New South Wales: 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 transferee and the beneficiary were related persons, or (iii) if the purchaser purchased as a trustee of a self managed superannuation fund—the transferee under the transfer was the custodian of that trustee. Note. Section 64C also provides for a duty concession in respect of a transfer of dutiable property that is made in partial conformity with an agreement for the sale or transfer of the property. The concession applies if the interest in the property transferred to the transferee is not identical to the interest agreed to be transferred to the transferee under the agreement. (4) The duty chargeable on a transfer to a trustee of dutiable property subject to a declaration of trust is $20 if ad valorem duty under this Chapter has been paid on the declaration of trust in respect of the same dutiable property. (5) The duty chargeable on a transfer of dutiable property as a consequence of a foreclosure order is $20 if ad valorem duty under this Chapter has been paid on the foreclosure. (6) The duty chargeable on a declaration of trust that declares the same trusts as those upon and subject to which the same dutiable property was transferred to the person declaring the trust is $20 if ad valorem duty under this Chapter has been paid on the transfer. (6A) The duty chargeable on a declaration of trust is $100 if the Chief Commissioner is satisfied that— (a) the declaration of trust supersedes another declaration of trust in respect of which duty under this Chapter has been paid and declares the same trusts as were declared under the superseded declaration of trust, and (b) the beneficiary under the declaration of trust is the same as under the superseded declaration of trust, and (c) the dutiable property subject to the declaration of trust— (i) is wholly or substantially the same as the property that was the subject of the superseded declaration of trust at the time of the declaration of the superseded declaration of trust, or (ii) represents the proceeds of re-investment of property that was the subject of the superseded declaration of trust at the time of the declaration of the superseded declaration of trust, or (iii) is property to which both subparagraphs (i) and (ii) apply. (7) A dutiable transaction in respect of marketable securities that confer a land use entitlement is taken to be a dutiable transaction in respect of the land use entitlement only. If duty has been paid on the dutiable transaction in accordance with a law of another Australian jurisdiction, the duty charged by this Chapter on the dutiable transaction is to be reduced by the amount of the duty so paid. (8) Despite subsection (1), if a single dutiable transaction is effected by more than one electronic registry instrument it is sufficient that one of those instruments is duly stamped with the duty chargeable on the dutiable transaction. Note. See section 290. 18A Land subject to property tax (1) For transactions involving land that is subject to property tax, including transactions that cause land to become subject to property tax, the requirements of this Chapter are subject to the Property Tax (First Home Buyer Choice) Act 2022. (2) Terms used in this section have the same meanings as in the Property Tax (First Home Buyer Choice) Act 2022. 19 What is the rate of duty? Duty is charged on the dutiable value of the dutiable property subject to the dutiable transaction at the relevant rate set out in Part 3. 20 Concessions and exemptions from duty Concessions and exemptions from duty charged by this Chapter are dealt with in Parts 6, 7 and 8. Part 2 Dutiable value 21 What is the "dutiable value" of dutiable property? (1) The dutiable value of dutiable property that is subject to a dutiable transaction is the greater of— (a) the consideration (if any) for the dutiable transaction (being the amount of a monetary consideration or the value of a non-monetary consideration), and (b) the unencumbered value of the dutiable property. (2) The dutiable value of dutiable property transferred by way of foreclosure is the unencumbered value of the dutiable property and not the value of the debt secured by the mortgaged property. (3) The dutiable value of a business asset to which section 28 applies is to be determined in accordance with that section. (4) The dutiable value of a partnership interest referred to in section 29 is to be determined in accordance with that section. (5) The dutiable value of leased property transferred by way of a lease is taken to be the amount of the premium paid or payable in respect of the lease. 