Partitions of Land

Preamble

1. Chapter 2 of the Duties Act 1997 imposes duty on dutiable transactions concerning dutiable property. Section 30 provides a concessional basis for assessing duty on a dutiable transaction that constitutes a partition of property comprised of land in New South Wales.
2. Section 30(1) provides that for the purpose of this section, a partition occurs when dutiable property comprised of land in New South Wales that is held by persons jointly (as joint tenants or tenants in common) is transferred or agreed to be transferred to one or more of those persons.
3. Section 30(2) provides that a partition is taken to be a single dutiable transaction.
4. This ruling details how the concession applies and relates to partitions effected on or after 27 June, 2005.
5. This ruling replaces revenue ruling SD 178.

Ruling

6. A partition under Section 30 is confined to dutiable property comprised of land in NSW. All other property, both dutiable and non-dutiable (such as shares, land not in NSW and cash) is to be disregarded when calculating duty on a partition.
7. Where there is a partition of land in NSW, application of Section 30 is not restricted to instances where the partition involves one parcel of land or adjoining parcels of land. Section 30 also applies to land that is held by partners in a partnership, that is, the partnership factor will be ignored and for the purposes of a partition, it would be the partners legal ownership of the land that is relevant.
8. Duty on a partition is assessed in accordance with Section 30 and is calculated on the dutiable value of the partition. The dutiable value of a partition is the greater of:
   1. the sum of the amounts by which the unencumbered value of the dutiable property transferred, or agreed to be transferred, to a person by the partition exceeds the unencumbered value of the interest held by the person in the dutiable property transferred, or agreed to be transferred, to each person by the partition immediately before the partition, and
   2. the sum of any consideration for the partition paid by any of the parties.
9. If the unencumbered value of the undivided share of each partitioner in all the land being partitioned is equal to the unencumbered value of the divided part taken by that person, the partition is ‘equal’. The total excess value will therefore be nil (and there is unlikely to be any consideration paid). In such a case, the dutiable value will be nil and the partition will be chargeable with the minimum duty of $50 under section 30(4).
10. Where there is an Agreement for Partition, the Agreement is stamped with ad valorem duty (or the minimum $50) and any transfers in conformity with that Agreement are charged with $50 each under section 30(4). Where there is no Agreement, one instrument is stamped with ad valorem duty (or the minimum $50) and any additional instruments which effect the partition are charged with $50 each under section 30(4).
11. Section 30 only applies to land in NSW that is held by persons jointly either as joint tenants or tenants in common. Land that is not held jointly cannot be assessed under Section 30. Land held in the form of a dual entitlement is not held jointly because the ownership is in severalty.

Dual Entitlement

12. A dual entitlement is a practice of the Department of Lands which acts as a stay of registration until single ownership of an entire lot is obtained. Dual Entitlement titles can arise following a consolidation of adjoining parcels of land and the creation of a new consolidated lot. For example, X owns Lot 1/1111 and Y owns the adjoining Lot 2/1111. They consolidate the properties to create Lot 3/2222. The title for the new Lot 3/2222 will show the registered proprietors in the First Schedule as:

    X of the part formerly in 1/1111

    Y of the part formerly in 2/1111

    If the consolidated title is subsequently subdivided, any transfers of individual lots to X or Y will be liable to duty calculated on the value of any of X’s property being transferred to Y and vice versa. Evidence including proportional valuations, survey reports and plans of the property to be transferred should be lodged.

Estates

13. As land which is the subject of a partition is required to be held jointly, any partitioning of estate land in NSW which is held by a trustee, executor or executrix does not fall within Section 30. A transfer to the beneficiaries should be stamped under Section 63 of the Duties Act 1997 prior to partitioning.

Evidence

14. In addition to the documents effecting the partition, the following documents are required to be lodged to enable assessment of duty on a partition:
    1. evidence of value (and a copy) for each parcel of land subject to the partition. The evidence of value should be in accordance with Revenue Ruling DUT 012.
    2. a current Certificate of Title for each parcel of land subject to the partition.