Revenue Legislation Amendment Act 2024 guide
Options and surcharge purchaser duty
Details about the transitional provisions for transactions involving surcharge purchaser duty and the exercise, assignment or transfer of an option.
What is a transfer of an option to purchase land?
From 1 January 2025, surcharge purchaser duty and surcharge call option assignment duty will be applied at the rate of 9% when foreign persons acquire an interest in residential-related property through the exercise, assignment, or transfer of an option.
Under section 9B of the Duties Act 1997 a deemed transfer is taken to occur if an option holder, for valuable consideration:
- nominates another person to exercise the option; or
- nominates another person as purchaser or transferee of the land the subject of the options on or before the exercise of the option; or
- agrees to a novation of the option, or otherwise relinquishes rights under the option, so that another person obtains a right to exercise the option or to purchase the land.
In some circumstances, the person who transfers the option may be liable to call option assignment duty. For more information refer to the transfer duty for land acquisitions involving options page and section 106–111 of the Duties Act 1997.
What are the transitional provisions?
In accordance with Schedule 1, section 2(b) of the Revenue Legislation Amendment Act 2024, surcharge purchaser duty will be calculated at the rate of 8% where surcharge purchaser duty liability arises from the exercise of an option for the sale or purchase of residential-related property if the option was granted before 18 June 2024.
Note: The higher rate of surcharge purchaser duty will generally apply regardless of the date the option was granted if the option is transferred then exercised on or after 1 January 2025.
How are the transitional provisions applied to options?
The following examples demonstrate how the increased surcharge duty rate will be applied to various options transactions with the transition provisions provided in the Revenue Legislation Amendment Act 2024 and other sections of the Duties Act 1997.
For the purpose of the following examples, each transfer and exercise of an option is taken to be for residential-related property in NSW with a valuable consideration.
Option granted
1 July 2024
Party A grants Party B (foreign person) a call option for the acquisition of residential-related property in NSW.
Exercise of an option
1 December 2024
Party B exercises the call option resulting in a Surcharge liability.
Result
Party B must pay Surcharge purchaser duty at a rate of 8% as the option was:
- the option was exercised before 1 January 2025, and
- the option was not transferred
Option granted
10 April 2024
Party A grants Party B (foreign person) a call option for the acquisition of residential-related property in NSW.
Exercise of an option
20 January 2025
Party B exercises the call option resulting in a Surcharge liability.
Result
Party B must pay Surcharge purchaser duty at a rate of 8% as the option was:
- granted before 18 June 2024, and
- the option was not transferred.
Option granted
15 August 2024
Party A grants Party B (foreign person) a call option for the acquisition of residential-related property in NSW.
Exercise of an option
20 January 2025
Party B exercises the call option resulting in a surcharge liability.
Result
Party B must pay surcharge purchaser duty at a rate of 9% as the option was:
- granted after 18 June 2024, and
- exercised after 1 January 2025.
Option granted
15 May 2024
Party A grants Party B (foreign person) a call option for the acquisition of residential-related property in NSW.
Option transferred/assigned
30 December 2024
Party B transfers the call option to Party C (foreign person)
Option Exercised
20 January 2025
Party C exercises the call option.
Result
Transfer of option to Party C
Party C must pay surcharge purchaser duty at a rate of 8% as the option was transferred before 1 January 2025.
Exercise of an option by Party C
Party C must pay surcharge purchaser duty at a rate of 9% as the option was:
- transferred/assigned to Party C, and
- exercised after 1 January 2025
Despite the option being granted before 18 June 2024, the higher surcharge purchaser duty rate will apply since transferring the option nullifies this transitional provision.
Note: Party B may also have a liability to pay call option assignment duty.
Option granted
21 April 2024
Party A grants Party B (foreign person) a call option for the acquisition of residential-related property in NSW.
Option transferred
30 December 2024
Party B transfers/assigns the call option to Party C (foreign person)
Option transferred
10 February 2025
Party C transfers the call option to Party D (foreign person)
Option Exercised
20 July 2025
Party D exercises the call option.
Result
Transfer of option to Party C
Party C must pay surcharge purchaser duty at a rate of 8% as the option was transferred before 1 January 2025.
Transfer of option to Party D
Party D must pay surcharge purchaser duty at a rate of 9% as the option was transferred after 1 January 2025.
Exercise of an option by Party D
Although the option was granted before 18 June 2024, Party D must pay surcharge purchaser duty at a rate of 9% as the option was:
- transferred/assigned to Party B and C, and
- exercised after 1 January 2025
Note: Party B and Party C may also have a liability to pay call option assignment duty.
How are these transactions processed?
Acquisitions arising from the arrangement involving an option (put option and/or call option), including the contract for sale, must be lodged in eDuties under application type - Assessment - transaction arising from a put/call option.
