Key changes to NSW Duty and Land Tax take effect as of 1 February 2024, from the Treasury and Revenue Legislation Amendment Bill which assented on 27 September 2023.The reform introduces substantial amendments aligned with the NSW Government’s 2023-24 Budget. Key changes are set to impact land tax, corporate reconstruction, consolidation transactions and landholder duty, demanding attention and strategic planning from affected individuals, businesses and investors.
Summary of some of the key reforms include:
Increases on fixed and nominal duty payable
Fixed and nominal duty payable have now increased as of 1 February 2024 as follows:
- $10 duty payable for counterparts and duplicate is increased to $20;
- $50 duty payable for changes in trustee concession is increased to $100
- $50 on certain transfers relating to Managed Investment Schemes is increased to $500; and
- $500 duly payable on declarations of trust over unidentified or non-dutiable property is increased to $750.
Landholder duty and significant interest acquisition threshold for private unit trust scheme
Landholder duty will now be charged on acquisitions of a significant interest (50% or more) in private unit trusts that directly or indirectly hold NSW land with an unencumbered value of $2 million or more.
The significant acquisition threshold for private unit trusts which was previously 50% or more for a private landowner and 90% or more for a public land owner is now set at 20%. For wholesale unit trusts or imminent wholesale unit trusts the 50% threshold is retained. These changes apply to acquisitions completed on or after 1 February 2024, unless the agreement or arrangement was entered into before 19 September 2023.
Removal of exemption from duty on electric vehicles
From 1 January 2024 duty exemptions for electrical vehicles under $78,000 will cease to be available to zero and low emission vehicles. The NSW government intends to consider potential changes to its planned road user charge under the Electric Vehicles (Revenue Arrangements) Act 2021, in its aims to address road funding concerns and potential impact of electric vehicle adoption which will commence from the earlier of 1 July 2027 or when battery EVs make up 30% of new light vehicle registrations following after the High Court’s decision on a similar road tax charge imposed by Victoria (Vanderstock & Anor v The State of Victoria).
Principal Place of Residence (PPR) Exemption
The PPR exemption threshold has been altered significantly compared to the previous 1% ownership, the PPR exemption is now only available to a person who occupies and owns an interest of at least 25% of the property. The Act includes transitional provisions to allow those who own less than a 25% interest but already claim the exemption to continue doing so for the 2024 and 2025 land tax years. However, the 25% ownership requirement will then apply in the 2026 land tax year.
Duties on Corporate Reconstructions and Consolidations Concession
A 10% duty is now payable on eligible corporate reconstruction transactions and corporate consolidation transactions, replacing the previous 100% exemption. Transitional provisions still allow full exemptions on transactions that arise from an agreement or arrangement entered into before 19 September 2023 and where an exemption application is lodged on or before 1 April 2024 and approved.
Remission of Interest
The amendment reenacts the power of the Chief Commissioner of State revenue to remit interest and to issue guidelines on how interest must be remitted in accordance with those guidelines. It also makes clear the impositions or remission of penalty tax is not relevant to the imposition or remission of interest.
Whilst the NSW Government modifies the structure of duty and land tax adapting to our modern transformative economic landscape. Affected parties should stay informed and seek professional advice to effectively navigate through any challenges or opportunities which may arise when considering any property, asset management and financial affairs.
DISCLAIMER: This article is provided to clients and readers for their general information and on a complimentary basis. It contains a brief summary only and should not be relied upon or used as definitive or complete statement of the relevant law.
