Stamp duty is a tax imposed by Australian state and territory governments on the purchase of assets. Each government has different stamp duty legislation, so it is important to understand how it applies in your relevant state or territory. In most cases, the purchaser pays stamp duty. Therefore, to determine if stamp duty applies to the business you are purchasing, you should obtain taxation advice from an experienced lawyer or accountant. This article gives a brief overview of how each state and territory imposes stamp duty for a business sale.
What is Stamp Duty?
Stamp duty is a state or territory-based tax that applies to certain transactions over assets considered dutiable property in that area. Dutiable property includes:
- real property such as land or real estate;
- shares; and
- units in a unit trust.
You must pay stamp duty on:
- documents or any transactions that affect the transfer of ownership of dutiable property; or
- the creation of rights concerning certain assets.
If you are dealing with a transaction concerning dutiable property, you must understand how stamp duty applies to you and what responsibilities you may have.
New South Wales
In NSW, stamp duty falls under the Duties Act 1997 (NSW) and is the responsibility of Revenue NSW. Since 1 July 2016, you do not have to pay stamp duty for the sale of business assets (other than real property business assets). However, a nominal duty may still be payable if the business sale includes a transfer of lease and goods.
Stamp duty is generally due within three months of the relevant transaction (for example, the transfer or agreement to transfer dutiable property).
Continue reading this article below the formQueensland
Stamp duty in Queensland applies to business sales and falls under the Duties Act 2001 (QLD). The Office of State Revenue Queensland is the responsible authority. In QLD, stamp duty is payable on dutiable property, which includes all business assets except:
- business transfers solely involving debts; and
- transfers of a supply right or intellectual property.
You, as a purchaser, will have to pay stamp duty within 30 days of signing the transfer agreement.
Victoria
Under the Duties Act 2000 (VIC), stamp duty is not charged on the transfer of business assets (other than real property), and there is no nominal fee on the sale of business agreement, as there is in NSW. The State Revenue Office Victoria is the responsible authority for all stamp duty enquiries in the state.
Liability for stamp duty for a sale of business arises when the relevant dutiable transaction occurs and is payable within 30 days of signing the agreement.
Western Australia
In Western Australia, stamp duty is payable on the sale of business assets, including goodwill and intellectual property. The Duties Act 2008 (WA) is the relevant law outlining the requirement to pay stamp duty. Likewise, the responsible authority is the State Revenue – Department of Finance (WA).
You have to pay stamp duty once after the exchange of business assets. The stamp duty is payable within one month after you receive an assessment notice from the State Revenue.
Northern Territory
Under the Stamp Duty Act 1978 (NT), stamp duty is payable on business asset sales except the following:
- stock-in-trade (trading stock);
- manufacturing materials and work-in-progress manufacturing goods;
- livestock;
- motor vehicles; and
- cash.
If you sell your business in the NT, you must lodge your sale of business agreement with the Territory Revenue Office. They will assess the stamp duty payable on the sale.
Stamp duty is payable within 60 days after parties sign the business sale agreement.
Australian Capital Territory
In the ACT, there is no stamp duty or nominal fee payable on a sale of business. The only exception is for real property assets. The ACT Revenue Office is responsible for all duty enquiries. Stamp duty is generally payable within 90 days of signing the relevant agreement.
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This How to Sell Your Business Guide covers all the essential topics you need to know about selling your business.
South Australia
In SA, stamp duty falls under the Stamp Duties Act 1923 (SA). Any sale of business agreements signed after 18 June 2015 will not incur stamp duty. There is no nominal fee applicable either. However, it will still apply to the transfer of land or a motor vehicle that is part of the sale of the business.
Revenue SA is the responsible authority for all stamp duty enquiries. Stamp duty is generally payable within two months of the relevant transaction.
Tasmania
Stamp duty in TAS falls under the Duties Act 2001 (TAS). In 2008, Tasmania removed duty on all assets in a business sale except the transfer of land. Likewise, there is no nominal fee payable on the transfer.
The State Revenue Office of Tasmania is responsible for all duty enquiries. Stamp duty for a business sale is generally payable within three months of the relevant transaction.
Key Takeaways
When selling a business, each transaction will be unique and encompass different assets for sale. On top of that, different states and territories in Australia have slightly different tax requirements. Therefore, you should discuss your business sale with your legal advisor and accountant to fully understand if stamp duty is payable and how much is payable. It is important to include the appropriate stamp duty clauses in your sale of business agreement.
If you require advice on stamp duty for your business sale, our experienced taxation lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
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