27 October, 2012


Stamp duty: a snapshot 
‘Stamp duty’ or ‘duty’ is a state-based transaction tax that applies to particular transactions. In relation to real estate, the tax is imposed in each state and territory of Australia based on the location of the property.
Duty is payable on a transfer of land. The rates of duty are up to 7.25%, calculated on the higher of the GST inclusive purchase price for the land and its market value.
Under ‘landholder duty’ or equivalent provisions, duty may be payable on acquiring an interest in a company or trust that holds an interest in Australian land. The applicable rates are up to 7.25%, calculated on the market value of the underlying interest in land. It does not matter whether the acquiring party or the company or trust being acquired is Australian or foreign resident.
The grant of a real property lease is generally not dutiable if the only consideration payable under it is rent. The grant of a lease for a premium or for consideration other than rent may attract duty at up to 7.25%.
Mortgage duty is payable on a secured financing where security is granted over property in New South Wales. The rate of duty is up to 0.4% of the secured loan amount.
Exemptions and concessions may apply to some situations and these are an important element of transaction planning. For example, corporate reconstruction relief may be available for a property transfer within the corporate group.
Australian stamp duty laws are complex and are not uniform throughout the taxing jurisdictions. The way the laws apply depends on the details of the transaction. This paper is for information purposes and is not a substitute for legal advice. Legal advice.

