Amendments to the Duties Act 2005
Amendments to the Duties Act 1997 No. 123
- Section 18(3)
- Section 29 - partnership interests
- Section 30 - partitions
- Exemption from duty for certain statutory vestings of land
- Section 65(14) - correction of an error
- Section 68 - Family law transfers to a trustee
- Section 71 - First Home Plus - eligibility of former trustees
- Section 173 - Leases - estimate and subsequent adjustment
- Section 212 - Where is property located? (shares)
- Section 222 - Exemption from mortgage duty for charges imposed under standard contracts for sale of land
- Section 274 - Exemption for intergenerational rural transfers
- Section 305 - Obtaining valuations of property
- Transactions involving put and call options
The following amendments commence on the date of assent of the State Revenue Legislation Amendment Act 2005
An amendment to section 18(3)(d) means that the purchaser and transferee have to be "related persons" at the time the agreement was entered into and at the completion or settlement of the agreement to obtain the benefit of the concession.
Section 29 - partnership interests
The amendments provide that the duty payable on the transfer of a partnership interest does not include duty on the value of any New South Wales land that will be separately transferred as a result of the transfer of the partnership interest.
Section 30 - partitions
The amendments limit the concession for partitions of dutiable property to partitions of land in New South Wales only.
Exemption from duty for certain statutory vestings of land
New subsection 54(3B) charges duty of $10 on statutory vestings of dutiable property following a change of trustee if subsections 54(2), (3) or (3A) would apply if it were a transfer of dutiable property.
New subsection 54A(3) charges duty of $10 on statutory vestings of dutiable property in a responsible entity if subsection 54A(2) would apply if it were a transfer of dutiable property.
Under section 65(13) no duty is chargeable on:
a) the vesting of common property in a body corporate on the registration of a strata plan under the Strata Schemes (Freehold Development) Act 1973, or
b) the vesting of a leasehold estate in common property in a body corporate on the registration of a plan as a strata plan of subdivision under the State Schemes (Leaseholds Development) Act 1986.
Section 65(14) - correction of an error
This new provision provides a statutory exemption for a transfer to correct an error in an earlier transfer of the same dutiable property if no additional consideration is payable and the transfer only passes an interest in property to the extent necessary to correct the error.
Section 68 - Family law transfers to a trustee
The amendments extend the exemption to include a transfer of dutiable property to a trustee for the child or children of a party to the marriage or domestic relationship following the break-up of that marriage or relationship, provided all other requirements for the exemption have been met.
Section 71 - First Home Plus - eligibility of former trustees
The amendments mean that when determining eligibility for First Home Plus, the Chief Commissioner is required to disregard a prior interest in residential property, or prior benefit under First Home Plus if satisfied that the interest was held or acquired as trustee for person under a legal disability, or as trustee of a resulting trust (as referred to in section 55).
Section 173 - Leases - estimate and subsequent adjustment
The amendments permit the initial estimate of the cost of a lease to be a genuine estimate having regard to any ascertainable amounts, minimum rates or amounts, and approximate rates or amounts specified in the lease.
in relation to a lease, mean improvements made by or on behalf of, or at the expense of, the lessee, being improvements that either remain the property of the lessee or are fixtures removable at the option of the lessee.
Dictionary definition - "fit-out costs"
The amendment clarifies the definition to confirm that fit-out costs (as referred to in section 166(1)(d)) are not subject to lease duty.
Section 212 - Where is property located? (shares)
The amendments displace the Corporations Act 2001 for the purpose of ensuring there is no inconsistency between that Act and a provision of the Duties Act 1997 that declares, for the purpose of charging mortgage duty, that shares in a company are taken to be located in the place where the company is registered.
Section 222 - Exemption from mortgage duty for charges imposed under standard contracts for sale of land
Under new subsection 222(7), duty is not chargeable on a charge over land that is created under an agreement for the sale or transfer of the land if any part of the deposit or balance of the purchase price for the land is paid to the vendor (or as the vendor directs) before completion of the sale or transfer.
Section 274 - Exemption for intergenerational rural transfers
The amendments redraft the exemption to incorporate the current guidelines into the Act, with some changes.
The amendments clarify that the ancestor of transferee, lessee or assignee, must be the transferor, lessor or assignor or the person directing the transferor, lessor or assignor where that entity is a company or trust.
The amendments allow the person carrying on the business prior to the transfer to be the transferee, lessee or assignee (whether alone or with others), or the ancestor of such person.
The amendments remove the requirement for the whole of the property to be transferred to obtain the exemption.
Section 305 - Obtaining valuations of property
To reduce the number of occasions on which a valuation is required to be obtained, the amendments specify that the Chief Commissioner can rely on a valuation that has been prepared for purposes other than determining liability to duty.
The amendments also authorise the Chief Commissioner to recover the cost of obtaining a valuation of property in any case in which liability for duty or the amount of that liability is determined by reference to the value of the property.
Transactions involving put and call options
The amendments provide that, upon the assignment of a call option over dutiable property in respect of which a put option is also in existence, the assignment of the call option will be liable to duty as if it were an agreement for the sale or transfer of the underlying option property. The person liable to pay the duty is the assignor.
If more than one assignment occurs, each assignment would trigger a liability to duty. However the duty paid by the assignor is reduced by the duty already paid (if any) by that person under Chapter 2 on the assignment of the option to them.
B grants A a call option that confers a right on A (or any assignee of A) to purchase land from B. A also grants B a put option that confers on B a right to require A (or any assignee of A) to purchase the land from B. No duty is payable at this point.
A then transfers the call option to C. Duty is payable as follows:
a) A (as the option holder) must pay call option assignment duty as if the transfer of the option were a transfer of the land. Duty is payable on the dutiable value of the land.
b) C (as the transferee of the option) must pay duty under Chapter 2 on the transfer of the option. Duty is payable on the dutiable value of the option (determined as provided for by Chapter 2).
C then transfers the option to D. C (as the option holder) is required to pay call option assignment duty as if the option were a transfer of the land. However, in this case C will receive a credit for the duty paid by C on the transfer of the option to C. D (as transferee of the option) is required to pay duty under Chapter 2 on the transfer.
If D then exercises the option it would pay duty under Chapter 2 on the agreement as purchaser of the property.
The dutiable value of the dutiable property that is subject to a call option assignment is taken to be the greater of:
a) the sum of the consideration for the assignment of the call option and the consideration payable in the event that the call option is exercised (being in either case the amount of monetary consideration or the value of non-monetary consideration), and
b) the unencumbered value of the dutiable property.
The provisions will not apply if the Chief Commissioner is satisfied that the options are being used solely for financing purposes or have been entered into under arrangements relating to the continuation of a business by its proprietors. For example, to ensure that partners in a business can retain control in the event of the retirement of one of the partners.