Stamp Duty On Business Purchase In Western Australia (WA)

Transfer duty, or stamp duty, is a levy placed on the purchase of property and businesses across Australia. The levy varies depending on your state, with most states charging your stamp duty based on the cost of the sale or the value of the business, including its assets. Knowing how much stamp duty you need to pay for the purchase of a business can seem impossible, but it does not need to be. Our guide today will walk you through transfer duty in Western Australia so that you know how much to pay and when it should be paid by.

What is transfer (stamp) duty in Western Australia?

Stamp or transfer duty in Western Australia refers to the duty that is placed on buyers when they buy property or businesses. The stamp duty is often calculated based on the sale price or valuation of the business, but this can vary from state to state. Western Australia applies many duties to assets of a business sale, where you will be required to pay stamp duty. The following are included as assets that are dutiable property in a business sale:

• Business identity – elements, like branding, that distinguish the business
• Business licenses – authorities or permits to operate certain types of businesses
• Client lists and rent rolls – lists of tenants and clients that generate ongoing revenue
• Goodwill – the customer loyalty and reputation that adds value to businesses
• Intellectual property – including patents, trademarks, and other proprietary technology
• Restraint of trade agreements – which prevent sellers from competing with the business post-sale
• Rights under uncompleted contracts – including benefits and obligations from ongoing agreements to supply goods or services

Not all business assets are considered dutiable and will be exempt from stamp duty. In Western Australia, the following are not considered dutiable:

• Franchise agreements – when the transfer of business assets moves from a franchisor to a franchisee under a franchise agreement. The only exception is when another party relinquishes rights to facilitate the transfer
• Intellectual property transfers – when the only dutiable property involved is intellectual property and is not aggregated with other business assets

It can be tricky to know which exemptions apply to you, so be sure to seek legal advice. A solicitor can help with your sale contract and ensure that you are paying the correct amount of transfer duty.

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

Stamp duty applies to the sale of businesses in Western Australia in the following circumstances:

Sale of business assets

The sale of business assets includes transferring the ownership of assets, including business licenses, goodwill, and intellectual property. In all of these circumstances, stamp duty will be levied, and you will be required to pay the charge.

Transfer of land or property

Should the business you are purchasing come with real estate, then the standard property transfer duty rates will apply. You will be expected to pay stamp duty on the property associated with the business. There are some exceptions to this, like if farmland is being transferred to your next of kin.

Chattels

Chattels include movable items like plants and equipment. These are dutiable when they are transferred with other dutiable property, like other business assets. If you are buying these chattels along with the rights to the business, then you will be required to pay stamp duty on their value. However, in cases where the chattels are sold separately or are not included in your sale of the business, you will not be charged the transfer duty on them.

How is transfer duty calculated?

Transfer duty is typically calculated based on the sale amount of the business or the value of the business, whichever is higher. The value of the business will exclude any assets that are not dutiable, like chattels, so it may seem lower than the initial valuation for the business you received.

Western Australia transfer duty rates

Western Australia has specific transfer duty rates that are used to calculate how much transfer duty you will pay on the purchase of your business. These rates are subject to change, but the latest figures put them as follows:

• Business sales up to $80,000 – $1.90 per $100
• Business sales from $80,001 to $100,000 – $1,520 plus $2.85 per $100 on businesses over $80,000
• Business sales from $100,001 to $250,000 – $2,090 plus $3.80 per $100 on businesses over $100,000
• Business sales from $250,001 to $500,000 – $7,790 plus $4.75 per $100 on businesses above $250,000
• Business sales over $500,000 – $19,665 plus $5.515 per $100 on businesses above $500,000

Western Australia’s government offers a transfer duty calculator that allows you to see how much transfer duty you will need to pay on the purchase of your business. A solicitor can also help you determine the cost of stamp duty and will ensure its accurate cost is represented in any paperwork you have pertaining to the sale.

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

Like in other states across Australia, the buyer is responsible for paying transfer duty in Western Australia. Whether you are buying a property, business, or asset, the stamp duty is paid by the buyer. There are some circumstances where you can negotiate a split of the stamp duty payment with the seller, but these are not common. Your solicitor can advise you on this and provide guidance where needed.

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

Stamp duty must be paid in full in Western Australia within thirty days of your duties assessment notice being issued. You will receive your notice and be told how much stamp duty you must pay. You will also be provided with a deadline to pay.

You can pay stamp duty via credit card, cheque, direct debit, and other major payment options. You will likely receive a letter from RevenueWA that will detail all of your stamp duty information and your payment options. The letter will also contain guidance on late payments. Failing to pay your stamp duty or paying late will incur late fees and interest, which can cause you to spend more than you initially would. It is important that you pay your stamp duty on time and allow plenty of room in your budget for it.

Exemptions and concessions

In Western Australia, stamp duty is payable on most business assets, but there are a few exceptions. In some cases, you can apply for an exemption or concession to lower the cost of your stamp duty. We have detailed your exception and concession options below:

Small business concessions

Small businesses can access a concession if the business you are purchasing does not exceed $200,000. This price includes all dutiable property associated with the business. The criteria to be classed as a small business must be met to access this concession, and a solicitor can help to ensure that your new business meets the right requirements.

Corporate restructuring

If you are restructuring your company, you can also be entitled to stamp duty relief. Transfers within a corporate group can qualify for some concessions, but there are strict requirements that you must meet. It is important that you check these carefully to ensure that you qualify for the relief.

Family farm transactions

In some circumstances, transfers of farming property can be exempt from stamp duty. The exemptions usually apply to transferring ownership of the farm from one family member to another, but you must ensure that you meet the requirements before doing so.

How to minimise stamp duty liability in Western Australia

While it isn’t always possible to avoid stamp duty, there are a few ways that you can reduce the cost of stamp duty during your purchase of a business, which we have detailed below:

• Asset allocation – involves structuring the sale agreement to allocate values to different assets, which can reduce the dutiable value
• Professional consultation – where engaging with legal advice can show you where to reduce the cost of stamp duty
• Utilise concessions – including stamp duty relief that can lower your final costs

These strategies won’t apply to every business purchase, but it is worth considering them to see if there is an option for you that would allow you to lower the cost of your stamp duty while purchasing a new business.

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

Most business purchases in Western Australia will involve a stamp duty levy, covering the sale of the business and its assets. The rate you pay will vary depending on the value of the business, with several concessions available to lower your cost. A solicitor can help you navigate these concessions, while a business broker will handle the sale, ensuring you find the right business for your needs.

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
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