Stamp Duty Concessions and Taxation Concession on the Purchase of Primary Production Land

 Friday, July 01, 2016

Stamp duty and tax are two important issues associated with purchasing farming land.

These costs eat into your equity, reduce the profitability of your investment and can affect whether or not your Bank will require you to purchase Lenders Mortgage Insurance.  Most farms are businesses and therefore will attract GST and significant stamp duty if the transaction is not structured properly.

For example, if you purchased a farm valued at $375,000.00, on three titles, all of equal size with water to the value of $50,000.00, including primary production goods of $25,000.00 then the duty chargeble will be $17,570.00 plus GST of $37,500.00.

However, if the transaction were to be structured carefully, the Stamp Duty could be reduced to as little as $7,947.00.  Depending on the circumstances GST may not be payable.  With these concessions, a saving of $47,123.00 is achieved.

This is achieved through a number of measures including;

  1. Disaggregation of Dutiable and Non-Dutiable Property;
  2. Valuation and aggregation of each parcel of land;
  3. Identification and valuation of Primary Production Goods (stock in trade); and
  4. The correct GST treatment of the transaction
The above exemptions are just a few of the possible scenarios which can apply in the sale and purchase of primary production land.  Each situation must be assessed on its own merits.

Cosgriff Lawyers has a team of property and agri-business lawyers who keep up-to-date on the latest developments relating to Primary Production tax and stamp duty concessions.  If you are thinking of selling or purchasing farmland, please do not hesitate to contact our office.