Cost of a lease
Abolition of Lease duty
Duty was abolished on lease instruments first executed on or after 1 January 2008. The abolition of duty on leases does not affect any obligation to pay duty in respect of a lease instrument and a variation of a lease instrument executed before 1 January 2008.
Stamping is not required unless the document falls under one of the following categories:
a) A lease or agreement for lease in respect of which a premium is paid or agreed to be paid (not including any premium paid or payable for a lease of premises in a retirement village within the meaning of section 5 of the Retirement Villages Act 1999)
b) A lease entered into pursuant to an option if an amount is paid or payable for the grant of the option
c) A transfer or assignment of lease
d) A surrender of lease
Such transactions remain subject to transfer duty.
Lease duty will not apply to a variation of lease made on or after 1 January 2008 even if the variation to the lease is to increase the cost of the lease that was executed before 1 January 2008. The cost of a lease is the total of the following:
If any lease executed before 1 January 2008 has any unascertainable cost components for which there is an estimate date on or after 1 January 2008, a final estimate of the cost of the lease will be made on the first such date on or after 1 January 2008. The lease instrument will be chargeable with duty as if that final estimate were the full cost of the lease, and no further estimates of the cost of the lease will be made..
Cost of a lease
The cost of a lease is the total of the following:
the rent payable during the term of the lease or in advance of the lease and any amount paid or payable for the right to use land under the lease
any premium payable for a lease in a retirement village within the meaning of section 5 of the Retirement Villages Act 1999
any rates and taxes paid or payable on behalf of the lessor in connection with the lease, including any GST payable
The value of improvements and additions to the leased premises made or undertaken to be made by or on behalf of, or at the expense of, the lessee under an agreement or covenant by the lessee (other than fit-out costs), to the extent provided in the table below
any royalties payable under the lease, including royalties for the right to enter onto and remove something from the land.
Rent includes any payment under the lease expressed to be rent.
Fit-out costs mean improvements made by or on behalf of, or at the expense of, the lessee, being improvements that either remain the property of the lessee or are fixtures removable at the option of the lessee.
Complete the OSR form ODA013 if your lease is for five years of less and you would like your document stamped urgently.
In the case of improvements, the amount of the costs to be included for assessment purposes in dependent on the length of the term of the lease.
| Term of the lease | % to be included in the total cost |
|---|---|
10 years or less | 100% |
10 - 20 years | 75% |
20 - 30 years | 50% |
30 - 40 years | 25% |
More than 40 years | nil |
