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A person
acquiring an existing business is required to pay Stamp
Duty when goodwill and/or other certain property is
acquired where:
(a)
the acquisition is evidenced by a written contract for
sale of business between parties; or
(b) there is no written agreement and the
purchase includes any of the following items:
-
Business
Assets
-
Land,
buildings and all property thereon
-
Mining
tenements and all property thereon
-
Business
Licence
-
Chattels
and other property
-
Fixed
plant and equipment.
What do
you need to do when a business is acquired?
(a)
If you sign a contract to purchase a business or if you
are taking over a business where the acquisition is
dutiable property, the person liable for the duty must
submit it for assessment of stamp duty within two months
after the date of first execution.
There are some new rules in respect of conditional
contracts. The new rules give a purchaser longer than 2
mths from the signing of the contract to stamp the
contract if certain conditions are present.
(b) Where there is no such instrument, or where
only some of the dutiable property is the subject of one
or more dutiable instruments:-
-
(i) The
person liable for the duty must submit for
assessment of stamp duty, a statement detailing the
dutiable property which is not covered by an
instrument along with any instruments;
-
(ii) All
other parties to the acquisition must also give
notice that the acquisition has occurred;
-
(iii)
The statement and the notice must be submitted
within 2 months after the acquisition occurred.
Again note that if the contract is subject to
conditions, the date for submission of the agreement
for stamp assessment may be later.
What is
property?
For stamp
duty purposes "property" comprises anything that:
(a)
has a value; and
(b) is capable of being conveyed or transferred.
Pursuant to
the State Revenue's interpretation, 'Property' includes
anything in the nature of proprietary rights and
interests.
The following are considered as property and are
dutiable when purchased:
-
Business
Assets (eg. goodwill, a business identity, business
licence, intellectual property and restraint of
trade agreement)
-
Prescribed Licence (eg. fishing licence, liquor
licence, taxi licence)
-
Chattels
(plant and equipment) - dutiable when transferred
with any "other property" (contracts executed on or
after 01 January 2004)
-
Tenant's
fixtures and fittings
-
Land,
buildings and all property thereon
-
Mining
tenements and all property thereon
Are there
any properties which are exempt from stamp duty?
Yes, the
following properties are some examples of properties
exempt from duty:
-
Trade
debts
-
Cash or
money in an account at call
-
Negotiable instruments and money on deposit with any
person
-
Choses
in action with respect to work in progress
(non-physical part- completed work such as unbilled
professional fees, etc.).
-
Ships or
other local marine vessels
-
Stock-in-trade.
How much
duty is payable?
The rates
below are current as at October 2004.
|
Property Value |
ob |
|
$0 -
$ 80 000 |
|
$2.00 |
per
$100 or part thereof |
|
$ 80
001 - $100 000 |
$ 1
600 + |
$3.00 |
per
$100 or part thereof in excess of $80 000 |
|
$100
001 - $250 000 |
$ 2
200 + |
$4.00 |
per
$100 or part thereof in excess of $100 000 |
|
$250
001 - $500 000 |
$ 8
200 + |
$5.00 |
per
$100 or part thereof in excess of $250 000 |
|
$500
001 and upwards |
$20
700 + |
$5.40 |
per
$100 or part thereof in excess of $500 000 |
Who is
responsible for payment of the duty?
(i)
The person who purchases the dutiable property is liable
for the payment of stamp duty
(ii) If the dutiable property is gifted, the
donor is liable for the payment of the duty.
What if I
do not lodge an instrument or statement on time?
There may be
a penalty tax of up to 100% of the duty assessed if the
instrument or statement is not lodged by the required
lodgement date.
Generally instruments must be lodged, within two (2)
months after the date of first execution.
Therefore any potential buyers of businesses should
remember to include in their costing, the cost of stamp
duty.
If a bank loan is being applied for , the purchaser
should consider including the cost of the stamp duty in
their loan applications.
The other issue that crops up sometimes is the cost of
GST. Generally, if a business is being bought as a going
concern, there is no GST payable. However be aware of
situations where the vendor stops trading before the
transfer of the business. You should always ensure that
the business is still in operation before the settlement
takes place.
Portfolio Settlements are able to assist you in any
business purchase that you are considering. Any
requirement for legal advice can be provided in house by
Tan and Tan Lawyers. |
