2023-24 Budget Update: Key changes to Australian state taxes

By Jinny Chaimungkalanont and Mark Peters

Coinciding with the Federal Budget, the Northern Territory is the first of the States and Territories to deliver its FY2023-24 budget.

The NT budget brings significant red tape reduction to businesses with a connection to the Territory, with the abolition of stamp duty on the conveyance of non-land property, except for chattels conveyed with an interest in land. NT stamp duty will also be abolished on chattels conveyed with a lease that has nil or nominal dutiable value.

Northern Territory

The Stamp Duty Amendment Bill 2023 (NT) was introduced to the NT Parliament this morning and will bring significant changes to the imposition of stamp duty in the Territory. The key changes include:

• Business Sale Duty: Largely abolishing stamp duty on business sale agreements by removing from the definition of dutiable property:
  • goodwill;
  • business names, trading names, and trade marks;
  • rights to use things, systems and processes in the Territory that are the subject of a patent, a registered design, or copyright;
  • information and technical knowledge connected with a business undertaking in the Territory;
  • patents, registered designs, and copyright;
  • Commonwealth or Territory statutory licenses or permissions (noting that mining tenements and petroleum interests remain subject to duty as part of the extended definition of land).

These changes will result in a significant red tape reduction as it is quite common in the case of large scale business transactions for there to be a limited connection to the Territory which could give rise to a lodgement obligations. It will also mean that certain IP and trade mark transactions (e.g. the grant or transfer of an IP licence in respect of a NT business) will not be chargeable with duty.

It is clear that the administrative burden both on the Territory Revenue Office and on taxpayers far exceeded the revenue derived with the anticipated budgetary impact of this change to result in revenue forgone of $3 million per annum from 2023-24.

The changes also extend to abolishing duty on franchising arrangements.

• Exemptions for Chattels Only Transactions: Introducing a new exemption from stamp duty so that the transfer of chattels in the Territory will not be subject to duty if the only other dutiable property the subject of the same transaction is a conveyance or grant of a lease, or an interest in a lease, for nil or only nominal dutiable value.

The inclusion of this exemption will ensure that duty is only imposed on the transfer of chattels in the Territory if a substantive interest in land / an option to purchase land is also conveyed / granted.

Duty should not be payable on the usual acquisition of a business, where the only land interest is a lease on usual commercial terms and the lease has nil or nominal dutiable value.

• Grant of Resource Interests: Clarifying the exemption from duty on the grant of a “resource interest” (being, a mining tenement or a petroleum interest (both further defined terms)) so that duty is not payable where the grant of a resource interest occurs unless, in the opinion of the Commissioner, the grant forms part of a wider transaction amounting in effect to a transfer of the resource interest.

• Surrenders of Property: Confirming that certain surrenders of property will continue to be subject to duty. For example, the surrender of an easement in order to allow the same easement, or a substantially similar easement, to be granted to a third person will continue to be subject to duty.

If ultimately passed, the changes will be deemed to take effect from 9 May 2023.

These changes bring the NT in line with most other jurisdictions which have abolished duty on non-land business assets. Such duty remains payable only in Queensland and Western Australia.

More to come

The budgets for the remaining States and Territories are expected over the coming months with Western Australia to deliver its budget on Thursday this week.