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Understand how transfer duty applies when buying a business in NSW, including which assets are dutiable, how duty is calculated, and when you need to pay.
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If you buy a business in New South Wales (NSW), you must pay transfer duty when the sale includes land or an interest in land, such as a lease. Anything fixed to the land is taken to be part of the land.
Duty may also be payable on certain goods transferred as part of the sale, including moveable plant and equipment.
A sale of business may also include other assets, for example intellectual property or licences. However, not all business assets are dutiable.
The buyer is responsible for paying the duty, not the seller.
Dutiable property in a business
You must pay transfer duty when you acquire a business if any of the property or assets of the business are dutiable property.
Dutiable property includes:
land, such as freehold property owned by the business
interests in land, such as commercial or retail leases (including the assignment of an existing lease) and fixtures, and
goods under certain circumstances.
Fixtures
Fixtures are considered an interest in land and are always liable to duty.
A fixture is an asset that:
is permanently attached to the land or buildings of the business, and
cannot be removed without damaging the land or buildings of the business, or
requires significant work by professional tradespeople to detach it from the land or buildings of the business.
Common examples may include:
built-in cabinetry permanently attached to walls or floors
air conditioning units bolted or hard-wired into the building
fixed shelving systems secured to walls or floors
industrial equipment bolted to concrete foundations
Transfer duty is calculated as though it is one transaction when land and business goods are sold under different agreements, but as part of the same arrangement.
Examples include agreements:
containing an inter-dependency clause, or
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.
The value of goods
The value of the goods may be disregarded if they make up 90% or more of the total value of all dutiable property.
If you are a solicitor, conveyancer or accountant read the sale of business guide for instructions on how to process assessments in Electronic Duties Returns.
Required documents
To have your business purchase assessed for transfer duty, you or your legal representative (solicitor or conveyancer) must gather the following documents:
Original executed business sale agreement or contract.
Evidence of value of the goods and the other dutiable property, if no apportionment is available.
Fixtures versus moveable goods apportionment, including individual values for significant items.
Transfer and assignment of lease documents, including a copy of the lease and variations of lease, if applicable.
When land and business goods are purchased under different agreements, but as part of the same arrangement, transfer duty is calculated as though it's one transaction.
This includes agreements with inter-dependency clauses.
You may also need to gather:
copies of all related agreements
an explanation of how the transactions are connected, and
the combined value of all dutiable property across all agreements.
Lodging an assessment or application
Your legal representative can manage the transfer duty process as part of the business purchase, including:
preparing and lodging the application for transfer duty assessment
ensuring all required documents are complete and accurate
calculating the correct duty amount
submitting your application online
liaising with Revenue NSW if we require additional information
arranging payment before settlement, and
endorsing any liable documents once an assessment has been issued.
For straightforward business transactions, your legal representative can process your duty assessment straight away.
More complex business transactions must be assessed by Revenue NSW. Your legal representative can advise on when you can expect our assessment for your business purchase.
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 business purchase has been assessed, your legal representative will receive a Notice of Assessment showing the amount you need to pay.
Transfer duty is due the earliest of:
the settlement date (if a purchase of land was part of the transaction), or
within three months after you sign the business sale agreement or lease.
Read more about paying duties, including what happens if you do not pay by the due date.
Objections and reviews
If you do not agree with our assessment, you can lodge an objection with us within 60 days of the decision.
If your objection is unsuccessful, or we do not respond within 90 days, you have the right to seek a review by the NSW Civil and Administrative Tribunal (NCAT).
Since the sale does not include land or an interest in land:
the sale of business is not a dutiable transaction, and
transfer duty is not payable on the moveable furniture, computers or display units.
Goodwill, intellectual property and stock-in-trade are not dutiable in NSW.
You will not need to pay transfer duty.
Example 2: Business sale with lease
You are buying a hairdressing business in Kiama for $200,000.
The purchase agreement includes:
Commercial lease (5 years remaining, valued at): $15,000
Goodwill: $100,000
Hair dryers (moveable): $40,000
Fixed salon fit out (built-in benches, sinks): $25,000
Stock-in-trade: $10,000
Furniture (moveable): $10,000
The lease and fixed salon fit out are dutiable property.
The salon equipment and furniture are also dutiable property as they are included in an agreement that contains other dutiable property.
Goodwill and stock-in-trade are not dutiable.
The total value of the dutiable property is $15,000 (lease) + $40,000 (hair dryers) + $25,000 (fixed salon fit out) + $10,000 (furniture).
Transfer duty will be calculated on $90,000.
Example 3: Business sale with land
You are buying a small farming business in Batlow for $1,300,000.
The purchase agreement includes:
Land and buildings: $900,000
Irrigation system: $40,000
Tractors and harvesters: $80,000
Goodwill: $70,000
Vehicles registered for road use: $150,000
The land and building are dutiable property. The irrigation system is also dutiable property as it is a fixture.
The tractors and harvesters are being used on primary production land so are excluded from transfer duty.
The goodwill and vehicles are not dutiable.
The total value of the dutiable property is $900,000 (land and buildings) + $40,000 (irrigation system).
Transfer duty will be calculated on $940,000.
Example 4: Business sale where goods exceed 90%
You are buying a manufacturing business in Granville for $500,000.
The purchase agreement includes:
Lease interest: $1,000
Fixed machinery and equipment (fixtures): $10,000
Moveable plant and equipment: $200,000
Goodwill: $50,000
The lease and fixtures are dutiable property. The moveable equipment is also dutiable property because it is included in an agreement with other dutiable property. Goodwill is not dutiable in NSW.
As the value of the goods ($200,000) exceeds 90% of the total dutiable value of the dutiable items (the lease, fixtures and goods are worth $211,000), the value of the goods can be disregarded.
Transfer duty would only be calculated on $11,000 ($1,000 (the value of the lease) + $10,000 (fixtures).
Example 5: Aggregated transaction
You are buying a restaurant business where the land and business assets are sold under separate contracts.
Both contracts have an inter-dependency clause stating one cannot proceed without the other.
The first contract is for the land and building valued at $800,000.
The second contract is for business assets as follows:
Fixed restaurant fit out: $150,000
Commercial kitchen equipment (moveable): $100,000
Goodwill: $200,000
Intellectual property: $130,000
When land and business goods are sold under different agreements, but as part of the same arrangement, transfer duty is calculated as though it is one transaction.
The landing and building, fixed restaurant fit out and the commercial kitchen equipment are dutiable property.
The goodwill and intellectual property are not dutiable property.
The aggregated dutiable value is $800,000 (land and building) + $150,000 (fixed restaurant fit out) + $100,000 (commercial kitchen equipment).
See if the land of your business will be liable for land tax.
Contact us
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).
