NSW budget: major stamp duty and land tax changes announced!

21 September 2023

The NSW budget was delivered on 19 September 2023. Some long-standing duty and land tax provisions are being amended by the announcements in the budget. The major changes are listed below.

Duty changes

These are the major changes effective 1 February 2024:

Landholder duty

The landholder duty threshold for acquisition in private unit trusts will be reduced from 50% to 20%. The company threshold remains at 50%.

The current 50% threshold will apply to acquisitions in unit trusts occurring before 1 February 2024. The 50% threshold will apply to acquisitions in unit trusts occurring after 1 February 2024 if the acquisition arose from an agreement that was signed before 19 September 2023.

Corporate reconstruction/corporate consolidations relief

The current exemption will be replaced with a 10% concessional rate (ie only 10% duty is payable).

The current exemption will apply to transactions occurring before 1 February 2024. The exemption will apply to a transaction occurring after 1 February 2024 if the agreement was signed before 19 September 2023 and the exemption application is made before 1 April 2024.

Comments on the landholder duty and corporate reconstruction/consolidation relief budget changes

The changes to landholder duty and the corporate reconstruction/consolidation concession are the same as the rules applying in Victoria.

There will be a transition period between now and early 2024 in which current matters can be finalised.

Fixed/nominal duty rates

The main changes here are that duty on trust deeds will increase from $500 to $750. Nominal duty on transfers will increase from $10 to $20.

Land Tax – PPR concession

Effective from the date of assent.

Currently, a full Principal Place of Residence Land Tax exemption applies where only one of the joint owners in a property uses the property as their principal place of residence. For example, you have a 1% interest in the property as a tenant in common and the other owner has a 99% interest. The full exemption applies to both owners if you, as the 1% owner, lives in the property even if the 99% owner does not. The minimum ownership threshold will be increased to 25%. This minimum threshold will apply to people acquiring their property after the date of assent.

Existing owners with less than a 25% existing interest can 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 onwards.

Other changes

From 1 January 2024, zero and low emissions vehicles will no longer be exempt from motor vehicle registration duty. They will also be liable to a road user charge.

From1 July 2024, coal royalty rates will increase by 2.6%.

Please contact one of our tax team if you wish to discuss any of these changes.

This article was written by John Caravousanos, Partner.

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