Australia: NSW 2023-2024 budgetary measures and implications on duties

In brief

On 19 September 2023, the Treasury and Revenue Legislation Amendment Bill 2023 ("Bill") was tabled for debate in the Legislative Assembly as part of the 2023-2024 NSW State Budget. The Bill, once passed, will implement significant changes to the Duties Act 1997 (NSW) which are to commence on 1 February 2024, with limited transitional relief available for transactions taking place after this date.

The Bill has passed both Houses of NSW Parliament and is currently awaiting assent.


Key changes

Key changes proposed by the Bill include:

  1. Reducing the acquisition threshold triggering landholder duty for an acquisition of units in a private unit trust scheme to 20% (down from 50%).
  2. Introducing a 50% acquisition threshold triggering landholder duty for an acquisition of units in two new categories of unit trust, a "wholesale unit trust scheme" and "imminent wholesale unit trust scheme".
  3. Reducing the threshold required to impute NSW land interests of a linked entity to the acquired entity (i.e., landholder), so that land interests directly held by a linked entity will be taken to be held by a landholder where it has at least a 20% entitlement to a distribution of that linked entity's property on its winding up (down from 50%).
  4. Replacing the full exemption available for corporate reconstruction and corporate consolidation transactions with a 90% reduction of duty.

In depth

  1. Changes to the landholder duty regime

Landholder duty in NSW is charged on acquisitions of a significant interest in companies and unit trusts that hold interests in NSW land and fixed assets with a total unencumbered value of at least AUD 2 million. Currently, the acquisition threshold triggering duty, i.e., "significant interest" is 50% or more for a private company or private unit trust scheme. Higher thresholds apply to acquisitions of interests in certain public companies and trusts (90%).

The proposed changes more closely align NSW with Victoria's landholder duty regime.

A new acquisition threshold for private unit trust schemes

The current acquisition threshold of 50% for a private unit trust scheme will be reduced to 20%. However, the 50% threshold will remain for acquisitions in:

  • Private companies
  • Unit trust schemes which are registered with Revenue NSW as wholesale unit trusts or imminent wholesale unit trusts. These are a new category of unit trust (see below).

The 90% acquisition threshold for 'public landholders' (i.e., certain listed companies, certain listed unit trusts and widely held unit trust schemes) remains unchanged.

Wholesale Unit Trust Scheme or Imminent Wholesale Unit Trust Scheme Registration

The Bill provides that certain unit trust schemes may be registered with Revenue NSW as either a wholesale unit trust scheme or imminent wholesale unit trust scheme. Acquirers of interests in these trusts will be entitled to the 50% acquisition threshold for landholder duty.

Similar to the registration process in Victoria, trustees of relevant unit trust schemes will be required to apply to Revenue NSW for recognition as a wholesale unit trust scheme or imminent wholesale unit trust scheme. However, the key difference being that NSW will require at least 80% to be held by "qualified investors" to allow registration (an increase from the 70% required in Victoria).

The Chief Commissioner may register a private unit trust scheme as a wholesale unit trust scheme if satisfied that:

  • It was not established for a particular investor
  • At least 80% of its units are held by 'qualified investors' (including generally listed companies and trusts, many superannuation funds and other wholesale unit trust schemes)
  • No qualified investor (alone or in aggregate with associated persons) holds 50% or more of its units
  • Any other requirements specified by the Chief Commissioner to be published in a gazette (not yet published). Note, the Victorian registration requirements are not similarly open ended.

The Chief Commissioner may register the private unit trust scheme as an "imminent wholesale unit trust scheme" if satisfied it will meet the abovementioned criteria within 12 months of the first issue of units to a "qualified investor".

The Chief Commissioner may also cancel the registration if satisfied of any disqualifying circumstances, such as a failure to comply with a condition of registration. This may result in any historical acquisitions in the unit trust scheme as being assessable.

Reduction to linking threshold

The threshold for the tracing of property through linked entities of a landholder will reduce from 50% to 20%. This means that land directly held by a linked entity of the acquired entity (i.e., landholder) will be taken to be held by that acquired entity if it is entitled to receive not less than 20% of the value of the property of the linked entity on its winding up. The value of the land imputed to the acquired entity will be proportionate to its interest in the linked entity.

