Duties Act 1997 (NSW)

Duties Act 1997 No 123 An Act to create and charge a number of duties. Chapter 1 Preliminary 1 Name of Act This Act is the Duties Act 1997. 2 Commencement This Act commences on 1 July 1998. 3 What does this Act do? This Act creates and charges a number of duties. Note. Each duty is dealt with in a separate Chapter of this Act. The Contents pages list the Chapters and their subject-matter. 4 What is a duty? A duty charged by this Act is, when a liability to pay the duty is created, a debt due to the State of New South Wales. 5 Arrangements for payment of duties This Act does not contain all the provisions concerning duties. This Act is to be read together with the Taxation Administration Act 1996. The Taxation Administration Act 1996 contains provisions that deal with, for example— • how assessments of duty are made • how assessments can be challenged • what happens if duty is not paid on time • how unpaid duty may be recovered • what records must be kept by taxpayers • how decisions made under this Act can be challenged • the investigative powers of tax administrators. 5A Application of Act to corporate collective investment vehicles (1) For this Act, each sub-fund of a CCIV is taken to be a unit trust scheme of which— (a) the CCIV is the trustee, and (b) the business, assets and liabilities of the sub-fund are the trust property, and (c) the members of the sub-fund are the beneficiaries. (2) For a sub-fund that is taken to be a unit trust scheme— (a) a share in the CCIV that is referable to the sub-fund is taken to be a unit in the unit trust scheme, and (b) a shareholder of the share, as a member of the sub-fund, is taken to be a registered unit holder of the unit in the unit trust scheme, and (c) the rights, entitlements, obligations and other characteristics attaching to the share are taken, as far as practicable, to be the same rights, entitlements, obligations and other characteristics attaching to the unit, and (d) a winding up of the sub-fund is taken to be a winding up of the unit trust scheme, and (e) a person who has an entitlement to a distribution of property in the event of the distribution of all the property of the sub-fund is taken to have the same entitlement to a distribution of property in the event of the distribution of all the property of the unit trust scheme. (3) For this Act, a CCIV is taken to be a separate person in relation to each unit trust scheme of which it is the trustee under subsection (1). (4) This Act does not apply to a CCIV or the members of a sub-fund of a CCIV except as provided for by this section. 6 Meaning of words and expressions used in this Act Words and expressions used in this Act (or in any particular provision of this Act) that are defined in the Dictionary at the end of this Act have the meanings set out in the Dictionary. 7 Notes in the text Notes included in this Act are explanatory notes and do not form part of this Act. Chapter 2 Transactions concerning dutiable property Part 1 Introduction and overview 8 Imposition of duty on certain transactions concerning dutiable property (1) This Chapter charges duty on— (a) a transfer of dutiable property, and (b) the following transactions— (i) an agreement for the sale or transfer of dutiable property, (ii) a declaration of trust over dutiable property, (iii) a surrender of an interest in land in New South Wales, (iv) a foreclosure of a mortgage over dutiable property, (v) a vesting of dutiable property by or as a consequence of an order of a court of this or another jurisdiction, whether inside or outside Australia, (vi) the enlargement of a term in land into a fee simple under section 134 of the Conveyancing Act 1919, (vii) a vesting of land in New South Wales by, or expressly authorised by, statute law of this or another jurisdiction, whether inside or outside Australia, (viii) a lease in respect of which a premium is paid or agreed to be paid, (ix) another transaction that results in a change in beneficial ownership of dutiable property, other than an excluded transaction. (c) (Repealed) Note. There are other provisions in this Act that deem certain transactions to be a transfer of dutiable property under this Chapter, for example— (a) section 9A, which provides for certain circumstances in which a transfer of a partnership interest is taken to occur, and (b) section 9B, which provides for certain circumstances in which a transfer of an option to purchase land is taken to occur, and (c) section 9C, which provides for circumstances in which a novation of an agreement for the lease of land in New South Wales is taken to be a transfer of dutiable property, and (d) Part 2 of Chapter 3, which treats a transfer or assignment of an option to purchase dutiable property as a transfer of the dutiable property in certain circumstances. (2) Such a transfer or transaction is a dutiable transaction for the purposes of this Act. (2A) Despite subsection (1)(b)(ix), an excluded transaction that results in a change in beneficial ownership of dutiable property is a dutiable transaction if it is part of a scheme or arrangement that, in the Chief Commissioner's opinion, was made with a collateral purpose of reducing the duty otherwise chargeable under this Chapter. (3) In this Chapter— beneficial ownership includes ownership of dutiable property by a person as trustee of a trust. change in beneficial ownership includes the following— (a) the creation of dutiable property, (b) the extinguishment of dutiable property, (c) a change in equitable interests in dutiable property, (d) dutiable property becoming the subject of a trust, (e) dutiable property ceasing to be the subject of a trust. declaration of trust means any