A public ruling, when issued, is the published view of the Commissioner of State Revenue (the Commissioner) on the particular topic to which it relates. It therefore replaces and overrides any existing private rulings, memoranda, manuals and advice provided by the Commissioner in respect of the issue(s) it addresses.
Where a change in legislation or case law (the law) affects the content of a public ruling, the change in the law overrides the public ruling—that is, the Commissioner will determine the tax liability or eligibility for a concession, grant or exemption, as the case may be, in accordance with the law.
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Example 1
C & D acquire a home for $350,000. Under the terms of the agreement, the transfer date is 2 March. They are to commence occupation of the property as their principal place of residence on 5 March. An application made for the home concession is approved. The transfer duty applicable to the transaction is $3,500.
If C & D had not received the benefit of the concession, the transfer duty payable would have been $10,675. Therefore the concession benefit was $7,175 ($10,675 – $3,500).
Due to an employment opportunity overseas, C & D arrange for the property to be rented. The lease commences on 8 October of the same year.
As the transferees have leased the property within one year after their occupation date, the reassessment provision (s.153) will be triggered and the concession benefit will be reduced.
The number of days that C & D occupied the property as their principal place of residence was 218 days (5 March to 8 October, inclusive).
The formula for calculating the further transfer duty payable is contained in s.153(2) of the Duties Act. It is the proportion of the concession benefit received that reflects the number of days that C & D fail to satisfy the occupancy requirements. In this instance, the number of days C & D have failed to satisfy the occupancy requirements is 147 days (365 – 218).
Therefore the further transfer duty payable is $2,889.65 ($7,175 × 147 ÷ 365).
Example 2
X & Y acquire a residence for $300,000. Under the terms of the agreement, the transfer date is 9 May. They are to commence occupation of the property as their principal place of residence on 10 May. An application made for the home concession is approved. The transfer duty applicable to the transaction is $3,000.
If X & Y had not received the benefit of the concession, the transfer duty payable would have been $8,925. Therefore the concession benefit was $5,925 ($8,925 – $3,000).
On 8 July of the same year, X’s grandmother, Z, takes up occupation of a self-contained unit attached to the residence. Z pays $100 a week for exclusive use of the unit.
As X & Y have granted exclusive possession of part of the property within one year of their occupation date, the reassessment provision (s.153) will be triggered and the concession benefit will be reduced.
The number of days that X & Y occupied the property as their principal place of residence was 60 days (10 May to 8 July, inclusive).
The formula for calculating the further transfer duty payable is contained in s.153(2) of the Duties Act. It is the proportion of the concession benefit received that reflects the number of days that X & Y fail to satisfy the occupancy requirements. In this instance, the number of days X & Y have failed to satisfy the occupancy requirements is 305 days (365 – 60).
Therefore the further transfer duty payable is $4,951.03 ($5,925 × 305 ÷ 365).
Example 3
G & H acquire, for $300,000, vacant land on which their first home is to be constructed. The transfer date for the vacant land is 1 September. G & H satisfy the conditions for a concession for a first home in relation to the acquisition of the vacant land, and an application for a concession is approved. The transfer duty applicable to the transaction is $4,125.
If G & H had not received the benefit of the first home vacant land concession, the transfer duty payable would have been $8,925. The concession benefit was $4,800 ($8,925 – $4,125).
A residence is constructed on the vacant land, and G & H commence occupation of the property as their principal place of residence on 1 March.
On 1 May, G & H enter into an agreement to sell the property. The agreement settles on 30 May.
As G & H have transferred the property within one year after their occupation date (1 March), the reassessment provision (s.153) will be triggered and the concession will be reduced.
The number of days that G & H occupied the property as their principal place of residence was 91 days (1 March to 30 May, inclusive).
The formula for calculating the further transfer duty payable is contained in s.153(2) of the Duties Act. It is the proportion of the concession benefit received that reflects the number of days that G & H fail to satisfy the occupancy requirements. In this instance, the number of days G & H have failed to satisfy the occupancy requirements is 274 days (365 – 91).
Therefore the further transfer duty payable is $3,603.28 ($4,800 × 274 ÷ 365).
Example 4
On 1 July, J & K enter into a long-term sublease of residential land and pay a premium of $300,000. Under the terms of the sublease, the transfer date is 30 July. J & K are to commence occupation of the property as their principal place of residence on 31 July. An application made for the home concession is approved. The value of the interest acquired in the land is $300,000. The transfer duty applicable to the transaction is $3,000.
If J & K had not received the benefit of the home concession, the transfer duty payable would have been $8,925. Therefore the concession benefit was $5,925 ($8,925 – $3,000).
On 5 November of the same year J & K surrender the sublease.
As J & K have surrendered the sublease within one year of their occupation date, the reassessment provision (s.153) will be triggered and the concession benefit will be reduced.
The number of days that J & K occupied the property as their principal place of residence was 98 days (31 July to 5 November, inclusive).
The formula for calculating the further transfer duty payable is contained in s.153(2) of the Duties Act. It is the proportion of the concession benefit received that reflects the number of days that J & K fail to satisfy the occupancy requirements. In this instance, the number of days J & K have failed to satisfy the occupancy requirements is 267 days (365 – 98).
Therefore the further transfer duty payable is $4,334.17 ($5,925 × 267 ÷ 365).
Example 5
On 31 January, M & N enter into a contract for the purchase of a home for $500,000. The contract is subject to a pre-existing lease that has four months remaining (i.e. the end of the current term will be 31 May). The transfer date is 1 March. Transfer duty was assessed at the home concessional rate.
The acquisition of the home subject to the lease will not be considered a disposal provided that the existing tenant vacates the land by 31 May, being the earlier of the termination of the current lease and six months from the transfer date.
If the tenants do not vacate by 31 May, M & N will be considered to have disposed of the property. Consequently a reassessment will be required on the basis that the home concession never applied.
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Example 6
E & F acquire a residence for $350,000. The transfer date is 2 March. At the time of the assessment they did not claim the first home concession as they intended to use the residence as an investment property.
On 2 November of the same year the tenants moved out, and E & F commenced occupation of the residence as their principal place of residence. Even though their occupation date is within one year after the transfer date, the concession will not be allowed as the land was leased between the transfer date and occupation date. The use of the property as an investment is inconsistent with the purchase of the property as a principal place of residence.
Elizabeth Goli
Commissioner of State Revenue
Date of issue: 12 December 2016
Public Ruling | Issued | Dates of effect | |
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From | To | ||
DA085.1.6 | 12 December 2016 | 12 December 2016 | Current |
DA085.1.5 | 3 July 2012 | 1 July 2012 | 11 December 2016 |
DA085.1.4 | 12 August 2011 | 1 August 2011 | 30 June 2012 |
DA085.1.3 | 15 April 2010 | 15 April 2010 | 31 July 2011 |
DA085.1.2 | 3 July 2009 | 1 July 2009 | 14 April 2010 |
DA085.1.1 | 24 February 2009 | 24 February 2009 | 30 June 2009 |
Supersedes Revenue Ruling DA 2.4 | 22 January 2009 | 22 January 2009 | 23 February 2009 |