Invest Conveyancing

Common questions about Stamp Duty

Posted on January 16th, 2015

Each State and Territory has its own legislation for Stamp Duty. In Western Australia, it is the Duties Act 2008.

The information provided here is based on Western Australian legislation.

Stamp Duty is a tax placed on legal documents usually in the transfer of assets or property.

This is a broad overview that has been written to provide a prospective Buyer with some understanding of Stamp Duty as it applies to the transfer of dutiable property.

One of the largest, and sometimes unexpected, costs in purchasing a property is Stamp Duty.   In Western Australia it is referred to as Transfer Duty.

The legislation of each State dictates the reductions and concessions in Duty that may apply to the Buyer.

How much Duty do I have to pay?

When dealing with a Contract for Sale for land in Western Australia, the most common rates of Duty are;

General Rate

This rate of Duty applies to most dutiable transactions that the Residential Rate of Duty cannot be applied; e.g. Commercial transactions, industrial and commercial vacant land and residential vacant land where no building contract has been entered into for  the construction of a residence on the property.

It should be noted that when residential vacant land is purchased  and initially assessed at the General Rate, and building of a  residence commences within (5) years of the Contract for Sale, the Duty can be reassessed. It should be noted that the Application for reassessment must be made within 5 years of the purchase, or within 1 year of the date that the building starts, whichever is the later.

Dutiable Value

dutiable-value

Residential Rate

This rate of Duty applies to places of residence. It is irrelevant whether the property will be occupied as a principal place of  residence or is an investment property.

If you are purchasing vacant land and have entered into a Building Contract for the construction of a dwelling on the land, the Residential Rate of Duty can be applied.

Dutiable Value

dutiable-value2

First Home Owner Rate

Subject to eligibility, the First Home Owners Rate of Transfer Duty applies if the value of the property is below certain thresholds.

There is a significant reduction in the Duty payable.

To be used as a guide only, below is an indication of the First Home Owner Rate of Duty as at the date specified;

If the property includes a home, as at 3 July 2014

Dutiable Value Rate of Duty
$0 – $430,000 Nil
$430,001 – $530,000 $19.19 per $100 or part of $100 above $430,000

For vacant land

Dutiable Value Rate of Duty
$0 – $300,000 Nil
$300,001 – $400,000 $13.01 per $100 or part of $100 above $300,000

When purchasing Vacant Land, Transfer Duty will be charged at the General Rate. When the First Home Owners Grant is issued and a building is completed and ready for occupation, you may make application for a refund of duty. All applications must be made within 12 months of the completion date, or within 3 months of the date the Grant is issued, whichever is the later.

When do I have to pay Transfer Duty on my purchase?

As taken from the Landgate Land Titles Registration Practice Manual;

“1.6.1   General

On July 1 2008 the Duties Act 2008 came into effect replacing the Stamp Act 1921 and provides every person whose duty it is to receive or register any instrument shall ensure that any instrument liable for duty is duly stamped. It is therefore necessary that any document liable for duty must be submitted to the Office of State Revenue (Stamp Duties Division) for assessment of the duty and stamping before being presented for registration. “

Therefore, Transfer Duty must be paid prior to settlement being completed.

In most circumstances payment of Transfer Duty may be made in (2) Ways.

Firstly, Duty can be paid by presenting the Contract for Sale, Transfer of Land document and cheque for the due Duty at the Office of State Revenue prior to settlement, at which time the documents will be duly endorsed. Your Settlement Agent or Solicitor will request the payment of Duty from you prior to the Settlement Date.

Secondly, the transaction can be completed using “Revenue On-Line” which is an electronic window to the services offered by the Office of State Revenue.

Your Settlement Agent or Solicitor must be registered to utilise this service. In effect, the registered person becomes at Tax Agent for the collection and payment of Duty on behalf of the Office of State Revenue.

Once registered, it enables your Settlement Agent or Solicitor to attend to the in-house processing of the Duty on the Contract for Sale.

Put simply, your Settlement Agent is able to assess, endorse and pay monthly returns for Duty online enabling them to collect the due duty at settlement and provide a Duty Certificate which is registered at Landgate with the Transfer of Land document.

Not all dutiable transactions can be endorsed through Revenue Online, however, the majority of them can be.   For a breakdown of those transactions which can be assessed using Revenue Online, please refer to the link below;

http://www.finance.wa.gov.au/cms/content.aspx?id=883

Office of State Revenue Lodgement and Payment of Duty requirements

While we all expect to pay Transfer Duty close to, or on settlement, the Office of State Revenue has imposed obligations for the latest date for lodgement and payment of Duty on a dutiable transaction.

Lodgement of Documents for assessment of Duty

All dutiable transactions including a Contract for Sale must be lodged for an assessment of Duty within (2) months of Contract Date. Failure to attend to the lodgement within this time will result in the Office of State Revenue imposing a late lodgement penalty.

Payment of Duty

If settlement has not been completed beforehand, the due date for payment of Duty depends on the type of transaction that has been lodged for assessment.

  • Subdivision or Issue of Title conditional agreements. Issue of Title agreements include “off the plan” Contracts for Sale. – Within (3) years after the date the Conditional agreement is made
  • General Conditional agreements which includes but is not limited to Contracts that are subject to finance approval or subject to the sale of the Buyers property. – Within (1) year after the date the Conditional Agreement is made.
  • A Transfer of dutiable property or an agreement for the transfer of dutiable property – Within (1) year after Contract Date.

For further information, you may wish to visit the following link;

 

http://www.finance.wa.gov.au/cms/uploadedFiles/_State_Revenue/Duties/Lodgment_and_Payment_Requirements.pdf?

 


Comments are closed.

Jay & Kerry

Thank you and your team for making our settlement process for purchase of a property in South Hedland, an easy experience, despite the fact we are located in Melbourne. We are “first time interstate buyers” and were a little apprehensive as to what and how to do things in a different state from here in Victoria. All investment properties we have had over the years have all been in Victoria, so it was great that all details of the settlement in South Hedland went smoothly and all via internet/phone. Once again, thank you for a great service from Invest Conveyancing.

Mike

Hi Fran,
Just a quick note to say Deb and I were very impressed with your timeliness and efficiency during the settlement of our recent purchase in Trigg. Thanks for making the whole process trouble free!
Cheers