Mortgages and Financing

Transfer Duty is a form of Indirect tax levied on the transfer of, or other dealings in dutiable property. Dutiable property can be classified as land, a chattel, or a business asset.

Different regions in Australia have been trying to harmonise their legislations relating to Transfer Duty. In recent times, New South Wales, Victoria, Western Australia, Queensland, Tasmania and the Australian Capital Territory have amended parts of their existing legislations. As per the legislations, only specific ‘dutiable transactions’ and specific items of ‘dutiable property’ are liable to be taxed.

South Australia and Northern Territory have not changed their legislations and have retained the name Stamp Duty for classifying Transfer Duty within it.

Due to the difference in the legislations, cross border transactions require special attention keeping in mind the varying legislations of different states and territories. The rates of duty also vary jurisdiction wise.

When is Transfer Duty Payable?

Certain dutiable transactions include:

  • acquisition or transfer of dutiable property;
  • vesting of dutiable property by statute or Court Order;
  • foreclosure of a mortgage over dutiable property;
  • acquisition of units and/or shares in a corporation or unit trust which is “land rich”;
  • surrender of special dutiable property; and
  • acquisition of partnership acquisition, trust or declaration of trust over dutiable property or trust surrender.

South Australia and Northern Territory have different norms for deciding what is taxable. In Northern Territory, Stamp Duty is levied on dutiable instruments and in South Australia it is levied on documents. In both these jurisdictions, Stamp Duty is applicable on transactions.

Examples of imposition of Stamp Duty in Northern Territory and South Australia include:

  • conveyance of dutiable property;
  • deeds not otherwise charged; and
  • motor vehicle certificate of registration.

Business Transfer Duty is levied on the transfer of business assets in Australia. It is currently applicable in New South Wales, Queensland, Western Australia, South Australia and the Northern Territory.

Exemptions from Payment of Transfer Duty

Every region or territory provides certain exemption from the payment of Transfer Duty. Examples of certain concessions include first home owner duty concession or a deferred payment concession. For example, in Western Australia transactions for charitable or similar public purposes and certain transactions between spouses and de-facto partners are exempt from payment of Transfer Duty. In Australian Capital Territory, certain transactions relating to motor vehicles are exempt from the payment of Transfer Duty.

Implications of Implementation of Goods and Services Tax (‘GST’)

Every region and territory reviewed their existing Stamp Duty and Transfer Duty legislations after the introduction of the GST regime on 1 July 2010. Most territories have updated their taxation laws but the time frame of abolition of transfer duty has not been uniform.

Many States have delayed the abolition of Transfer and Stamp Duties. For example, Queensland was scheduled to abolish 50% of duty on transactions involving non-realty conveyances by 1 January 2010 but the process has been deferred until 1 July 2013. Similarly, Western Australia has deferred the abolishment of transfer duty on the transfer of non-real business assets which includes goodwill, intellectual property and licences. New South Wales also plans to abolish the Business Transfer Duty on 1 July 2013.

Our experienced team at Total Home Buyers Services may guide you in understanding the laws and rules relating to payment of Transfer Duty. Please feel free to contact us in case of any queries.

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