The Duties Amendment Bill proposed to make the following changes to the Duties Act 2000 (Vic), effective on 21 November 2008:
Leases, assignments of lease and surrenders
Transfer duty will be charged on the granting of a lease (or an agreement for lease) of land for which consideration other than rent reserved is paid (or agreed to be paid) either in respect of the lease or in respect of:
- a right to purchase the land or a right to a transfer of the land;
- an option to purchase the land or an option for the transfer of the land;
- right of first refusal in respect of the sale or transfer of the land; or
- any other lease, licence, contract, scheme or arrangement by which the lessee or an
- associated person of the lessee obtains any right or interest in the land (other than the leasehold estate).
Transfer duty will be charged on the transfer or assignment of a lease (or an agreement for lease) for which any consideration is paid (or agreed to be paid) either in respect of the transfer or assignment or in respect of:
- a right to purchase the land or a right to a transfer of the land;
- an option to purchase the land or an option for the transfer of the land;
- a right of first refusal in respect of the sale or transfer of the land; or
- any other lease, licence, contract, scheme or arrangement by which the transferee or assignee obtains any right or interest in the land (other than the leasehold estate).
The granting, transfer or assignment of a lease that is a residency right in a retirement village under the Retirement Villages Act 1986 (Vic) will not be subject to duty.
A dutiable transaction involving a lease of the kind referred to above will be liable to duty on the greater of the amount or value of the consideration other than rent reserved that is paid or agreed to be paid and the unencumbered value of the land that is subject to the lease. The value of the land is to be determined without regard to the lease.
The Bill contains limited relief from the consequences of double duty. If duty is paid on the grant, transfer or assignment of a lease of the kind referred to above, no transfer duty is chargeable on the subsequent transfer of the land to the lessee, transferee or assignee.
Transfer duty will also be charged on a surrender of dutiable property. "Dutiable property" will include a lease of the kind referred to above and any interest in dutiable property (other than a security interest, an option to purchase, or a lease other than a lease of the kind referred to above). As a consequence of this change, the transfer, surrender or other transactions involving equitable and lesser interests in land will now attract transfer duty.
Change in beneficial ownership of land
Transfer duty is presently charged on any other transaction that results in a change in beneficial ownership of dutiable property. The term "change in beneficial ownership" will be defined to include the following transactions
- the creation of dutiable property;
- the extinguishment of dutiable property;
- a change in equitable interests in dutiable property;
- dutiable property becoming the subject of a trust; or
- dutiable property ceasing to be the subject of a trust.
As already noted, the definition of "dutiable property" will include any interest in dutiable property but exclude a security interest, an option to purchase, or a lease other than a lease of the kind referred to above.
The term "beneficial ownership" will be defined to include ownership of dutiable property by a person as a trustee of a trust. The trustee of a trust of dutiable property will be taken to have beneficial ownership of the property.
A transaction that results is a change in beneficial ownership of the dutiable property will be charged with duty on the whole of the property rather than on the proportional ownership change in the property.
14 day payment period
With effect from the day after the date of assent, the Bill will reduce the period for the payment of duty and lodgement of approved forms and statements with the Commissioner, from within 3 months after the liability for duty arose to 14 days. The Bill includes transitional provisions for transactions occurring before the Bill comes into operation.
Hall & Wilcox is hosting seminars on the Duties Act changes and asset protection on Wednesday 25 March and Thursday 2 April. Invitations will be forwarded in the next few days.
The indirect tax specialists at Hall & Wilcox have extensive experience and expertise in this area of tax. To discuss how Hall & Wilcox can assist you, please contact the head of our duties area,
Rodney Richard.