Options are now liable for duty

The most significant change is the imposition of duty on certain transactions that result in a “change in beneficial ownership” of dutiable property. Revenue NSW has confirmed the following transactions are now dutiable:

  • the grant of a put and/or call option
  • transfers granting easements

Our initial review of the new provisions and the proposed administration from Revenue NSW discloses that the changes are complex and great care will need to be taken when dealing with put and/or call options as duty triggers may arise at numerous points over the life of a transaction (i.e. grant, transfer and exercise of the put and/or call option).

Grant of an option

Revenue NSW has now included an option granted over dutiable property in NSW (such as over land) is a ‘change in beneficial ownership’. This means that ad valorem duty is payable on any call option fee (consideration) paid for a grant of an option entered into from this date.

The option fee includes GST (if applicable).

Revenue NSW has provided the following example:

Example 1:

The grantee pays an option fee of $20,000 and obtains an option to purchase land from ABC Pty Ltd (the grantor) for $2,000,000.00.

Duty liability:

Duty is payable on the option fee of $20,000 that was paid to the grantor. A grant of an option is a change in beneficial ownership under section 8(1)(b)(ix) of the Duties Act 1997.

From the above example, the duty payable on the $20,000 would be $265 and would be payable within 3 months of the date of the option agreement.

Interestingly, Revenue NSW has also confirmed:

  • Surcharge purchaser duty (chapter 2A of the Duties Act 1997) does not apply to transactions that are liable to duty under section 8(1)(b)(ix).
  • Premium transfer duty (if applicable) can also apply.
  • Duty paid in NSW on the grant of an option is not credited toward the duty payable when the option is exercised.
  • If the call option is not exercised, a refund of duty will not be issued for any duty paid for the grant of the option.
  • Put option fee does not form part of the consideration.

Essentially this new duty is an additional cost to be carried by the developer.

These provisions are separate to the complex ‘call option assignment duty’ provisions.


Grant of an easement for consideration

The grant of an easement will now be dutiable.

The duty will be the greater of the consideration and the unencumbered value of the easement.


There are now new forms and lodgement requirements for option agreements – Morabito Legal can assist you with these forms and providing some guidance through these new duty provisions. 

For any further information regarding this article please call Dominic or Paul on 02 9261 0222 or email or


Selling residential land via Put and Call Options – Cooling Off becomes a problem! 

A recent Supreme Court decision of BP7 Pty Ltd v Gavancorp Pty Ltd [2021] NSWSC 265 highlighted an unintended anomaly in the conveyancing legislation in relation to put options, which has led to considerable uncertainty in the security of put and call options. 

In that case, the Court considered that “option to purchase property”, as described in the Conveyancing Act 1919, should be given its ordinary meaning – that is, an option able to be taken (by the holder of the option) to purchase certain property. Unfortunately a put option does not fit into this definition as it does not involve the exercise of a choice to purchase property (but rather to compel someone to sell property). 

So the unfortunate situation arises as follows:

  • Under section 66S of the Act, there are cooling-off rights for contracts for the sale of residential property unless an exception under section 66T applies;
  • Section 66T says that there is no cooling-off period if the contract is made in consequence of the exercise of an ‘option to purchase’ property;
  • The Court in Gavancorp characterised a put option as not an “option to purchase”; and
  • Therefore the exemption does not arise and the purchaser has “cooling off rights” under section 66S.

To rub salt in the wound, in addition to the Purchaser being able to exercise the cooling off rights to withdraw from the contract (arising from the put), the purchaser was entitled to a refund of the deposit paid

The Supreme Court decision in Gavancorp has cast some uncertainty as to contracts arising from put options. 

Thankfully, the proposed Conveyancing (Sale of Land) Regulation 2022 which will replace the Conveyancing (Sale of Land) Regulation 2017 when it ends on 1 September 2022 is seeking to address this uncertainty.

Section 17 of the proposed Regulation addresses this issue by confirming that a contract arising from an option to compel a purchase is not subject to the cooling off period in s66S of the Act, extending the exemption provided in s66T. 

Morabito Legal is currently submitting our support for this amendment with the Office of the Registrar General and we will advise you of the amended regulation in due course.

In the interim, we suggest that all put options for residential land have the holder of the put option provide a signed s66W certificate on exchange.

For any further information regarding this article please call Dominic or Paul on 02 9261 0222 or email or


Self Managed Super Funds and Binding Death Nominations

Many Australians have their own self managed superannuation funds (SMSF). What happens to those SMSF on the death of a member?

Most of us would assume that a member’s interest in a superannuation fund automatically forms part of their estate. This is not always the case.  A member has the power (subject to the governing rules of the superannuation fund) to provide the trustee of the fund with a nomination as to the payment of death benefits from the superannuation fund.  This is known as a Binding Death Benefit Nomination (BDBN). 

The main advantage of using a BDBN is that death benefits can be directed to a particular beneficiary (usually to a dependant spouse) so that the payment is tax free.

Normally, to be effective, a BDBN needs to comply with some technical requirements. Section 59(1A) of the Superannuation Industry (Supervision) Act 1993 (SIS Act) requires compliance with regulation 6.17A of the Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations). The regulation says that a BDBN must:

  • be signed and dated by the member;
  • be witnessed by two individuals over the age of 18 not mentioned in the BDBN;
  • only nominate beneficiaries who are either dependants or the legal personal representative of the member; and
  • be renewed every 3 years.

On 15 June 2022 the High Court handed down its decision in the Hill v Zuda Pty Ltd as trustee for the Holly Superannuation Fund case. The Full Bench of the High Court unanimously held that 6.17A of the SIS Regulations does not apply to SMSF BDBNs.  This view is consistent with the view of the NSW Supreme Court and the ATO

In practical terms, this means:

  • that members of an SMSF do not need to renew their BDBN every three years; and
  • that the various formal execution requirements (where you would sign the BDBN before 2 witnessed just like a Will) do not apply to SMSF BDBNs.

Though it may seem a great relief that SMSF BDBNs are not required to be remade or reconfirmed every three years – we would still recommend that you periodically review your BDBN (just like your Will) especially if significant events have occurred in your life such as divorce or your spouse’s death.

For any further information regarding this article please call Dominic or Paul on 02 9261 0222 or email or

1 – See Self Managed Superannuation Funds Determination 2008/3