22 What is the consideration for the transfer of dutiable property? (1) The consideration for the transfer of dutiable property is taken to include the amount or value of all encumbrances, whether certain or contingent, subject to which the dutiable property is transferred. (2) The consideration for the transfer of the interest of a transferee under an uncompleted agreement for the sale or transfer of dutiable property is taken to include the balance of the amount or value of the consideration that would be required from the transferee under the agreement in order to complete it in accordance with its terms. (3) The consideration for the transfer of the goodwill of a business is taken to include the amount or value of the consideration for any restraint of trade arrangement entered into in connection with the transfer of the goodwill. (4) The consideration for a transfer of land in New South Wales that occurs as a consequence of the exercise of an option to purchase land is taken to include the amount or value of the consideration provided by or on behalf of the transferee for the option (whether for its grant, transfer, exercise or otherwise). Note. This section extends to an agreement for sale or transfer of dutiable property. Under sections 8 and 9 such agreements are treated as transfers of dutiable property. 23 What is the "unencumbered value" of dutiable property? (1) The unencumbered value of dutiable property is the value of the property determined without regard to any encumbrance to which the property is subject. (2) The unencumbered value of the goodwill of a business is taken to include the value of any restraint of trade arrangement entered into by the vendor in order to protect the value of the goodwill. (3) If, before land is transferred to a transferee, the transferee has made improvements to the land, the unencumbered value of the land is to be determined as if those improvements had not been made. (4) Subsection (3) does not apply to improvements made to the land for or on behalf of the transferee by the transferor. 24 Interests, agreements and arrangements that reduce the dutiable value (1) In determining the dutiable value of dutiable property under this Part, any interest, agreement or arrangement (other than an encumbrance) granted or made in respect of the dutiable property that has the effect of reducing the dutiable value is to be disregarded, subject to subsection (2). (2) An interest, agreement or arrangement is not to be disregarded if the Chief Commissioner is satisfied that it was not granted or made as a part of an arrangement or scheme with a collateral purpose of reducing the duty otherwise payable on the dutiable transaction. (3) In considering whether or not he or she is satisfied for the purposes of subsection (2), the Chief Commissioner may have regard to— (a) the duration of the interest, agreement or arrangement before the dutiable transaction, and (b) whether the interest, agreement or arrangement has been granted to or made with an associated person, and (c) whether there is any commercial efficacy to the granting of the interest or the making of the agreement or arrangement other than to reduce duty, and (d) any other matters the Chief Commissioner considers relevant. 25 Aggregation of dutiable transactions (1) Dutiable transactions relating to separate items of dutiable property, or separate parts of, or interests in, dutiable property are to be aggregated and treated as a single dutiable transaction if— (a) (Repealed) (ab) the transferor is the same or the transferors are associated persons, and (b) the transferee is the same or the transferees are associated persons, and (c) the dutiable transactions together form, evidence, give effect to or arise from what is, substantially, one arrangement relating to all of the items or parts of, or interests in, the dutiable property. Note. Associated person is defined in the Dictionary. (2) Dutiable transactions are not to be aggregated under this section if the Chief Commissioner is satisfied that— (a) the dutiable property to which the transactions relate are comprised of separate allotments of vacant land, and (b) the transferee is a person authorised to contract to do residential building work under the Home Building Act 1989, and (c) the transferee intends to construct residential premises on the allotments for the purposes of sale to the public. (3) The dutiable value of aggregated dutiable property is the sum of the dutiable values of the items or parts of, or the interests in, the dutiable property as at the time at which each dutiable transaction occurs. (4) The amount of duty payable in accordance with this section is to be reduced by the amount of any ad valorem duty under this Chapter paid on a prior dutiable transaction that is, or prior dutiable transactions that are, aggregated in accordance with this section. (4A) The amount of duty payable on dutiable transactions aggregated in accordance with this section is to be calculated at the rate applicable under this Chapter at the time at which the earliest of the aggregated dutiable transactions occur. (5) Duty may be apportioned to the instruments effecting or evidencing the dutiable transactions, or may be charged in accordance with section 18 (1), as determined by the Chief Commissioner. (6) A transferee