Collateral securities
Collateral securities
Duty is not chargeable on the date of its first execution on the amount or part of the amount secured by a collateral mortgage that is the same money as is secured by:
a mortgage or instrument of security that is duly stamped subject to Section 218BA or stamped under a corresponding Act, or
a mortgage package that has been duly stamped subject to Section 218BA or stamped as a mortgage package under a corresponding Act.
However, if at the time an advance or a further advance is made under a mortgage, instrument of security or mortgage package, no such mortgage or mortgage package has been duly stamped subject to Section 218BA, the collateral mortgage ceases to be a collateral mortgage for the purposes of this section and is chargeable with duty under this Act otherwise than as a collateral mortgage.
If the same money is secured, or partly secured, by 2 or more mortgages, at least one of which is a mortgage that is exempt from duty under a corresponding Act because it effects a refinancing (an exempt mortgage) and at least one of which is a collateral mortgage that is chargeable with duty subject to Section 218BA:
the duty chargeable on the collateral mortgage (or, if there is more than one collateral mortgage, on one of them) is to be reduced by the amount of duty from which the exempt mortgage is exempt under the corresponding Act , and
each collateral mortgage, other than the collateral mortgage referred to in the previous paragraph, is chargeable with the minimum duty for collateral mortgages.
A collateral mortgage is chargeable with a minimum duty of $10.
A collateral mortgage that no longer secures an amount secured by a mortgage, instrument or mortgage package referred to in subsection, or by an exempt mortgage, is not security for another advance unless mortgage duty for the amount of the other advance is paid.
Collateral mortgages - anti avoidance measure (section 218BA)
The provision allows a mortgage that is collateral to a mortgage instrument of security or mortgage package that has been stamped in a jurisdiction where mortgage duty is reduced on or after 1 July 2006 to be assessed as if it were part of a mortgage package, with a cap on duty applying to prevent double duty.
For example
Advance of $20 million secured by property in WA dated 1 July 2006 (duty at half rate applies say $40,000) and mortgage over NSW property executed on 1 August 2006. Property is 40 per cent in WA and 60 per cent in NSW.
NSW duty payable as a package is on $12 million. Duty payable is $47,941.
As $40,000 duty has been paid in WA, NSW duty is reduced to $39,941.
