|Ruling number||DUT 031|
|Date issued||13 November 2006|
|Issued by||Tony Newbury|
Chief Commissioner of State Revenue
|Effective from||13 November 2006|
Chapter 2 of the Duties Act 1997 imposes duty on ‘dutiable transactions’, including an agreement for the sale or transfer of dutiable property (section 8 (1)(b)(i)), and a declaration of trust over dutiable property (section 8 (1)(b)(ii)). A declaration of trust is defined in section 8 (3) to mean:
any declaration (other than by a will or testamentary instrument) that any identified property vested or to be vested in the person making the declaration is or is to be held in trust for the person or persons, or the purpose or purposes, mentioned in the declaration although the beneficial owner of the property, or the person entitled to appoint the property, may not have joined in or assented to the declaration.
Section 294 of the Act provides:
An instrument that contains or relates to several distinct matters for which different duties are chargeable under this Act is to be separately and distinctly charged with duty in respect of each such matter, as if each matter were expressed in a separate instrument.
In some circumstances, a contract for sale of property may be liable to duty both as a agreement for the sale or transfer of dutiable property and as a declaration of trust over that property. This ruling identifies those circumstances, and replaces similar statements in Revenue Rulings SD 109 and SD 120.
In Farrar v Commissioner of Stamp Duties (1975) 5 ATR 364, Sheppard J held that the description of the purchaser ‘as trustee for John Joseph Farrar’ amounted to a declaration of trust on the basis that without those words, there was nothing binding the purchaser to hold the land purchased on trust. Accordingly, duty was payable in respect of the document as both a contract of sale and a declaration of trust.
A provision of a document is more likely to be held to be a ‘distinct’ matter within section 294 of the Duties Act if it does more than record obligations imposed by law (see Commissioner of Stamp Duties (NSW) v Pendal Nominees Pty Ltd & Anor (1989) 167 CLR 1 on section 17 of the Stamp Duties Act 1920, which was the equivalent of section 294 of the Duties Act). Provisions in the form of a covenant, the use of mandatory language and the creation of enforceable rights in parties other than the beneficial owner are instances in which the provisions of a document will go beyond the general law. Another indication is where the agreement for sale and the declaration of trust would have been assessed separately had they been expressed in different documents.
Consistent with the decisions referred to above, a contract for sale will be considered to be liable to duty as a declaration of trust, in addition to the duty payable as an agreement for sale or transfer, where the purchaser is described:
as trustee for a named person or persons
as trustee for a named class of persons (for example, ‘ the children of X’, or ‘the beneficiaries of the XYZ Trust’)
as trustee for a named corporate body
as trustee for a named unincorporated body.
A declaration in a contract that does not identify the person or persons for whom, or the purpose or purposes for which, the property is to be held will not constitute a declaration of trust for duties purposes. Further, words in a contract that are merely descriptive of the purchaser's capacity as trustee of an existing trust would not amount to a declaration of trust for duties purposes.
A contract will not be considered to be liable to duty as a declaration of trust where the purchaser is described:
as trustee for the estate of a named person
as trustee for a named trust
as trustee for a named superannuation fund
as trustee for a company to be formed or incorporated.