1. Introduction: stamp duty

The 8 Australian states and territories raise a significant proportion of their revenue through a state- or territory-based transaction tax known as stamp duty or duty. Different laws apply, depending on the ‘location’ of the transaction for duty purposes.
Duty is payable on the transfer of various types of property such as land and buildings, plant and equipment, business assets and marketable securities (depending on the applicable laws). Duty is also payable on acquisitions of certain interests in trusts and companies holding land or other dutiable property (the relevant provisions, known as ‘landholder’, ‘land rich’ and ‘trust acquisition’ provisions, are together referred to in this paper as ‘landholder duty’). Other kinds of duty include lease premium duty, mortgage duty, insurance duty and motor vehicle registration duty. As a result of the introduction of goods and services tax (a federal tax), duty on some of these transactions is being progressively abolished but duty on real estate assets will remain.
Because stamp duty applies to a wide variety of transactions, and because it is often calculated on the amount of money or the value of the property involved, it can be a crucial element in business planning and costing. The duty implications of a transaction may affect corporate structures, choice of land tenure, lease or buy-back decisions and fund-raising structures. It is a highly specialised area of legal practice, and expert advice should be obtained early in the decision-making process.
2. Investing in direct real estate
2.1 Duty payable on transfer of direct real estate
A transfer of land attracts duty at rates of up to 7.25% on the higher of the unencumbered (gross) market value of the land and the consideration (purchase price) for the land. Land includes land, buildings, other improvements and fixtures. Generally speaking, duty is also payable on any moveable plant and equipment transferred with land, subject to exceptions.
Where land is transferred with a business conducted on the land, duty is payable on the land and plant and equipment transferred. Duty may also be payable on the business assets transferred (such as goodwill and intellectual property) in some jurisdictions. Where duty is payable only on the transfer of land and plant and equipment, but not on goodwill (ie in Victoria, Tasmania and ACT), the revenue offices may require a valuation report to substantiate the apportionment of value as between the land and the business assets.
In most cases, the statutory obligation to pay duty is imposed on the buyer, and the usual commercial practice is that the buyer pays duty. However, the statutory obligation to pay duty can also be imposed on the seller in some cases.
A stamp duty issue that commonly arises is where the transferee of the land is a different entity to the entity that initially had the right to acquire the land (such as on exercise of a nomination right under a call option or under a contract for sale, or on assignment of an option or contract). In such a case, it is important to consider the duty implications of transaction alternatives to mitigate duty risks.
2.2 Acquisition structure and exit strategies
When acquiring real estate, it is important to also consider the duty implications of any exit strategy, since the duty profile of a sale can differ depending on the level at which the sale occurs. Where an exit strategy involves a sale at the holding entity level, the nature of structures established to hold the real estate can affect the duty outcome.
In particular, landholder duty may apply to a sale of securities in companies and unit trusts. Whether or not landholder duty is payable will depend on the nature and structure of the holding entity, the extent of the interest acquired by the buyer, and other circumstances (eg public float and listing on a stock exchange, retail or wholesale offer). Further information on landholder duty is provided below.
3. Investing indirectly in real estate: landholder duty
The landholder duty provisions impose duty at rates of up to 7.25% on certain acquisitions in a company or unit trust that is a ‘landholder’.
3.1 General outline of the landholder duty rules 
What is a ‘landholder’?
An entity will be a ‘landholder’ if it has landholdings in the relevant jurisdiction with a value equal to or exceeding the applicable threshold value. For example, an entity is a landholder in New South Wales if it has landholdings in New South Wales with a value of A$2 million or more. The land value threshold varies between jurisdictions. In addition, a 60% test applies if the entity holds land in Tasmania. That test requires that all of the entity’s landholdings, wherever located, comprise 60% or more by value of the entity’s total property (subject to some exclusions).
Complex rules, including tracing rules, apply to work out what are ‘landholdings’ of an entity.
The landholder duty provisions apply to unlisted and listed companies and trusts, although in some cases the rules which apply to listed entities are different to those which apply to unlisted entities.
What transactions are dutiable?
Unless an exemption applies, landholder duty is payable when a person acquires an interest in a landholder that is, results in or adds to a ‘significant interest’.
An ‘interest’ is, broadly speaking, an entitlement to a distribution of property from the landholder. The interest of a creditor is generally ignored, unless (under the New South Wales landholder provisions) the interest is not a ‘debt interest’ for income tax purposes. An interest can be acquired on sale, transfer, issue, redemption and payment-upof securities. Care must be taken when working out the extent of a person’s ‘interest’ in an entity, especially where an entity has different classes of securities on issue or where securities in the entity are paid up to different proportions.
A ‘significant interest’ varies between jurisdictions.
  • For example, in New South Wales a significant interest is an interest of 50% or more for an unlisted private company or trust. This means duty is payable when a person acquires an interest of 50% or more in an unlisted private company or trust that is a landholder in New South Wales.
  • In Victoria, a significant interest is an interest of 20% or more for an unlisted private trust but 50% or more for an unlisted company or wholesale unit trust. That is, a person’s acquisition of an interest of 20% in a landholder entity would be dutiable in Victoria if the entity is an unlisted private trust, but may not be dutiable if the entity is a company or a wholesale unit trust.
  • For listed entities, the significant interest threshold is generally 90% or more.
In determining whether a significant interest is acquired, complex rules aggregate interests of associated persons as well as interests acquired under associated transactions.
Note that specific anti-avoidance rules may apply to impose duty on a transaction even if no ‘interest’ is acquired (such as on acquisition of control, certain economic rights including synthetics, or legal debt which are equity interests for income tax purposes). In addition, general anti-avoidance provisions may apply.
Note also that the position is different in Queensland for a private unit trust. Duty is payable on an acquisition of an interest, of any size, in a trust that holds Queensland land (or other dutiable property, of any value), unless the trust 
qualifies under one of the public unit trust concessions, for example a listed trust, widely held trust, wholesale trust or pooled public investment unit trust (see 3.3 below). A similar issue also arises in South Australia for a trust that is not registered as a managed investment scheme under the Corporations Act 2001.
How much duty?
