Exemptions and concessions

The following exemptions and concessions may apply to transfers of dutiable property:

Break-up of marriages and other relationships

No duty is chargeable on a transfer, or an agreement for the sale or transfer, of matrimonial/relationship property if the property is transferred, or agreed to be sold or transferred to: the parties to a marriage/de facto relationship/domestic relationship that is dissolved or annulled or terminated, or in the opinion of the Chief Commissioner has broken down irretrievably, or to either of them. The transferee could also be to a child or children of either of them, or to a trustee for the child or children of a party of the marriage or relationship.

What requirements must be met in order for this exemption to be claimed?

For marriages and de facto relationships, the transfer or agreement must be effected by or in accordance with a financial agreement made under the Family Law Act 1975, or an order of a court under that Act. For marriages, an agreement that the Chief Commissioner is satisfied has been made for the purpose of dividing matrimonial property as a consequence of the dissolution, annulment or breakdown of the marriage will suffice.

For domestic relationships, the transfer or agreement must be effected by or in accordance with an order of a court made under the Property (Relationships) Act 1984, or a termination agreement within the meaning of section 44 of the Property (Relationships) Act 1984 that has been certified in accordance with section 47 of that Act.

What is matrimonial property?

Matrimonial property means property in relation to the parties to a marriage or of either of them (within the meaning of the Family Law Act 1975 of the Commonwealth), including any property treated as property in relation to the parties or of either of them as a result of an order made under that Act.

What is relationship property?

Relationship property means:

  • in relation to a de facto relationship, property in relation to the parties to the de facto relationship or of either of them (within the meaning of the Family Law Act 1975 of the Commonwealth), including any property treated as property in relation to the parties or of either of them as a result of an order made under that Act
  • in relation to a domestic relationship, property of the parties to the relationship or of either of them.

What is a de facto relationship?

A de facto relationship has the same meaning as in section 4AA of the Family Law Act 1975 of the Commonwealth. A person is in a de facto relationship with another person if:

  • the persons are not legally married to each other; and
  • the persons are not related by family; and
  • having regard to all the circumstances of their relationship, they have a relationship as a couple living together on a genuine domestic basis.

There are a number of factors considered when determining if the parties have a relationship as a couple living together on a genuine domestic basis. See the Family Law Act 1975 for more information.

What is a domestic relationship?

A domestic relationship is a close personal relationship (other than a marriage or a de facto relationship) between two adult persons, whether or not related by family, who are living together, one or each of whom provides the other with domestic support and personal care.

As a general rule, the parties are in a domestic relationship because of the need for domestic support and personal care, rather than it being ancillary to the relationship. For instance, a live-in carer might well be in a domestic relationship with the person they care for, as the relationship is based on the need for one of them to provide the other with domestic support and personal care. Two people who just happen to share a residence, and perhaps cook for each other on occasion, may not be deemed to be in a domestic relationship.

I have paid ad valorem duty on the transfer of a property from my ex-wife to myself, and the transfer was in accordance with a financial agreement made under the Family Law Act 1975. Can I claim a refund?

Yes. The Chief Commissioner must reassess the transfer and refund the duty paid, if the application is made within 5 years after the assessment, or decision, was made.

What evidence do I need to provide to claim the exemption?

For the break-up of a marriage or de facto relationship, the following documentation must be provided:

For the break-up of a domestic relationship, the following documentation must be provided:

  • Original executed Transfer
  • Completed Revenue NSW form – Application for Exemption or refund – Break-up of a domestic Relationship ODA 070
  • An order of a court made under the Property (Relationships) Act 1984, or a termination agreement within the meaning of section 44 of the Property (Relationships) Act 1984 that has been certified in accordance with section 47 of that Act
  • Purchaser Declaration ODA 076
  • Client Identification.

Deceased estates

Where the dutiable property of a deceased estate is transferred from a legal personal representative to a beneficiary, concessional duty of $50 applies where the transfer is:

  • in accordance with the terms of the will, or
  • in accordance with the rules of intestacy, or
  • the subject of a trust for sale contained in the will, or
  • an appropriation of the property of the deceased person in or towards satisfaction of the beneficiary’s entitlement under the trusts contained in the will or arising on intestacy.

