Stamp Duty and Farms

by Elizabeth Romerill

The State Revenue Office recently made changes to the exemptions and concessions available for the amount of stamp duty payable when you purchase a property.

Over the next few weeks we will explain some of the exemptions and concessions that are now available and how that could affect you.

Family farms

Stamp duty will not be payable when the family farm is transferred between family members.

To qualify for this stamp duty exemption, you need to be able to fulfil the following requirements:

Land must be primarily used for primary production purposes

The exemption is only available with respect to land that is deemed to be ‘farming land’. It will not be applicable for residential or commercial land. So what is ‘farming land’? The State Revenue Office has defined ‘farming land’ to be land that is used primarily for one or more of the following purposes:

(a) cultivation for the purpose of selling the produce of cultivation (whether in a natural, processed or converted state); or

(b) the maintenance of animals or poultry for the purpose of selling them or their natural increase or bodily produce; or

(d) commercial fishing, including the preparation for commercial fishing or the storage or preservation of fish or fishing gear; or

(e) the cultivation or propagation for sale of plants seedlings mushrooms or orchids.

The mere fact that land is zoned Farming will not be enough to satisfy this requirement. You will need to ensure that the land is currently used for one of the above purposes and that you intend to continue to use the land in that manner.

2. Transferor and Transferee are related

The person selling the land and the person buying the land will need to be ‘related’ in some manner. This will include blood relations as well as some corporate or trustee entities.

A blood relation will include natural relatives such as:

(a) a child (including adopted children)

(b) a parent

(d) partner of any person referred to (a), (b) or (c) above;

(e) partner (irrespective of gender)

(f) niece or nephew

(g) auntie or uncle

Parties may also be considered to be related if the party selling or buying the property is a Company whereby all the shares are owned by relatives or is a fixed or discretionary trust whereby the beneficiaries of that trust are relatives.

3. Working the land

If the property is located in a Melbourne urban zone, an additional requirement will need to be met.

The party selling the property will need to also show that they work the farm in relation to the primary production activity on a full time basis or that a relative and no other person works the farm on a full time basis.

The party purchasing the property will also have to show that they have worked the farm or intend to work the farm following transfer.

Properties located outside of the Melbourne urban zone will not need to address this requirement.

If you are able to qualify for this exemption, it can offer quite substantial savings on purchasing costs as you will be exempt from paying any stamp duty. It is important that you are aware of any possible concessions or exemptions available to you when purchasing a property. Our office can assist you with all aspects of the conveyancing process, including possible stamp duty savings.

Stamp Duty and Farms