Paying duty under the lease provisions
Duty is payable within 30 days of a dutiable transaction occurring.
A dutiable transaction involving a lease occurs upon its grant, transfer, assignment or surrender.
Where a dutiable lease transaction includes a right or option to acquire the underlying land, the transaction occurs at the time of grant, transfer or assignment irrespective of whether the right or option to acquire the underlying land has been exercised at that time.
However, where additional consideration equivalent to the full unencumbered value of the land is required to be paid upon or following the exercise of the right or option, the Commissioner will generally only require a taxpayer to pay the duty liability if and when the right or option to acquire the land has been exercised.
In such circumstances, it is considered that the lessee has not acquired valuable rights in the land equivalent to ownership and will only do so upon the exercise of the right or option and payment of the full purchase price of the land.
In all other cases (where additional consideration less than the full unencumbered value of the land is payable on the exercise of the right or option), duty will be payable within 30 days of the grant, transfer or assignment of the lease.
If duty is not paid within the 30-day time period, a tax default will occur and penalty tax and interest may apply.
Please note that the lodgment of transaction documents within the 30-day time period will not remove the requirement to pay duty or prevent a tax default from occurring.
For more information, please refer to ss. 7(1)(b)(v), 7(1)(b)(va), 11 and 16 of the Duties Act 2000.