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Time to Revisit Stamp Duty on Sale of Business in Queensland and New South Wales

News

With recent changes in NSW relating to the payment of stamp duty on the sale of businesses it is necessary to attempt to clarify some of the confusion.

Queensland

Even though there was some gossip years ago that stamp duty on the sale of businesses in Qld will be abolished, the date to give effect to that gossip was deferred and is yet to be determined.

In the meantime, stamp duty is payable when you buy business assets.  Business assets are any of the following:-

  • Goodwill.
  • A statutory business licence.
  • A right to use a statutory business licence
  • A business name.
  • A right under a Franchise Agreement.
  • A debt of a business if the debtor lives in Qld.
  • A supply right of a business.
  • Intellectual property.
  • Personal property in Qld (for example, trading stock or plant and equipment).

If the transaction you have entered into is dutiable and you do not attend to the payment of the stamp duty you may be liable for unpaid tax interests and penalties on top of the unpaid duty.

In some cases stamp duty will not apply to an Agreement if the sole purpose of the Agreement is only for the transfer of:

  • A debt of a business.
  • A supply right of a business.
  • Intellectual or personal property of a business.

You must also keep in mind that if GST is payable, stamp duty must be calculated on the GST inclusive amount.

New South Wales

From 1 July 2016 the following business assets are no longer subject to stamp duty in NSW:-

  • Goodwill.
  • Intellectual property.
  • A statutory licence or permission under a Commonwealth law if the rights under the licence or permission have been exercised in NSW.
  • A statutory licence or permission under a NSW law, for example a taxi licence or water access licence.
  • A gaming machine entitlement within the meaning of the Gaming Machines Act 2001.

The following types of property however remain dutiable property from 1 July 2016:-

  • Land and an interest in land (for example a Lease).
  • Goods in NSW.

Duty is therefore payable on the value of dutiable goods being sold such as plant and equipment if the transaction includes land or an interest in land such as an assignment of lease.  It is however important to note that no duty would be payable in respect of dutiable goods if they comprise 90% or more of the value of the dutiable property being sold (Revenue Ruling DUT004).

We have been involved in numerous contracts for sale of businesses in NSW where the parties have agreed not to do an apportionment of the purchase price between goodwill and plant and equipment.  With this amendment to the Act parties will now be obliged to do an apportionment to determine the stamp duty payable.

By way of summary:-

  • Goodwill: not dutiable.
  • Plant and equipment: dutiable if an interest in land such as a transfer of lease is applicable and unless the value of the plant and equipment is more than 90% of the purchase price.
  • Stock in trade: not dutiable.

We welcome any enquiries or comments in relation to these issues and look forward to assisting you.  You are welcome to contact our office with any enquiries regarding stamp duty in either Queensland or New South Wales.  Please contact Property and Commercial Department Manager, Jess Kimpton on direct line 07 5506 8214, email jkimpton@attwoodmarshall.com.au or free call 1800 621 071.

We have a dedicated Property and Commercial team that practice exclusively in this area.

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