Section 273B of the Duties Act provides for an exemption for certain corporate reconstruction and corporate consolidation transactions that occur prior to 1 February 2024.

For eligible transactions that occur on or after 1 February 2024, the exemption from duty is replaced with a concession of 10% of the duty that would otherwise be payable.

This reduction in duty provides relief from duty on intragroup transactions enabling a corporate group to reorganise its business structure, for example by transferring assets between corporations that are members of the corporate group.

The reduction in duty applies to an eligible transaction arising as a consequence of a legitimate corporate reconstruction.

The corporate consolidation reduction in duty enables the interposition of a head corporation between a corporation that is a member of a corporate group and the shareholders or unitholders of that corporation for the purposes of the formation or continuation of a consolidated group.

How is the reduction in duty calculated?

Where there is an eligible transaction the duty on the transaction is 10% of the duty otherwise chargeable (i.e. a 90% discount).

Example – Duty on an eligible corporate reconstruction transaction

On 1 May 2024, corporation A transfers land with a dutiable value of $1,000,000 to corporation B. This is an eligible corporate reconstruction transaction and meets all the relevant requirements under Section 273B.

The corporate reconstruction reduction is calculated as follows:

• Dutiable value of property = $1,000,000
• General duty rate calculation = $39,735.00
• Reduced duty rate = 10% of duty otherwise payable
• Corporate reconstruction duty = $3,973.50

Is Surcharge Duty payable?

If you are a foreign purchaser and acquire residential-related property in NSW or you have made a relevant acquisition in a landholder that has an interest in residential land, you may also need to pay Surcharge duty at 10% of the duty chargeable in addition to transfer/landholder duty.

More information on surcharge duty can be found in the Surcharge Purchaser Duty guide.

What are the transitional provisions?

The transitional provisions provide an exception for transactions that arise from an agreement or arrangement entered before the amending legislation was introduced to Parliament and for which an exemption application is lodged on or before 1 April 2024 and is approved. In these circumstances, the full exemption will continue to be available.

The transitional provisions below apply to these common scenarios but are subject to the ordinary requirements of a corporate reconstruction application being met:

1. Where there is an agreement or arrangement prior to 19 September 2023 and a corporate reconstruction is lodged prior to 1 April 2024 – a 100% exemption will be available.
2. There is no agreement or arrangement prior to 19 September 2023, but a corporate reconstruction is lodged, and transaction documents are executed prior to 1 February 2024 – a 100% exemption will be available.
3. There is no, or insufficient evidence of an arrangement prior to 19 September 2023, but a corporate reconstruction is lodged prior to 1 February, but no transaction documents are executed until after 1 February – a 90% exemption will be available.
4. There is no, or insufficient evidence of an arrangement prior to 19 September 2023, but a corporate reconstruction is lodged prior to 1 February, primary transaction documents are executed prior to 1 February but completion documents (e.g., real property or share transfer) documents are not executed until after 1 February. These matters will be looked at on a case by case basis. Where the reason for the extended execution is due to external circumstances (e.g., Foreign Investment Review Board), a 100% exemption may still be available.