Broadly speaking, the duty payable on a dutiable acquisition in a private landholder is calculated at rates of up to7.25%, by reference to the proportionate value of the landholdings of the landholder as is represented by the interest acquired. In some jurisdictions, duty is also payable on plant and equipment subject to some exclusions.
For a public landholder such as a company or trust listed on the ASX or other recognised exchange, a concessional duty rate may apply. For example, a takeover of an ASX-listed entity that is a landholder in New South Wales would be chargeable with duty at an effective rate of 0.55% (rather than 5.5%) of the entity’s New South Wales landholdings and goods.
The person statutorily liable for payment of duty can include the acquirer, the acquirer’s related persons and the landholder in which the acquisition is made.
3.2 Example: differences between direct land acquisition, companies and trusts
As a general comment, a company holding structure will often give rise to a better stamp duty profile than a trust holding structure. By way of example, A owns land in Victoria worth A$10 million. B proposes to acquire an interest in the land, directly or indirectly. The duty outcomes on various transaction alternatives would be as follows (assuming B is unrelated to the other securityholders in A and assuming the aggregation rules do not apply).
Duty of $550,000 (if no GST is 
payable) or $605,000 (if an 
additional 10% GST is payable on 
the purchase price)
Duty of $550,000 Duty of $550,000
Duty of $275,000 (if no GST is 
payable) or $302,500 (if an 
additional 10% GST is payable on 
the purchase price)
Duty of $275,000 Duty of $275,000
Duty of $137,500 (if no GST is 
payable) or $151,250 (if an 
additional 10% GST is payable on 
the purchase price)
No duty Duty of $137,500
3.3 The wholesale fund concession: Victoria and Queensland
Generally speaking, the dutiable acquisition threshold is 50% or more for an unlisted private trust that is a managed investment scheme registered under the Corporations Act 2001 (Cth), with the exception of a trust that holds land in Victoria or Queensland.
For a trust that qualifies as a wholesale unit trust under the Victorian and Queensland duties legislation, the dutiable acquisition threshold becomes 50% or more, which in effect means that unit transactions in the trust should not be dutiable provided they do not breach the 50% threshold. The trade-off is that certain restrictions apply, including restrictions on the profile of investors in the trust. Whether or not to establish a fund to satisfy particular concessions will depend on applicable circumstances.
The conditions a unit trust must satisfy to qualify under the Victorian wholesale unit trust scheme concession are:
  • the trust is not established for a particular investor
  • the trust holds at least 3 parcels of land, at least 2 of which have an unencumbered value of A$10 million or more,or otherwise there are at least 6 unrelated unitholders each with a subscription of at least A$3 million
  • at least 70% of the units are held by qualified investors
  • no qualified investor holds 50% or more of the units on an associates inclusive basis, and
  • registration as a wholesale unit trust is not sought for the purpose of, or as part of a scheme or arrangement with a collateral purpose of, avoiding or reducing landholder duty.
‘Qualified investors’ include:
  • a complying superannuation fund and complying approved deposit fund with at least 300 members
  • a pooled superannuation trust
  • a public unit trust
  • a wholesale unit trust
  • a listed company
  • a life company holding investment of a statutory fund
  • the Crown in right of the Commonwealth
  • a state or a territory including any statutory body representing the Crown
  • an entity established and wholly owned by a government agency of a state or territory or the Commonwealth and primarily used for the purpose of meeting statutory government liabilities or obligations, and
  • an investor-directed portfolio service satisfying certain criteria. 
Foreign equivalents of most of the above categories of persons can apply for approval by the Victorian State Revenue Office as a qualified investor.
The conditions a unit trust must satisfy to qualify under the Queensland wholesale unit trust concession are:
  • the trust is not established or managed for a particular investor
  • the trust is established and managed by a funds manager (this includes a body corporate that provides funds management and investment services to wholesale investors as its principal business, provided the body 
  • corporate manages funds of more than A$500 million, the business is not conducted to provide the services only to
  • particular wholesale investors, and the body corporate is recognised by other funds managers as a competitor)
  • the units in the trust are predominantly acquired by, for or on account of, wholesale investors, and 
  • (where the trust holds land in Queensland) the trust is established, and continues, solely for the investment of funds placed with it by wholesale investors using the funds manager’s funds management and investment services.
‘Wholesale investors’ include: a funds manager or trustee investing funds of another wholesale unit trust managed, a trustee of a superannuation fund under the Superannuation Industry (Supervision) Act 1993 (Cth) having more than A$10 million in assets and a person with more than A$10 million invested in wholesale unit trusts If the above conditions are not met, a separate concession (known as the pooled public investment unit trust concession) may be available.
Initial issue of units under a wholesale offering
It is important to be mindful of the stamp duty aggregation rules when establishing a wholesale fund. Preferably, units in the fund should be issued before the fund acquires any interest in land (including under a call option or a sale contract). If this is not possible, the acquisition by investors who are not related to one another may be aggregated on account of investors making their acquisitions in concert or as part of one arrangement, one transaction or one series of transactions (which may then result in a dutiable acquisition, even if each investor acquires an interest that is of itself less than the dutiable acquisition threshold). The tests vary between jurisdictions and the revenue offices do not approach the issue in a uniform way. Whether the aggregation rules apply will depend on the circumstances of the 
3.4 IPO and ASX listing
An initial public offering and ASX listing of a property trust can give rise to landholder duty implications. Most notably, duty is payable in Victoria on the conversion of a private unit trust to a public unit trust, and on the conversion of a private company to a listed company. The duty payable is at 0.55% of the entity’s Victorian landholdings.
4. Stamp duty on secured borrowings
New South Wales is the only Australian state that still imposes mortgage duty. Mortgage duty is payable on an instrument that creates a mortgage or other security over property in New South Wales. Duty is payable on such a security even if the security provider and the borrower are not Australian entities.
The amount of duty payable is 0.4% of the secured advances (usually, the loan amount). Where a security or a package of securities secures property in New South Wales and elsewhere, the duty is calculated at 0.4% x secured advances x ‘NSW proportion’. The ‘NSW proportion’ is the percentage by value of the secured property located in New South Wales as a proportion of the total secured property.
New South Wales mortgage duty is scheduled to be abolished on 1 July 2013.
5. Corporate reconstruction relief
Corporate reconstruction relief is available in all Australian jurisdictions other than in Tasmania, for the transfer of property within a wholly owned (or at least 90% owned) corporate group. The rules differ between jurisdictions. 
Generally speaking:

