Goodbye Torrens Assurance Levy

You will recall that on 1 July 2010 the former NSW Labor Government introduced the Torrens Assurance Levy, which is an ad valorem tax payable on the registration of a transfer of NSW property where the purchase price is more than $500,000. The greater the purchase price, the higher the levy payable. By way of example, the tax amounts to $204 on a property with a price of $600,000, and increases to $1,004 for a property at $1,000,000 and $6,004 for a property at $3 million.

The Real Estate Institute of New South Wales (REINSW) immediately sought, and received, an undertaking from the then Opposition Leader Barry O’Farrell that he would repeal the ad valorem tax should the NSW Liberals & Nationals be elected to government at the 2011 NSW election. He has come good on his promise to repeal the ‘Torrens Assurance Levy’ and as a result the Real Property Amendment (Torrens Assurance Levy Repeal) Bill 2011 was introduced into the NSW Parliament on 9 May 2011.

Tim McKibbin, Chief Executive Officer of REINSW, says that “While the Bill is not yet law, we are pleased to see the new Government taking steps to honour its undertaking to REINSW. We will monitor the progress of the Bill as it makes its way through Parliament…”

The Bill is proposed to come into effect on 1 July 2011. Under transitional provisions, the tax will continue to apply to registrations of transfers that are executed to give effect to Contracts for Sale of Land entered into on or after 1 July 2010 and before 1 July 2011. Only registrations of transfers made to give effect to Contracts for Sale where the contract for sale is entered into on or after 1 July 2011 will benefit from the abolition of the tax.

It will be interesting to see whether this will effect purchasers exchanging on contracts up to 30 June 2011.