Quick answer
Transfer duty, often called stamp duty, is a state or territory tax on most property purchases, calculated on the price or value and payable to the relevant revenue office within a set time. For business buyers it can be a large cash requirement on top of the deposit, and lenders often will not fund it. Planning for it before exchange, and arranging secured funding if needed, keeps settlement on track.
Key points
- Duty is set and collected by each state and territory
- It is calculated on the price or value of the property
- Lenders often do not include duty in the purchase loan
- Transfers between related entities can attract duty
- A short-term secured loan can fund duty when cash is committed
Why duty deserves its own plan
When a business buys premises, attention naturally goes to the price and the loan. Transfer duty can be an afterthought, until the conveyancer’s settlement statement arrives. On a substantial commercial or industrial purchase, duty can be a very large sum, and it is due in cash at or around settlement. Lenders typically lend against the property’s value and often do not add duty on top. The buyer must then cover it from reserves already committed to the deposit, fit-out or working capital.
Planning for duty before exchange is far easier than finding it in the final week.
Who collects duty
Each state and territory administers its own duty:
- New South Wales: Revenue NSW
- Victoria: State Revenue Office Victoria
- Queensland: Queensland Revenue Office
- Western Australia: Department of Finance (RevenueWA)
- South Australia: RevenueSA
- Tasmania: State Revenue Office Tasmania
- Australian Capital Territory: ACT Revenue Office
- Northern Territory: Territory Revenue Office
Their websites set out rates, thresholds, exemptions and when payment is due. Several jurisdictions have reformed, or are reforming, how property taxes apply, including to commercial and industrial property, so confirm the position at the time of purchase rather than relying on past experience.
How duty is calculated
Duty is generally calculated on the higher of the price paid and the property’s value, using rates that step up with value. Some states also apply surcharges in particular circumstances, such as for certain foreign purchasers. Whether GST is included in the amount on which duty is calculated depends on the transaction and the state, so ask your conveyancer.
When it is due
Payment timing varies by state and transaction type. In many cases duty is paid at or shortly after settlement through the settlement process or by the conveyancer. Your conveyancer will confirm the exact date. Missing it can attract interest and penalties.
Concessions rarely apply to business purchases
Most duty concessions and exemptions target home buyers, first home buyers or particular family transfers. Companies and trusts buying business premises generally pay the standard scale. Never assume a concession mentioned by a friend or agent extends to a company or trust buying premises.
Related-party transfers and restructures
Moving property between entities in the same group, for example from a director personally to a family trust or company, can be dutiable just like a sale to an unrelated buyer. Some states have specific exemptions for certain restructures, but they come with conditions. If a refinance or new loan is part of a restructure, get advice on duty before documents are signed.
Ask about funding duty on your purchase once your conveyancer confirms the amount.
Funding duty with a secured loan
When cash is committed elsewhere, a short-term secured loan over property you already own can fund duty and other settlement costs. A second mortgage behind an existing home loan or a caveat are common. Prepaid or capitalised interest keeps cash free, and the loan is cleared later by refinancing, selling an asset or trading income. See stamp duty funding.
Duty and GST together
Commercial buyers frequently face GST on the price at the same moment as duty. A single secured facility can fund both, and the GST part is paid down once the ATO refunds the credit. Our guide to GST, going concerns and the margin scheme explains the GST side.
Illustrative example
Illustrative only. A printing company buys a larger factory. The bank lends its usual percentage of the price, and the deposit comes from company savings. The conveyancer’s settlement statement shows a large duty liability due at settlement. A caveat loan over a director’s investment unit pays the duty and legal fees, with six months of interest prepaid. When the company’s bank later agrees a top-up based on the new factory’s value, the caveat loan is repaid.
A simple budgeting method
List every cash requirement from exchange to settlement: deposit, balance of price, GST if applicable, duty, legal costs, lender costs, adjustments and immediate works. Next to each, write the funding source. Any item without a confirmed source is a gap to solve before exchange.
Common mistakes
- calculating duty with an outdated rate or threshold
- assuming the purchase lender will fund duty
- forgetting duty on related-party transfers
- leaving duty funding until settlement week
Plan it once, settle smoothly
Duty is unavoidable, but it should never be a surprise. Send us the purchase details, your conveyancer’s duty figure, the settlement date and the security on offer, and we will confirm how quickly funds can be ready. A first enquiry involves no credit check, one team handles it, and precise figures speed up the answer. Plan your duty funding.
Duty on business acquisitions
When buying a business rather than property alone, duty may also apply to certain business assets or to land held within the business, depending on the state and how the transaction is structured. Share the full transaction with your adviser so nothing is missed. Duty on a business acquisition can be easy to overlook because attention is on goodwill, stock and staff, yet it can add materially to the cash needed at completion. Duty on a business acquisition can be easy to overlook because attention is on goodwill, stock and staff, yet it can add materially to the cash needed at completion. Ask your adviser to confirm the position early.
Frequently asked questions
Who sets transfer duty rates?
Each state and territory sets its own rates, thresholds, exemptions and payment timing through its revenue office.
Can I add duty to my purchase loan?
Some lenders allow it within their LVR limits; many do not. Ask early so you can plan.
Do business purchases get duty concessions?
Most concessions target home buyers. Business and commercial purchases usually pay full duty, but check the current rules in your state.
Does moving property between my own entities attract duty?
It can. Transfers between related entities may be dutiable just like a sale to a stranger. Get advice before restructuring.
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