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2023-24 NSW Budget tightens PPR land tax, expands landholder duty net – and last chance for Corporate reconstruction and consolidation duty exemption

A version of this article was published in the Thomson Reuters’ Weekly Tax Bulletin on 22 September 2023.

The NSW Treasurer, Daniel Mookhey handed down Labor's first Budget in 12 years on 19 September 2023. Significant changes have been made to the NSW State taxes.

The expected tax revenue for NSW over the next four years till 2025-27 will rise by $17.6 billion. Since the 2023 pre-election budget update, all estimates were revised upwards, with payroll tax increasing by $2.8 billion, transfer duty by $9.5 billion, and land tax by $4.9 billion. The upgrade to taxation revenue is due to improvements in transfer duty revenue driven by the property market and stronger payroll tax revenue due to strength in the labour market.

As part of the NSW Budget, the NSW Government introduced the Treasury and Revenue Legislation Amendment Bill 2023 (NSW) (Bill) into the NSW Parliament on 19 September 2023. The Bill was passed on 21 September 2023 and is awaiting assent.

This article highlights the key changes.

Land tax principal place of residence ("PPR") exemption tightened

A person is liable for annual land tax where the property owned as at 31 December in NSW, excluding exempt land, exceeds the land tax threshold ($969,000 for the 2023 land tax year). The PPR exemption is available for any person with an interest in a property who "uses and occupies" the property as their PPR. A person with as little as 1% interest in a property is able to claim the PPR land tax exemption.

A move to tighten land tax exemption will mean that property owners need to own an interest of 25% or more to claim the PPR land tax exemption. An individual who currently holds less than 25% interest in the property will continue to satisfy the PPR exemption until 31 December 2025.

Currently, NSW land tax assessments are not issued to owners that hold property that are exempt from land tax. Property owners that are no longer eligible for the PPR exemption must register for land tax. Joint owners of NSW property should review their stake in the property with their advisers having regard to their family's estate planning, funding, and lifestyle objectives.

Corporate reconstruction and consolidation relief will no longer be a full exemption

There is an opportunity to undertake restructures before 1 February 2024 to save on the imposition of 10% tax. This is a valuable opportunity for entities seeking additional wealth protection by interposing a holding company or having existing dutiable property held in a subsidiary transferred to the holding company without attracting duty.

From 1 February 2024, the full exemption from duty for corporate reconstruction and consolidation transactions will be replaced with a 90% concession in duty (similar to Victoria). Any transactions that occur before 1 February 2024 will continue to get the full exemption.

Transactions that occur after 1 February 2024 will be imposed with 10% of the duty otherwise payable. Transitional provisions provide an arrangement entered into before 19 September 2024 will get the full exemption provided that the application for the exemption is made on or before 1 April 2024. However, a restructure involving multiple transaction steps over the same dutiable property will be subject to 10% duty for each restructure step. By comparison, Victoria charges duty once if the steps form part of the same restructure within 30 days of each other. There is no credit available under the NSW regime.

Landholder duty – private unit trust scheme

The transfer of shares in a company or units in a unit trust is not subject to duty in NSW unless:

  • the entity holds real property with an unencumbered value of $2 million or more; and 

  • a person makes a "relevant acquisition" including when aggregated with other interests held by that person or associated persons amounting to a "significant interest" (currently 50% but will be lowered to 20%). 

From 1 February 2024, the landholder duty threshold for a private landholder that is a private unit trust scheme will be reduced from 50% to 20%. A private unit trust scheme includes all unit trusts that are not public unit trusts (ie. widely held trusts or listed trusts). Investors (including self-managed superannuation funds) who acquire a 20% or more interest in a private unit trust will now be subject to NSW duty costs.

Other private landholders (eg. private companies) will continue to have the significant interest threshold of 50%. No changes will be made to public landholders that require an acquisition of 90%.

Tracing more "linked entities" for private landholders

The threshold for private entities (ie. trusts and companies) to be linked entities for landholder duty purposes will be lowered from 50% to 20% capturing more private landholders from 1 February 2024. An entity will be linked to another entity where it is entitled to receive 20% or more of the assets in the event of distribution of all the property.

Wholesale Unit Trust Registration

Wholesale investors will be able to register as wholesale unit trust under a new registration regime. The significant acquisition threshold for wholesale unit trust is 50%.

A unit trust will be able to register as a wholesale unit trust where:

  • at least 80% of all investors are qualified investors

  • no qualified investor, either alone or together with associated persons, holds 50% or more of the units in the unit trust

  • the unit trust was not established for a particular investor

  • the unit trust satisfies additional requirements that the Chief Commissioner may specify as published in the Gazette. 

Transitional provisions will apply to enable acquisitions made in a scheme on or after 1 February 2024 to be an acquisition in a registered wholesale unit trust if the application to register the trust as a wholesale unit trust was made before 1 May 2024 and the application is approved.

Imminent Wholesale Unit Trusts

A trust can be registered as an imminent wholesale unit trust where the Chief Commissioner is satisfied that it meets the criteria for a wholesale unit trust scheme within 12 months after the date on which the first units in the trust are issued to a qualified investor.

Removal of duty exemption and rebate for electric vehicles

From 1 January 2024, duty exemptions for electrical vehicles ("EVs") under $78,000 and $3,000 rebates for the purchase of EVs under $68,750 will cease. The NSW Government plans to introduce a road tax on EVs in 2027. This move follows a similar decision made by Victoria in June, which already has an EV road tax in place.

Changes to fixed and nominal duty

The fixed and nominal duty amounts for various transactions will increase from 1 February 2024 including:

  • declarations of trusts over unidentified or non-dutiable property from $500 to $750

  • certain transfers and instruments relating to managed investment schemes from $50 to $500

  • on certain concessions, including change of trustee concessions from $50 to $100 

  • duplicates or counterparts from $10 to $20. 

Changes to the penalties and interest regime

The Taxation Administration Act 1996 (NSW) will be amended so that the Chief Commissioner may remit penalties and/or interest and to clarify that the remission of one does not necessarily necessitate the remission of the other.


The NSW Government is making additional investments in the compliance systems of Revenue NSW. This is expected to payroll tax revenue by $337 million, land tax revenue by $225.5 million and transfer duty revenue by $87.5 million over the 4 years to 2026-27.

Other Matters – update on payroll tax for GPs

Since our last article Payroll Tax Rulings for Medical Practices Released, the Minister for Finance, Courtney Houssos announced on 24 August 2023 that the NSW Government will pause payroll tax audits for general practitioners (GPs) and their practices for 12 months to allow for ongoing consultation with the Royal Australian College of General Practitioners and Australian Medical Association. There is also a 12-month pause on tax penalties and interest accrued on outstanding payroll tax debts incurred before and at the commencement of the 12 month period for GPs: see section 61A of the Taxation Administration Act 1996 (NSW) (amended under Revenue, Fines and Other Legislation Amendment Act 2023 assented on 4 September 2023).  

GPs refer to a medical practitioner who under the Health Practitioner Regulation National Law, holds registration as a general practitioner. The definition does not extend to all allied health professionals or optometrists. Non-GPs do not have the benefit of the 12 month pause. This is an opportunity for GPs, allied health professionals and their practices to review their structure, contractual arrangements and to consider making a voluntary disclosure or engagement with the State Government revenue authorities.

For more information, please contact Lisa To. 

Author: Lisa To