Duties Act 1997

The Act casts a wide net. Primary liability falls on:

• Transferees/purchasers – for transfer duty (s 13), landholder duty (s 154), and surcharge purchaser duty (s 104R).
• Insurers – for insurance duty (s 235), subject to the insured’s liability where the insurer is unregistered (s 236).
• Mortgagors – for residual mortgage duty (s 207).
• Applicants for registration – for motor-vehicle registration duty (s 263).
• Acquirers of significant interests – for landholder duty (s 154).

Secondary or joint liability is imposed on:

• transferors in certain family or trust situations (s 13);
• trustees of discretionary trusts that do not exclude foreign beneficiaries (s 104JA);
• associated persons whose interests are aggregated (ss 25(6), 149(3));
• legal personal representatives and beneficiaries in deceased estates (s 63).

The Act also affects a range of intermediaries and third parties who must retain records, lodge returns, or refrain from registering unstamped instruments (ss 16, 301). Professional advisers (solicitors, accountants, conveyancers) are indirectly affected through their obligation to ensure clients comply and through the executive-liability provisions of the Taxation Administration Act 1996 (s 121).

Foreign persons (defined by reference to the Foreign Acquisitions and Takeovers Act 1975 (Cth) with modifications) are subject to the additional 8 % surcharge on residential-related property (Chapter 2A). Corporate groups undertaking reconstructions or consolidations (Chapter 11) obtain concessional treatment only if they satisfy the strict “corporate group” test (s 273E).

Charging provisions

• Dutiable transactions – s 8(1) lists nine categories, the most important being transfers of land (s 8(1)(a)) and agreements for sale (s 8(1)(b)(i)). The 2022 amendment added “another transaction that results in a change in beneficial ownership of dutiable property, other than an excluded transaction” (s 8(1)(b)(ix)), with an anti-avoidance override in s 8(2A).
• Surcharge purchaser duty – imposed on the same transactions when the transferee is a foreign person and the property is residential-related (s 104L).
• Landholder duty – imposed on acquisitions of significant interests (50 % private, 90 % public) in landholders whose land holdings exceed $2 m (ss 146, 149, 155).
• Mortgage duty – now largely abolished; residual liability arises only on pre-2016 instruments or post-2016 advances (s 208).
• Insurance duty – 9 % on Type A, 5 % on Type B, 2.5 % on Type C general insurance; flat rates for life insurance and life insurance riders (ss 234, 243).

Key rights and concessions

• First Home Buyer Assistance (Division 1 of Part 8) – full exemption or concessional rates for purchasers whose dutiable value is below the adjustable thresholds (currently $1.05 m for established homes, $1.65 m for new homes after indexation).
• Family breakdown concessions (ss 68, 104B–104C) – full exemption for transfers between spouses or de facto partners pursuant to a financial agreement, court order, or approved deed.
• Corporate reconstruction and consolidation concessions (Chapter 11) – 10 % of the otherwise chargeable duty where the transaction is between members of the same corporate group and satisfies the anti-avoidance tests (s 273B).
• Primary production land – full exemption where the transferee is a family member who continues the farming business (s 274).
• Superannuation and managed investment scheme roll-overs – nominal $500 or $750 duty (ss 54A, 61, 62, 163FA).

Anti-avoidance

• Collateral-purpose test in s 8(2A) (change in beneficial ownership), s 24 (arrangements reducing dutiable value), and Chapter 11A (general anti-avoidance).
• Specific “top-hatting” and “land rich” anti-avoidance rules in Chapter 4.

The Taxation Administration Act 1996 supplies the general enforcement regime. Key duties-specific provisions include:

• Offences – failure to lodge an acquisition statement (s 152) or insurer return (s 253) attracts a maximum penalty of 100 penalty units. Executive liability applies to directors (s 121 of the Taxation Administration Act).
• Interest and penalty tax – automatic market-rate interest from the due date (s 21 of the Taxation Administration Act). Penalty tax of 25 % (or 75 % for deliberate avoidance) may be imposed (s 27).
• Recovery – duty is a debt due to the Crown (s 4 of the Taxation Administration Act). A charge over the land holdings of a landholder arises for unpaid landholder duty (s 154(3)). The Chief Commissioner may lodge a caveat (s 154(4)).
• Offence of registering unstamped instruments – s 301 prohibits registration of an unstamped dutiable instrument or surcharge duty transaction; maximum penalty 100 penalty units.
• Impounding – the Chief Commissioner may impound unstamped instruments (s 307).

Recent enforcement emphasis has been on foreign purchaser compliance. Revenue NSW conducts data-matching with foreign-investment approval records and has increased audit activity in the landholder and foreign-buyer space.

The Duties Act is not a stand-alone statute. It interacts with:

• Corporations Act 2001 (Cth) – definitions of “company”, “managed investment scheme”, “related body corporate”, and the treatment of CCIV sub-funds (s 5A, inserted 2024).
• Land Tax Management Act 1956 – the $2 m landholder threshold, the definition of “land used for primary production”, and the valuation rules for apportionment (ss 146, 28, 29).
• Valuation of Land Act 1916 – land values and apportionment factors for mixed-use land (ss 32B, 32C, 104ZB).
• Family Law Act 1975 (Cth) and Property (Relationships) Act 1984 (NSW) – the family-breakdown exemptions (ss 68, 104B–104C).
• A New Tax System (Goods and Services Tax) Act 1999 (Cth) – exclusion of GST from dutiable value where the supply is GST-free (s 266(2)(a)).
• Electronic Conveyancing National Law (NSW) – electronic registry instruments are treated as instruments for stamping purposes (ss 12(4), 290, 228A).

The Act also contains its own anti-avoidance rule (Chapter 11A) that operates in addition to the general anti-avoidance provisions of the Taxation Administration Act.

