Aggressive New Policies at the Victorian SRO

November-December 2004

The State Revenue Office continues to press aggressively for stamp duty where none might previously have been expected.

Change of trustee

Revenue Ruling DA.030 (October 2004) restricts the previous exemption of a property transfer to a new trustee. The exemption will not be given if it is considered that there is a “scheme for conferring an interest … to the detriment of the beneficial interest or potential beneficial interest of any person” or where the Commissioner is of the opinion that the “change in trustee … forms part of a transaction or series of transactions that have a separate commercial objective … whether or not the effect of those transactions was to avoid the payment of duty”.

Stamp Duty Trap for Purchasers

If a contract of sale does not specify proportions by which the purchasers are buying the land, the SRO will imply the purchasers are taking equal interests (without evidence to the contrary), and will assume a sub-sale has occurred and impose further stamp duty if the proportions are not equal.

Additional Valuations Required

Even though the Duties Act in Victoria does not charge stamp duty separately on the sale of a business, the State Revenue Office insists in Revenue Ruling DA.029 (August 2004) that the presence of a business affects the value of the land so that valuations are now to be required in each of the following scenarios:

  1. where there is a transfer of real estate concurrently with a business transfer where total consideration including improvements and business assets including goods [e.g. trading stock] exceeds $1 million; or
  2. a transfer of real estate where a business transfer occurs within 12 months before or after and total value of real estate and business (including stock) exceeds $1 million; or
  3. any transfer similar to (1) or (2) but under $1 million if any of the parties (vendor or purchaser) are related or associated, or where the transaction involves fractional interests, or where the Commissioner simply disagrees with the market value.

Land Tax Ruling and Principal Residence

Ruling LT-016 (July 2004) removes the previous scope for obtaining a principal place of residence Land Tax exemption while holding the real estate in a discretionary trust or a unit trust.

Land Tax Deadline

Land Tax assessments for 2005 will be set on the basis of land-holdings in existence as at 31/12/2004. For those seeking to rearrange their affairs, it is vital that any disposals or changes in legal or beneficial ownership are in place before that date. However, there are stamp duty and capital gains tax costs to be weighed up in any rearrangement exercise.

For more information, contact Joe Lederman or Anita Rumba on 9606 0022.

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