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Upcoming NSW Duty and Land Tax Revisions Effective 1 February 2024

Residence Land Tax
 

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Mark your calendars for the commencement of significant changes to NSW duty and land tax, starting from 1 February 2024. These changes, outlined in the Treasury and Revenue Legislation Amendment Bill 2023, have been enacted as Act No 26 of 2023, receiving assent on 27 September 2023. The reforms specifically focus on the stamp duty regime applicable to corporate restructure transactions and alterations to land tax exemptions for family homes. Moreover, the Act encompasses various other measures announced in the NSW Budget 2023–24. Stay informed as we navigate through these updates together.

 

Updated Criteria for Landholder Duty on Private Unit Trusts

Notify of upcoming policy change: recent adjustments to acquisition thresholds for private unit trusts holding significant interests in land. The landholder duty is applicable to acquisitions of a substantial interest (50% or more) in private companies and unit trusts that have a direct or indirect ownership of New South Wales (NSW) land valued at $2 million or above, without any encumbrances.


With the implementation of the latest provisions, the criteria for holdings in private unit trusts categorized as landholders have been modified. A 20% significant acquisition threshold will now be applicable to most private unit trusts, while the 50% threshold will be maintained for acquisitions in wholesale unit trusts or imminent wholesale unit trusts registered with Revenue NSW. The acquisition thresholds for private companies (50%) and public landholders (90%) remain unchanged. Moreover, the threshold for tracing property through "linked entities" of a landholder has been adjusted from 50% to 20%.


These amendments to the landholder duty provisions will be effective for acquisitions completed on or after 1 February 2024, unless they are a result of an agreement or arrangement entered before 19 September 2023. We appreciate your understanding and cooperation with these updates.

electric vehicle
End to the motor vehicle duty exemption for EVs. 

The eligibility for motor vehicle registration duty exemption for zero and low emission vehicles concluded on 1 January 2024. However, transitional provisions permit battery electric vehicles (EVs) and hydrogen fuel cell EVs, bought or for which a deposit was made prior to 1 January 2024, and not registered by that date, to retain access to the exemption.

 

Updates to Principal Place of Residence Land Tax Exemption

Effective from 1 February 2024, the principal place of residence exemption will only be applicable to individuals occupying a property who possess a minimum ownership interest of 25% in the property. Previously, a property could be exempt from land tax if only one of multiple owners occupied the property as their principal place of residence, even with a minimal ownership stake in the property.


To ensure a smooth transition, individuals currently claiming the principal place of residence exemption for land tax, despite owning less than a 25% interest in the land, will be allowed to continue claiming the exemption for the 2024 and 2025 land tax years. However, starting from the 2026 land tax year, the minimum 25% ownership requirement will be applicable to these owners.


interest rate

Understanding Interest Remission Guidelines

To provide clarity on the remission of interest associated with tax defaults, it's essential to note that the interest rate comprises two components — a market rate component (based on the bank accepted bill rate) and a premium component (fixed at 8%). Amendments have been introduced to the Taxation Administration Act 1996 (NSW) to specify that interest, including the premium component, can only be remitted following the guidelines established by the Chief Commissioner of State Revenue.


For further details, refer to the Treasury and Revenue Legislation Amendment Bill 2023 on the Parliament of NSW website and the media release by NSW Treasurer Daniel Mookhey regarding the High Court decision on Victoria's road user charge, dated 18 October 2023 (accessed on 15 January 2024).


 

In summary, the imminent NSW duty and land tax revisions starting 1 February 2024, bring substantial changes. Stay informed by following our official social media platforms for continuous updates and valuable insights. Your understanding and collaboration are crucial as we navigate through these evolving regulations together.

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