declaration (other than by a will or testamentary instrument) that any identified property vested or to be vested in the person making the declaration is or is to be held in trust for the person or persons, or the purpose or purposes, mentioned in the declaration although the beneficial owner of the property, or the person entitled to appoint the property, may not have joined in or assented to the declaration. excluded transaction means the following— (a) the purchase, gift, allotment or issue of a unit in a unit trust scheme, (b) the cancellation, redemption or surrender of a unit in a unit trust scheme, (c) the abrogation or alteration of a right relating to a unit in a unit trust scheme, (d) the payment of an account owing for a unit in a unit trust scheme, (e) the grant, renewal or variation of a lease for no consideration, (f) the grant of an easement for no consideration, (g) the grant of a profit a prendre for no consideration, (h) the provision of a security interest within the meaning of the Personal Property Securities Act 2009 of the Commonwealth, (i) a change in a trustee's right of indemnity, (j) the creation of an interest in dutiable property by statute, (k) a transaction of a kind prescribed by the regulations, (l) a combination of the transactions referred to in paragraphs (a)–(k). lease means a lease of land in New South Wales or an agreement for a lease of land in New South Wales. premium, in respect of a lease entered into pursuant to an option, includes an amount paid or payable for the grant of the option. transfer includes an assignment, an exchange and a buy-back of shares in accordance with Division 2 of Part 2J.1 of the Corporations Act 2001 of the Commonwealth. 8AA Imposition of duty on acknowledgment of trust (1) This Chapter also charges duty on the making of a statement that— (a) purports to be a declaration of trust over dutiable property, but (b) merely has the effect of acknowledging that identified property vested, or to be vested, in the person making the statement is already held, or to be held, in trust for a person or purpose mentioned in the statement. (2) For the purpose of charging the duty— (a) the making of the statement is taken to be a declaration of trust over dutiable property and, accordingly, is a dutiable transaction, and (b) the property vested, or to be vested, in the person making the statement is taken to be the property transferred, and (c) the person making the statement is taken to be the transferee, and (d) the transfer is taken to occur when the statement is made. 8A Vesting of land in New South Wales by statute law (1) Without limiting section 8 (1) (b) (vii), land in New South Wales is vested under statute law if the law vests the land in an entity that the law states is the successor in law of, continuation of or same entity as, the entity in which the land was previously vested. (2) However, land in New South Wales is not vested under statute law on the registration of a company under Part 5B.1 of Chapter 5B of the Corporations Act 2001 of the Commonwealth. (3) The merger of a corporation (company A) with and into another corporation (company B) in circumstances where neither subsection (4) nor subsection (5) applies is taken to be a vesting of the land in New South Wales of company A in company B by statute law. (4) A merger of corporations (the merging corporations) in circumstances where another corporation (company C) results as a consequence of the merger is taken to be a vesting of the land in New South Wales of the merging corporations in company C by statute law. (5) A merger of corporations (the merging corporations) with and into each other in circumstances where each of the merging corporations continues in existence is taken to be a vesting in the merging corporations, jointly, of 50% (in value) of the land in New South Wales of the merging corporations by statute law. (6) A division of a corporation (the dividing corporation) in circumstances where the dividing corporation does not continue in existence and 2 or more other corporations (the new corporations) result as a consequence of the division is taken to be a vesting in each new corporation by statute law of the land in New South Wales of the dividing corporation that is held by the new corporation as a result of the division. (7) A division of a corporation (the dividing corporation) in circumstances where the dividing corporation continues in existence and 1 or more other corporations (the new corporations) result as a consequence of the division is taken to be a vesting in each new corporation by statute law of the land in New South Wales of the dividing corporation that is held by the new corporation as a result of the division. 9 Imposition of duty on dutiable transactions that are not transfers (1) The duty charged by this Chapter on a dutiable transaction referred to in section 8 (1) (b) is to be charged as if each such dutiable transaction were a transfer of dutiable property. (2) Accordingly, for the purpose of charging duty under this Chapter, in relation to a dutiable transaction specified in Column 1 of the following Table— (a) the property specified opposite the dutiable transaction in Column 2 is taken to be the property transferred (and a reference in this Act to property transferred includes a reference to such property), and (b) the person specified opposite the dutiable transaction in Column 3 is taken to be the transferee of the dutiable property (and a reference in this Act to a transferee includes a reference to such a person), and (c) the transfer of the dutiable property is taken to have occurred at the time specified opposite the dutiable transaction in Column 4 (and a