Less double tax for businesses in NSW
DID you know there is one less double tax for NSW businesses from July 1?
As a part of the recent State Government budget, changes previously promised and not implemented are finally being put in place in respect to certain duties levied on business assets, marketable securities and mortgages.
The abolition of mortgage duty, marketable securities duty and duty on the transfer of business assets (such as goodwill, licences and intellectual property) will go ahead from July 1.
Full detail of the changes can be viewed at www.osr. nsw.gov.au.
These changes remove what can be a significant cost or barrier to the sale of a business or business assets and the financing of business operations.
Mortgage Duty alone on a refinance of a $2million loan from one bank to another would cost a business $4000.
This removes a significant barrier to the refinance of a business's banking facilities from one lender to another.
On new loans and increased loans there will also be no requirement to pay mortgage duty on a new loan of $2million - this is a saving of $7941.
The removal of these taxes is welcome, although be aware that dealings in debt and loans can still have duty consequences in Queensland, Western Australia and the Northern Territory.
In addition, while no share transfer duty is now payable in Australia, landholder duty may be payable on any relevant transfer.
As always though what the NSW government gives on the one hand it takes with the other - this comes in the form of higher surcharge purchase duty on foreign purchasers similar to those in Victoria and Queensland.
This surcharge is in addition to the duty normally payable on the on acquisitions of land and also applies to landholder duty charged on indirect acquisitions of residential land.
In NSW the surcharge is 4% on the purchase of residential real estate by foreign purchasers and a 0.75% land tax surcharge on residential real estate owned by foreign persons commences in the 2017 land tax year.
It is not clear yet whether the higher rates in New South Wales and Queensland will apply to commercial residential premises such as hotels.
This will presumably be known once bills are available.
The surcharge applies to all contracts entered from June 21, 2016.
In NSW this would mean a foreign purchaser would be paying a top duty rate on a purchase of 9.5% (note additional premium property rate of 7% can also apply for properties over $3m in value).
When combined with the new foreign vendor withholding tax regime, every property transaction must be analysed to determine if the buyer or seller are foreign.
Further, on the buyer side, an analysis is required as to the land acquired and whether it is residential land.
Please contact us with any feedback and suggestions on 02 6651 4101 or for more information on becoming a member of the Coffs Harbour Chamber of Commerce, simply email email@example.com or visit www.coffschamber.com.au