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Stamp Duty on Rental Business

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When is Stamp Duty on Rental Business Abolished in South Australia?

In the 2005-06 State Budget, the Government announced that rental duty will be phased out between 1 July 2007 and 1 July 2009 (refer to Circular 255).  As a result, legislative amendments were introduced and passed through Parliament to give effect to the phasing out of stamp duty on rental business, commencing on 1 July 2007 with full abolition effective 1 July 2009.

Under the Stamp Duties Act 1923 no rental duty will be payable on rental income, whether new or existing contracts, received on or after 1 July 2009. Refer to Circular 312 for details of the Stamp Duties (Tax Reform) Amendment Act 2009.

Stamp duty is still payable on any receipts pursuant to contractual bailments where the relevant receipts are due and payable on or before 30 June 2009.

As at 1 July 2009 it is prohibited to on-charge stamp duty on any commercial contractual bailment and measures must be taken so that effective 1 July 2009, income received does not include charges that are currently passed on as stamp duty.

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Compliance Activities

RevenueSA's compliance activities will continue post 1 July 2009. If your organisation is selected for audit or an offer to self-audit, you will be advised of this in writing in due course.

Any issues arising from an audit or self assessment should be referred to the Compliance Services Branch at GPO Box 2149 Adelaide SA 5001.

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Who is affected by Stamp Duty on Rental Business?

Any person (legal entity) who carries on a rental business that involves a dutiable rental business prior to 1 July 2009, must be registered and lodge returns. This is irrespective of where the rental business is transacted and whether or not the person is a resident or has a place of business in this State.

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Where is the stamp duty payable - Jurisdictional nexus?

The State where the goods are to be predominantly used will determine its liability to stamp duty on rental income.

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Examples of Rental Businesses, but not limited to, liable for stamp duty include:

  • car rental firms that hire out motor vehicles;
  • electrical stores that hire out fridges, video recorders, televisions, etc;
  • costume houses that hire out fancy dress, formal dress and accessories;
  • video stores; and
  • finance Companies that provide finance for Hire-purchase Agreements - including equipment financing arrangements.

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What transactions do not attract stamp duty

  • the hiring of houses, flats or on-site caravans or any rental where land is attached;
  • goods hired out with an operator - chauffeur driven car, etc; and
  • floor plan financing.

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Definition of "Equipment Financing Arrangements":

  1. hire purchase agreements; and
  2. contractual bailments of not less than nine months where the final payment need not be made earlier than eight months after it was entered into.

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Requirement to be Registered for Stamp Duty on Rental Business

If you are carrying on a dutiable rental business that commenced prior to 1 July 2009, you must lodge an Application for Registration with RevenueSA.  Each registered business must submit returns declaring your rental income up to and including 30 June 2009. There is a legal requirement to lodge a return even if the income declared is below the allowance and no duty is payable.

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What are the Stamp Duty rates for Dutiable Rental Business?

  • General Rental Business - the rate of stamp duty on this type of rental business is as per general rental income received in a return period less statutory allowance and any allowable servicing cost deductions calculated at the rate applicable when the rental agreement was entered into.
  • Equipment Financing Arrangement - the rate of stamp duty on this type of rental business is as per rental income received in a return period (less any allowable servicing cost deductions) calculated at the rate applicable when the Equipment Financing Arrangement was entered into.  There is no provision to claim the statutory allowance nor is there provision to deduct servicing costs as a separate item.

Rates applicable are as follows (as per Budget changes 2005-06)

General Rental Business Income
Contracts entered into during the period: Threshold Rate
1 July 2002 to 30 June 2003 $52,000 1.8%
1 July 2003 to 30 June 2007 $72,000 1.8%
1 July 2007 to 30 June 2008 $72,000 1.2%
1 July 2008 to 30 June 2009 $72,000 0.6%
Contracts entered into or income received from 1 July 2009 ABOLISHED

 

Equipment Financing Arrangement
Contracts entered into during the period: Threshold Rate
Prior to October 2003 NIL 1.8%
1 October 2003 to 30 June 2007 NIL 0.75%
1 July 2007 to 30 June 2008 NIL 0.5%
1 July 2008 to 30 June 2009 NIL 0.25%
Contracts entered into or income received from 1 July 2009 ABOLISHED

 

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Is GST included in Rental Income to be Declared?

Effective 1/1/2003 - GST Exclusive: Gross Rental income declared should exclude any GST collected from clients during the relevant return period. GST incurred as part of servicing cost expenses can be included in the calculation of servicing cost deduction.

Prior to 1/1/2003 -GST Inclusive

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General Rental Business Statutory Allowance

All registered rental businesses that receive income as a consequence of general rental business are provided with an allowance of $6000 per month ($72,000 per annum) under the Act. This means that the first $6000 of rental income earned per month is not dutiable and can be deducted for the purpose of calculating your stamp duty liability.  Please see RevenueSA Circular 242 for more details. No allowance is available for Equipment Financing Arrangement.

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Am I entitled to claim Servicing Costs?

General Rental Business
Servicing costs associated with the repairs and maintenance of goods is deductible from your gross rental income.  Examples of allowable servicing costs and those not allowable include:

Allowable servicing costs:

  • Parts used in repairs and maintenance
  • Service vehicle running costs
  • Light and power (for the service area only)
  • Labour costs of rewinding tapes (for video shops)
  • Salaries of staff attributable to repairs and maintenance only
 

Not allowable as servicing costs:

  • Depreciation
  • Stock losses
  • Insurance
  • Delivery
  • Advertising and selling expenses
  • Overheads
  • Registration of motor vehicles
  • Telephone expenses 


In order to establish your servicing cost deduction percentage, you need to work out your total servicing costs as a percentage of your gross rental income. The maximum allowable percentage under the Act is 40%.

Equipment Financing Arrangements
Servicing costs for Equipment Financing Arrangements are not separately claimable however the amount declared, upon which duty is calculated, can exclude any servicing costs incurred that are separately charged. Non-separately charged amounts are not to be declared; however to do so, approval from the Commissioner is required.

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Can I pass stamp duty onto my Customers?

Stamp duty is payable by the registered person (or firm). A registered person is prohibited by the Act from passing on stamp duty under a hiring arrangement, except under certain commercial leasing transactions. See RevenueSA Circular 241 and Circular 242 for more details.

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This page was last reviewed 14 April, 2011