to whom this section applies must disclose to the Chief Commissioner, in writing, at or before the time at which an instrument or statement relating to the dutiable transactions is lodged for stamping, details known to the transferee of— (a) all of the items or parts of, or interests in, the dutiable property included or to be included in the arrangement referred to in subsection (1), and (b) the consideration for each item or part of, or interest in, that dutiable property. Maximum penalty (subsection (6)): 100 penalty units. Note. An offence against subsection (6) committed by a corporation is an executive liability offence attracting executive liability for a director or other person involved in the management of the corporation—see section 121 of the Taxation Administration Act 1996. (7) The reference in this section to dutiable property does not include a reference to marketable securities. (8) In this section— vacant land includes land that the Chief Commissioner considers is substantially vacant apart from there being on that land the remnant of any building, or any other object or structure, that the Chief Commissioner is satisfied has been preserved because of its heritage significance. 26 Certain transactions concerning goods and other property (1) If a dutiable transaction involves goods and other dutiable property, the Chief Commissioner may disregard the value of the goods in the transaction if the dutiable value of the other property does not exceed 10% of the dutiable value of all the dutiable property in the transaction. (2) (Repealed) 26A (Repealed) 27 Apportionment—dutiable property and other property (1) If a dutiable transaction relates to dutiable property and property that is not dutiable property, it is chargeable with duty under this Chapter only to the extent that it relates to dutiable property. (2) If a dutiable transaction relates to different types of dutiable property for which different rates of duty are chargeable under this Chapter, the dutiable transaction is chargeable with duty under this Chapter as if a separate dutiable transaction had occurred in relation to each such type of dutiable property. 28 Apportionment—business assets in this and other jurisdictions (1) Business assets to which this section applies This section applies to a business asset referred to in section 11 (1) (g), being— (a) the goodwill of a business, if the business has also supplied goods outside New South Wales, or provided services outside New South Wales, to a customer of the business during the previous 12 months, or (b) intellectual property that has also been used or exploited in one or more other Australian jurisdictions during the previous 12 months, or (c) 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 one or more other Australian jurisdictions. (2) How is the dutiable value of a business asset determined? The dutiable value (DV) of a business asset to which this section applies is to be determined in accordance with the following formula— where— A is the unencumbered value of the business asset, or so much of the consideration for the dutiable transaction as relates to the business asset, whichever is the greater, and X is the gross amount (expressed in Australian dollars) of goods supplied, and services provided, in New South Wales by the business to customers of the business during the last 3 completed financial years preceding the dutiable transaction, and Y is the gross amount (expressed in Australian dollars) of goods supplied, and services provided, in and outside New South Wales by the business to customers of the business during the last 3 completed financial years preceding the dutiable transaction. (3) Subsection (2) applies to intellectual property together with goodwill as if the intellectual property and goodwill comprise a single business asset. (4) If an apportionment cannot be made under subsection (2), the Chief Commissioner may make an apportionment on such basis as the Chief Commissioner considers appropriate in the circumstances. (5) In this section, a reference to a service provided to a customer includes a reference to anything done for a customer pursuant to a contractual obligation. (6) This section applies only to dutiable transactions that occur before 1 July 2016 (the date on which duty on transfers of business assets is abolished). 