Australia: Mortgage duty - counting down to switch off in NSW

Mortgage duty is set to be abolished on 1 July 2012. New South Wales is the only Australian state yet to abolish the tax on secured lending arrangements.

Mortgage duty was originally scheduled to be abolished in NSW on 1 January 2011 in return for the state government's share of GST revenue, but in 2007 the NSW Treasurer, The Hon. Michael Costa MLC announced measures to bring forward the abolition to 1 July 2009. That date was embedded into the Duties Act by amending legislation. However, in November 2008, the NSW Treasurer The Hon. Eric Roozendaal MLC released a mini budget announcing that the abolition of mortgage duty would be deferred until 1 July 2012. The Duties Act was then amended to state unequivocally that mortgage duty is abolished on and from 1 July 2012.

Absent any 11th hour announcement when the current NSW Treasurer, The Hon. Mike Baird MP releases the state's budget on 12 June 2012, mortgage duty will not be charged on advances, or further advances, made after 1 July 2012 even if the mortgage was executed before that date.

A liability for duty should still arise if, prior to 1 July 2012, the amount secured by a mortgage exceeds the amount for which it is stamped. This is important where finance facilities contemplate progressive draw-downs. During the lead up to 1 July, stamping based on actual advances may be preferred where draw-down levels will increase after mortgage duty is finally abolished.

Budget update

The Northern Territory Government delivered its budget on 1 May 2012. The budget speech says:

The NSW Government will not release its budget until 12 June and we may not know until then whether it will follow suit by deferring the abolition of duties.

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This report does not comprise legal advice and neither Gadens Lawyers nor the authors accept any responsibility for it.