The last decade has seen three major policy-driven reforms:

1. Abolition of mortgage and insurance duty (2016–2018) – Part of a national agreement to remove inefficient transaction taxes. Mortgage duty was phased out from 1 July 2016; insurance duty on general insurance was reduced and ultimately abolished for most classes from 1 January 2018. The changes were justified on efficiency and competitiveness grounds.

2. Foreign purchaser surcharge (2016) – Chapter 2A was inserted to deter non-resident speculation in the housing market. The rate has risen from 4 % to 8 % (as at 2024). The policy rationale was to improve housing affordability for residents.

3. Landholder duty modernisation (2009 and 2012) – The old “land-rich” test was replaced by a simpler $2 m land-value threshold (Chapter 4). The 2012 amendments introduced the “linked entity” concept (s 158) and constructive ownership rules to close loopholes.

The 2023–2024 amendments (corporate collective investment vehicles, indexation of thresholds, and the Help to Buy interaction in s 53B) continue the trend of aligning State duties with federal corporate and tax law while providing targeted relief for first-home buyers and build-to-rent developments.

Landholder duty has generated the most litigation. Key cases include:

• Chief Commissioner of State Revenue v Pacific National (NSW) Pty Ltd [2016] NSWCA 137 – clarified the meaning of “land” for landholder duty purposes and the treatment of fixtures.
• Commissioner of State Revenue v Adams Bidco Pty Ltd [2019] NSWCA 34 – confirmed that the 90 % public-landholder threshold is applied immediately after the acquisition.
• Chief Commissioner of State Revenue v Lend Lease IMT (Millers Point) Pty Ltd [2015] NSWCA 135 – examined whether a development agreement created an “interest in land”.

Controversies have centred on:

• The breadth of the “change in beneficial ownership” head of charge (s 8(1)(b)(ix)) – critics argue it catches ordinary commercial restructures.
• Foreign purchaser compliance – Revenue NSW data-matching with FIRB approvals has led to increased audits and some high-profile penalties.
• The interaction between landholder duty and corporate reconstruction relief (Chapter 11) – the “same group” test in s 273E is regarded by practitioners as unduly narrow.

The High Court has not yet heard a major landholder duty case, but the volume of Supreme Court and Court of Appeal decisions indicates continuing uncertainty.

Most practitioners will recognise the following traps:

• Aggregation of foreign and non-foreign transferees – under s 104U(2) surcharge is charged only on the foreign share, but the ordinary transfer-duty calculation under s 18(3) still requires the related-person test to be satisfied for the $20 concession. Failure to recognise this can produce a $20 vs full-ad-valorem dispute.
• Discretionary trusts and foreign beneficiaries – since the 2020 amendments a discretionary trust that does not expressly exclude foreign persons is taken to be a foreign trustee (s 104JA). Many older trust deeds still need to be varied.
• “Top-hatting” anti-avoidance – the Chief Commissioner’s power to disregard a change in beneficial ownership where the collateral purpose is to reduce duty (s 8(2A)) is used aggressively in corporate restructures.
• Off-the-plan concessions – the residence requirement in s 49A(1B) is strictly enforced; failure to occupy for 12 continuous months within the permitted period triggers a full reassessment plus interest.
• Mortgage duty on pre-2016 instruments – although the regime was abolished, pre-2016 mortgages remain on foot. Any variation that increases the amount secured can crystallise additional duty.
• Landholder duty and “linked entities” – the tracing rules in ss 158–158A are complex; missing a sub-trust or a 20 % link can produce a 50 % understatement of the landholder’s land value.

The most expensive gotcha is failing to obtain a private ruling before a large corporate reconstruction. The anti-avoidance provisions in Chapter 11A are broad and the penalty for a “scheme” is 75 % of the avoided duty.

For conveyancers and solicitors

1. Identify the transaction type early (transfer, agreement, declaration of trust, landholder acquisition, foreign purchaser).
2. Use the Revenue NSW online calculator or the Duties Online portal to pre-lodge and obtain a unique transaction identifier.
3. For foreign purchasers, obtain a foreign-buyer declaration and, where applicable, a section 104ZKA permanent-resident declaration.
4. For first-home-buyer concessions, ensure the purchaser’s declaration (s 16A) is lodged with the instrument.
5. For corporate reconstructions, obtain advance written approval under Chapter 11 before executing the instruments; retain evidence of the commercial purpose.
6. For landholder duty, prepare a comprehensive acquisition statement (s 152) including valuation reports for land and goods; consider seeking a private ruling if the landholder holds substantial non-land assets.

For insurers

1. Register under Part 3 of Chapter 8 (or confirm existing registration).
2. Maintain systems that allocate premiums to Type A, B, or C insurance and to life insurance riders.
3. Lodge monthly returns by the 21st day of the following month; use the approved electronic format.
4. For small-business exemptions, retain the small-business declaration for at least seven years.

For taxpayers generally

• Keep contemporaneous records that demonstrate the commercial purpose of any arrangement that reduces dutiable value (s 24(3)).
• For deceased estates, obtain the Chief Commissioner’s opinion under s 63(1)(d) before lodging the transfer.
• For family-breakdown transfers, ensure the financial agreement or court order is in evidence before claiming the exemption.
• When in doubt, apply for a private ruling under the Taxation Administration Act 1996 (s 58). The ruling binds the Chief Commissioner and provides certainty.

Compliance is now heavily automated. Most standard residential conveyances are processed through the Duties Online portal with real-time stamping. Complex landholder, foreign-buyer, or corporate-reconstruction matters still require manual lodgment and supporting valuations. The key to minimising risk is early identification of the duty type, accurate valuation evidence, and retention of records that demonstrate the transaction’s commercial (non-tax) purpose.