On 1 August 2019, Land Use Victoria mandated that nearly all land transfer transactions, including complex stamp duty transactions, must now be lodged and managed online which, for complex transactions, results in additional time being required for settlement.
What you need to know
For complex land transfer transactions, lawyers and conveyancers were traditionally required to prepare evidentiary material setting out why the matter was complex and explaining what exemption or concession should be applied to a particular case. This information was then uploaded to the Duties Online workspace for consideration and determination by the State Revenue Office.
Under the new regime, the same evidentiary material is provided to the State Revenue Office through an Electronic Lodgement Network Operator (ELNO) such as PEXA. Upon receipt, the State Revenue Office sets the settlement date for the transfer as the date in which they will have completed the assessment of the complex stamp duty transaction.
What does this mean for your transaction? More time!
Going forward, settlement of a complex transaction will not be able to take place until such time as the stamp duty determination has been finalised by the State Revenue Office and an assessment notice issued via the ELNO. This means you will now need to allow an additional 30 days for settlement of complex transactions.
This is in contrast to the old system where, if you were purchasing a property that required determination of duty by the State Revenue office, settlement could occur and the purchaser's lawyers or conveyancer would retain the original paperwork for lodging at Land Use Victoria until a copy of the transfer and evidentiary materials was submitted for assessment by State Revenue Office within 21 days from submission. Once assessed, the transfer of land could then be lodged for registration at Land Use Victoria. Duty was usually then due to be paid within the timeframe noted on the Assessment Notice. This usually would give a purchaser additional time in which to pay its stamp duty
Example under the new system:
John has decided to sell his residence to his brother and sister-in-law, Bob and Wendy, as their principal place of residence. Settlement under the Contract of Sale is due on 2 September 2019.
As John, Bob and Wendy are related parties, and Bob and Wendy will be claiming a principal place of residence exemption, the transfer is deemed complex and will need to be submitted to the State Revenue Office with the appropriate evidentiary material for determination by no later than 3 August 2019 for settlement to occur in accordance with the Contract of Sale on 2 September 2019.
The new system means stamp duty is now payable at settlement for all transactions including complex transactions.
The State Revenue office have published a lodgement category checklist which can be found here.
Why have these changes been introduced?
This update to the complex transaction assessment system is to:
- improve electronic settlement rates;
- duty is calculated, collected and paid at the time the electronic transfer occurs (ie. No delay in the State Revenue Office receiving the duty);
- aligns standard and complex transactions so all transactions are managed online;
- increased data security for participants;
- ensure that stamp duty is viewed and agreed by the parties prior to settlement.
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. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.