Last year, legislative changes were made to the NSW stamp duty regime under the State Revenue and Fines Legislation Amendment (Miscellaneous) Act 2022 (Act) from 19 May 2022. To read our previous alert outlining these changes please Click Here.

Revenue NSW has now released a Commissioner’s Practice Note providing further guidance on how the variations impact lease transactions.

Improvements by tenants

The grant of a lease or an agreement for lease is now dutiable where the tenant is under an obligation to undertake improvements to the land which will vest in the landlord at the end of the lease term. In most cases, duty will be calculated on entry into the lease or agreement according to the estimated value of the improvements when the lease term concludes (i.e. the benefit obtained by the landlord when the premises revert back to the landlord). A lease may become dutiable on expiry where the tenant has undertaken improvements and surrenders the right to fixtures and fit outs to the landlord.

Generally, the longer the lease term, the more the improvements will depreciate over time along with the value of the improvements received by the landlord at the end of the lease. Evidence of the value of the improvements must be provided at the time of stamping. If a valuation is not provided or if the value does not seem reasonable or appropriate, the parties may appoint the Chief Commissioner to make an assessment.

In lieu of evidence of value, the Chief Commissioner may employ the following methodology to determine what proportion of the cost of the improvements is dutiable.

Term of Lease% of cost of  
10 years or less100
Greater than 10 but not more than 20 years75
Greater than 20 but not more than 30 years50
Greater than 30 but not more than 50 years25
Greater than 50 yearsnil
Periodic lease or lease for a term that cannot be
ascertained when the lease is made


Costs greater than $1,000

In addition, a grant of lease will now be dutiable where the tenant pays or agrees to pay the landlord’s legal fees which are non-refundable and greater than $1,000. Legal fees for an extension or renewal of lease will not be dutiable where the tenant pays for those fees by way of or instead of rent.

Other transactions which are now dutiable include the grant of a lease for consideration other than rent and the grant of a call option to purchase land in NSW.

What should you do?

Tenants and landlords alike are encouraged to exercise caution when entering or granting leases that may be dutiable. If you need assistance in assessing whether a leasing transaction will lead to a stamp duty liability, please don’t hesitate to contact our property and commercial team on (02) 4927 2900.