Stamp duty

Stamp duty is a state government tax which is payable when a property is sold. Stamp duty is calculated on the purchase price of the property and is paid by the buyer. Each state and territory has a different rate of duty.

When stamp duty arises

The Duties Act 1997 (NSW) states that after 'first execution',i.e. once the contract has been signed, or once the offer has been accepted; the purchaser has a period of 3 months to pay stamp duty without penalty. The Office of State Revenue (OSR) will usually calculate the period for payment of duty on the contract from the date of exchange of contracts.

However, if the contract becomes ineffective due to a failure of the parties to complete the transaction, a refund of the duty may be obtained.

If the duty is not paid within 3 months of 'first execution' a penalty arises under the Taxation Administration Act 1996 (NSW).

Stamping procedure

The practical elements for stamping at the OSR are as follows:

•  the duties application form is filled out and completed;

•  the form and other relevant documents are then taken to an assessor;

•  the assessor then inspects the documents and the lodging party's calculation of the duty payable;

•  the application together with the documents are then passed on to the cashier; and

•  the documents are stamped.

Generally, the OSR will not stamp a document until it is signed. Transfers should therefore be signed by the transferee, the transferee's attorney or the transferee's solicitor before lodgment for stamping. Usually the contract will be stamped without the signature of the transferor.

The transfer needs to be 'registered', and is not registrable unless it is "marked" (in the case of a pre-stamped transfer) or "stamped" ($2 paid on lodgment) pursuant to the contract. The time to pay stamp duty is usually before settlement.

The simplest method is for the contract and the transfer to be lodged together for stamping. If the contract is lodged first by itself, and the transfer is lodged subsequently, the stamped contract must be produced with the transfer.

Once the transfer is stamped, a "transfer stamped" stamp is placed on the contract. As the transfer confirms payment of duty, the contract is not produced at the Department of Lands.

Any alteration in a document made after it has been stamped will require production of the document at the OSR for the placing of a "noted" stamp over the alteration. An alteration for these purposese is one which affects the stamp duty and can be either an alteration to the parties, the property or the price.

Duty rates

To calculate the amount of duty payable, please email our Sydney Conveyancing Solicitor.