NSW stamp duty on transfers of business assets other than real property is scheduled to be abolished from 1 July 2016.
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 dollars.
However, before getting too excited about the savings, we have been here before – the scheduled abolition of this form of stamp duty has been deferred many times over the past few years.
The good news is that if there isn’t another deferment, 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, mortgage duty (most commonly payable on securities for commercial lending as there is no longer stamp duty on investment housing loans or owner occupied housing loans) is also scheduled to be abolished at the same time. This also includes duty on company charges and general security agreements.
While we do not have a crystal ball, the scheduled abolition date is only some 3 months away. 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.