When GST was introduced in 2000, part of the then agreement between the Commonwealth and the States for the sharing of GST revenues proposed the abolition of various state taxes relevant to business.
As might have been anticipated, most State Governments including NSW have not been particularly prompt in doing that. Finally, there is good news the business on this front.
Effective 1 July 2013 NSW stamp duty on –
- Purchase of shares in private companies;
- Mortgages; and
- Purchase of business assets other than land,
is to be abolished.
The abolition of these duties was originally proposed to take effect from 1 July last year however that was deferred in the 2012 State Budget to this year. Most experts are waiting on this year’s State Budget, scheduled to be released on 18 June, before relying upon the proposed changes taking effect.
Traditionally June is a peak activity month for business sales and purchases. This year however the “carrot” of reduced or eliminated stamp duty and the uncertainty until after the State Budget may recommend that some business transactions be deferred into the new financial year.
There are anti-avoidance provisions already in the stamp duty legislation to stop the exemption applying to transactions which finalise after 1 July but result from legally enforceable arrangements entered into before that time. This means that there is limited scope to put a legally binding deal in place before 30 June and then claim the benefit of the stamp duty exemption if settlement takes place after 1 July.
This will be one of the issues that vendors and purchasers will need to grapple with in the period leading up to the end of the financial year. Sellers will naturally wish to complete transactions whereas some purchasers may wish to defer until the new financial year.
At Everingham Solomons the business law team has the experience and expertise to provide advice on all sale and purchase of business matters and associated stamp duty issues because Helping You is Our Business.
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