Stamp Duty On Business Purchase In Queensland (QLD)

Buying a business in Queensland comes with many considerations and costs, including stamp duty or transfer duty. This tax applies to businesses and properties, with a percentage of the sale being taxed and paid to the Taxation Office. When buying a business in Queensland, it is important that you understand when transfer duty applies and how it is calculated, ensuring that you budget for it correctly.

Our guide walks you through everything you need to know about transfer duty in Queensland and how you can calculate it before buying a new business.

What is transfer (stamp) duty in Queensland?

Stamp duty is a tax levied by state governments in Australia on business acquisitions, property transfers, and motor vehicles. In Queensland, stamp duty is known as transfer duty, and you are expected to pay it on a transfer of business or property. The transfer duty is calculated based on the value of the transaction or the market value, whichever is higher. The rates and exemptions for transfer duty vary depending on your state and territory, so make sure to check out our other guides if you are not buying or selling a business in Queensland.

When does transfer duty apply to a business purchase in Queensland?

Not all business purchases in Queensland require stamp duty. The assets being transferred and their 9nnection to Queensland will determine whether you need to pay stamp duty or not. Below, we have outlined the main scenarios you need to consider.

Buying business assets (asset purchase)

A business purchased by acquiring its assets (instead of shares in a company) is classified as dutiable property, and you will be required to pay transfer duty on your purchase. In Queensland, transfer tax is applied to business assets, including intellectual property and goodwill. This is different from other states, so it’s important that you consider these assets carefully before purchasing your business. Business assets is a broad term, but it usually covers a variety of tangible and intangible items, including:

• Business name and trademarks – including the business’s name or branding rights
• Business licences or permits – such as a statutory business license used for operating the business​
• Debts of the business – if the money owed to the business is from a debtor in Queensland
• Franchise or distribution rights – including the rights under a franchise agreement or a supply agreement of the business​
• Goodwill – includes the business reputation and customer relationships (an intangible asset)
• Goodwill-related agreements – including restraint of trade covenants linked to the sale
• Intellectual property – like copyrights, patents, trademarks, or industry secrets

Most intangible assets are part of the dutiable in Queensland, even when you buy a business as a going concern. Transfer duty will apply to its intellectual property, goodwill, and customer lists. It’s important that you consider the cost of transfer duty before buying any business to ensure it suits your budget.

Buying business property (land or lease)

Any property included with the purchase of the business will also be liable for transfer duty. Transfer duty also applies to any land included with the business, so you will need to pay stamp duty on any land or property that comes with the business.

The same applies to an interest in land. If the business operates from leased premises, you will need to pay stamp duty. Paying stamp duty here only applies when the lease is transferred to you along with the business, as the lease is considered an interest in land.

Tangible assets and chattels

Tangible assets and chattels are not always dutiable in Queensland. Any equipment or inventory from a business that you are purchasing will not be charged stamp duty, saving you some money on the transfer.

However, there are some exceptions to this rule. If these chattels are part of a large transaction and include other suitable assets, then you will need to pay duty on them. For example, if your sale includes goodwill plus some equipment, then you will need to pay duty on the entire transaction. You must check your sale contract carefully when purchasing a business to see if any of these assets will have assets that can be charged transfer duty.

Share purchases vs asset purchases

There is a difference between buying a business’s asset and a company that owns the business, which is something that you should be aware of. Transferring shares in a company is not usually subject to transfer duty in Queensland if the company is not ‘land rich.’ Companies that own significant land in Queensland might be expected to pay a landholder duty instead.

If you buy a business as an asset sale, the sale usually incurs transfer duty if the sale includes land, licenses, intellectual property, goodwill or similar assets. If you buy a business via a share sale, you can avoid duty on the business assets unless the business owns a lot of land in Queensland. We recommend taking some time to consider both sales structures to decide which is best for you and your business needs.

How is transfer duty calculated?

Transfer duty is calculated in Queensland by looking at the dutiable value of the transaction. We have detailed dutiable value below to help you better understand it and how it applies to your purchase.

Dutiable value (consideration or market value)

The dutiable value is usually more than the price you paid or the market value of the assets. The value is calculated this way to prevent you from evading duty tax by undervaluing the assets you are purchasing. When you purchase a business and goods and service tax (GST) is payable, your transfer duty is calculated on the amount, including GST.

