NSW duty on change in beneficial ownership of dutiable property – list of excluded transactions expanded

On 19 May 2022, the Duties Act 1997 (NSW) was amended to impose duty on transactions which result in a change in beneficial ownership of dutiable property.  However there are a number of prescribed transactions that are excluded from comprising a change in beneficial ownership for duty purposes. These transactions include:

• the purchase, gift, allotment or issue of a unit in a unit trust scheme;
• the cancellation, redemption or surrender of a unit in a unit trust scheme;
• the abrogation or alteration of a right relating to a unit in a unit trust scheme;
• the payment of an account owing for a unit in a unit trust scheme;
• the grant, renewal or variation of a lease for no consideration;
• the grant of an easement for no consideration;
• the grant of a profit a prendre for no consideration;
• the provision of a security interest within the meaning of the Personal Property Securities Act 2009 (Cth);
• a change in a trustee’s right of indemnity;
• the creation of an interest in dutiable property by statute;
• a transaction of a kind prescribed by the Regulations; and
• a combination of the transactions referred to above.

The Duties Regulation 2022 (NSW) was released on 26 August 2022 and expanded the excluded transactions to also include:

• a change in default beneficial interests of the default beneficiaries, including a change to the default beneficial interests of the default beneficiaries, and the addition or removal of a default beneficiary;
• a change in beneficial ownership of dutiable property that occurs under a testamentary instrument or the laws of intestacy, or otherwise by operation of law on the death of a person;
• the grant or termination of a life estate in dutiable property for no consideration;
• the variation or surrender of an easement for no consideration;
• the grant, creation, variation or extinguishment of a mortgage, charge or other security over land;
• the creation, variation or surrender, for no consideration, of a tenant’s interest in fixtures that are fit-out for commercial premises;
• a change in tenancy under a lease for no consideration;
• a change, for no consideration, in the holding of property from joint tenants to tenants in common in equal shares, or vice versa;
• the grant, variation, cessation, revocation or cancellation of a water right within the meaning of the Valuation of Land Act 1916 (NSW);
• the expiry, extinguishment or merger of one or more leases for no consideration;
• the variation or extinguishment of a profit a prendre for no consideration; and
• the surrender of a security interest within the meaning of the Personal Property Securities Act 2009 (Cth) for no consideration.

The Chief Commissioner has confirmed that these regulations have retrospective operation from 19 May 2022.