The exemption for transfers between spouses or de facto partners changed on 1 July 2017 but some practitioners have not kept up with these changes. There are now many more requirements to meet before an exemption can be obtained and practitioners need to advise their clients about them. It is important to always check requirements and not rely on your memory when it comes to duty.
What's on this page?
The State Revenue Office (SRO) appears to be reviewing previous applications for exemptions for transfers between spouses. As a result, claims against practitioners have been made where the requirements for the claimed exemption were not met.
Since 1 July 2017, the requirements for a transfer to a spouse, de facto or domestic partner to be exempt from duty include:
- there must be no monetary consideration given
- the property must be residential
- no one else receives an interest in the property pursuant to the transfer
- at least one person in the relationship must live in the property as their principal place of residence for a continuous period of 12 months commencing within 12 months of the transfer
- certain requirements are satisfied in relation to any mortgage including, the transferee assumes liability for the existing mortgage.
The Commissioner has a discretion to vary the residency requirements if there is a good reason (s43B).
These requirements are set out in s43, s43AA, s.43A, s43B, s43C and s43D of the Duties Act 2000 (Vic).
There has, however, been no change to the exemption for transfers due to a breakdown of a marriage or domestic relationship. Refer to s44 of the Duties Act 2000 (Vic).
Key takeaways
- Keep up to date with changes to duty law.
- Do not rely on your memory when advising on duty issues, always check the legislation or State Revenue Office website.
- Give your clients written advice about the duty requirements
- Warn clients that the SRO may audit the transfer to determine whether the entitlement to any exemption is valid and that this audit may occur many years after the transfer is registered.
Resources
The LPLC has developed a range of resources about tax issues in property transactions that can be found on our website including a checklist to assist practitioners identify the most common tax and duty issues which might arise in the purchase or sale of property.
