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ARTICLE · 05 MARCH 2025

When is a loan really an Option Fee? And when is an Option a Contract?

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Revenue NSW has indicated that it will closely scrutinise all simultaneous put & call options from an anti-avoidance perspective.

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Lynette Harrison
Lynette Harrison
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It certainly is not news to those of us who deal in the property development space that Revenue NSW now imposes transfer duty (or for those of us who have come from the old school - stamp duty) on the grant of an option to purchase. These laws also impose penalties on put and call options that Revenue NSW consider have been documented for the predominant purpose of delaying the obligation to pay transfer duty. These laws have been in place since May 2022. The impact of these laws is that a purchaser under an option is liable to pay more duty than they otherwise would under a normal contract for sale.

The transfer duty is calculated on the greater of the consideration paid for the option and the market value of the option. In most cases, this would usually be the call option fee.

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