Queensland transfer duty rates

Transfer duty rates in Queensland are based on a sliding scale from sales up to $5,000 to sales over $1,000,000. It is important that you are aware of the rates so that you can estimate the cost of your transfer duty before moving forward with the sale. We have outlined the transfer duty rates below:

• Up to $5,000 – No duty is paid on the first $5,000
• $5,001 to $75,000 – $1.50 for every $100 over $5,000. For a $75,000 purchase, the duty would be $1,050 (1.5% of $70,000).
• $75,001 to $540,000 – $1,050 (from the previous bracket) plus $3.50 for every $100 over $75,000. For a $540,000 purchase, duty comes to $17,325 in total​
• $540,001 to $1,000,000 – $17,325 plus $4.50 for every $100 over $540,000. At a $1,000,000 purchase price, the duty would tally up to $38,025​
• Over $1,000,000 – $38,025 plus $5.75 for every $100 over $1,000,000​

Who is responsible for the payment of transfer duty in Queensland?

The buyer is typically responsible for paying the transfer duty in Queensland. The law states that both parties are liable if the transfer duty is not paid, with the Office of State Revenue legally entitled to recover any unpaid transfer duty from the buyer or the seller.

In practice, the sale contract will normally state that the buyer must pay the entire transfer duty. It is standard that the buyer pays the costs included for acquiring the business (including stamp duty), and the seller focuses on ensuring the deal is legally effective.

As a buyer, you will need to budget for the purchase price of the business and its transfer duty. You will want to ensure there are funds set aside, as you must pay the transfer duty when the sale is completed. You can use the rates we showed you earlier to understand how much you might be required to pay.

When and how will payment need to be made on transfer duty?

Stamp duty is usually paid within thirty days of the liability arising, usually the date of the execution or settlement of the contract. Any solicitor that you have employed to help you with the sale will ensure that the payment is made in full and on time, ensuring that all the paperwork is submitted to the Queensland Revenue Office.

If you don’t pay the stamp duty within thirty days of signing your contract, you might be charged a penalty tax and interest. If your contract is conditional or the settlement date is in the future, you will still need to pay your transfer duty within thirty days to prevent any charges. Of course, this does not apply if your contract is cancelled.

Exemptions and concessions

There are some businesses that will be exempt from paying transfer duty when you purchase them. We have outlined a few exceptions below so you can see if the purchase of your new business is exempt from paying stamp duty.

Small business restructure exemption

Small businesses can enjoy a stamp duty relief if they are restructuring. If you are reorganising your business, like moving from a sole trader or partnership to a company you own, you might be able to avoid paying stamp duty. You do need to qualify for this, and you must have an annual turnover of less than $5 million, with the business assets being transferred valued at less than $10 million.

You need to apply for the exemption for your small business and ensure that you meet the criteria. Your business broker can help you with this if needed.

Transactions for no real change in beneficial ownership

There are also exemptions for transfers between related entities under corporate group restructures or transfers to beneficiaries of trusts. To get an exemption for this, you will usually need to apply via the OSR.

Personal property only

Transactions that are for chattels or personal property with no dutiable business assets will be exempt from transfer duty.

Intra-family farm transfers

There are concerns available for the transfer of family farms to a next of kin; you can reduce or eliminate transfer duty. There are lots of specific conditions in place to reduce your transfer duty on farm transfers, so make sure that you seek legal advice beforehand so that you know if you can claim any of these discounts.

Going concern (GST) or small business for GST purposes

Unfortunately, there is no reduction of transfer duty when you buy a business sold as a going concern. You will be expected to pay stamp duty as normal on any dutiable assets sold with the business.

Critical legal considerations for business buyers

When buying a business, there are several legal considerations that you need to make, including penalties for not paying transfer duty and any landlord duty you may be required to pay. We have listed all the legal considerations you must make below:

• Aggregation of multiple transactions
• Landholder duty
• Penalties avoidance
• Professional advice
• Vehicle registration duty

A solicitor can help walk you through all of these legal considerations to ensure that you make the right decisions and avoid any hefty fines.

Get more information on buying & selling a business from an experienced business broker across Australia

Stamp duty must be paid on most businesses you buy in Queensland, but there are some exceptions to the rule. With the help of dedicated business brokers and solicitors, you can find the right business and ensure that you don’t pay too much for your transfer duty.

We have experienced business brokers across Australia, and you can get in touch with them by following the details below:

• Get in touch with business brokers on the Gold Coast
• Get in touch with business brokers in Brisbane
• Get in touch with business brokers in Perth
• Get in touch with business brokers in Sydney
• Get in touch with business brokers in Adelaide
• Get in touch with business brokers in Melbourne