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Property professionals EDR guide: Section 63 of the Duties Act
Determining eligibility for Section 63 of the Duties Act
Learn how to assess an instrument under Section 63 of the Duties Act, including eligibility criteria and common scenarios where the concession applies.
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Introduction
This chapter provides an overview of the key principles relating to the transfer of dutiable property in deceased estates and offers practical guidance through common scenarios. You will also find information on lodgement requirements to ensure compliance with Revenue NSW obligations.
Transmission application to an executor
Under section 65(12) of the Duties Act 1997, no duty is chargeable on the vesting of dutiable property in a legal personal representative of a deceased person.
Any transmission application to give effect to this vesting is not liable to duty.
Here are some common scenarios relating to transmission applications to an executor.
Scenario 1: Transmission application to executor
In accordance with the will, the executor is to sell two properties owned by the deceased with the proceeds to be distributed equally to two beneficiaries.
Transmission application(s) are entered into to transfer the properties to the executor to enable the executor to sell the properties.
Result:
There is no duty liability.
Any transmission application/s entered into, is not liable to duty as the properties are transferring to the executor who is holding in a trustee capacity only.
The transmission application does not require marking or notation by Revenue NSW.
Transmission application to a beneficiary or devisee
To qualify for the concessional duty under section 63(1) of the Duties Act 1997, it is important that the beneficiary or devisee receives the property in accordance with the terms of the will. If specific property is allocated to certain beneficiaries under the will, any transfer outside those provisions will not meet the requirements for the concession, as it is not in accordance with the terms of the will.
Transfer from an executor, administrator or trustee to the beneficiary or beneficiaries
When property from a deceased estate is transferred to the executor or administrator through a transmission application, it may then be transferred to the beneficiary or devisee by way of a subsequent transfer.
To qualify for the concessional duty under section 63(1) of the Duties Act 1997, it is important that the beneficiary or devisee receives the property in accordance with the terms of the will. If specific property is allocated to certain beneficiaries under the will, any transfer outside those provisions will not meet the requirements for the concession, as it is not made under and in accordance with the terms of the will.
Cautions
The information below is provided to prevent common assessment and processing errors identified by Revenue NSW under this document type.
Agreements for sale or transfer
Section 63 does not extend to agreements for sale or transfer. If a legal personal representative enters into a contract with a beneficiary, the contract will be liable to ad valorem duty on the higher of the consideration or value of the dutiable property the subject of the contract.
If a foreign person is inheriting property in accordance with the deceased's will, they are exempt from paying surcharge purchaser duty (SPD). However, if they acquire residential related property not made under and in conformity with the trusts contained in the will, surcharge purchaser duty may apply. In this instance, all documents must be lodged to Revenue NSW for assessment via eDuties. Refer to Chapter 4 - Processing instructions.
Transactions that must not be processed in EDR
As referred to in the Duties Document Matrix (PDF, 403.7 KB), only transfers that strictly comply with the will can be processed through Electronic Duties Return (EDR). Specifically, EDR is limited to transmissions/acknowledgements, or transfers made directly to the devisee or beneficiary as outlined in the will. Any deviation from the trusts contained in the will could result in the concession not applying.
You must lodge any transmission application, acknowledgement, or transfer to Revenue NSW using eDuties that is:
Not in accordance with the terms of the will,
Claimed under laws of intestacy,
A transfer of property, the subject of a trust for sale as set out in the will,
Scenario 3: Transfer not in conformity with the will – no written agreement
In accordance with the will, two properties owned by the deceased are to be distributed in equal shares to two beneficiaries.
The beneficiaries decide to each take one of the properties. Consequently, two transmission applications are prepared: one to transfer Property 1 to Beneficiary A and another to transfer Property 2 to Beneficiary B.
The transmission application/transfer is not made under and in conformity with the trusts contained in the will and ad valorem duty may be payable
The verbal agreement between the beneficiaries to vary the trusts contained in the will may fall within the provisions of section 63(2) of the Duties Act 1997
All documents including an explanation of the arrangement between the beneficiaries must be lodged with Revenue NSW for assessment via eDuties. Refer to Chapter 4 - Processing instructions
Scenario 4: Transfer not in conformity with the will - Deed of family arrangement
In accordance with the will, two properties owned by the deceased are to be distributed in equal shares to two beneficiaries.
The beneficiaries agree that Beneficiary A is to acquire both properties, while Beneficiary B will take a cash amount in lieu of the property. They enter into a Deed of Family Arrangement to formalise their agreement.
The transmission application/transfer is not in accordance with the will. Ad valorem duty may be payable
The transmission application/transfer in accordance with the deed that varies the trusts contained in the will may fall within the provisions of section 63(2) of the Duties Act 1997
In accordance with the will, two beneficiaries are entitled to the residue of an estate in equal shares. The residue consists of one property and cash.
The legal personal representative appropriates the assets so that Beneficiary A receives the property and Beneficiary B receives the cash.
Any transaction associated with an appropriation must be lodged with Revenue NSW for assessment via eDuties. Refer to Chapter 4 - Processing instructions
Scenario 6: Trusts for sale
A trust for sale in the will directs the executor to sell the estate property and distribute the proceeds of sale to the beneficiaries.
The beneficiaries and the executor agree not to sell the trust property but transfer the property to the beneficiaries in accordance with the proportions to which they are entitled to the net proceeds of sale under the will.
Scenario 7: The deceased died without a valid will
A person died without leaving a valid will. Upon application to the Court, letters of administration are granted to enable the administration of the estate and the distribution of the deceased’s assets.
