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.
These circumstances are discussed in paragraph 9 of this Public Ruling.
A contract for the sale of a block of land from person A to person B states that the consideration is $106,500. The valuation submitted shows that on the open market, the property could be sold for $100,000 to $110,000. In this case duty would be assessed on the stated consideration, namely $106,500.
An agreement for the sale of a house from person E to person F states that the consideration is $180,000. The valuation submitted shows that on the open market, the property could be sold for $150,000 to $160,000. Duty would be assessed on the consideration, namely $180,000.
A mother decides to gift a block of residential land to her son. In this case, evidence of value must be submitted to the Commissioner as the transaction is between related parties. If the valuation is from a real estate agent, the agent must list at least 3 recent comparable sales to substantiate the valuation of the subject property.
A real estate agent gives 3 recent comparable sales and states that on the open market, the block of land would sell for $54,000 to $60,000. Duty would be assessed on the highest ascertainable value of the property, namely, $60,000.
Duty is assessable on the full value of the property. The Commissioner is under no obligation to adopt the lowest value in the range. To do so would be to assume, without any justification, that the property would not achieve its full sales potential on the open market—its full value.
Using the same circumstances as above, except that the valuation from the real estate agent does not give 3 recent comparable sales, and states that the value of the land is $35,000. The Commissioner is not satisfied that the value of $35,000 represents the unencumbered value of the property. In such cases, the Commissioner will request the taxpayer to re-submit a valuation by a real estate agent to include 3 recent comparable sales. After the valuation is re-submitted, the Commissioner will decide whether to obtain a valuation by a registered valuer.
As for the previous example, except that taxpayer does not re-submit a valuation and so the Commissioner decides to obtain a valuation from a firm of registered valuers, ABC Valuations. The registered valuer states that by using the direct comparison method, the value of the subject property is $50,000 to $55,000. The value submitted by the taxpayer ($35,000) is greater than 10% below the valuation obtained by the Commissioner. Duty would be assessed on $55,000 and the cost of obtaining the valuation would be passed on to the person liable for the duty.
Commissioner of State Revenue
Date of issue: 3 July 2009
|Public Ruling||Issued||Dates of effect|
|DA505.1.2||3 July 2009||3 July 2009||Current|
|DA505.1.1||24 February 2009||24 February 2009||2 July 2009|
|Supersedes Revenue Ruling DA 28.1||1 March 2002||1 March 2002||23 February 2009|