29 Partnership interests (1) The dutiable value of a partnership interest (DV) is to be determined in accordance with the following formula— where— A is the value of the partnership interest, or so much of the consideration for the dutiable transaction as relates to the partnership interest, whichever is the greater, and X is the unencumbered value of all dutiable property of the partnership, and Y is the unencumbered value of all assets of the partnership. (2) For the purposes of this section and despite subsection (1), the unencumbered value of dutiable property that is a business asset to which section 28 applies is the dutiable value of the business asset determined in accordance with section 28. (3) If the property of a partnership includes a land-related asset and an interest in the land-related asset is transferred as a result of the transfer of the partnership interest, the dutiable value of the partnership interest is to be reduced by the dutiable value of the interest in the land-related asset that is transferred, but only if ad valorem duty under this Chapter has been paid or is payable on the transfer of the interest in the land-related asset. Note. For example, 3 partners jointly hold land valued at $9 million and other non-dutiable property valued at $3 million. The partnership has liabilities of $6 million. One partner retires, and is paid $2 million for his or her partnership interest. The retiring partner transfers a one-third interest in the land to the remaining partners. Duty is payable at an ad valorem rate on the transfer of the one-third interest in the land. The transfer of the interest in land has a dutiable value of $3 million. Under this section, the partnership interest has a dutiable value of $1.5 million (DV = $2M × $9M/$12M). As the dutiable value of the interest in land transferred exceeds the dutiable value of the partnership interest transferred, the minimum duty would be payable on the transfer of the partnership interest. (3A) The minimum duty chargeable in respect of a transfer of a partnership interest to which subsection (3) applies is $100. (4) For the purposes of subsection (3), each of the following items of dutiable property is a land-related asset— (a) land in New South Wales, (b) transferable floor space, (c) a land use entitlement, (d) an interest in an item of dutiable property referred to in paragraph (a), (b) or (c). 30 Partitions (1) What is a partition? For the purposes of this section, a partition occurs when dutiable property comprised of land in New South Wales that is held by persons jointly (as joint tenants or tenants in common) is transferred or agreed to be transferred to one or more of those persons. (2) Single dutiable transaction For the purposes of this section and sections 16, 18 and 104X, a partition is taken to be a single dutiable transaction. (3) Dutiable value The dutiable value of a partition is the greater of— (a) the sum of the amounts by which the unencumbered value of the dutiable property transferred, or agreed to be transferred, to a person by the partition exceeds the unencumbered value of the interest held by the person in the dutiable property transferred, or agreed to be transferred, to each person by the partition immediately before the partition, and (b) the sum of any consideration for the partition paid by any of the parties. (3A) (Repealed) (4) Minimum duty The minimum duty chargeable on a transaction that effects a partition is $100. (5) Who is liable to pay the duty? Duty charged by this section is payable by the persons making the partition or any one or more of them. (6) Anti-avoidance criteria This section does not apply in respect of a partition if the Chief Commissioner is satisfied that the partition is part of a scheme to avoid duty on an exchange of land that was not jointly held by the parties before the scheme was entered into. 31 Effect of alteration in purchase price (1) If after an agreement for the sale or transfer of dutiable property is entered into and before the property is transferred— (a) the consideration under the agreement is reduced and the reduced consideration is not less than the unencumbered value of the dutiable property when the consideration was reduced, or (b) the consideration under the agreement is reduced because the parties have agreed not to transfer some of the dutiable property previously agreed to be transferred and the reduced consideration is not less than the unencumbered value of the dutiable property that remained to be transferred when the consideration was reduced, or (c) the consideration under the agreement is increased and the dutiable value when the consideration was increased is greater than the dutiable value when the agreement was entered into, the Chief Commissioner must assess or reassess the liability to duty of the agreement in accordance with the change in the consideration. (2) The liability to pay additional duty arising from an increase in the consideration occurs on the date the consideration is agreed to be increased. (3) The amount of duty assessed or reassessed in accordance with this section must be calculated at the rate applicable under this chapter when the agreement for the sale or transfer was first executed. Part 3 Rates of duty Division 1 Preliminary 32AA Definitions In this Part— adjustable amount means an amount specified in this Part as an adjustable amount for the purposes of Division 3. base amount means the amount specified for a threshold range in Column 4 of the table to section 32 (1). fixed rate means the rate specified for a threshold range in