust ownership structures and options. This change may cause legal advice about some approaches to land ownership to change.

For more information or advice about these changes, contact us