reference in this Act to the time at which a transfer occurs includes a reference to such a time). Table Column 1 Column 2 Column 3 Column 4 Dutiable transaction Property transferred Transferee When transfer occurs agreement for sale or transfer the property agreed to be sold or transferred the purchaser or transferee when the agreement is entered into declaration of trust the property vested or to be vested in the declarant the person declaring the trust when the declaration is made surrender the surrendered property the person to whom the property is surrendered when the surrender takes place foreclosure the mortgaged property the mortgagee when the foreclosure order is made vesting by court order the vested property the person in whom the property is vested when the order is made enlargement of a term in land into a fee simple the estate in fee simple the person who acquires the estate in fee simple when the term is enlarged vesting by statute law the vested land in New South Wales the person in whom the land is vested when the vesting by statute law occurs lease the leased property the lessee when the lease is entered into another transaction that results in a change in beneficial ownership of dutiable property the property the beneficial ownership of which is changed the person who obtains the beneficial ownership or whose beneficial ownership is increased when beneficial ownership changes 9A Transfer of partnership interest occurring on change in partnership arrangements (1) A transfer of a partnership interest is taken to occur when a change in partnership arrangements occurs. (2) A change in partnership arrangements occurs if— (a) a partner in an existing partnership retires so that a new partnership is formed (with or without the admission of new partners), or (b) a new partner is admitted to an existing partnership so that a new partnership is formed. (3) A new partnership is formed when a partner in an existing partnership retires, unless the partnership is wound up on that retirement (sometimes referred to as a general dissolution of the partnership). (4) A new partnership is formed whenever a new partner is admitted to an existing partnership. (5) For the purposes of this Act— (a) if a change in partnership arrangements occurs because of the retirement of a partner in an existing partnership, the retiring partner's partnership interest is taken to be transferred to the partners in the new partnership (a retirement transfer), and (b) if a change in partnership arrangements occurs because of the admission of a new partner to an existing partnership, the new partner's partnership interest is taken to be transferred to the partners in the new partnership (an admission transfer). (6) If a change in partnership arrangements results in both one or more retirement transfers and one or more admission transfers, duty is chargeable only on— (a) the retirement transfer or retirement transfers, if the dutiable value of the retirement transfer or retirement transfers exceeds the dutiable value of the admission transfer or admission transfers, or (b) the admission transfer or admission transfers, if the dutiable value of the admission transfer or admission transfers exceeds the dutiable value of the retirement transfer or retirement transfers. (7) This section does not affect liability for duty on a transfer of a partnership interest that occurs otherwise than because of a change in partnership arrangements. Note. For example, a transfer of a partnership interest from one partner to another partner in an existing partnership will also be dutiable under this Chapter. (7A) To avoid doubt, a transfer of a partnership interest that is taken to occur under this section is a transfer of dutiable property and a reference in this Act to a transfer of dutiable property or a dutiable transaction includes a reference to such a transfer. (8) In this section, retirement of a partner includes retirement as a consequence of the death of a partner. 9B Transfer of option occurring on nomination or other change (1) A transfer of an option to purchase land in New South Wales is taken to occur if, for valuable consideration— (a) another person is nominated to exercise the option, or (b) another person is nominated as purchaser or transferee of the land the subject of the option on or before the exercise of the option, or (c) the option holder agrees to a novation of the option, or otherwise relinquishes rights under the option, so that another person obtains a right to exercise the option or to purchase the land. (2) For the purposes of this Act, in a case referred to in subsection (1) (a) or (b)— (a) the option is taken to be transferred when the nomination is made (and a reference in this Act to the time at which a transfer occurs includes a reference to such a time), and (b) the person nominated is taken to be the transferee of the option (and a reference in this Act to a transferee includes a reference to such a person). (3) For the purposes of this Act, in a case referred to in subsection (1) (c)— (a) the option is taken to be transferred when the option holder agrees to the novation or otherwise relinquishes rights under the option (and a reference in this Act to the time at which a transfer occurs includes a reference to such a time), and (b) the person who obtains a right to exercise the option or to purchase the land is taken to be the transferee of the option (and a reference in this Act to a transferee includes a reference to such a person). (4) This section applies regardless of when the option is exercisable. (5) For the purposes of this section, anything done by a person under a power of appointment or other authority granted by an option holder is taken to have been done by the option holder. (6) To avoid doubt, a person who has a right to accept an offer to sell land has a right to purchase the land. (7) To avoid doubt, a transfer of an option to purchase land that is taken to occur under this section is a transfer of dutiable property and a reference in this Act to a transfer of dutiable property or a dutiable transaction includes a reference to such a transfer. (8) In this section— option holder, in relation to an option to purchase land in New South Wales, means a person who has a right to purchase the land under the option (whether vested or contingent). 