Occasionally, you may come across situation where you will enter into a transaction with a party that is related to you (personally and/or professionally).


We strongly advise you inform your legal advisor, prior to entering into any transaction, if you have a business or personal relationship with the other party or if the consideration for the sale and purchase is less than the market value at the time.


If so, this will have duty implications and the Office of State Revenue will require, for duty assessment purposes, a valuation of the property (or business as the case may be) using at least three comparable sales within the last three months. If applicable, these valuations must meet certain criteria and are required before duty being assessed and paid.
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You should contact your legal advisor as soon as possible to discuss if you think the abovementioned may apply because failure to obtain the valuations can result in serious consequences for you, for example, the imposition of penalty duty and interest.

To continue with our previous discussions on matters relate to transfer duty, you should note that your transaction may be exempt from transfer duty if:

a)         the contract is terminated or comes to an end;
b)         it is a transfer pursuant to a Family Court order, maintenance agreement or binding financial agreement;
c)         it is a transfer between de facto spouses under a recognised cohabitation or separation agreement;
d)         it is the distribution of a deceased’s property to beneficiaries, surviving joint tenants or to a trust set up to distribute the estate;
e)         the property was won in an art union competition;
f)          you are a registered charitable institution (for examples, a religious body or educational institution);
g)         the transfer is to correct a clerical error in a previous transaction;
h)         it is a transfer between complying superannuation funds or entities;
i)           it is a transfer to a registered industrial organisation under the Industrial Relations Act 1999 (Qld).

You should contact your legal advisor as soon as possible if you think that any of the abovementioned exemptions may apply to you.

You will recall the end of our last article titling “Transfer Duty” briefly mentioned the additional foreign acquirer duty (“AFAD”). In general, AFAD applies to transactions in land which are liable to transfer duty if:
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a)         the duty liability arises on or after 1 October 2016;
b)         the land is AFAD residential land (see below); and
c)         the acquirer under the transaction is a foreign acquirer.

AFAD residential land is land in the State of Queensland that is or will be used solely or primarily for residential purposes, where particular conditions are met. These include:

• established homes and apartments;
• vacant land on which a home or apartment will be built;
• land for development for residential use; and
• refurbishment, renovation or extension of a building for residential use.
  
  

AFAD residential land does not include land used for hotel and motel purposes.


A person will be a “foreign acquirer” if the person is:

• a foreign individual viz an individual other than an Australian citizen or permanent resident. However, AFAD will not apply to a New Zealand citizen who is the holder of a permanent visa, or who is the holder of a special category visa as defined in the Migration Act 1958 (Cth);
• a foreign corporation viz a corporation incorporated outside Australia or a corporation in which foreign persons have a controlling interest; or
• a trustee of a foreign trust viz a trust where at least 50% of the trust interests are foreign interests.

AFAD is an additional duty imposed at the rate of 3% of the dutiable value of the transaction. 

However, if there are multiple buyers and only one is a foreign acquirer, AFAD will only apply to the extent of the foreign acquirer's interest under the transaction. Liability for AFAD will not affect any entitlement to a home concession for transfer duty.

If, within three years of the transaction, the acquirer becomes a foreign corporation or the trustee of a foreign trust, it is important to note that the Commissioner of State Revenue must make a reassessment to impose AFAD on the transaction. This may occur, for example, because of a change in the controlling interest in the company or interests in the trust.

If this becomes applicable, you must take action to inform the Commissioner of State Revenue of the changed circumstances within twenty eight days. If you do not, significant additional penalty duty may be payable and interest will be charged from when you are liable to notify the Commissioner of State Revenue. If applicable, this is your responsibility and is outside the scope of our retainer.

If you think AFAD may apply to your transaction, then we suggest you obtain advice in this regard without delay.