Partitions and Stamp Duty by Paul Anderson
Introduction Following the recent Supreme Court decision of Aoun Investments Pty Limited v Chief Commissioner of State Revenue, the Commissioner has issued revenue ruling DUT35 on this subject to replace revenue ruling SD178.
Legislation Under Section 30 of the Duties Act 1997 nominal duty only may be payable upon a “partition of land”. A “partition” is defined in subjection 1 as follows: “What is a partition? For the purposes of this section, a partition occurs when property (some or all of which is dutiable property) that is held by persons jointly (as joint tenants or tenants in common) and beneficially is transferred or agreed to be transferred to one or more of those persons.”
Example A simple example might be if A and B jointly own lots 1,2, 3 and 4 in a strata plan. They decide to partition the lots so that A takes lots 1 and 2 and B takes lots 3 and 4. If the lots are equal in value, then only $10.00 stamp duty is payable rather than ad valorem stamp duty calculated on the value of the units. However, if lot 4 is worth more that the other lots because it is the penthouse and B pays to A the sum of $50,000.00 by way of an adjustment, then ad valorem stamp duty is payable by B but only on the sum of $50,000.00.
Supreme Court Decision Aoun Investments Pty Limited (“Investments”) owned lot 27 in a deposited plan and the adjoining lot 28 was owned by Boutros Aoun (“Boutros”). Under a deed executed by the parties, it was agreed that the 2 lots would be developed for home units under a strata plan creating 12 lots. It was further agreed that once the strata plan was registered the lots would be partitioned between the parties so that Investments received lots 1 to 6 and Boutros lots 7 to 12. A condition of development consent granted by the relevant Council was that the 2 lots (27 and 28) be consolidated. As a result, lot 24 in a new deposited plan was created. Ownership of lot 24 was described as “Investments as to the part formerly in lot 27 and Boutros as to the part formerly in lot 28” 28”. This was in line with the standard procedure of the Registrar General. Following registration of the strata plan, ownership of each of the 12 lots was described in the same terms, i.e. “Investments as to the part formerly in lot 27 and Boutros as to the part formerly in lot 28”. Again, this was in line with standard practice of the Registrar General. Boutros then executed a Transfer in favour of Investments of the parts of lots 1 to 6 in the strata plan formerly in lot 28 and Investments executed a Transfer in favour of Boutros of those parts of lots 7 to 12 formerly in lot 27. Investments and Boutros claimed that each Transfer was only liable for nominal duty because the transaction was a partition within the meaning of Section 30 and the lots were of equal value. The Commissioner disagreed.
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