|Ruling number||DUT 022|
|Date issued||16 August 2001|
|Issued by||Peter Achterstraat|
Chief Commissioner of State Revenue
|Effective from||16 August 2001|
|Effective to||4 February 2009|
|Status||Replaced by DUT 036|
Chapter 2 of the Duties Act 1997 charges duty on specified ‘dutiable transactions’. Section 25 provides for the aggregation of certain dutiable transactions for the purposes of calculating duty in some circumstances.
Section 25 (1) provides that dutiable transactions are to be aggregated and treated as a single dutiable transaction if:
they occur within 12 months, and
the transferee is the same or the transferees are associated persons, and
the dutiable transactions together form, evidence, give effect to or arise from what is, substantially, one arrangement relating to all of the items or parts of, or interests in, the dutiable property.
Section 25 (2) provides that dutiable transactions are not to be aggregated if the Chief Commissioner is satisfied that it would not be just and reasonable to do so in the circumstances.
Section 25 (6) provides a maximum penalty of 100 penalty units for the failure of a transferee to whom section 25 applies to disclose to the Chief Commissioner, in writing, at or before the time at which an instrument or statement relating to the dutiable transactions is lodged for stamping, details relating to the dutiable property and the consideration for each item or part of, or interest in, that dutiable property.
This ruling outlines the manner in which section 25 will be applied, with emphasis on:6. This ruling primarily refers to transactions over real property, but the general principles would apply to all types of dutiable property (other than marketable securities), including, for example, business assets.
the circumstances in which two or more dutiable transactions are considered to constitute ‘one arrangement’; and
the circumstances in which the Chief Commissioner will consider exercising the discretion to not aggregate.
This ruling primarily refers to transactions over real property, but the general principles would apply to all types of dutiable property (other than marketable securities), including, for example, business assets.
Where one arrangement comprises more than two dutiable transactions occurring on different days, the 12 month period will commence from the date of the first dutiable transaction that is being aggregated. Therefore, if separate items of dutiable property, or separate parts of, or interests in, dutiable property, are transferred over a period of longer than 12 months, only those transactions occurring within the first 12 months would be aggregated with the initial transaction.
Any other property under the same arrangement that is the subject of a transaction after that initial 12 month period would not be aggregated with those earlier transactions, even if within 12 months of one of the transactions. However, where more than one dutiable transaction occurs more than 12 months after the initial transaction, those later transactions may be aggregated together (but not with the earlier transactions).
Where there are more than two different transferees in a single dutiable transaction, all the transferees must be ‘associated persons’ as defined in the Dictionary to the Act. For example, if two agreements to purchase land are entered into by a husband and wife (in one agreement) and their son and daughter-in-law (in the other agreement), the agreements cannot be aggregated under section 25 because not all the transferees are ‘associated persons’ - the daughter-in-law is not ‘associated’ with her husband’s parents.
The term ‘arrangement’ has been interpreted in different ways in different statutory contexts. In the present context, an arrangement comprises two or more dutiable transactions, usually being two or more agreements, so that an ‘arrangement’ constitutes a wider course of action than a single agreement, such as ‘all kinds of concerted action by which persons may arrange their affairs for a particular purpose or so as to produce a particular effect’: Bell v Federal Commissioner of Taxation (1953) 87 CLR 548 at 573.
In the stamp duties context, aggregation provisions in other jurisdictions have referred to transactions ‘that form part of a larger transaction or a series of transactions’. Section 25 refers to ‘arrangement’ in the context of aggregating separate transactions (including transactions over a period of time), and so it is considered that ‘one arrangement’ would include a ‘series of transactions’ of that kind. Further, the words ‘together form, evidence, give effect to or arise from’ are at least as wide as ‘form part of’.
As a consequence of these similarities, historical stamp duties cases on aggregation remain relevant to the operation of section 25. ‘One arrangement’ would include “cases where the relationship between the transactions is an integral and not a fortuitous one depending merely on such circumstances as contiguity in time or place”: Attorney-General v Cohen and Another  1 KB 478, per Greene LJ at 491.
The purchase of separate but adjoining blocks of land with the intention of integrating them into one holding could constitute ‘one arrangement’ for the purposes of section 25 (see Old Reynella Village Pty Ltd v Commissioner of Stamps (SA) (1989) 20 ATR 1080). However, it is accepted that the intention of the purchaser(s) to subsequently deal with property as a single arrangement or transaction is not, of itself, sufficient to characterise the initial transactions as one arrangement. There must be some further factor to indicate that the relationship between the transactions is ‘an integral and not a fortuitous one’. The most obvious example of this is an interdependency clause in agreements, but it would include antecedent options or development applications.
Section 25 does not refer to the identity of the vendors or transferors, so that the aggregation provisions can apply even if the vendors or transferors are not ‘associated’ or ‘related’. However, the fact that the vendor is the same (or the vendors are related) can be relevant in determining whether the transactions constitute one arrangement.
Aggregated assessment of agreements for the sale of land will be made under section 25 (1) in the following circumstances:17. The above examples do not limit the circumstances in which an aggregated assessment will be
where the agreements contain an interdependency clause, or
where the agreements relate to fractional interests in one property, or
where the agreements are pursuant to antecedent options over the properties, or
the properties are sold subject to a development application or approval, or
completion is conditional on the purchaser obtaining development approval, or
the purchaser has lodged a development application prior to entering into the agreements.
In addition, where the vendors are the same or associated persons, transactions will also be aggregated if:
the agreements relate to freehold property and a business conducted on that property, or
assets of a single going concern business are purchased under separate agreements, or
the purchasers are buying all the lots in a subdivision or all units in a home unit block or a farming or grazing property.
made. An assessment under section 25 (1) may also be made if other factors are present that lead to the conclusion that the transactions have sufficient relationship, connection or interdependence to make them, in substance, one arrangement.
The following scenarios are NOT considered to constitute one arrangement.
Where the properties were purchased separately at auction.
Where there is an exchange of properties between ‘associated’ persons.
Where the only factor connecting the agreements, other than satisfying the first two criteria of section 25 (1), is:
a development application lodged by the purchaser after execution of the agreements (unless completion of the agreement is conditional on the purchaser obtaining development approval); or
a single loan or facility agreement or mortgage; or
the payment of a single deposit.
19. A decision under section 25 (2) to not aggregate can only apply to an arrangement that satisfies all three elements of section 25 (1), including that the transactions constitute one arrangement. Clearly, section 25 is wider in its application than its predecessor in the Stamp Duties Act 1920 (sections 41 (3A) & (3B) and 43A (2) & (3)), which were introduced as antiavoidance provisions to deal with practices such as contract splitting.
As a consequence, the discretion to not aggregate will only be exercised in exceptional circumstances, and would depend on the facts of each case. The mere fact that the use of separate transactions was not for the purpose of avoiding duty is not sufficient reason to exercise the discretion. As a general rule, the situation would have to be an unintended consequence of the broad wording of the legislation.
An example of a general case in which the Chief Commissioner will exercise the discretion is outlined in Revenue Ruling DUT 016, ‘Duty on Land Purchased by Home Builders’. In all other cases, a written submission must be lodged if an applicant is requesting consideration be given under section 25 (2).
Section 25 (5) provides that when an assessment is made under section 25 (1), duty may be apportioned to the instruments effecting or evidencing the dutiable transactions, or may be charged in accordance with section 18 (1), as determined by the Chief Commissioner. Where such instruments are lodged together, they will be stamped in accordance with section 18 (1), with one instrument stamped with the ad valorem duty calculated on the sum of the dutiable values (see section 25 (3)), and each other instrument stamped with fixed duty of $10.