Duties Regulation 2022 - Change in beneficial ownership

Section 8(1)(b)(ix) of the Duties Act 1997 introduced duty on any transaction that results in a change in beneficial ownership, other than excluded transactions. Excluded transactions will not be chargeable with duty.

Excluded transactions include ‘transactions of a kind prescribed by the regulations’.

Duties Regulation 2022 (released 26 August 2022)

The Regulation is now in force and can be viewed here. The Regulation applies retrospectively to transactions which have occurred in accordance with an agreement or arrangement entered into on and after 19th of May 2022, which is the date of assent of the State Revenue and Fines Legislation Amendment (Miscellaneous) Act 2022.

The following is an excerpt from the Duties Regulation 2022:

(1) For the Act, section 8(3) definition of excluded transaction, paragraph (k), the following transactions are prescribed —

1. a change in default beneficial interests under a discretionary trust, including the following:
   • a change to the default beneficial interests of the default beneficiaries,
   • the addition or removal of a default beneficiary,
2. a change in beneficial ownership of dutiable property that occurs:
   • under a testamentary instrument or the laws of intestacy, or
   • otherwise by operation of law on the death of a person,
3. the grant or termination of a life estate in dutiable property for no consideration,
4. the variation or surrender of an easement for no consideration,
5. the grant, creation, variation or extinguishment of a mortgage, charge or other security over land,
6. the creation, variation or surrender, for no consideration, of a tenant’s interest in fixtures that are fit-out for commercial premises,
7. a change in tenancy under a lease for no consideration,
8. a change, for no consideration, in the holding of property:
   • from joint tenants to tenants in common in equal shares, or
   • from tenants in common in equal shares to joint tenants,
9. the grant, variation, cessation, revocation or cancellation of a water right,
10. the expiry, extinguishment or merger of one or more leases for no consideration,
11. the variation or extinguishment of a profit a prendre for no consideration,
12. the surrender of a security interest for no consideration.

(2) In this section —

1. security interest has the same meaning as in the Personal Property Securities Act 2009 of the Commonwealth.
2. water right has the same meaning as in the Valuation of Land Act 1916.

Transfer duty and leases

The creation and extinguishment of dutiable property which includes leases is dutiable unless exempt or excluded. Excluded items include the grant, renewal or variation of a lease for no consideration and any transactions prescribed by the Regulations. The Regulation will be retrospective and will commence from the date of assent of the legislation which is the 19th of May 2022.

The Regulation, CPN 025: Change in beneficial ownership and CPN 027: Leases and change in beneficial ownership contain a detailed explanation of the duty consequences of lease transactions. Generally, leases where rent is paid or payable will not be liable for duty, provided there is no premium or other consideration for the grant of the lease.

Leases granted for consideration (monetary or non-monetary) will be liable. Please be aware that an excluded transaction that results in a change in beneficial ownership of dutiable property will be treated as a dutiable transaction if it is part of a scheme or arrangement to avoid or reduce duty.

Revenue NSW requirements

Leases liable to duty under the above provisions will need to be lodged with Revenue NSW for assessment of duty via eDuties.

1. Within the eDuties platform, select the Application type "Change in Beneficial Ownership – create, extinguish, or change of dutiable property"
2. Lodge with the following:
   • A cover letter - setting out the details of the transaction
   • The executed and dated instrument
   • ODA 082 - Change in beneficial ownership declaration, or if there is no instrument, a completed form OSD 046 - Statement for Dutiable Transaction not Effected by a Written Instrument
   • Duties proof of identity

Where can I find more information?

Section 8(1)(b)(ix) of the Duties Act 1997

State Revenue and Fines Legislation Amendment (Miscellaneous) Act 2022