When is an educational institution exempt from stamp duty on land purchases in New South Wales?

In brief - Use of land for educational purposes may exempt the purchaser from stamp duty

If a school or college purchases land and intends to use the whole or part of that land for educational purposes, there are provisions under the Duties Act 1997 which may exempt the purchaser from stamp duty on the transfer and mortgage.

Approval by Chief Commissioner of State Revenue required

If the Chief Commissioner of State Revenue has determined that an educational institution, in accordance with its rules or objects, uses its resources wholly or predominantly for the promotion of education in Australia, section 275(3)(a) of the Act applies.

Charitable or benevolent institutions

You may have a similar instance where an organisation with a broader purpose purchases land to be used for a school, but the organisation has many other objectives apart from educational purposes. In this case there may be an exemption available under section 275(3)(b) of the Act.

The organisation can apply for an exemption. The Chief Commissioner must be of the opinion that the institution or organisation is of a charitable or benevolent nature and the dutiable transaction is for such purposes as the Chief Commissioner may approve in accordance with the guidelines approved by the Treasurer. The organisation may also be acting as trustee for a body corporate, society or institution.

Utilisation of property key to obtaining approval

The purchasing body must satisfy the Chief Commissioner as to the use of that property. For example, a house with acreage in a residential area may be bought for the purpose of being used in conjunction with a school for which that organisation is purchasing the land. There may be a residence, tennis court or swimming pool on the land. The intention of buying the property is to use the tennis court for the students.

Pursuant to section 275A of the Act, if the Chief Commissioner is satisfied that the land is to be used by the purchasing organisation for an exempt purpose, ie for the promotion of education in Australia, then the dutiable value of the land is reduced by the portion of the value which corresponds to the portion of land used for an exempt purpose. An assessment for exemption may be made on the basis of the value of the proportion of the land which is taken up by the tennis court.