Commissioner's practice note: Arbitration and Section 68 of the Duties Act 1997
Practice Note Number
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CPN 006v2 |
Tax/benefit
|
Duties
|
Type
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Exemptions
|
Date issued
|
May 2022 |
Issued by
|
Cullen Smythe
Commissioner of State Revenue
|
Status
|
Current |
Purpose
This practice note clarifies whether section 68 of the Duties Act 1997 (“Act”) will apply, where parties to a break-up of marriage or de facto relationship have privately agreed to resolve their matter by arbitration.
Background
Section 68 of the Act provides an exemption for transfers, or an agreement for the sale or transfer of property due to a break-up of marriage, de facto relationship or domestic relationship. The section also states that the exemption will only be granted if the transfer or agreement is effected by or in accordance with the following:
Break-up of marriage
- a financial agreement made under section 90B, 90C or 90D of the Family Law Act 1975 of the Commonwealth that, under that Act, is binding on the parties to the agreement, or
- an order of a court under that Act, or
- 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, or
- a purchase at public auction of property that, immediately before the auction, was matrimonial property where the public auction is held to comply with any such agreement or order.
Break-up of de facto relationship
- a financial agreement made under section 90UB, 90UC or 90UD of the Family Law Act 1975 of the Commonwealth that, under that Act, is binding on the parties to the agreement, or
- an order of a court under that Act, or
- an agreement that the Chief Commissioner is satisfied has been made for the purpose of dividing relationship property as a consequence of the breakdown of the relationship, or
- a purchase at public auction of property that, immediately before the auction, was relationship property where the public auction is held to comply with any such agreement or order.
This practice note looks at arbitration awards and whether these awards can be used for the purpose of claiming an exemption under section 68 of the Act.
Commissioner’s Practice Note
The Family Law Act 1975 encourages parties to resolve disputes without Court’s involvement. Section 10L of the Family Law Act 1975 defines arbitration as a process (other than the judicial process) in which parties to a dispute present arguments and evidence to an arbitrator, who makes a determination to resolve the dispute. Arbitration may be done either by:
- the Court making an order referring the parties to an arbitrator for arbitration under section 13E of the Family Law Act 1975; or
- the parties consenting to arbitrate their dispute privately prior to or during the commencement of any proceedings.
On completion of the arbitration, an award is delivered. This award may be registered in court. Section 13H of the Family Law Act 1975 states that
(1) A party to an award made in section 13E arbitration or in relevant property or financial arbitration may register the award:
- (a) in the case of section 13E arbitration--in the court that ordered the arbitration; or
- (b) otherwise--in a court that has jurisdiction under the Family Law Act 1975.
(2) An award registered under subsection (1) has effect as if it were a decree made by that court.
Arbitral Awards
If the arbitral award is registered, it has the same effect as a decree made by the court and is therefore considered to be an order of the court under the Family Law Act 1975 for the purpose of section 68 of the Act in relation to the break-up of marriages and de facto relationships.
If both parties agree with the award and wish to abide by its terms, the award need not be registered. The unregistered arbitral award is considered to be an agreement that the Chief Commissioner is satisfied was made for the purpose of dividing matrimonial property as a consequence of the dissolution, annulment or breakdown of a marriage for the purposes of section 68(1)(b)(iia) or for the purpose of dividing relationship property as a consequence of the breakdown of the relationship for the purposes of section 68(1A)(b)(iia).
Cullen Smythe
Commissioner of State Revenue