Abolition of duty on transfer of business assets

On 1 January 2011, duty on the transfer of “business assets” (other than land) will be abolished.

“Business assets” for this purpose is defined in the Duties Act 1997 (Act) to be:

  1. the goodwill of a business created through the sale of goods and/or services to NSW customers in the previous 12 months; and/or
  2. the intellectual property that has been used or exploited by the business in NSW during the previous 12 months; and/or
  3. a statutory licence granted under a Commonwealth Law, if the rights under the licence have been used in NSW during the previous 12 months.

The abolition is subject to anti-avoidance provisions, in particular, if the parties enter into an option arrangement for the purchase of a business exercisable after 1 January 2011 and enter into a subsequent agreement for management of the business until that time, duty will be payable on exercise of that option.

The provision is designed to ensure duty is payable on any transaction that was made or entered into before 1 January 2011, the only purpose of which was to defer the transaction until after 1 January 2011, so that duty would not be chargeable.

 

Author: Vincent Tripodina, Solicitor