It’s time to remove stamp duty from the sale of small businesses

6 December 2021

"REIWA has been a long-time advocate for stamp duty reform. Find out why it's time to remove stamp duty from small business purchases."

REIWA has been a long-time advocate for stamp duty reform. It is an inefficient tax that acts as a handbrake on the economy and is a huge barrier to home ownership.

In the short term, it appears unlikely that major stamp duty reform will happen in Western Australia. The Premier made it clear during his 2021-22 WA Budget announcement that his government had no intention of implementing major tax reform during the pandemic.

Whilst we can appreciate these are uncertain times and a degree of caution is required as we transition to living with COVID-19 in the community, it feels like a missed opportunity to take stamp duty reform off the table altogether given the state’s enviable financial position.

A quick win for small business

One ‘quick win’ that would not require a major overhaul of the entire tax system is removing stamp duty from small business sales (defined as those entities with business assets worth less than $10 million or an annual turnover of less than $5 million).

WA is one of the only states in the country that still imposes stamp duty taxes on small business purchases. Victoria, New South Wales, Australian Capital Territory, Tasmania and South Australia have all implemented complete stamp duty exemptions for purchases of small business assets. It’s time WA does too.

Stamp duty is an unnecessary cost burden for small businesses

Whilst overall WA has been incredibly fortunate throughout the pandemic, those who have been hit hardest by lockdowns and restrictions have been small businesses. They need our support more than ever, especially as borders open and some restrictions return.

Under our current laws, a buyer who purchases a WA small business with assets worth $5 million is required to pay $251,415 in stamp duty. If stamp duty on small businesses were to be abolished, the potential saving of $251,415 could go towards employing five full-time staff members or training 10 apprentices.

As one of the only places in the country that still collects stamp duty on business assets, we are creating a business environment that is less competitive than the eastern states and placing a cost burden on small businesses which discourages productivity and the entrepreneurial spirit.

It’s crucial the WA Government implement policies that boost productivity. With more people making career changes than ever before, we need to pave the way for those who want to have a go.