On and from 4 September 2023, the Revenue, Fines and Other Legislation Amendment Act 2023 (NSW) came into effect (the Act). The Act makes a number of important amendments to the following pieces of legislation:
- Duties Act 1997 (NSW);
- Land Tax Management Act 1956 (NSW); and
- Taxation Administration Act 1996 (NSW).
1. Amendments to the Duties Act 1997 (NSW)
Section 12 (Liability for Duty)
1.1 Section 12 of the Duties Act sets out when liability for stamp duty arises. Historically, this has been when a transfer of dutiable property occurs (meaning the date of the agreement or transfer) and this is still the case for the majority of transactions.
1.2 Section 12 however has been amended to provide that if a transfer of dutiable property is effected by an instrument (such as a transfer), liability for duty arises when the instrument is first executed.
In the instance of an electronic registry instrument, the instrument is taken to be first executed when it is first digitally signed by a subscriber. If however a transfer is executed in advance of a settlement, the liability for duty will arise on the date that the transfer is executed as opposed to the date of settlement.
Section 25 (Aggregation of Duty)
1.3 Section 25 of the Duties Act deals with when multiple transactions are deemed to be aggregated (and therefore must be considered as one single transaction for stamp duty purposes).
1.4 Previously, transactions would be aggregated where:
(1) the transactions occurred within 12 months of one another;
(2) the transferor is the same or the transferors are associated persons;
(3) the transferee is the same or the transferees are associated persons; and
(4) 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.
1.5 The recent amendments have deleted section 25(1)(a), which removes the 12-month time limit within dutiable transactions need to occur to be treated as a single transaction for aggregation purposes.
1.6 This means that dutiable transactions are to be aggregated and treated as a single dutiable transaction if:
(1) the transferor is the same or the transferors are associated persons;
(2) the transferee is the same or the transferees are associated persons;
(3) 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.
This means dealings can occur outside of 12 months of one another and still be deemed to be aggregated if they form part of one overall arrangement.
1.7 Any transaction entered into prior to 4 September 2023 may be aggregated with transactions that occur after this date, are within 12 months of each other and meet the aggregation criteria.
Section 31 (Alteration in Purchase Price of Duty)
1.8 Section 31 relates to the reassessment of stamp duty on a matter where the purchase price/consideration has been reduced or increased since the date of exchange and original assessment.
1.9 Section 31 has been amended to provide that when there is a change in consideration, the stamp duty liability will be calculated using the rate of duty applicable at the time the agreement was first executed.
This is important where the change in the consideration amount occurred after the agreement was entered into but before the property is transferred.
Section 55 (Apparent Purchaser Provisions)
1.10 Section 55 of the Duties Act relates to a concession on stamp duty where property is transferred to its “apparent purchaser”.
1.11 Section 55 has now been extended to include a transfer to the legal personal representative of an apparent or real purchaser.
This means that where a property has vested in an apparent purchaser, and either the apparent purchaser or the real purchaser has died and have legal personal representatives, nominal $50 duty may still apply to the transfer to their legal representatives.
2. Amendments to the Land Tax Management Act 1956 (NSW)
The Land Tax Management Act 1956 has now been amended to provide that land used as a site for a school is now exempt from land tax even if the land is not owned by the school itself (i.e. if it is owned by a third party and leased or owned by the NSW Government).
3. Amendments to the Taxation Administration Act 1996 (NSW)
3.1 The Taxation Administration Act 1996 has been amended to provide that the Chief Commissioner can require a taxpayer to provide or to obtain a valuation of property for the purposes of assessing the tax liability of the taxpayer.
3.2 Whilst it is somewhat common practice within Revenue NSW to require a taxpayer to obtain a valuation at their own cost, if Revenue NSW obtains a valuation (likely due to failure of the taxpayer to do so), Revenue NSW may recover from the taxpayer the cost of obtaining a valuation if:
(1) the value of the property in the valuation differs from the value of the property provided by the taxpayer by at least 10%, or
(2) the taxpayer fails to comply with a written notice given to them within 60 days after the notice is issued.
Whilst this may not affect every transaction, it is important to be aware that these changes may have wider reaching implications.
If you have any concerns as to how these amendments could impact you or your business, contact our office to discuss with one of our Property experts on (02) 4626 5077.
The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.