9C Novation of agreement for lease (1) A novation of an agreement for the lease of land in New South Wales is taken to be a transfer of dutiable property as if— (a) the lessee's interest in the agreement were dutiable property, and (b) the novation of the agreement were a transfer of that dutiable property. (2) For the purposes of this Act— (a) the transfer is taken to occur when the agreement for lease is novated (and a reference in this Act to the time at which a transfer occurs includes a reference to such a time), and (b) the new lessee is taken to be the transferee of the dutiable property (and a reference in this Act to a transferee includes a reference to such a person). (3) A reference in this Act to dutiable property includes, in relation to a transfer that is taken to occur under this section, a reference to a lessee's interest in an agreement for the lease of land in New South Wales. (4) To avoid doubt, a reference in this Act to a dutiable transaction includes a reference to a transfer of dutiable property that is taken to occur under this section. 10 Form of dutiable transaction is immaterial The duty charged by this Chapter is payable whether a dutiable transaction is effected by an instrument or by any other means. 11 What is "dutiable property"? (1) Dutiable property is any of the following— (a) land in New South Wales, (b) transferable floor space (also known as heritage floor space), being floor space area that— (i) is recorded on a register kept by a local government council in New South Wales, and (ii) derives from the unutilised development potential of land in New South Wales that contains improvements of heritage value, and (iii) may, subject to obtaining all necessary consents and approvals, be utilised in the development of other land in New South Wales, (c) a land use entitlement, (d) shares— (i) in a NSW company, or (ii) in a corporation incorporated outside Australia that are kept on the Australian register kept in New South Wales, Notes. Shares is defined in the Dictionary to include rights to shares. Some shares (namely, shares quoted on the ASX or a recognised stock exchange) are not dutiable property—see subsection (2). (e) units in a unit trust scheme, being units— (i) registered on a register kept in New South Wales, or (ii) that are not registered on a register kept in Australia, but in respect of which the manager (or, if there is no manager, the trustee) of the unit trust scheme is a NSW company or is a natural person resident in New South Wales, Notes. Units is defined in the Dictionary to include rights to units. Some units (namely, units quoted on the ASX or a recognised stock exchange) are not dutiable property—see subsection (2). (f) (Repealed) (g) a business asset, being, at any relevant time— (i) the goodwill of a business, if the business has supplied goods in New South Wales, or provided services in New South Wales, to a customer of the business during the previous 12 months, or (ii) intellectual property that has been used or exploited in New South Wales during the previous 12 months, but only if the intellectual property is the subject of an arrangement that includes a dutiable transaction over goodwill referred to in subparagraph (i), or (iii) a statutory licence or permission under a Commonwealth law, if the rights under the licence or permission have been exercised, during the previous 12 months, in respect of New South Wales or in an area that includes New South Wales or a part of New South Wales, Note. Intellectual property is defined in the Dictionary. Business assets are subject to apportionment under section 28. (h) a statutory licence or permission under a New South Wales law, (h1) a gaming machine entitlement within the meaning of the Gaming Machines Act 2001, (i) a partnership interest, being an interest in a partnership that has partnership property that is dutiable property elsewhere referred to in this section, (j) goods in New South Wales, if the subject of an arrangement that includes a dutiable transaction over any dutiable property (other than intellectual property) elsewhere referred to in this section, not including the following— (i) goods that are stock-in-trade, (ii) materials held for use in manufacture, (iii) goods under manufacture, (iv) goods held or used in connection with land used for primary production, (v) livestock, (vi) a registered motor vehicle, (vii) a ship or vessel, (k) an option to purchase land in New South Wales, (l) an interest in any dutiable property referred to in the preceding paragraphs of this section, except to the extent that— (i) it arises as a consequence of the ownership of a unit in a unit trust scheme and is not a land use entitlement, or (ii) it is, or is attributable to, an option over dutiable property, or (iii) it is an interest in a marketable security, being an interest that is traded on the Sydney Futures Exchange. Note. In relation to interests in land, see clause 4 of the Dictionary. (2) Despite subsection (1), the following marketable securities are not dutiable property— (a) shares, or