NSW budget 2023-24 – Key changes to NSW stamp duty regime

The first state budget delivered by the Minns Labor Government today includes a raft of state tax changes that are expected to deliver $958.5 million over four years.

Explained as measures ‘to improve integrity and fairness in the tax system and close loopholes’, the key changes include significant changes to the NSW landholder regime and a move from a 100% exemption for corporate reconstruction and corporate consolidations, to a 90% duty reduction.

These changes are intended to apply from 1 February 2024 – with limited transitional relief for transactions occurring after then. For both the landholder and corporate reconstruction changes, where an acquisition or transaction occurs after 1 February 2024, transitional relief is only available where the acquisition or transaction arises from an agreement or arrangement entered into before 19 September 2023 (i.e. the date that these changes were announced). For agreements entered into after 19 September 2023 to qualify for relief, the new rules will apply unless the relevant acquisition (for landholder duty) or corporate reconstruction transaction completes before 1 February 2024.

The budget also includes a $111.1 million investment over four years to boost Revenue NSW’s tax compliance activities.

Below is a high level summary of the main stamp duty changes proposed. There are also a number of land tax changes, a removal of an exemption for certain electric vehicles from the duty and a proposed road user charge for electric vehicles. These are not included in the summary below.

Main stamp duty changes proposed

This table is also available for download as a PDF.

	DETAILS	START DATE	Example uses 2
Landholder changes	The proposed NSW landholder duty changes move NSW closer to the Victorian landholder model but there are differences
Changes to acquisition thresholds	New ‘significant interest’ concept: Private landholders: Private unit trust scheme: 20% or more Other private landholder (registered unit trust schemes and private companies): 50% or more Public landholder (trust or company): 90% or more		1 Feb 2024
Wholesale unit trust registration	Inserts new regime for registration of wholesale unit trust schemes. Registered wholesale unit trust schemes will be entitled to a 50% acquisition threshold for landholder duty. The proposed regime for wholesale unit trusts is broadly similar to Victoria, except that a wholesale unit trust in NSW will require at least 80% qualified investors (compared with 70% in Victoria). The proposed requirements for registration as a wholesale unit trust scheme in NSW are: the scheme was not established for a particular investor, and not less than 80% of the units in the scheme are held by qualified investors, and no qualified investor, either alone or together with associated persons, holds 50% or more of the units in the scheme, and the scheme satisfies additional requirements that are specified by the Chief Commissioner by orders published in the Gazette. Transitional An acquisition of an interest in a unit trust scheme that has not been registered as a ‘wholesale unit trust scheme’ is taken to be an acquisition in a relevantly registered scheme if (a) the acquisition occurs on or after 1 February 2024, and (b) an application is made to register the scheme before 1 May 2024, and (c) the application is approved.	1 Feb 2024
Imminent wholesale unit trust scheme	The Chief Commissioner may register a unit trust scheme as an imminent wholesale unit trust scheme where satisfied it will be a wholesale unit trust scheme within 12 months after the day on which the first units in the scheme are issued to a qualified investor. This is similar to the Victorian provisions for imminent wholesale unit trust schemes. Registered imminent wholesale unit trust schemes will be entitled to a 50% acquisition threshold for landholder duty.	1 Feb 2024
Qualified Investor	The qualified investor criteria are substantially similar to the criteria under the Victorian Duties Act. Like Victoria, foreign investors must apply to the Chief Commissioner to be recognised as a qualified investor.	1 Feb 2024
Linking threshold decrease	The threshold for the tracing of property through linked entities of a landholder will decrease from 50% to 20%. Entities in a chain will be considered linked where one of the entities would be entitled, in the event of a distribution of all property of the other entity to receive not less than 20% of the value of the property of the other entity.	1 Feb 2024
Transitional - Landholder	The landholder rules (Chapter 4), as in force immediately before it was amended, continues to apply to the following- (a) a relevant acquisition occurring before 1 February 2024, (b) a relevant acquisition occurring on or after 1 February 2024 if the acquisition arose from an agreement or arrangement entered into before the introduction date – 19 September 2023. See also Transitional provision noted above for acquisitions in ‘wholesale unit trust schemes’.
Corporate reconstructions and corporate consolidations change to 90% relief	Concession for duty on corporate reconstructions and corporate consolidations reduced from a 100% exemption to a 90% concession.
Transitional – corporate reconstruction and consolidations	The current exemption for corporate reconstructions and corporate consolidations will continue to apply in relation to the following — (a) a transaction occurring before 1 February 2024, (b) a transaction occurring on or after 1 February 2024 if: (i) the application for exemption is made on or before 1 April 2024, and (ii) the transaction arose from an agreement or arrangement entered into before the introduction date - 19 September 2023.
Increase to fixed & nominal duties	There are numerous fixed and nominal duty provisions. There are increases across the board, and notably, the fixed trust declaration duty will increase from $500 to $750. $10 increased to $20 (e.g. s 18(2)–(6) etc) $50 increased to $100 (e.g. s 18(1) and (6A), 29(3A) etc) $50 increased to $500 (e.g. s 54A(1)–(7) and 59) $500 increased to $750 (e.g. s 58(1) and (2), 61(2) etc)