State and territory taxes
Stamp duty
Stamp duty is a state and territory tax on certain transactions, most commonly property and vehicle transfers, administered by state revenue offices, with rates and concessions that vary by jurisdiction.
Stamp duty is a tax charged by state and territory governments on specified transactions. It is most familiar as the duty paid when buying property, but it can also apply to vehicle registrations and transfers, insurance policies in some jurisdictions, and other transactions depending on local law. It is administered by state and territory revenue offices, not the ATO.
Because each jurisdiction sets its own rules, the rates, the thresholds and the available concessions differ. Duty on property is commonly calculated on the dutiable value, which is generally the higher of the price paid and the market value, using a sliding scale of rates. First home buyer concessions, exemptions for certain transfers and special rates for foreign purchasers may apply, and these are changed regularly, so current information should be checked with the relevant revenue office.
Stamp duty is paid by the buyer or transferee in most property transactions, and is usually due within a short time after settlement or the contract. Conveyancers and solicitors often handle the payment through the settlement process. For vehicles, duty is generally paid when ownership is transferred or the vehicle is registered, and the amount may depend on the price or the vehicle's value.
From a GST perspective, stamp duty itself is a government tax and does not attract GST. However, the underlying transaction can involve GST. For example, buying new residential premises or commercial property may involve GST on the price, and the margin scheme may apply. Stamp duty is charged on the dutiable value, which in some jurisdictions can include the GST component, so GST and duty can interact. The details vary by state.
Stamp duty is generally not deductible as a business expense when it relates to acquiring a capital asset such as property. Instead it usually forms part of the asset's cost base for capital gains tax purposes. Keeping the settlement statement and duty assessment is important, as you will need them to calculate your cost base when you sell.
A common mistake is assuming the duty on a property purchase is claimable as a GST credit or immediately deductible. Another is overlooking concessions that may be available. This is general information only, so confirm your situation with your state or territory revenue office or a registered tax professional.
Worked example
Assume, purely for illustration, a buyer purchases an investment property for $600,000 in a state where the duty assessed is $22,000. The duty is paid to the state revenue office, not the ATO, and no GST is charged on the duty itself. The $22,000 is added to the property's cost base for CGT purposes. Actual duty depends on the state, the property and any concessions.
Practical tips
- Check the current rates and concessions with your state or territory revenue office, as they differ and change.
- Keep your settlement statement and duty assessment, as they form part of your cost base for capital gains tax.
- Ask your conveyancer how GST on the underlying transaction interacts with duty in your state.