The State Taxation and Mental Health Acts Amendment Act 2021 introduced a premium rate of land transfer duty (stamp duty) for high-value property transactions with a value of more than $2 million.
From 1 July 2021, the duty payable increased to $110,000 plus 6.5% of the dutiable value of more than $2 million.
The premium rate of duty does not apply to a dutiable transaction or an acquisition of an interest in a landholder that occurs on or after 1 July 2021 that was made pursuant to an agreement or arrangement entered into before 1 July 2021.
Meaning of agreement or arrangement
An agreement or arrangement is considered to mean a concerted action or plan to undertake a specific transaction.
While an executed binding agreement for the transfer is not required to show that there is a concerted action or a plan, the concerted action or plan must:
- be in writing
- be sufficiently certain, and
- envisage the dutiable transaction.
A commitment to undertake the dutiable transaction must be shown, rather than simply being an intention to investigate or consider it.
An example of a document, other than a contract of sale, that would qualify as an agreement or arrangement for these purposes is a written option to purchase the land for a specified price where consideration was given for the granting of the option. The option will be considered an agreement or arrangement for the dutiable transaction, even if the option has yet to be exercised.
On the other hand, a right of first refusal would not be considered an agreement or arrangement in this context.
Another example of a non-binding document that would qualify as an arrangement in this context is a Heads of Agreement between the landowner and a purchaser setting out, with sufficient certainty, a proposed dutiable transaction concerning the land (e.g. by annexing a draft contract of sale for the land to the Heads of Agreement).
Where a person is nominated as a substitute purchaser under a contract, the agreement for the transfer to that purchaser will be considered to have been entered into on the date of that contract, unless the nomination is a sub-sale trigger event under Part 4A of Chapter 2 of the Duties Act 2000 (i.e. there is additional consideration or land development).
Where the nomination is a sub-sale trigger event, the agreement for the ‘subsequent transaction’ will be considered to have been entered into on the date of that nomination.