What is stamp duty?
Answer
A tax on property purchases
Explanation
Stamp duty, formally called transfer duty in most jurisdictions, is a state and territory tax levied on the transfer of property and certain other assets. It is one of the largest costs of buying property in Australia after the purchase price itself, and is collected by the relevant state revenue office.
Each state and territory sets its own rates and thresholds. Most use a sliding-scale schedule where the rate rises with the property's value. On a typical New South Wales purchase of 1 million dollars, transfer duty would be about 40,000 dollars under the standard schedule. Victorian rates produce about 55,000 dollars on a 1 million-dollar purchase. Queensland, South Australia, Western Australia, Tasmania, the ACT, and the Northern Territory all have similar but distinct schedules.
Several concessions and exemptions can reduce or remove stamp duty. First home buyers receive exemptions or concessions in every state, with thresholds varying: NSW exempts purchases up to 800,000 dollars and provides concessions to 1 million dollars (2024-25). Victoria exempts first-home purchases up to 600,000 dollars and concessions to 750,000 dollars. Queensland raised its first-home threshold to 700,000 dollars in 2024. Off-the-plan purchases, pensioner concessions, and farm transfers attract specific concessions in some states.
Several states have reformed or are reforming stamp duty. The ACT has been progressively abolishing stamp duty since 2012 in favour of higher annual general rates. Victoria abolished stamp duty on commercial and industrial property from July 2024, replacing it with a 10-year transitional commercial and industrial property tax. New South Wales briefly offered first home buyers a choice between stamp duty and an annual property tax in 2023 before reverting to stamp duty under the Minns Labor government. The Productivity Commission and the Henry Tax Review have repeatedly recommended replacing stamp duty with broader land tax, citing efficiency gains, but reform has been politically difficult because of the transitional cost to existing homeowners. Stamp duty is also charged on certain motor vehicle transfers, insurance policies, and (in some states) share trades.
Why this matters for your test
Stamp duty can add tens of thousands of dollars to the cost of buying a home, and recognising first-home concessions plus state-by-state differences helps new citizens budget for a purchase.
Source: Australian Citizenship: Our Common Bond (2024)
