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LOOKOUT: NSW State Budget 2023-24 Stamp Duty and Land Tax Changes

The NSW State budget has announced some changes to our stamp duty and land tax rules.
There are 4 main changes that we want to tell you about:

“Land rich” stamp duty

What was once known as “land rich” stamp duty (now called landholder duty), which applies when transferring an interest in a trust or company that owns land with an unencumbered value (not just land value) of $2m or more, is being given a shake up.

The 50% or more threshold for a significant interest when applying landholder duty for a private unit trust will be reduced to 20%. This change only applies to a private unit trust, not to a private company.

Also, entities in a chain will be linked if there is a 20% connection instead of the present 50% connection.

This change will apply on and from 1 February 2024.

Land tax – principal place of residence

A little known land tax provision, where only 1 of multiple owners of a property occupies the property as their principal place of residence, is being changed.

The current provision means that a couple could own 999/1000 of a property and their child could own 1/1000 of that property. If the child lived in the property as their principal place of residence and the parents did not, it would be exempt from land tax.

As a result of the change to the land tax rules, the exemption from land tax will only apply if the child owns at least 25% of the property.

Transitional provisions mean that those who already claim the principal place of residence exemption from land tax but own less than a 25% interest in the land may continue to claim the exemption for the 2024 and 2025 land tax years. The minimum 25% ownership requirement will then apply to those owners from the 2026 land tax year. So there is only a transitional application of the current rule, not a grandfathering of it.

Fixed nominal stamp duty amounts

The fixed nominal stamp duty amounts will increase as follows:

  • $10 increased to $20 (e.g. the contract and transfer on a sale of land)
  • $50 increased to $100 (except when it relates to a Management Investment Scheme, when it is $500)
  • $500 increased to $750 (e.g. a related party transfer to a SMSF, a bare trust, a declaration of trust such as a discretionary trust and a unit trust)

This change applies on and from 1 February 2024.

Corporate reconstructions

Corporate reconstructions will no longer get a 100% stamp duty concession.  The concession will be reduced to 90%, so duty will now be payable on 10% of the dutiable value.
This change will apply on and from 1 February 2024.
If you have any questions, please feel free to contact our experienced team of Property lawyers.

Important Disclaimer: The content of this article is general in nature and for reference purposes only. It does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication



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