Stamp duty is part of the cost that comes with buying a car in Australia. But what is it? How is it calculated? When does it need to be paid?
For starters, it’s important to understand that stamp duty is imposed by state and territory governments. So fees, regulations and exemptions can vary depending on where your vehicle is registered.
But if you live in NSW and are looking to purchase a vehicle, this is the blog for you. By the time you’re done here, you’ll know exactly what stamp duty is, what it’s going to cost you, or whether you might be exempt from paying anything at all.
What Is Stamp Duty?
Stamp duty is the tax paid on the application documents required to register a motor vehicle in NSW; a one-off fee paid upon the transfer of ownership.
It’s collected by the Roads and Maritime Services, the government agency responsible for managing roads and waterways, on behalf of the Office of State Revenue, a division within the Department of Finance, Services and Innovation. Which is also a part of the Treasury and Finance Cluster.
The Roads and Maritimes Services help provide children, students, commuters, older persons and those with disabilities proper access to public transport services. They offer relief and assistance to Australians affected by natural disasters and emergencies. And ensure safe and efficient travel across NSW with policies that minimise the environmental impact of all Roads and Maritime projects.
When Is Stamp Duty Paid?
Stamp duty is paid whenever a new or used vehicle is purchased. Or whenever ownership is being transferred. This includes situations where:
- The vehicle is being registered for the first time
- Registration is being transferred to another person
- An imported second-hand vehicle is first registered in NSW
- Registration is issued in another name
How Is Stamp Duty Calculated?
The stamp duty rate that you’ll have to pay on the transfer of a vehicle’s registration will either be based on its market value or the sale price you paid for it – whichever is greater.
This is due to the fact that a vehicle’s sale price may not always be an accurate reflection of its actual value. Like cases where a vehicle is purchased in poor condition but repaired significantly prior to registration. Or in cases where a vehicle is won in a contest or received as a gift and there was no sale price at all.
If you are unsure of what the market value of your vehicle is, there are a number of ways to acquire that information. You can contact a trusted dealership to appraise it. If you’re an NRMA member, you could phone them, ask your insurance company, or visit a reputable site like RedBook or Glass’s Guides for current pricing information.
A few other things to keep in mind when considering the market value of a vehicle:
- If Goods and Services Tax (GST) was paid on the purchase of the vehicle, it must be included in the total dutiable value
- Rebates are considered a gift from the manufacturer, so when a rebate is paid directly to the purchaser or used as a deposit, stamp duty is to be paid on the market value before the rebate
- Extended warranties are not included in the dutiable value of a vehicle
Once the vehicle’s value has been determined, calculating the cost of the stamp duty you’ll be required to pay is simple.
In NSW, vehicles valued between $0 -$44,999, are charged $3 for every part of $100. So for a car valued at $35,000, that breaks down into 350 parts of $100 x 3, for a stamp duty cost of $1,050.
For vehicles valued $45,000 and over, you pay a flat rate of $1,350 plus $5 for every part of $100 over $45,000. So for a car valued at $50,000, that breaks down into 50 parts of $100 x 5 + $1,350 for a total stamp duty of $1,600.
Stamp Duty Exemptions And Refunds
There are many exemptions to the stamp duty that exist in NSW. For example, if a vehicle is left to you in a will or awarded to you as part of a divorce settlement, no stamp duty applies. But court evidence confirming the terms of divorce and property settlement will need to be provided. Eligible war veterans are also exempt from the stamp duty.
Vehicles that are the property of nonprofit organisations involved in charitable, benevolent, philanthropic, patriotic or welfare work can obtain a stamp duty letter of exemption from Revenue NSW.
If you’ve already registered the vehicle in your name in another state or territory and can show a certificate of registration that shows you’ve paid interstate duty on it, you won’t need to pay stamp duty again when registering in NSW.
Or if a company buys a car and the dealer registers it under an incorrect name.
There are stamp duty concessions for eligible pensioners as well. Pensioner concessions apply to one vehicle per customer and are available to DVA pensioners who:
- Receive a disability pension of 70% or more
- Receive an Intermediate, Totally and Permanently (TPI) or Extreme Disablement Adjustment (EDA) pension
- Have been assessed under the Military Rehabilitation and Compensation Act 2004 at 50 or more impairment points
If you’re sold a stolen car and it is repossessed, you are also entitled to a stamp duty refund.