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Transfer duty exemption for transfers of primary production land
A transfer duty exemption may apply when you transfer primary production land, like a farm, to family members, including your spouse or children.
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In New South Wales (NSW) you must pay transfer duty when you buy a property, or a property is transferred into your name.
However, there is an exemption for transfers of primary production land between family members.
The exemption applies to various types of transactions including transfers, agreements for sale, leases and assignments of leases.
Eligibility requirements
Individuals
You may be exempt from paying transfer duty if you meet the following requirements:
A member of your family (transferor) transfers property to you (transferee).
A primary production business is undertaken on the property before and after the transfer. The primary production must be for a significant commercial purpose, with the intention to generate a profit. Hobby farms are not eligible for the exemption.
Trusts and corporations
The exemption is available for transfers, leases and assignments of primary production land owned by trusts and corporations that meet the eligibility requirements for individuals.
The exemption can apply to transfers both to and from trusts and corporations.
Examples of situations where the exemption may apply include:
deceased estates
bare trusts
self-managed superannuation funds
discretionary trusts
private unit trust schemes, and
proprietary limited companies.
The individuals who control the transferor and transferee entities must be family members.
We refer to these individuals as the persons directing the transferor or transferee entities.
Who controls a corporation?
The person directing the transferee or transferor must be:
a shareholder who is entitled to not less than 25% of the assets of the company on winding up
beneficially entitled to those shares in the company, and
entitled to vote at meetings of the company.
Who controls a trust?
Generally, a trust is controlled by the beneficiaries or unit holders of the trust.
Examples
For a discretionary trust, the person directing the transferee or transferor must be a beneficiary (as takers in default of appointment) entitled to not less than 25% interest in the capital of the trust.
For a private unit trust, the person directing the transferee or transferor must be a unit holder:
who holds those units beneficially, and
is entitled to not less than 25% of the assets of the unit trust scheme on its winding up.
Note
A person directing the transferor must have held at least a 25% interest in the corporation or trust for 3 years before the transfer.
A person directing the transferee must maintain at least 25% interest in the corporation or trust for 3 years after the transfer.
If the transferee ceases to maintain a minimum 25% interest for 3 years from the transfer of land, Revenue NSW will re-assess the transfer together with interest and penalties.
Eligible transfers
The transferor can transfer:
the entire property to one or more family members
a partial interest in the property, or
one of multiple properties they own.
The transfer of a fractional interest that results in the transferee obtaining full title (where the transferee is already a part owner) may be eligible.
Foreign transferees
Surcharge purchaser duty is not payable if the transaction is eligible for this exemption.
However, if any parcels of land being transferred are predominantly used for residential purposes, surcharge purchaser duty may be payable if foreign persons acquire the residential related property.
If you are solicitor, conveyancer or accountant, the transfer can be endorsed electronically through Electronic Duties Returns if the parties to the transfer are natural persons. In all other cases, the transfer and application for exemption should be lodged through eDuties for Revenue NSW to assess whether the exemption applies.
Your legal representative can generally process your duty assessment straight away if the property transfer is between natural persons (not trusts or corporations).
If your transaction requires assessment by Revenue NSW, your legal representative can advise on when you can expect a decision about your application.
Duties Notice of Assessment
A Duties Notice of Assessment (Notice of Assessment) is a document from Revenue NSW that informs a purchaser or transferee of the amount of duty they must pay.
When your application has been assessed, your legal representative will receive a Notice of Assessment showing the Duty Assessed as:
a nil balance if you are eligible for the exemption, or
the amount you must pay if you are not eligible for the exemption.
Read more about paying duties, including what happens if you do not pay by the due date.
Objections and reviews
If we reject your application for an exemption, you can lodge an objection within 60 days of the decision.
If your objection is unsuccessful, or Revenue NSW does not respond within 90 days, you have the right to seek a review by the NSW Civil and Administrative Tribunal (NCAT).
Call the duties team on 1300 139 814 or +61 2 7808 6916 if you are overseas. Staff are available Monday to Friday, 8.30am to 5.00pm AEST (excluding public holidays).
