Revenue NSW have released an updated version of the Commissioner’s Practice Note on the Grant of options to purchase land (Practice Note).
Significant amendments have been made to the Practice Note to provide detailed commentary on how options differ from a pre-emptive right to purchase land, how the Commissioner characterises options (i.e. put option, a “true” call option and a conditional contract to transfer), as well as a number of comprehensive examples across a number of scenarios.
The Practice Note was originally released by Revenue NSW in 2022 to provide guidance as to when the grant of an option would be dutiable, in light of the introduction of a duty on transactions giving rise to a change in beneficial ownership. Prior to 2022, the grant of a call option in NSW was not subject to duty.
Whilst the updated guidance does not change the Chief Commissioner’s views on how transfer duty applies to options, it does provide helpful clarification and guidance on the approach Revenue NSW takes when determining the duty payable on options for anyone dealing with NSW land, including clients, advisors, property developers, investors, and other stakeholders.
The treatment of put and/or call options in NSW from a duty perspective is very complex and extends to not only their grant, but also their assignment, nomination or novation. This is further complicated by the fact the transfer duty approach to options differs across the states and territories.
If you have any questions about the duty implications of put and/or call options in NSW, or other Australian states or territories, please contact Matt Baumgurtel, Catherine Nufer or another member of the Hamilton Locke Tax or New Energy teams.
Matt Baumgurtel leads the New Energy sector team at Hamilton Locke.
Catherine Nufer is a Special Counsel, specialising in stamp duty, in Hamilton Locke’s Tax team.
