When is stamp duty NOT imposed on a transaction for Queensland business assets or chattels in Queensland?

03 December 2018 Topics: Tax and revenue, Duty

Queensland’s transfer duty regime (previously called ‘stamp duty’) is arguably the most comprehensive in Australia.

Transfer duty is charged on dealings in most property with a nexus (or deemed nexus) to Queensland at rates of up to 5.75%. Where the additional foreign acquirer duty applies, additional transfer duty of 7% is also imposed.

There is some good news for transfer duty in Queensland.

Although transfer duty is charged on a raft of Queensland business assets, transfer duty is NOT imposed if the transaction is ONLY for personal property or chattels.

Personal property and chattels include plant and equipment, livestock and trading stock.

The different duty outcomes are best illustrated in an example.

Scenario 1:

  • Cattle in Queensland valued at $3 million are transferred to an unrelated party.
  • The starting point is that transfer duty will be charged on this transfer of cattle. In duty vernacular, cattle are ‘dutiable property’ as both a chattel and personal property and transfer duty is charged on a transfer of dutiable property.
  • However, provided no other type of dutiable property is the subject of the same transaction (i.e. just the cattle are being transferred) and the transfer is not aggregated with a dutiable transaction that is not for a chattel – NO transfer duty is payable.

Tip: when could the transfer be ’aggregated’ with another dutiable transaction? An example is where the primary production land was previously transferred as part of substantially the same arrangement or perhaps under a separate agreement.

Scenario 2:

  • The same facts as Scenario 1 except that, in addition to the cattle, a cattle brand will also be transferred to the buyer.
  • A cattle brand is a Queensland business asset in the form of a statutory business licence. As the arrangement is no longer limited to a transfer of cattle and another business asset will also be transferred, transfer duty will be imposed on the transfer of both the cattle and the cattle brand.
  • Does the inclusion of the cattle brand change the duty outcome? Yes!
  • The transfer duty payable will be in the vicinity of $153,025, unless an exemption or concession applies
  • This is based on certain assumptions. For example, the cattle brand is of nominal value, the $3 million value for the cattle is GST inclusive and the ‘dutiable value’ of the cattle is $3 million.

 

Tip: for transactions involving primary production property and family businesses, it is always worth checking if a duty exemption or concession will apply, as the outcome could be that NO duty is payable!

Let’s consider another example in the context of mining and resources.

Scenario 3:

  • Big Miner Co is selling an exploration permit for coal (EPC) to New Miner Co.
  • An EPC is a ‘resource authority’ and therefore ‘land’ for the purposes of Queensland duty.
  • Land in Queensland is dutiable property and transfer duty is charged on the transfer (or agreement for the transfer) of dutiable property.
  • The contract also provides for the transfer of information in relation to the EPC.
  • The good news is that mining information is generally NOT dutiable property and therefore transfer duty should not be imposed on the value of the information.
  • You do need to carefully consider if the mining information is correctly characterised as intellectual property (e.g. copyright) or goodwill as these business assets are subject to transfer duty in Queensland.

Tip: adopt a reasonable approach when apportioning the consideration allocated to the EPC, the mining information and any other property that is the subject of the agreement. The Office of State Revenue will require valuation evidence to support the apportionment of the purchase price to mining information.

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This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please let us know.