Stamp duty is often a significant transaction cost, with stamp duty of over $40,000 payable on a contract for the sale of business in NSW with a purchase price of $1 million.
As a result of the announcement, from 1 July 2016 NSW stamp duty will no longer be payable on:
- transfers of marketable securities – including shares in private companies and units in unit trusts (land rich duty may still apply)
- transfers of business assets including goodwill and intellectual property and plant and equipment when part of a transaction which includes goodwill (commonly seen as a ‘sale of business’)
- transfers of commercial fisheries shares
- transfers of statutory licences and permissions (including taxi and liquor licences) and gaming machine entitlements
In keeping with the approach of reducing NSW government transaction costs for business, commercial mortgage duty is also scheduled to be abolished at the same time. This also includes duty on company charges and general security agreements.
If your individual situation allows, the possible stamp duty savings achieved by delaying the transaction and entering into contracts after 1 July 2016 should be considered as part of your business transaction.
There are however anti avoidance mechanisms in place. For example, stamp duty for contracts entered into after 1 July 2016 as a result of the exercise of an option granted prior to that date will remain, so care should be taken around ‘creative’ arrangements that seek to avoid stamp duty.
Kells has a NSW Law Society Accredited Specialists in Business Law who work closely with their clients on all types of business transactions, including sales and purchase of businesses, share and unit transfers, business, company and trust establishment, variation and cessation. Contact us on (02) 4221 9311 or through our website enquiry form at www.kells.com.au for more information.