The Victorian government has moved to simplify the
administration of the off-the plan and refurbished lots duty
concessions. The changes should reduce the cost and
administrative burden on developers. However, the new record
keeping requirements and the imposition of joint & several
liability will need to be carefully managed by developers.
The State Taxation Acts Amendment Act 2008 2008
(which received royal assent on 17 June 2008) made some
important changes to the off-the-plan and refurbished lots duty
concessions in subsections 21(3) and 21(4) of the Duties Act
2000 (Act). The new rules apply to
contracts of sale entered into on or after 1 October
These concessions provide that the consideration (for duty
purposes) for the transfer of a lot does not include any amount
in respect of construction or refurbishment costs after the
date the contract of sale was entered into.
The changes have been made as a result of a 2007 State
Revenue Office (SRO) review of the concessions
click this link to view ). The object of the review was to
determine whether the concessions could be simplified to
provide greater certainty and transparency for developers,
builders, real estate agents and home purchasers. The SRO
statutory declarations and calculations that are currently
required are complex and time consuming.
The changes, principally contained in new sections
21A to 21E of the Act, can be summarised as
In calculating the percentage of the building works
component in a contract of sale, the parties will have the
option to use a fixed
percentage for the land component and building
component (with different percentages applicable to different
building types). Percentage amounts are to be periodically
published in a Revenue Ruling.
The parties will be able to calculate building works in
10% increments (to overcome the difficulty in determining
exact percentages of building works completed as at the date
A 'whole of project' calculation approach
will apply for multi-unit refurbishments. For example, in the
case of multi–unit developments, the concession
will be based on whole of project (or stage) building works
completion figures and not on figures that relate exclusively
to a particular lot. This acknowledges the difficulty in
providing accurate calculations relating to a particular lot
at a given point in time and reflects the reality that costs
attributable to common areas (e.g. stairwells) ought to be
included. The calculation methodology to be adopted to
quantify different sized (valued) lots is to be published in
a Revenue Ruling.
The information/evidence that purchasers must provide to
the SRO to obtain the concessions is listed in new section
21(4A). This includes, among other things, a copy of the
building permit/approval and a statutory declaration by the
vendor. We expect that the existing SRO statutory
declarations will be updated in due course.
The amendments also introduce the following measures to
safeguard these important concessions:
requiring vendors to keep records of full
details of the relevant calculations (e.g. the
basis of the percentage completion figures provided to the
purchaser) and be able to provide them to the SRO upon
request. Records are required to be retained by the
transferor (vendor) for a period of five years from the
date on which the dutiable transaction occurred or the
record was made; and
imposing joint and several liability
on transferors and transferees for any additional duty
arising as a result of incorrect information supplied to
the SRO as part of a concession claim.
While the changes should reduce the cost and administrative
burden on developers in providing the necessary statutory
declarations to enable purchasers to claim the concessions, the
record keeping requirements and the imposition of joint &
several liability will need to be carefully managed by
The content of this article is intended to provide a
general guide to the subject matter. Specialist advice should
be sought about your specific circumstances.
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