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Property professionals guide: Contracts for sale of land
Aggregation of dutiable transactions
Aggregation may apply to transfer duty when two or more transactions form one larger transaction. Learn different scenarios where aggregation applies.
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Under Section 25 of the Duties Act 1997 aggregation of dutiable transactions may apply when you have two or more transactions that form part of what is essentially one larger transaction.
Aggregation Criteria
Transactions are to be aggregated and treated as a single dutiable transaction if all the following criteria apply:
the transferor is the same or the transferors are associated persons, 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.
The following information is an extract from Revenue Ruling DUT 36v4 - Aggregation of dutiable transactions which provides examples of when transactions would constitute ‘one arrangement’. It is recommended the ruling is read in its entirety before making a determination of duty.
Examples of transactions that would constitute “one arrangement” include:
where the agreements contain an interdependency clause
agreements that relate to fractional interests in one property
agreements that relate to freehold property and a business conducted on that property
where the agreements are pursuant to antecedent options over the properties
where the properties are sold subject to a development application or approval
where completion is conditional on the purchaser obtaining development approval in relation to the properties
where the purchaser has lodged a development application in relation to the properties prior to entering into the agreements
agreements that relate to separate assets of a single going concern business
the purchase of all the lots in a subdivision
the purchase of all units in a home unit block
the purchase of all land and other assets of a primary production business (whether the primary production land is in the same title or different titles).
The above examples do not limit the circumstances in which an aggregated assessment may be made. An assessment under section 25 (1) of the Act 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.
In some instances, transactions will not be aggregated. The following scenarios are not considered to constitute one arrangement.
The purchase of separate lots at auction. However, if the purchase of one was dependent on the purchase of the other it will be treated as one arrangement
An exchange of properties between associated persons
The acquisition of single lots in a new strata plan or subdivision by associated persons where none of the other factors in Revenue Ruling DUT 036v4 - paragraph 18 are present
Where the only factor connecting the contracts, other than satisfying the first three criteria of section 25 (1) of the Act, is:
a development application relating to the properties lodged by the purchaser after execution of the contracts (unless completion of the contracts is conditional on the purchaser obtaining development approval), or
a single loan or facility agreement or mortgage; or
the payment of a single deposit.
Exception for licenced home builders
Section 25 (2) of the Act provides an exception from aggregation for vacant land purchased by licensed home builders in certain circumstances.
Under this provision transactions are not aggregated if the Chief Commissioner is satisfied that:
the dutiable property to which the transactions relate are comprised of separate allotments of vacant land, and
the transferee is a person authorised to contract to do residential building work under the Home Building Act 1989, and
the transferee intends to construct residential premises on the allotments for the purposes of sale to the public.
To be excluded from the aggregation provisions, licensed home builders purchasing more than one parcel of vacant land from the same vendor must complete declaration form ODA 023.
Common scenarios
Here are seven common scenarios relating to aggregations that may assist in making a determination.
Scenario 1
In four separate contracts, all exchanged on the same date, a couple and their three children each purchase a unit in a four lot strata plan from the same vendor.
Result: Aggregated
The vendor in each contract is the same person
The purchasers in each contract are associated persons
All the units in the strata plan are being purchased therefore it is considered to be one arrangement.
Scenario 2
Two adjoining properties were offered at auction by the same vendor, but only one was sold. The other was purchased by private treaty 3 days later by the same purchaser.
Result: Not aggregated
The vendor in each contract is the same person
The purchasers in each contract are the same persons
As one of the properties was purchased at auction, the contracts will not be considered as aggregated under one arrangement
Scenario 3
Separate contracts are exchanged on the same day for the same farming property “Sunnyside”. One contract is for the property described as ‘West Sunnyside” and is owned by a married couple and the other is for “East Sunnyside” owned by the husband only. One property is purchased by a person as an individual and the other by the trustee of the individual’s superfund.
Result: Aggregated
The vendor in each contract are associated persons
The purchasers in each contract are associated persons
The contracts are for the whole of the farming property and therefore considered as one arrangement
Scenario 4
A licensed builder buys 25 blocks of vacant land in a subdivision of 100 lots from the same developer with the intention of building a house on each block of land for on selling to the public.
Result: Not aggregated
The vendor in each contract is the same person
The purchasers in each contract are the same persons
Section 25 (2) of the Duties Act provides an exception from aggregation for vacant land purchased by licensed home builders if they meet the requirements.
Scenario 5
A son and his parents buy adjoining lots of vacant land in a new subdivision from the same developer. They exchanged contracts and plan to build a home on their respective blocks of land. There are no interdependency clauses.
Result: Not aggregated
The vendor in each contract is the same person
The purchasers in each contract are associated persons
There is no other factor that is considered to be one arrangement.
Scenario 6
An individual is buying three adjoining lots of vacant land in a subdivision from the same developer and intends to build villas across the three lots. There is an interdependency clause in each contract.
Result: Aggregated
The vendors in each contract are associated persons
The purchasers in each contract are associated persons
As there is an interdependency clause, it is considered that these contracts are one arrangement
Scenario 7
A developer approaches five vendors, to purchase their adjoining houses. None of the vendors are related or associated persons. They all agree to sell him their properties. The sales are dependent upon a development application over the five properties being approved by council. There is an interdependency clause in each contract.
Result: Not aggregated
The vendors in each contract are not associated persons
The purchaser in each contract is the same person
The sale is dependent upon a development application over the five properties being approved by council and there are interdependency clauses in the contracts. Both these factors are normally considered one arrangement however as the vendors are not associated persons the contracts cannot be aggregated.
Lodgement requirements
As specified in the Duties Document Matrix (PDF, 403.7 KB) most aggregation of dutiable transactions can be processed on EDR. Refer to the matrix for scenarios that must be lodged with Revenue NSW via eDuties.
The vendor in each contract is the same person
As one of the properties was purchased at auction, the contracts will not be considered as aggregated under one arrangement