Transfer of dutiable property

Acquiring a partnership interest does not automatically trigger duty in New South Wales, however, a duty may apply if the partnership owns property in New South Wales which is dutiable (namely; land, real estate, or intellectual property), or the acquisition increases the partners ownership share.

The duty is calculated on the increase of the partners share value of the dutiable property and not the purchase price, with aggregation rules applying to larger transactions, and others for professional partnerships and trust-held interests. Exemptions may apply to transfers between related parties and in small business restructures.

Duty may apply to the value of the property transferred to the new trust, depending on the type of property and the relationship between the settlor (person creating the trust) and its beneficiaries. Where property is transferred to a trust which previously didn’t exist, a duty will most likely become payable.

However, a duty will generally not apply if the trust document is only made toacknowledge that property held by someone is actually held in an existing trust for someone else.

Given this key difference, it is important to obtain advice and remain aware of the duty obligations of all parties to a trust when it is established.

Foreign persons who acquire residential-related property in NSW must pay a surcharge purchase duty, which is currently calculated at 8% of the dutiable value of a property and is paid in addition to any transfer duty. The duty is payable by foreign individuals, corporations and trustees