BUYING A BUSINESS BUT NOT AWARE OF CHANGES TO STAMP DUTY LAWS?
- 18 Oct 2016
Well luckily for you, the laws have changed in your favour.
From 1 July 2016, goodwill of a business operating in NSW or intellectual property that has been used or exploited in NSW or a statutory licence or permission under a Commonwealth law (of rights exercised in NSW) cease to be dutiable property. So if you signed a contract to buy such a business after 1 July 2016 and entered into a contract to buy such a business after 1 July 2016, you are not required to pay stamp duty.
A business’s goodwill is essentially the price someone will pay for future earnings. It’s the intangible value of a business, or what it’s worth beyond the value of the tangible assets it owns. Things like a business’s location, its reputation for quality, the staff it employs and the market it’s competing in, can enhance goodwill. Equally, goodwill can be destroyed quickly by changing technology or consumer behaviour, changes to zoning laws, changes to suppliers or poor management.
Didn't meet the requirements but now seeking to avoid stamp duty?
Care should be taken. Abolition does not apply in respect of a transfer or transaction that occurs on or after 1 July 2016 if it replaces a transfer or transaction involving the same business asset that occurred before 1 July 2016 or is made or entered into pursuant to an option agreement prior to 1 July 2016 or was made before 1 July but deferred to avoid stamp duty liability.
Further, goods in NSW (such as stock in trade) will still be dutiable property if for example they are transferred pursuant to a contract which also transfers land or an interest in land (such as a lease interest).
For professional legal advice, contact Maclarens Lawyers on (02) 9682 3777
