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The NSW government has passed new laws that will see stamp duty exemptions extended on the transfer of primary production land to a company directed by a family member.
Previously, NSW duties concessions allowed for family farm transfers to be exempt from stamp duty when the transfer of the primary product land was between family members. This aimed to support the retirement of older members of a family by passing the land on to a younger generation stamp duty-free.
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However, the exemption only allowed the original owner of the property to be a company controlled by the family and for the transfer to go to an individual family member.
Given that many family farms have a business structure that uses a partnership, trust or company – and few are owned by individuals in name – this exemption was not reportedly available to many farmers.
As such, the amended law will now allow the exemption for family farm transfers to apply where the land is transferred to company or other entity, so long as that entity is directed by a family member.
The family member will be required to maintain control of the transferee entity for at least three years after the transfer (consistent with the current requirement that the transferor entity must have been controlled by a family member for a minimum of three years prior to the transaction).
It is estimated that nearly 150,000 primary production properties in NSW may be eligible for stamp duty exemptions under the rule change.
In his second reading speech for the State Revenue And Fines Legislation Amendment (Miscellaneous) Bill 2022, NSW Minister for Finance, Damien Tudehope, said that the change would “make the exemption fairer and bring it into line with the structures commonly used by farming families”.
When the law passed and received assent earlier this month, Mr Tudehope added that the old system “d[idn’t] make sense with the way family businesses operate” and that the new law was a “fairer proposal, which will modernise family farming business practices.”
“We want to support more family businesses in our regions to continue being the thriving heart of country communities…,” Mr Tudehope said.
“This change supports families and farmers.
“It also reduces the cost of working on farms in NSW by alleviating stress in both the sale and purchase of land.”
The Deputy Premier and Minister for Regional NSW, Paul Toole, added that the move would help futureproof farms for generations to come.
“Farmers are the backbone of bush communities and the State’s economy, and they have worked tirelessly to keep our supermarket shelves stocked despite every possible challenge thrown at them over the past few years,” Mr Toole said.
“NSW is home to a diverse range of primary industries, and this move makes it easier for the next generation to follow in their families’ footsteps, whether it be in beef, dairy, poultry, wool or cropping operations.
“As of 1 July 2021, there were almost 240,000 rural properties in NSW worth an estimated $203 billion – these new laws will help ensure the farming sector continues to go from strength to strength.”
Noting the passing of the law, the Minister for Agriculture and Western NSW, Dugald Saunders, said this is another step forward in encouraging younger generations into farming.
“The farming industry has been through a lot in the last few years; drought, bushfires, a global pandemic, a mouse plague and of course floods, so this will be a welcome announcement for food and fibre producers,” Mr Saunders said.
“There are some fantastic up-and-comers in agriculture who are excited to officially take over their family farms, however stamp duty can definitely be a deterrent and a disincentive to stay in the regions.
“Agriculture plays a huge role in NSW’s economy – with the industry currently valued at around $21 billion – so initiatives like these which encourage more people into the sector will only grow that contribution and, at the same time, encourage fresh ideas and new practices in farming.”
[Related: LNP commits $75m to farm ownership scheme]
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