Sale of business with no land (as defined)

Pursuant to a Business Sale Agreement dated 1 July 2016, XYZ Pty Ltd (as vendor) sells their business known as ‘The Hot Dog Co.’ to HDC Pty Ltd for consideration of $385,000, with no Land (as defined) being transferred as part of the transaction.

The Business Sale Agreement is not liable to duty.

Sale of business with transfer of land and fixed items

Pursuant to a Business Sale Agreement dated 15 July 2016, MNO Pty Ltd purchased a country hotel business and land from Country Hotels Pty Ltd. Part of the purchase price for the business includes an amount of $145,000 for plant and equipment. After reviewing the Plant and Equipment schedule, it is determined that plant and equipment includes Fixed Items with a value of $125,000. The remaining plant and equipment valued at $20,000, consists of chairs, tables, pool tables and cash registers. The land is sold for $300,000.

Duty will be calculated by aggregating the amounts paid for the transfer of land ($300,000) and the Fixed Items ($125,000) for a total value of $425,000, resulting in duty of $17,580.

However, as the transactions in this example occurred after 7 December 2015 and involve non-residential, non-primary production real property, both the transfer of land and the transfer of the Fixed Items qualify for a one-third duty reduction.

Duty will therefore be calculated as follows:

$17,580 - $5,860*  = $11,720

*being 1/3 of $17,580

Duty is stamped on and apportioned between the Memorandum of Transfer

($300,000 / $425,000) x $11,720 = $8,272.94

and the Business Sale Agreement

($125,000 / $425,000) x $11,720 = $3,447.06

Both instruments are stamped via RevNet pursuant to the RevNet document type: Conveyance of Land - For Consideration - Qualifying Land

Sale of business with a transfer of lease and fixed terms

Pursuant to a Business Sale Agreement dated 20 June 2016, Max’s Steel Pty Ltd purchases a steel making business from FL Pty Ltd for consideration of $4,500,000. A condition of the sale requires FL Pty Ltd to transfer its interest in the lease of the business premises.

The Business Sale Agreement apportions $2,500,000 of the purchase price to plant and equipment. After reviewing the asset register, it is determined that the plant and equipment includes Fixed Items (such as a furnaces and continuous casting machines) valued at $1,500,000. The remaining plant and equipment valued at $1,000,000 consists of loose tools, furniture, trucks and vehicles.

Duty payable on the Fixed Items is $76,330.

However, as the transactions in this example occurred after 7 December 2015 and involve non-residential, non-primary production real property, the transfer of the Fixed Items qualifies for a one-third duty reduction.

Duty will therefore be calculated as follows:

$76,330 - $25,443.33* = $50,886.67

*being 1/3 of $76,330

Duty is stamped on the Business Sale Agreement via RevNet pursuant to the RevNet document type: Conveyance of Land – For Consideration – Qualifying Land.

While it has been submitted that a leasehold interest often has no value, the Commissioner is of the view that a leasehold interest conveyed pursuant to a Transfer of Lease constitutes a conveyance of Land (as defined), for which at least a nominal value is applicable. However, this can be stamped with nominal duty via RevNet pursuant to the RevNet document type: Conveyance of Land - For No Consideration - Transfer of Lease - Qualifying Land.

Where a Deed of Assignment of Lease is executed together with a Transfer of Lease (which has been stamped via RevNet with nominal duty as set out above), the Deed of Assignment of Lease is to be adjudged stamped via RevNet pursuant to:

Adjudged – Deed of Assignment of Lease – Pursuant to Transfer of Lease (please note that the Guide Note is to follow)

Where a Deed of Assignment of Lease is executed without a Transfer of Lease, the Deed of Assignment of Lease is stamped with nominal duty via RevNet pursuant to the RevNet document type: Conveyance of Land - For No Consideration - Transfer of Lease - Qualifying Land