Stamp Duty On Business Purchase In South Australia (SA)

Stamp or transfer duty is a tax levied towards business and property sales. When you purchase a business or property, transfer duty is calculated based on the value of the business or the price you paid and must be paid by the buyer. Transfer duty is in place across all of Australia, but the criteria and cost vary depending on the state and territory. South Australia has made changes to its transfer duty, which makes it an attractive place to purchase a business. Let us show you what the duty is in South Australia and how it applies to your next business purchase.

What is transfer (stamp) duty in South Australia?

Stamp duty, or transfer duty in South Australia, applies to the purchases of property, land, and businesses. What you pay stamp duty on has changed, though, with many business assets now being exempt from stamp duty. In 2015, South Australia abolished stamp duty on the following business assets when they are transferred to a new business:

• Goodwill – including the reputation of the business and its customers
• Intellectual property – like trademarks and patents
• Licences – including any license the business needs to continue operating
• Plant and equipment – including those needed to continue operations at the business
• Motor vehicle registrations – like any vehicle used by the company to continue its operations or as an employee perk (like a company car)

In South Australia, most businesses will come with assets that are exempt from stamp duty. This lowers the amount of stamp duty you will need to pay, making South Australia an attractive location for a business.

When does transfer duty apply to a business purchase in South Australia?

Stamp duty applies in South Australia for the following circumstances:

Transfers involving real property

If the business you are purchasing comes with real estate, then you will be required to pay stamp duty. The stamp duty applies only to the land element of the transaction. The value of the land or the price you have paid for it will be used to calculate how much stamp duty you will pay.

Motor vehicle transfers

Stamp duty is charged to businesses that transfer motor vehicle registrations to a new owner. The amount of transfer duty you pay on this will be based on the value of the vehicle and its type.

How is transfer duty calculated?

Transfer duty on businesses is calculated based on the dutiable value of any assets that are covered by stamp duty. The value of these assets is used to calculate the stamp duty owed from your purchase

Dutiable value (consideration or market value)

The dutiable value is based on any taxable assets and their worth or what you paid for them. Whichever value is higher will be used for your stamp duty calculation, so you are unable to avoid paying stamp duty or reducing its price by adjusting the value of the assets.

South Australia transfer duty rates

South Australia uses transfer duty rates to calculate your transfer duty based on the dutiable value of your business. These rates can fluctuate, but currently, they sit at:

• Up to $12,000: $1.00 for every $100 or part of $100
• $12,001 to $30,000: $120 plus $2.00 for every $100 or part of $100 over $12,000
• $30,001 to $50,000: $480 plus $3.00 for every $100 or part of $100 over $30,000
• $50,001 to $100,000: $1,080 plus $3.50 for every $100 or part of $100 over $50,000
• $100,001 to $200,000: $2,830 plus $4.00 for every $100 or part of $100 over $100,000
• $200,001 to $250,000: $6,830 plus $4.25 for every $100 or part of $100 over $200,000
• $250,001 to $300,000: $8,955 plus $4.75 for every $100 or part of $100 over $250,000
• $300,001 to $500,000: $11,330 plus $5.00 for every $100 or part of $100 over $300,000
• Over $500,000: $21,330 plus $5.50 for every $100 or part of $100 over $500,000

Who is responsible for the payment of transfer duty in South Australia?

The buyer of the business is responsible for paying transfer duty in South Australia. In some cases, you are able to negotiate this with the seller, but it is usually the obligation of the buyer to pay the transfer duty and any other taxes relating to the sale. It’s important that you calculate the stamp duty before moving forward with the purchase to ensure that you have enough money to make the payments.

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

Transfer duty must be paid when you lodge all of the sale documents with revenueSA. The documents can be lodged within two months of the sale execution, giving you time to gather the funds and make your payment. You can choose from several methods to pay, including cheque and direct debit, with more information available on payment methods from the revenue office.

When submitting your paperwork and payment, it is important that you double-check everything is correct. You can use a solicitor to double-check all of the documents and submit the documents and payment for you. Failing to lodge and pay your stamp duty within two months can leave you with penalties and interest charges, so make sure you make your payment on time.

Exemptions and concessions

While many assets are not included with stamp duty, there are some exemptions and concessions that can reduce any remaining stamp duty that you need to pay. We have outlined the three most common exemptions and concessions below that can help you lower your stamp duty. It is important that you check the criteria for these exemptions to ensure that you qualify for any reductions.

Family farm transfers

Transferring a farm and its property between family members can qualify for an exemption to stamp duty. There are specific conditions for this, so make sure that you and your solicitor do your due diligence to ensure that you qualify.

Corporate restructuring

Some transactions within corporate groups can also qualify for relief when properties are being transferred.

Charitable organisations

Transferring of business property to charity institutions can be exempt from stamp duty. In these situations, the property must be used for charitable purposes to ensure that no stamp duty is charged.

How to minimise stamp duty liability

There are a few ways that you can reduce your stamp duty when buying a business in South Australia, which we have outlined below:

Asset segregation

When drafting your sale contract, make sure that any assets exempt from stamp duty are clearly labelled. Where possible, segregate them so that your dutiable value can easily be calculated for an accurate stamp duty charge. You don’t want to pay stamp duty on exempt assets.

Utilise exemptions

Before completing your paperwork, spend some time researching the exemptions and concessions available to see if you are eligible to reduce your stamp duty bill. It is especially important for corporate restructures and those transferring family farms to check if they are exempt or can reduce their stamp duty bill.

Seek professional advice

You should always speak to legal and tax professionals before completing your paperwork and purchasing a business. These are experts in their field and can help to optimise your tax outcomes, reducing how much stamp duty you could pay.

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

South Australia can be an excellent place to buy a business as if you choose one without land or vehicles, you could pay no stamp duty! There are several stamp duty exemptions, too, that will allow you to save money and find the perfect business. To help you find your new business, we recommend using a business broker.

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