Column 5 of the table to section 32 (1). maximum threshold amount means the amount specified for a threshold range in Column 3 of the table to section 32 (1). minimum threshold amount means the amount specified for a threshold range in Column 2 of the table to section 32 (1). premium base amount—see section 32A (2). threshold range—see section 32 (2). Division 2 Rates of duty 32 General rate (1) The rate of duty chargeable on a dutiable transaction is the base amount for the threshold range that applies to the dutiable transaction plus the amount determined at the fixed rate in respect of the dutiable value of the dutiable property involved in the transaction. Column 1 Column 2 Column 3 Column 4 Column 5 Threshold range Minimum threshold amount Maximum threshold amount Base amount Fixed rate 1 $0 $14,000 $0 $1.25 for every $100 (or part) of the dutiable value 2 $14,000 $30,000 $175 $1.50 for every $100 (or part) by which the dutiable value exceeds the minimum threshold amount 3 $30,000 $81,000 $415 $1.75 for every $100 (or part) by which the dutiable value exceeds the minimum threshold amount 4 $81,000 $304,000 $1,307 $3.50 for every $100 (or part) by which the dutiable value exceeds the minimum threshold amount 5 $304,000 $1,013,000 $9,112 $4.50 for every $100 (or part) by which the dutiable value exceeds the minimum threshold amount 6 $1,013,000 — $41,017 $5.50 for every $100 (or part) by which the dutiable value exceeds the minimum threshold amount (2) For the purposes of this Part, a threshold range applies to a dutiable transaction if the dutiable value of the dutiable property involved in the transaction is more than the minimum threshold amount but not more than the maximum threshold amount (if any) specified for that threshold range. (3) The rate of duty provided for by this section applies unless other provision is made by this Chapter. (4) Each minimum threshold amount and maximum threshold amount is an adjustable amount for the purposes of Division 3. 32A Premium rate for residential land with dutiable value exceeding $3,000,000 (1) The rate of duty chargeable on a dutiable transaction in respect of residential land that has a dutiable value exceeding $3,040,000 is the premium base amount plus $7 for every $100, or part, by which the dutiable value of the residential land exceeds $3,040,000. (2) The premium base amount is the amount of duty chargeable in respect of a dutiable transaction involving dutiable property that has a dutiable value of $3,040,000, determined in accordance with section 32. Note. The premium base amount in respect of a dutiable transaction occurring in the financial year commencing on 1 July 2019 is $152,502. (2A) The rate of duty chargeable on a dutiable transaction in respect of residential land that has a dutiable value not exceeding $3,040,000 is as provided for by section 32. (2B) If the dutiable property subject to a dutiable transaction comprises 2 or more individual items of residential land and 1 or more of those items has a dutiable value exceeding $3,040,000, the rate of duty chargeable on the dutiable transaction is as follows— (a) for each item of residential land that has a dutiable value exceeding $3,040,000—the premium base amount plus $7 for every $100, or part, by which the dutiable value of the item exceeds $3,040,000, (b) for the rest of the dutiable property—the rate provided for by section 32. (2C) The amount of $3,040,000 specified in any provision of this section is an adjustable amount for the purposes of Division 3. (3) For the purposes of this section, residential land means— (a) a parcel of land on which there is one single dwelling or one flat, or a parcel of land on which there is a building under construction that, when completed, will constitute one single dwelling or one flat, or (b) a strata lot, if it is lawfully occupied as a separate dwelling, or suitable for lawful occupation as a separate dwelling, or (c) a land use entitlement, if it entitles the holder of the land use entitlement to occupy a building, or part of a building, as a separate dwelling, or (d) a parcel of vacant land that is zoned or otherwise designated for use under an environmental planning instrument (within the meaning of the Environmental Planning and Assessment Act 1979) for residential or principally for residential purposes. (4) For the purpose of subsection (3) (a), land does not cease to be regarded as land on which there is one single dwelling, or one flat, merely because the land is also used or is capable of being used for the purpose of one other residential occupancy, if that residential occupancy is an excluded residential occupancy. (5) This section does not apply to a case in which section 32B or 32C applies. (6) In this section— excluded residential occupancy means— (a) one room, or (b) one suite of rooms (not being a flat) each room of which all occupants of the suite are entitled to occupy, or (c) one flat, or (d) one suite of rooms (not being a