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.
An agreement for the transfer of land for $110,000 is accompanied by a formally executed deed of variation executed by the parties indicating that they are effecting a variation to the terms of the agreement to reflect reduced consideration of $100,000.
The assessment must be raised on the amended figure of $100,000 evidenced in the written deed of variation.
The agreement must be noted by the Commissioner, to show that transfer duty has been assessed on the reduced consideration as a result of the deed of variation.
In these cases, no formal deed of variation of the agreement has been signed.
The vendor agrees, by letter, to accept the lesser sum of $115,000 rather than the $120,000 specified in the agreement but the agreement has not been formally varied to reflect this agreement. No transfer document has been produced for assessment at this stage.
The assessment should be raised on the amount appearing as consideration in the agreement and not on the claimed lower purchase price. This is because letters only acknowledge a lower amount to be accepted as the purchase price or the waiver by the vendor of a contractual term. The letters have not varied the actual terms of the agreement. Evidence such as a deed of variation must be provided, to indicate that the terms of the agreement have been formally varied.
If the value of the property, according to evidence of value produced, is higher than the amount expressed as consideration in the agreement, transfer duty should be assessed on that higher value.
If the value of the property is shown to be equal to or less than the expressed consideration then transfer duty should be assessed on the amount expressed as consideration in the agreement.
An agreement for the transfer of land is executed and lodged for assessment. An assessment has been issued on the consideration shown in the agreement. Upon production of the transfer, the solicitors advise that a defect in the property has been identified, that the value of the property has been reduced and the purchase price has also been reduced. The reduction in the purchase price is evidenced by an exchange of solicitors’ letters. As the agreement has already been assessed, the variation will not be reflected in the agreement.
If the transfer shows the reduced consideration in accordance with the copies of the solicitors’ letters, the issued assessment should be amended to reflect the reduced consideration. The agreement must be noted to indicate the amount of the reduced consideration and the reason for the reduction.
If the transfer does not reflect the reduced consideration, the assessment must remain on the higher amount as shown in the agreement and transfer regardless of solicitors’ letters.
Commissioner of State Revenue
Date of issue: 24 February 2009
|Public Ruling||Issued||Dates of effect|
|DA501.1.1||24 February 2009||24 February 2009||Current|
|Supersedes Practice Direction DA 3.1||1 March 2002||1 March 2002||23 February 2009|