What if the trustee of a deceased estate appropriates the property of the deceased person?

Under section 46 of the Trustee Act 1925, a trustee may appropriate any part of the property subject to the trusts contained in the will of a deceased person or arising on intestacy.

Duty of $50 is chargeable if the transfer of dutiable property occurs as the result of an appropriation of the property by the trustee of a deceased estate, but only if the transfer is in or towards satisfaction of the beneficiary’s entitlement under the trusts contained in the will or arising on intestacy. Any transfer that exceeds the beneficiary’s entitlement cannot be deemed to be an appropriation that meets the conditions of the concession.

Example

Two beneficiaries (A and B) are equally entitled to the residue of a deceased estate which comprises:

  • The family home valued at $500,000
  • Shares valued at $500,000.

Each beneficiary is entitled to half of the family home and half of the shares. The trustee appropriates the family home and the shares so that the family home will be transferred 100% to A and the shares will be transferred 100% to B.

Concessional duty of $50 will be chargeable on the transfer of the family home to A.

This only applies where a trustee invokes their power under the Trustee Act 1925 to appropriate the property of the estate in or towards satisfaction of the beneficiary’s entitlement under the estate. The $50 duty concession does not apply where the beneficiaries agree to vary the trusts contained in the will, or arising on intestacy.

What if the beneficiaries under a will make an agreement to vary the trusts contained in the will (for example, a Deed of Family Arrangement)?

Where there is an agreement (in writing or otherwise) between a beneficiary and one or more other beneficiaries to vary the trusts contained in the will of the deceased person or arising on intestacy, the dutiable value of dutiable property may be reduced by the proportion of that dutiable property that the beneficiary was entitled to under the will. Duty will be calculated on the excess the transferee is receiving when compared to their entitlement under the estate.

Example

Two beneficiaries (A and B) are equally entitled to the residue of a deceased estate which comprises:

  • The family home ($400,000)
  • The holiday home ($500,000).

Each beneficiary is entitled to $450,000 from the estate. The beneficiaries agree (in writing or otherwise) that the family home is to be transferred to A, and the holiday home is to be transferred to B.

Each transfer may be assessed as follows:

  1. The family home ($400,000):
    • A and B are each entitled to half of this property.
    • Dutiable value of the family home is to be reduced by A’s entitlement to this property ($200,000).
    • Duty charged on $200,000 = $5,490.
  2. The holiday home ($500,000):
    • A and B are each entitled to half of this property.
    • Dutiable value of the family home is to be reduced by B’s entitlement to this property ($250,000).
    • Duty charged on $250,000 = $7,240.

Will dutiable transactions effected by an agreement to vary the trusts contained in the will of the deceased person or arising on intestacy be aggregated?

No. Section 25 of the Duties Act 1997 does not apply, and each dutiable transaction will be treated separately for the purposes of determining the duty liability.

Am I liable to the surcharge purchaser duty if I inherit property under a deceased estate?

No. The surcharge purchaser duty will not be payable unless the trusts under the will are varied under an agreement made between the foreign beneficiary and one or more of the other beneficiaries. In that case surcharge purchaser duty will be payable on the portion of the property to which the foreign beneficiary did not have an entitlement arising under the trusts contained in the will or arising on intestacy.

What happens if the will of a deceased estate is contested?

If a will is contested, the duty chargeable will be determined based on any court orders made. The order would be deemed to be a codicil to the will, so any transfer made under and in conformity with the orders would be deemed to be a transfer under and in conformity with the trusts contained in the will of the deceased person.

What evidence do I need to provide when claiming concessional duty?