flat) each room of which all occupants of the suite are entitled to occupy, and one room, or (e) one flat and one room, or (f) 2 rooms, each of which is separately occupied. flat means a room or suite of rooms (whether or not forming part of a building or a detached building)— (a) occupied or used as a separate dwelling, or (b) so constructed, designed or adapted as to be capable of being occupied or used as a separate dwelling, but does not include a single dwelling, a strata lot or a dwelling, or portion of a building, that is occupied under a land use entitlement. single dwelling means a house— (a) occupied or used as a separate dwelling, or (b) so constructed, designed or adapted as to be capable of being occupied or used as a separate dwelling, but does not include a strata lot or a property commonly known as a shop and dwelling. 32B Rate for residential land used for other purposes (1) If a dutiable transaction in respect of residential land has a dutiable value exceeding $3,040,000, and the Chief Commissioner is satisfied that the residential land is used for purposes other than residential purposes, duty is to be charged at the rate of $7 for every $100, or part, of the premium value of the residential land. (2) The premium value of the residential land is the amount (if any) by which the dutiable value of the residential land, when reduced by the apportionment factor, exceeds $3,040,000. (2A) The amount of $3,040,000 specified in subsections (1) and (2) is an adjustable amount for the purposes of Division 3. (3) The apportionment factor is— (a) if the land is mixed development land or mixed use land and there is an apportionment factor entered in the Register of Land Values in respect of the land value of the land under Division 5 or 5A of Part 1B of the Valuation of Land Act 1916—that apportionment factor, or (b) if paragraph (a) is not applicable—such other apportionment factor as the Chief Commissioner considers fair and reasonable to reflect the use of the land for non-residential purposes, subject to subsections (4) and (5). (4) If there is no apportionment factor entered in the Register of Land Values in respect of the land value of the land, and the land is mixed development land or mixed use land, the Chief Commissioner may request the Valuer-General to determine the apportionment factor in respect of the land concerned. (5) If a request is made under subsection (4)— (a) the Valuer-General must determine the apportionment factor concerned and enter it in the Register of Land Values under the Valuation of Land Act 1916, and (b) that apportionment factor is to be applied in respect of the residential land. Note. Divisions 5 and 5A of Part 1B of the Valuation of Land Act 1916 allow objections to be made against the amount of an apportionment factor. (6) Duty is to be charged, at the rate set out in section 32, in respect of the dutiable value of the dutiable property transferred reduced by the premium value of the residential land. (7) In this section— mixed development land has the same meaning as in Division 5 of Part 1B of the Valuation of Land Act 1916. mixed use land has the same meaning as in Division 5A of Part 1B of the Valuation of Land Act 1916. residential land has the same meaning as in section 32A. 32C Rate for large parcels of residential land (1) If a dutiable transaction in respect of residential land that is a parcel of land has a dutiable value exceeding $3,040,000, and the area of the parcel of land exceeds 2 hectares, duty is to be charged at the rate of $7 for every $100, or part, of the premium value of the residential land. (2) The premium value of the residential land is the amount (if any) by which the dutiable value of the residential land, when multiplied by the apportionment factor, exceeds $3,040,000. (2A) The amount of $3,040,000 specified in subsections (1) and (2) is an adjustable amount for the purposes of Division 3. (3) The apportionment factor is the proportion that 2 hectares bears to the total area of the parcel of land in hectares. (4) Duty is to be charged, at the rate set out in section 32, in respect of the dutiable value of the dutiable property transferred reduced by the premium value of the residential land. (4A) This section does not apply in respect of residential land if section 32B applies to the land. (5) In this section— residential land has the same meaning as in section 32A. 33 Shares, units, derivatives and interests (marketable securities) (1) The rate of duty chargeable on dutiable transactions in respect of marketable securities is 60 cents per $100, or part, of the dutiable value of the marketable securities. (2) (Repealed) (3) A minimum rate of duty of $10 is chargeable under this section in respect of a transfer of shares of a corporation that is not the legal or beneficial owner of land in New South Wales. (4) A rate of duty chargeable under this section does not apply to a dutiable transaction that confers a land use entitlement.