Abolition of NSW Marketable Security Duty
On 1 July 2016 marketable security duty is being abolished in NSW.
The following types of property (marketable securities) cease to be dutiable property from 1 July 2016:
- Shares in a NSW company, and shares in a corporation incorporated outside Australia that are kept on the Australian register kept in NSW
- Units in a unit trust scheme, being units:
- registered on a register kept in NSW, or
- that are not registered on a register kept in Australia, but in respect of which the manager (or, if there is no manager, the trustee) of the unit trust scheme is a NSW company or is a natural person resident in NSW.
NSW company means:
- a company incorporated or taken to be incorporated under the Corporations Act 2001 of the Commonwealth that is taken to be registered in NSW for the purposes of that Act, or
- any other body corporate that is incorporated under an Act of NSW.
Agreements for sale or transfers of marketable securities first executed on or after 1 July 2016 do not need to be stamped or marked. Where an agreement for sale of shares is first executed prior to 1 July 2016 and the subsequent transfer is first executed on or after 1 July 2016, duty is payable on the agreement but no duty is payable on the transfer ( and the transfer does not need to be stamped or marked).
Note: duty on transfers of shares and units quoted on the Australian Stock Exchange or a recognised stock exchange was abolished on 1 July 2001.
Commercial fishery shares
Duty on transfers of shares in a share management fishery (within the meaning of the Fisheries Management Act 1994) is abolished on 1 July 2016.
Other transactions not liable to duty from 1 July 2016
- Entitlements arising from capital reductions or right alterations under Part 3 of Chapter 2 (sections 124 to 131) of the Duties Act, 1997 (the Act).
- Allotment of shares by direction under Part 5 of Chapter 2 (sections 137A to 144) of the Act.
Anti- avoidance measure
Abolition does not apply in respect of a transfer or transaction that occurs on or after 1 July 2016 if it was made or entered into pursuant to another arrangement, made before 1 July 2016, the only or main purpose of which was to defer the transfer or transaction until 1 July 2016, or later, so that duty would not be chargeable on the transfer or transaction.
Interim stamped agreements for sale
An agreement to transfer any of the abolished dutiable property first executed before 1 July 2016 which was interim stamped with estimate duty (under section 49 of the Act) will continue to be liable to additional duty even if the date of final purchase price or completion occurs on or after 1 July 2016. A refund of estimate duty will also be provided in these circumstances if the estimate duty was more than should have been paid at completion.
A landholder is a unit trust scheme, a private company or a listed company that has land holdings in NSW with a threshold value of $2,000,000 or more.
Duty on certain acquisitions of shares or units in landholders remains liable to duty under Chapter 4 of the Act.
So whilst marketable security duty is not payable on the share or unit acquisition from 1 July 2016 the acquisition could attract landholder duty. Read more about landholder duty.
Company title dwellings and land use entitlements
A transfer of shares or units in a company title dwelling or land use entitlement is still liable to duty from 1 July 2016.
An acquisition of a land use entitlement by an allotment of shares or an issue of units also remains liable to duty.
Company title dwelling is defined in the dictionary of the Act, 1 as a separate dwelling in a building containing more than one separate dwelling situated in NSW owned or leased by a company in which shares issued by the company are owned or leased by a company in which shares issued by the company are owned by persons who, by virtue of the ownership of their shares, have an exclusive right to occupy a part of the building.
Land use entitlement is defined in the dictionary of the Act as an entitlement to occupy land within NSW conferred through an ownership of shares in a company or an ownership of units in a unit trust scheme, or a combination of a shareholding or ownership of units together with a lease or licence.
Duty on transactions involving company title dwellings and land use entitlements are chargeable at the general rate (set out in section 33 of the Act) on the dutiable value of the property transferred.