• Buying a Business in WA


    A Western Australian business asset is dutiable property and includes goodwill and intellectual property. Certain transactions relating to business acquisitions may give rise to a transfer duty liability if there is a dutiable transaction over business assets.

    A Western Australian business is:

    • a business that, at any time in the year before the transaction, has either been carried on in or from Western Australia, or has supplied commodities or services to customers in Western Australia; or
    • carrying out an activity for gain or reward under a Western Australian or Commonwealth business licence.

    A business asset includes:

    • goodwill of a business
    • a restraint of trade arrangement
    • a business identity
    • a business licence
    • a right of a business under an uncompleted contract to supply commodities or provide services
    • intellectual property of a business
    • things that a business has that are in the nature of rent rolls and client lists, but does not include a trade debt.

    Some transactions involving Western Australian business assets are not dutiable transactions. For further information relating to business assets, please refer to Duties Fact Sheet ‘Business Acquisitions'.

    A dutiable transaction includes circumstances where a person agrees to relinquish a business licence, or to not apply for a renewal of a licence, so that it or another similar licence can be issued to another person. For further information relating to business licences, please refer to Duties Fact Sheet ‘Business Licences’.

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    Chattels that are transferred with business assets

    A chattel, such as an item of plant or equipment, is dutiable property if it is being transferred with other dutiable property (such as business assets). However, the following are not included as chattels:

    • chattels that are stock-in-trade
    • chattels held for use in manufacture
    • chattels under manufacture
    • chattels held or used in connection with the business of primary production
    • livestock
    • a vehicle the transfer or grant of a licence for which is chargeable with, or exempt from, vehicle licence duty
    • a ship or vessel.
    Example

    An agreement for the sale of business assets provides that the consideration is to be paid as follows:

    - Goodwill ----------------- 
    - Plant & Equipment ----
    - Stock ---------------------
    - Motor Vehicles ---------
    $  50,000
    $100,000
    $  80,000
    $  20,000

    As the dutiable transaction involves the transfer of stock-in-trade and licensed vehicles, the consideration apportioned to these will not be included in the dutiable value. Vehicle Licence Duty will be charged when the vehicle licence is transferred at the Department of Transport.

    The dutiable value for the transaction is $150,000 (the consideration allocated to the goodwill and the plant and equipment).

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    What rate of duty applies?

    charts

    The rates of duty below can be applied to the transfer of business assets. To view the applicable thresholds please refer to the ‘Rates of Duty’ section on the Assessment of Transfer Duty page.

    General Rate

    Unless a concessional rate of transfer duty applies for the transfer of business assets, the general rate of transfer duty will be applied.

    Concessional Rate (s147)

    A concessional rate of transfer duty applies to a dutiable transaction that is a sale of business assets if:

    • the dutiable property is business property;
    • the dutiable value of the dutiable property does not exceed $200,000; and
    • the purchaser is an eligible purchaser, being a person who is not a government body and that intends to carry on the business for an indefinite period.

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    When is a valuation of business assets required?

    There may be circumstances where a valuation is required for the business assets subject to the transaction.

    Related parties

    When the parties are related or not otherwise dealing at arms length, a valuation of the business assets is required. Further information involving related party transactions are available in the ‘Related party transactions’ section of the Assessment of Transfer Duty page.

    Consideration

    A valuation of the business assets will be required when there is no consideration for the business assets, or the consideration appears to be inadequate or unascertainable.

    Example

    An agreement for the sale of business assets provides that the consideration is to be paid as follows:

    - Goodwill --------------------
    - Business Licences -------
    - Intellectual Property -----
    $         1
    $75,000
    $25,000

    The agreement provides that the consideration allocated to goodwill is to be adjusted after the transfer of dutiable property and provides for the purchaser to pay to the vendor an amount equal to 3% of the annual sales for the three years following settlement.

    Although part of the consideration is unascertainable, the Commissioner will value, or obtain a valuation of, the goodwill of the business at the date that liability to duty arose on the agreement.

    For further information, please refer to Commissioner’s Practice TAA 22 'Valuation of WA Business Assets for Duties Purposes'.

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    Transfer of business assets in multiple jurisdictions

    The dutiable value of a dutiable transaction for a business asset where neither the principal place of business nor the head office of the Western Australian business is in Western Australia is determined using the following formula —

    calculation

    where —

    • DV is the dutiable value;
    • CUV is the consideration for the transaction; or the unencumbered value of the business asset the subject of the transaction if —
      • there is no consideration for the transaction; or
      • the consideration cannot be ascertained when liability for duty on the transaction arises; or
      • the unencumbered value is greater than the consideration for the transaction;
    • TS is the gross amount (in Australian dollars) of all the commodities supplied and services provided by the business in the last 3 completed financial years preceding the transaction;
    • WAS is the gross amount (in Australian dollars) of the commodities delivered and services provided by the business to customers in Western Australia in the last 3 completed financial years preceding the transaction.

     

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    Substituted transferees and disclosure of agency relationships

    exchangeDetails of the purchaser(s) of the dutiable property must be provided in full.

    Additional duty may be payable where the transfer is not in accordance with the agreement for the transfer, or if particular details are not clearly identified.

    For more information refer to: 

     

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