Purpose?
The Bill amends the Duties Act 2000 (Vic) and does the following:
- replaces the Commissioner's discretion not to aggregate dutiable transactions with a specific exception to the aggregation of dutiable property where vacant land is bought by registered builders of homes where the homes are completed before on-sale
- makes provision for certain parallel arrangements (including parallel home building contracts) effectively imposing double duty on those arrangements
- removes the exemption from duty for a grant of any Crown lands by the Crown in right of Victoria.
When will it come into operation?
The amendments will come into operation the day after the Bill receives Royal Assent except for the amendments concerning Motor Vehicle Duty at Division 3 of Part 2 and Consequential Provisions/Penalties at Part 3, which will commence on 1 July 2012.
How the changes will work?
Aggregation
Under existing rules, the Commissioner may exercise his discretion not to aggregate dutiable transactions in certain circumstances. This is replaced with a specific exception for transactions involving vacant land purchased by registered builders of homes where the homes are completed before on-sale.
Parallel Arrangements
The amendments also confirm that certain parallel arrangements and building contracts are subject to duty under the sub-sales provisions.
Generally, a parallel arrangement is an arrangement entered into by a subsequent purchaser or an associate of the subsequent purchaser.
An example of a parallel arrangement is—
- a builder (first purchaser) enters into a sale contract to purchase vacant land from a developer
- the first purchaser nominates a home buyer (subsequent purchaser) who will receive the vacant land from the developer under the sale contract
- at or around the same time as the subsequent purchaser acquires the rights under the sale contract, he or she enters into a separate, parallel building contract with the first purchaser to build a home on the vacant land. Entering the building contract is integral to the subsequent purchaser obtaining the transfer right.
Grant of Crown Land
The Bill also implements the proposal announced in the 2012-2013 Budget to remove the exemption from duty for a grant of any Crown lands by the Crown in right of Victoria with exceptions relating to right of ways.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.
