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Property professionals guide: Contracts for sale of land
Cancelled contracts, agreements and transfers
Guidance for property professionals on lodging cancelled contracts, agreements and transfers, including refund processes and eligibility requirements.
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This chapter will provide information on the steps required to remove the duty liability when a contract or a standalone transfer has been cancelled. Cancelled means rescinded, annulled or otherwise terminated without completion.
Eligibility criteria for cancellation and/or refund
Cancelled agreements
Section 50 of the Duties Act 1997 provides that an agreement for the sale of dutiable property that is cancelled is not liable to duty under this Chapter if the Chief Commissioner is satisfied:
that the agreement was not cancelled to give effect to a subsale, or
that the purchaser or transferee under the agreement is a promoter of a named company proposed to be incorporated and that the company is the purchaser or transferee of the dutiable property under a subsequent agreement, or
that the purchaser or transferee under the agreement and the purchaser or transferee under a subsequent agreement relating to the same dutiable property were related persons when the agreement that is cancelled was entered into.
If duty has been paid on an agreement that is not liable to duty under this Chapter because of section 50(1), the Chief Commissioner must reassess and refund the duty if an application for a refund is made within:
5 years of the initial assessment, or
12 months after the agreement is cancelled, whichever is the later.
Other circumstances where an agreement is cancelled is when an agreement is novated (substitution of a ‘new’ agreement for an ‘old’ agreement in consideration of the discharge of the ‘old’ agreement). More information on cancelled and novated agreements can be found in Revenue Ruling DUT 011.
Cancelled transfers of dutiable property
Section 50A of the Duties Act 1997 provides for a cancellation of a transfer of dutiable property if the transfer instrument has been cancelled or abandoned, and the dutiable property has not been transferred to the transferee, and the transfer was not cancelled to give effect to a sub sale.
If duty has been paid on a transfer that is not liable to duty because of this section, the Chief Commissioner must reassess and refund the duty if an application for a refund is made within 5 years of the initial assessment.
If duty has been paid on a failed instrument that is not liable to duty because of this section, the Chief Commissioner must reassess and refund the duty if an application for a refund is made within 5 years of the initial assessment or 12 months after the instrument has failed, whichever is the later.
Cancelling a Duties Liability
When a contract or standalone transfer is terminated or rescinded, Revenue NSW must be satisfied that the transaction is genuinely at an end. The steps to follow depend on whether a Duties assessment has been issued.
Where a Duties Notice of Assessment has been issued
If a Duties Notice of Assessment has been issued and the agreement or standalone transfer is cancelled or rescinded, a duty liability still exists even if the duty has not been paid. To request the cancellation of the liability and the Duties assessment, Revenue NSW must review and confirm that all the above conditions have been met and the transaction is at an end. Only then will the liability and the Duties assessment be cancelled.
To avoid debt recovery action, ensure that the cancellation process is completed promptly with Revenue NSW.
Where a Duties Notice of Assessment has not been issued
There is still a duty liability if an agreement or standalone transfer is cancelled or rescinded before a Duties assessment has issued. Revenue NSW must be satisfied that all conditions have been met and the transaction is genuinely at an end before cancelling the liability.
All relevant transactions and supporting information must be lodged with Revenue NSW for consideration.
It is important to note that any assessment related to a rescinded Contract for Sale of Land, or a cancelled transfer cannot be cancelled through the CSP under "Cancel Duties Assessment." Instead, the required documentation must be provided directly to Revenue NSW for the cancellation process.
How to apply for cancellation and/or refund
All cancelled agreements and transfers without an agreement must be lodged via eDuties under one of the following application types:
Cancelled agreements (for the sale or transfer of dutiable property) - Section 50
Cancelled transfers of dutiable property - Section 50A
When it is considered that a sub-sale has occurred. For example before completion of the first sale, the property is on sold to a third party.
When there are clauses in the Deed of Rescission stating the cancellation is conditional upon subsequent events occurring, and evidence is not provided that the conditions were met. For example where the rescission is dependent on the purchaser paying the vendors costs, entering into a new agreement etc
When not all the required evidence is provided or all purchaser/transferees do not complete the relevant declarations.
If the parties are in dispute and the agreement is not being rescinded by mutual agreement.
