Stamp duty on buying a business in Australia
Business transfer duty
Business transfer duty is a form of stamp duty levied on the transfer of business assets in Australia. As it is a stamp duty, each state and territory has its own rules. Stamp duty is generally payable by the purchaser of a business.
Business transfer duty is currently levied in New South Wales, Queensland, Western Australia, South Australia and the Northern Territory.
Each of these states and territories has announced its intention to abolish the duty, but none of them has proceeded to abolish the duty on the date (or dates) previously scheduled by them. Each has given budgetary pressures as the reason for deferring the abolition of the duty. There are currently no dates fixed for the abolition of the duty in any of these states or territories.
The main types of assets that are subject to duty are:
- Goodwill in a business
- Plant and equipment
- Intellectual property (including domain names, trademarks, copyrights, etc)
- Stock-in-trade of a business (in Queensland or South Australia)
- Supply rights and other contracts of a business
- Customer lists
- Trade debts (also known as trade receivables) of a business (if owed by a customer located in Queensland or South Australia).
Not all these assets are subject to duty in all states and territories.
Each state and territory has its own rates and scales for duty. The highest rate of duty on a transfer of a business is 5.75%.
Intangible assets such as goodwill of a business and intellectual property are generally apportioned between the states and territories based on the proportion of sales to customers over the past three years.
It is important to remember that even when duty on business assets is abolished, duty will still be levied on the transfer of land (whether sold with a business or on its own) and on goods sold with land. Duty on the transfer of land can be at rates up to 6.75% in the Australian Capital Territory, although most jurisdictions impose a maximum duty rate no higher than 5.5%.
There are many differences between the eight states and territories, so it is best to get an expert opinion if you are buying a business in Australia.
Deloitte's national State Taxes team has broad experience in stamp duty in all Australian states and territories.
For more information, please contact one of our State Taxes specialists.