Stamp duty is a state based tax that the Northern Territory government charges on certain transactions and documents. The legislation in which these duties are set out is the Stamp Duty Act (NT) (‘The Act’). Items which may typically incur stamp duty are transfer of real property (land), mining tenements, exploration licences, registration or transfer of motor vehicles, transfer of shares and transfer of businesses. This article outlines the exemptions which may be available for not-for-profit entities.
Motor vehicles
Stamp duty is payable on the registration of a new motor vehicle or on the transfer of a second-hand motor vehicle. Duty is calculated on the purchase price of the vehicle if the transaction is made on normal commercial terms. In any other case, duty is calculated on the market value at the time of the transaction.
Exemptions are available per Schedule 2, section (23) (h) of ‘The Act’ for the registration or transfer of a vehicle if it is:
- in the name of a public benevolent institution or a not-for-profit organisation having its sole or dominant purpose as a charitable benevolent, philanthropic or patriotic purpose; or
- used by a public hospital, educational institution or a council, society, organisation or if it is used by a body established and carried on exclusively or principally for the promotion of the interests of a school, other than a school carried on for profit of an individual.
An exemption certificate is required from the Territory Revenue Office to certify the exempt status of the organisation or the transaction. The certificate may remain in force for a period of five years and may be used for future purchases within this period.
The ‘Application for Exemption – Stamp Duty on a Motor Vehicle’ form needs to be completed and submitted with the Motor Vehicle Registry to obtain the exemption.
If stamp duty has been paid, an application for a refund may be made within five years of the date it was paid.
Land and business property
A conveyance or an agreement to convey dutiable property such as land, business property and other property, is liable for stamp duty. Further information as to what is included for each of these items is listed below.
Land includes:
- A lease of land;
- A mining tenement from 1 July 2008, including exploration licences and exploration retention licences; and
- A fixture to land.
Business property includes:
- Goodwill of a business including a restraint of trade agreement which would protect or enhance the value of the business;
- Intellectual property rights and other rights connected with a business i.e. a right to use a business name, trading name or trade mark or a right to use a thing, system or process that is the subject of a patent, registered design or copyright or a right to use information or technical know-how;
- A patent or registered design or a copyright; and
- Statutory business licence for the carrying out of a business activity e.g. fishing licence, liquor licence.
Other property being:
- An option to purchase any dutiable property; and
- Chattels if acquired with other dutiable property other than stock in trade, material held for manufacture, goods under manufacturer, livestock, motor vehicles which are required to be registered or the registration transferred, cash or money in an account at call and negotiable instruments or money on deposit.
Entities which may apply for an exemption from stamp duty on dutiable property include:
- Public hospital;
- Public benevolent institution;
- Religious institution;
- Public education institution;
- Council, society, organisation or other body established or carried on exclusively or principally for the promotion of the interests of a school (other than a school carried on for profit);
- Non-profit organisation having as its sole or dominate purpose a charitable, benevolent, philanthropic or patriotic purpose.
The foregoing exemption, as outlined in Schedule 2 (14) of ‘The Act’, only applies where the property is to be used for a purpose other than carrying on of a commercial activity. Commercial activities are operations which take on the characteristics of a business and can include a whole range of different services such as the sale of books and paintings, tour operator or performance entertainer. Items which would generally not constitute carrying on of a commercial activity include rent received from residential premises, income received from investing in shares or managed funds and donations received without a return of goods or services.
Not for profit entities may also be eligible for an exemption from payroll tax.
Payroll tax exemption
Your organisation may be exempt if it is one of the following:
- Non-profit organisations with a charitable, benevolent, philanthropic or patriotic purpose;
- Public benevolent institution;
- Religious institution;
- Non-profit, non-government school or college, not including technical schools or colleges, for wages paid to people providing education at or below secondary level;
- Public hospital;
- Non-profit private hospital; and
- Local governing body.
If your organisation is exempt, you may still need to register for payroll tax if you have staff are engaged in commercial or business activities. Activities that constitute a commercial activity have been defined to include anything not related to the charitable purposes of the entity, any commercial activities and any activities which compete with a business carried on by another person. This definition is not intended to include small scale traditional fundraising activities that would normally be undertaken by charities, or charitable activities merely done on a cost recovery or nominal fee basis i.e. an op shop or soup kitchen.
Employers who believe they may be exempt from payroll tax should apply to the Territory Revenue Office for a determination of their exempt status (this can be done by email or letter – there is no formal application to be completed).
How can Nexia Edwards Marshall NT help you?
For any questions or to discuss any of the above in relation to your not-for-profits situation, please contact Sarah McEachern or Noel Clifford.