units in a unit trust scheme, that are quoted on the Australian Securities Exchange or a recognised stock exchange, (b) an interest in shares, or an interest in units in a unit trust scheme, if— (i) the shares or units are quoted on the Australian Securities Exchange or a recognised stock exchange, or (ii) the interest is quoted on the Australian Securities Exchange or a recognised stock exchange. (3) In the definition of business asset in this section, a reference to services provided to a customer includes a reference to anything done for a customer pursuant to a contractual obligation. Note. Part 4 of this Chapter provides for the abolition, on 1 July 2016, of duty on transfers of some of the types of dutiable property listed above. The following types of dutiable property cease to be dutiable property on 1 July 2016— (a) shares and units referred to in subsection (1) (d) and (e), (b) business assets referred to in subsection (1) (g), (c) statutory licences or permissions referred to in subsection (1) (h), (d) gaming machine entitlements referred to in subsection (1) (h1). 12 When does a liability for duty arise? (1) A liability for duty charged by this Chapter arises when a transfer of dutiable property occurs. (2) However, if a transfer of dutiable property is effected by an instrument, liability for duty charged by this Chapter arises when the instrument is first executed. (3) A liability for duty in respect of a dutiable transaction that is charged with duty as if it were a transfer of dutiable property arises even if the dutiable property is not in existence at the time that the transfer is taken to have occurred, or the instrument effecting the transfer is first executed, as the case requires. (4) An electronic registry instrument is taken to be first executed— (a) if the instrument is digitally signed by a subscriber within the meaning of the Electronic Conveyancing National Law (NSW)—on the date the instrument is first digitally signed by the subscriber, or (b) otherwise—when the Chief Commissioner first receives information relating to the instrument. 13 Who is liable to pay the duty? Duty charged by this Chapter is payable by the transferee, unless this Chapter requires another person to pay the duty. 14 The liability of joint tenants For the purpose of assessing duty charged by this Chapter, joint tenants of dutiable property are taken to hold the dutiable property as tenants in common in equal shares. 15 Necessity for instrument or written statement (1) If a dutiable transaction that is liable to ad valorem duty under this Chapter or Chapter 2A is not effected by an instrument, the transferee must make a written statement in an approved form. (2) The written statement must be made within 3 months after the liability arises. (3) (Repealed) (4) If a dutiable transaction is completed or evidenced by an instrument within 3 months after the date on which the dutiable transaction occurs, the requirement to lodge a statement and pay duty under this Chapter or Chapter 2A in respect of the statement may be satisfied by the lodgment of and payment of duty on the instrument within 3 months after the date on which the dutiable transaction occurs. 16 Lodging instrument or written statement with Chief Commissioner (1) A transferee who is liable to pay duty under this Chapter or Chapter 2A in respect of a dutiable transaction must, within 3 months after the liability arises, lodge with the Chief Commissioner— (a) the instrument that effects the dutiable transaction or, if there is more than one such instrument, each one of them as provided by sections 18 (1) and 104X (1), or (b) the written statement made in compliance with section 15. (2) If the instrument is in a digital form, the instrument must be lodged with the Chief Commissioner in a form and manner approved by the Chief Commissioner. 16A Lodging purchaser's declaration with Chief Commissioner A transferee who is liable to pay duty in respect of a dutiable transaction under this Chapter or Chapter 2A must lodge a declaration in the approved form with the instrument or written statement lodged under section 16. 17 When must duty be paid? (1) A tax default does not occur for the purposes of the Taxation Administration Act 1996 if duty is paid within 3 months after the liability to pay the duty arises. (2) (Repealed) 18 No double duty (1) If a dutiable transaction is effected by more than one instrument, one instrument is to be stamped with the duty payable on the dutiable transaction and each other instrument is chargeable with duty of $100. Note. Instrument includes a written statement. (2) The duty chargeable in respect of a transfer of dutiable property made in conformity with an agreement for the sale or transfer of the dutiable property is $20 if the duty chargeable in respect of the agreement has been paid. (3) The duty chargeable in respect of a transfer of dutiable property that is not made in conformity with an agreement for the sale or transfer of the dutiable property is $20 if— (a) the duty chargeable in respect of the agreement has been paid, and (b) the transfer would be in conformity with the agreement if the transferee was the purchaser under the agreement, and (c) the transfer occurs at the same time as, or proximately with, the completion or settlement of the agreement, and (d) at the time the agreement was entered into, and at the completion or settlement of the agreement— (i) the purchaser under the agreement (other than a purchaser who purchased as a trustee) and the transferee under the transfer were related persons, or (ii) if the purchaser purchased as a trustee (other than as a trustee of a self managed superannuation fund)—the transf