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In this section
  1. Lodging applications
  2. Pay your transfer duty
  3. Buying a property
  4. First home buyers
  5. Buying off-the-plan
  6. Surcharge purchaser duty
  7. Buying a business
  8. Deceased estate transfers
  9. Family transfers
  10. Landholder duty
  11. Compliance

Buying a business

When you buy a business in NSW, you must pay transfer duty if the sale includes land or an interest in land, such as a lease.

If it does, you may also need to pay transfer duty on the assets used to operate the business, including  warehouse equipment and computers.

Transfer duty is due three months after you sign the business sale agreement.

Assets included

A business is any activity you do regularly with the aim of making a profit.

It does not need to be a company, corporation, partnership or have any formal organisation. It can be any size. Selling homemade jam at a local market each Sunday is a business.

To work out the value of your business, include:

  • land and property
  • interest in land, such as a lease
  • plant and equipment
  • shares and units
  • goods that are not stock-in-trade, under manufacture, or excluded from transfer duty.

You may also need to pay a $10 transfer duty for any:

  • sale of a business agreement
  • duplicate sale of a business agreement
  • transfer of lease
  • transfer in conformity to the agreement.

Read more about the assets you must pay transfer duty on in section 11 of the Duties Act 1997.

Excluded assets

Generally, you will not pay transfer duty on:

  • goods that are stock-in-trade
  • manufacturing materials, or anything under manufacture
  • assets used on land for primary production
  • livestock
  • registered vehicles
  • ships or vessels.

The exception applies to assets that cannot be moved from the property.

From 30 June 2016, you also no longer have to pay transfer duty on:

  • gaming machines
  • intellectual property used in NSW
  • licences or permissions under NSW law or Commonwealth law, if used in NSW, such as a taxi licence or water access licence
  • the goodwill of a business, if it supplies goods or services in NSW.

You must pay transfer duty on these assets if your agreement is replacing one made before 1 July 2016 for the same business property and assets.

Under section 26 of the Duties Act

The Chief Commissioner will disregard the value of the goods in a dutiable transaction if the dutiable value of the other dutiable property does not exceed 10 per cent of the dutiable value of all the dutiable property in the transaction.

The Chief Commissioner will not disregard the value of the goods if the other dutiable property exceeds 10 per cent of the dutiable value of all the dutiable property in the transaction.

Example:

  • Lease $15k
  • Goods $85k
  • Stock in trade $50k
  • Goodwill $200k

The dutiable property in this example (from 1 July 2016) comprises the lease and the goods the total dutiable value of which is $100k.

As the dutiable value of the leasehold interest being transferred exceeds 10% of the dutiable value of the dutiable property (being $15k / $100k = 15%), the Chief Commissioner will not disregard the value of the goods in this transaction and ad valorem duty is payable on $100k.

Example:

  • Lease $1k
  • Goodwill $1k
  • Goods $99k

The dutiable property in this example (from 1 July 2016) comprises the transfer of the lease and the goods the total dutiable value of which is $100k.

As the dutiable value of the leasehold interest being transferred does not exceed 10 per cent of the dutiable value of all the dutiable property in the transaction (being $1k / $100k = 1%), the Chief Commissioner will disregard the value of the goods and ad valorem duty is payable on $1k.

Buying land and assets under separate contracts

Transfer duty is calculated as though it's one transaction when land and business goods are sold under different agreements, but as part of the same arrangement, including:

  • agreements containing an inter-dependency clause
  • where the parties entered into options before making the final agreements.

The buyers and sellers do not need to be the same parties on each agreement for it to be the same arrangement.

Read more about the aggregation of dutiable transactions.

Examples

When you buy a  business, the assets not liable for transfer duty include:

  • $25,000 intellectual property
  • $25,000 stock-in-trade

Liable assets include:

  • your  factory, valued at $500,000
  • your plant and equipment, valued at $100,000, if they've been transferred with the land as part of the business.

You must pay transfer duty on the value of your property, plus the value of your plant and equipment:

  • Land + liable goods = $500,000 + $100,000 = $600,000
  • Transfer duty owed = $22,490

Calculating transfer duty

The easiest way to work out how much transfer duty you'll need to pay is by using our online calculator.

Calculate your transfer duty

Contact us

Contact us for more information on buying a business and paying transfer duty.

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