a) to qualify for relief, some jurisdictions impose a pre-transfer association rule (ie group members must have been part of the group for a requisite period of 1–3 years) but an exception may be available for a newly established group member

b) to qualify for relief in South Australia, substantially all of the transferor’s assets must be transferred

c) where relief is applied for and obtained, post-transfer requirements may apply (eg group members must remain within the group for at least 1–3 years, or the relevant property must be kept within the group for 3 years), subject to some exceptions (such as on a deregistration or a public offer and listing on a stock exchange)

d) relief is available for companies and unit trusts, other than in Queensland and the Northern Territory where relief does not apply to trusts.

In some cases, additional stamp duty concessions may apply where income tax relief is available.



Stamp duty overview, as at 1 July 2012
$2m (duty on land and 
≥ 50%
≥ 90% acquisition 
(duty at up to 0.55% 
of land and goods)
VIC 5.5% $1m (duty on land)
≥ 50% for company 
and wholesale trust
≥ 20% for private 
≥ 90% acquisition 
(duty at up to 0.55% 
of land)
QLD 5.25%
companies and listed 
trusts: $2m (duty on 
separate trust 
acquisition provisions 
apply to trusts (no 
≥ 50% for company 
and wholesale trust
no threshold for 
private trust
≥ 90% acquisition 
(duty at up to 0.525% 
of land)
Y (for companies) Y
SA 5.5%
$1m (duty on land and 
separate trust 
acquisition provision 
may also apply (no 
≥ 50% 
no threshold if trust 
provision applies
≥ 90% acquisition 
(duty at up to 0.55% 
of land and goods)
WA 5.15%
$2m (duty on land and 
≥ 50%
≥ 90% acquisition 
(duty at up to 5.15% 
of land and goods)
Y (95%) Y
(from 1 
2012: 4.5%)
$500,000 / 60% (duty 
on land)
≥ 50% n/a X X
ACT 7.25%
no thresholds (duty on 
≥ 50% n/a Y (95%) Y
NT 5.45%
$500,000 (duty on
≥ 50%
≥ 90% acquisition 
(duty at up to 5.45% 
of land)
Y (for companies) Y
Timetable for abolition of duties and current rates, as at 1 July 
NSW 1 July 2013 (0.4%) 1 July 2013 (0.6%) 1 1 July 2013 (5.5%) 1 January 2008 1 July 2007
VIC 1 July 2004 1 July 2002 n/a 26 April 2001 1 January 2007
1 January 2008
& 1 July 2008
1 January 2007 abolition deferred 1 January 2006 1 January 2007
1 July 2008
& 1 July 2009
abolition deferred abolition deferred 1 July 2004
1 July 2008
& 1 July 2009
1 July 2006
& 1 July 2008
1 January 2004 1 July 2013 (5.15%) 1 January 2004 1 January 2007
1 July 2006
& 1 July 2007
1 July 2002 1 July 2008 1 July 2002 1 July 2002
ACT n/a 1 July 2010 1 July 2006 1 July 2009 1 July 2007
NT n/a 1 July 2006 abolition deferred 1 July 2006 1 July 2007


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