Stamp Duty & Compulsory Acquisition of Land in NSW

Compulsory acquisition of land, sometimes referred to as resumption, is the legal process by which acquiring authorities in New South Wales acquire privately owned land for public purposes. Common examples include road widening, rail infrastructure, schools, hospitals and other major public projects.

The compulsory acquisition process is generally governed by the Land Acquisition (Just Terms Compensation) Act 1991 (NSW), commonly referred to as the Just Terms Act. The Act provides for ‘just compensation’ by reference to specified statutory heads of compensation, including market value and where applicable, disturbance and other allowances.

Understanding your full compensation entitlements under the Just Terms Act is essential as many landowners are unaware that compensation extends beyond the market value of the acquired land.

Under the Just Terms Act stamp duty may be recoverable as part of disturbance compensation, but only in limited circumstances. In substance, the stamp duty must be reasonably incurred, or might reasonably be incurred, in purchasing replacement land because the acquisition requires the claimant to relocate to another residence or place of business.

This may arise where:

• An owner-occupier purchases another home after compulsory acquisition of their residence; or
• A business purchases replacement premises to relocate its operations.

By contrast, stamp duty will not usually be recoverable where compensation is reinvested in:

• A new investment property;
• A substitute development site; or
• Another asset that is not connected with a genuine relocation of a home or business.

In general, any recoverable stamp duty is generally limited to the duty referable to replacement land of equivalent value to the interest acquired.

The NSW Court of Appeal in Sydney Metro v G&J Drivas Pty Ltd confirmed that if a claim does not satisfy the relocation requirement in s59(1)(d) of the Just Terms Act, it cannot ordinarily be recovered under the broader ‘other financial costs’ provision in s 59(1)(f).

Which means, stamp duty may be claimed only where the replacement purchase is genuinely for relocation, and not merely to replace an investment or development opportunity.

NSW compulsory acquisition law is highly technical. Many landowners accept compensation offers from acquiring authorities without fully understanding the full scope of their legal entitlements, including disturbance compensation items such as stamp duty.

At Rely Legal, our practice is focused on Compulsory Acquisition Law in NSW, and we will:

• Assess your full compensation entitlements under the Just Terms Act
• Identify all claimable disturbance costs, including stamp duty
• Negotiate with acquiring authorities to secure your full compensation entitlements
• Provide clear, practical advice tailored to your individual circumstances