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New Disclosure Requirements for Sub-Sales of Land

© July 2005 by Joe Lederman, BALDWINS Australian Lawyers and Consultants

On 29 June 2005, section 31 of the Victorian Duties Act was replaced by new
provisions, sections 32A to 32X (also known as Part 4A Chapter 2 of the Victorian
Duties Act). Simultaneously, on 29 June 2005, the Victorian State Revenue Office
(SRO) issued a new form of Statutory Declaration that must be completed for any
transfers of real estate after that date where there is a sale contract or agreement that
provides for a further sale of part of the property to someone else.

It will now be easier for the Commissioner to detect sub-sales that might not
ordinarily show up via the transfer registration system. The new requirements oblige
full disclosure to be made of the subsequent transactions making it easier for the
Revenue to collect the stamp duty on both the original purchase and the subsequent
on-sale even where there has been no registered transfer between the original vendor
and the person acquiring the property interest in the first transaction.

Situations where stamp duty will be imposed (pursuant to Part 4A of Chapter 2 of the
Victorian Duties Act) include the following:

· transfers involving additional consideration - where the vendor enters into a
contract or agreement to sell or transfer property to the first purchaser but
transfers the property to a subsequent purchaser, and the subsequent purchaser
(or the purchaser's associate) is to give "additional consideration" for the
transfer right;

· transfers involving land development - where the vendor enters into a contract
or agreement to sell or transfer property to the first purchaser but transfers the
property to a subsequent purchaser, and "land development" occurs in relation
to the property between the date of the contact and the date of the transfer; or

· where the vendor grants a call option to the first purchaser or the first
purchaser grants a put option to the vendor, and the vendor transfers the
property to a subsequent purchaser, and "land development" occurs in relation
to the property between the date the option is granted and the date of the
transfer.

The new legislation replaces the contentious section 31 of the Duties Act and clarifies
some of the legal arguments such as those that were raised in the recent Supreme
Court case of The People's Investment Company Pty Ltd v Commissioner of State
Revenue [2004] VCAT 2424.

The new laws do provide some exceptions and concessions such as for some intra-
family disposals.

For further information, contact Joe Lederman at BALDWINS, Australian Lawyers & Consultants.

Return to the Baldwins Homepage or Australian Tax Law Library.