On 19 May 2022, amendments to the Duties Act 1997 (NSW) came into force.

The relevant section is amended to include a transaction that results in a “change in beneficial ownership of dutiable property”.

A significant part of the amendments means that some transactions that did not attract stamp duty, would now be liable for stamp duty. Some examples include but are not limited to the:

·       grant of a put and/or call option;

·       declaration of trust;

·       grant of an easement for consideration; and

·       the grant, renewal or variation of a lease.

Other amendments allow some leniency to duty payers.

Some interesting examples are highlighted below.

Granting of an Option

Duty is calculated on the option fee (consideration) paid for the grant of option.

The option fee includes GST (if applicable), but does not include security deposits, performance payments and legal costs.

It remains unclear where the option contains both a nominal option fee and a substantial security deposit, where the security deposit is not refundable when the option is not exercised. Will the Commissioner treat the so-called “security deposit” as an “option fee” for dutiable purposes?

Revenue NSW’s response is that if the fee is not refundable, even if it is labelled a “security deposit”, it is still deemed as an “option fee” and is dutiable.

Duty paid on the option fee is not credited towards the duty payable when the option is exercised.

If the call option is not exercised, the duty paid on the grant of option will not be refunded.

Surcharge purchaser duty does not apply under this amendment.

Declaration of Trust

The legislative amendment overrided the Supreme Court decision in Benidorm Pty Ltd v Chief Commissioner of Revenue [2020] NSWSC 471. The Commissioner’s leave to appeal to the High Court was refused.

A declaration of trust that does no more than to declare an existing trust, will now be dutiable.

Refund of Surcharge Purchaser Duty

Surcharge purchaser duty can now be refunded if after the transfer of a residential land, the land is used by the transferee wholly or predominately for commercial or industrial purposes.

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*Disclaimer: This is intended as general information only and not to be construed as legal advice. The above information is subject to changes over time. You should always seek professional advice before taking any course of action.* 

Resources:

State Revenue and Fines Legislation Amendment (Miscellaneous) Act 2022 (NSW)

Benidorm Pty Ltd v Chief Commissioner of Revenue [2020] NSWSC 471

Section 8(1)(b)(ix), Duties Act 1997 (NSW)

Section 8AA, Ibid.

Section 104ZJA, Ibid.

https://www.revenue.nsw.gov.au/electronic-duties-for-professionals/professionals-resources/duties-technical-guides/legislation-amendment-act-2022-guide?result_396764_result_page=1