For example, you acquire 100% of the shares on issue in B Pty Ltd, a private company. B Pty Ltd does not directly own interests in NSW Land. B Pty Ltd owns 20% of the shares on issue in LandCo Pty Ltd (LandCo) and is entitled to receive 20% of the property of LandCo in the event of its winding up. LandCo owns NSW land with an unencumbered value of AUD 10,000,000. Under the changes proposed by the Bill, B Pty Ltd will be taken to hold AUD 2,000,000 of NSW land (20% of the value of the land held by LandCo will be imputed to B Pty Ltd).

Accordingly, landholder duty will be charged on your acquisition of B Pty Ltd as it will be taken to be a "landholder" for NSW duty purposes as it holds NSW land with an unencumbered value of AUD 2,000,000. Diagram below.


Start date of changes and transitional relief

The changes to the landholder duty provisions will apply to acquisitions completed on or after 1 February 2024 unless the acquisition arose from an agreement or arrangement entered into before 19 September 2023 (i.e., the introduction date of the Bill).

Additional transitional relief is available for registered wholesale unit trust schemes (set out above). 

  1. Reduction of concession for corporate reconstructions and consolidations

Under the current regime, corporations may be fully exempt from duty when transferring dutiable property such as land in NSW and shares or units in a group company between entities of the same corporate group as part of a restructure. Similarly, "top hatting" arrangements (e.g., where a company is interposed between another company and its existing shareholders) may be fully exempt from duty.

The proposed amendments will reduce the amount of relief received by corporations for eligible corporate reconstruction and corporate consolidation transactions, from 100% to 90% of the duty that would otherwise be chargeable for the transactions.

Victoria is the only other jurisdiction with a similar 90% concessional relief regime (with all other jurisdictions allowing 100% relief). However a key difference is that Victoria effectively provides 100% relief on any subsequent restructure transactions that are part of the same arrangement, that occur within 30 days and relate to the same property. The proposed regime in NSW does not have a similar concept.

Start date of changes and transitional relief

The current corporate reconstruction and corporate consolidation exemption regime will continue to apply to:

  • Transactions occurring before 1 February 2024
  • Transactions occurring on or after 1 February 2024 if that transaction arises from an agreement or arrangement entered into before 19 September 2023 (i.e., the introduction date of the Bill). and the exemption application is lodged on or before 1 April 2024.

This effectively means that any contemplated transactions will need to occur prior to 1 February 2024 for the existing 100% relief regime to apply. Otherwise, the new 90% concessional regime will apply.

  1. Increase in fixed and nominal duties

The Bill proposes increases to fixed and nominal duties applied by Revenue NSW on some transactions. In particular, from 1 February 2024, duty of:

  • AUD 10 will be increased to AUD 20 – for example, AUD 20 duty will be chargeable (up from AUD 10) on a transfer made in conformity with a contract for the sale and purchase of NSW land.
  • AUD 50 will be increased to AUD 500 - for example, AUD 500 duty will be chargeable (up from AUD 50) for a transfer of dutiable property (such as land) from a responsible entity of a managed investment scheme to a custodian.
  • AUD 500 will be increased to AUD 750 – for example, AUD 750 duty will be chargeable (up from AUD 500) for stamping a trust deed executed in New South Wales established over non-dutiable property (e.g., cash).
  1. Removal of exemption from duty for certain zero and low emission vehicles

From 1 February 2024, exemption for certain electric vehicles from the payment of duty will be removed. The transitional provisions will retain the exemption for battery electric vehicles or hydrogen fuel cell electric vehicles that had been purchased (or for which a deposit was paid) before 1 January 2024 but had not been registered before that date.

  1. Introduction of windfall gains tax

There has been speculation that the 2023/24 NSW budget could see the introduction of a new regime for windfall gains tax in NSW so that tax will be paid by property owners referable to the value uplift in the property as a result of the actions of the government (e.g., a rezoning). NSW Legislative Council Hansard dated 2 August 2023 (in particular the comments made by the Honourable Bob Nanva) refer to the possible introduction of such a regime.

The Bill, however, makes no provision for the introduction of such a regime. We will continue to monitor this space and report on any developments.


The 2023/24 NSW budget contemplates a clear tightening up of the duty regime, including widening the landholder duty net, removing a full exemption for qualifying corporate reorganisations and consolidation and increasing various fixed duties. That trend is also reflected in the land tax context with the removal of the ability to claim a principal place of residence exemption in relation to land unless the persons who use and occupy the land as a principal place of residence together own at least a 25% interest in the land. The trend appears to consistent with a general tightening of State taxes in other jurisdictions such as Victoria.

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