The following evidence must be supplied:

  • Original executed Transmission Application or Transfer
  • A full copy of the probate/will together with the schedule of inventory owned by the deceased or a full copy of the Letter of Administration with confirmation of the assets owned by the deceased
  • A full copy of the Deed of Family Arrangement (if applicable)
  • A full copy of any court orders (if applicable)
  • Evidence of value of the dutiable property being transferred if section 63(2) applies (see Revenue Ruling DUT 012)
  • Purchaser Declaration – ODA 076
  • Client Identification

Transfers between married couples and de facto partners

An exemption from duty may apply where a transfer of residential land is between a married couple or de facto partners and the property being transferred is either:

  • the family home (principal place of residence), or
  • vacant land which is intended to be used as the site of the family home.

What is residential land?

Residential land means:

  • a parcel of land on which there is:
    1. one single dwelling or one flat, or
    2. one single dwelling, or one flat, and a shop, or
    3. a building under construction that, when completed, will constitute one single dwelling or one flat (or one single dwelling, or one flat, and a shop), or
      • a strata lot, if it is lawfully occupied as a separate dwelling, or suitable for lawful occupation as a separate dwelling, or
      • a land use entitlement, if it entitles the holder of the land use entitlement to occupy a building, or part of a building, as a separate dwelling, or
      • a parcel of vacant land that is zoned or otherwise designated for use under an environmental planning instrument for residential or principally residential purposes.

What is the principal place of residence of a person?

The principal place of residence of a person means the one place of residence that is, among the one or more places of residence of the person within and outside Australia, the main residence in which the person ordinarily resides.

I am transferring half of my holiday home to my de facto partner. Am I eligible for the duty exemption?

No. The exemption only applies in respect of a transfer of your principal place of residence. A holiday home is not your principal place of residence if it is not the main residence in which you ordinarily reside.  

Can I claim the exemption if our family home includes a study from which I conduct my business?

The residential land must be used solely for residential purposes and not for any other purpose (such as a commercial, industrial or professional purpose).

However, the use of not more than one room on the land for a non-residential purpose is to be disregarded, if the use relates to a business or undertaking that is primarily conducted elsewhere. For example, I may usually work in an office, but on occasions use my study to work from home. In this case, the exemption would still apply.

If I am using more than one room in my home to conduct my business, the exemption would not apply. However, in this instance, the duty chargeable on the transfer or agreement may still be reduced. The dutiable value of the land is reduced by the residential component, as determined by the relevant apportionment factor.

Who determines the apportionment factor to be applied where the land is also used for non-residential purposes?

The non-residential apportionment factor is either the apportionment factor determined by the Valuer-General or, if there is no apportionment factor determined by the Valuer-General, such other apportionment factor as the Chief Commissioner considers fair and reasonable to reflect the use of the land for non-residential purposes.

If there is no apportionment factor entered in the Register of Land Values in respect of the land value of the land, and the land is mixed development land or mixed use land, the Chief Commissioner may request the Valuer-General to determine the apportionment factor in respect of the land concerned.

I own my family home, and intend to transfer a portion of the property to my brother and my husband. Can we claim the exemption?

No. Both the transferor and the transferee must be the married couple or one of them or the de facto partners or one of them and no other person may be a party to the transfer.

I own my family home with my brother, and intend to transfer a portion of the property to my husband. Can we claim the exemption?

Yes. If as a result of the transfer, from you to you and your husband, your interest is held equally (as joint tenants or tenants in common), the exemption can still apply on the part of the property you are transferring, regardless of any other owner (your brother, in this case) of the property remaining on title.

How long must I reside with my girlfriend before I can transfer half of my home to her and claim the exemption?

In the case of de facto partners, the parties to the relationship must have lived together as a couple in the relationship for at least the 2 years before the date of the transfer.

If I am eligible for this duty exemption, will I also be exempt from surcharge purchaser duty if I am a foreign person?

No. While you may be eligible for an exemption from duty, this does not mean that you are also exempt from surcharge purchaser duty. You will be required to pay surcharge purchaser duty at the rate of 4% of the dutiable value of the proportion of the residential-related property being transferred to you.

What evidence do I need to provide to claim the exemption?

For an exemption from duty between married couples and de facto partners the following documentation must be provided:

Last updated: 7 August 2017