Nobody likes to pay stamp duty, but it is relevant to just about every major transaction that you will enter into during your lifetime – from buying property or businesses through to cars. Here are some facts on stamp duty that you may not have known:
- Stamp duty is technically called “transfer duty”. It is commonly referred to as stamp duty because many years ago, documents were stamped by placing adhesive stamps onto the relevant documents to be lodged in Titles Office. The Titles Office registry would only allow the document to be registered if it was “stamped”.
- The Office of State Revenue (OSR) regulates stamp duty in Queensland in accordance with the Duties Act.
- Where duty is to be paid on any dutiable transaction, the duty must be paid to the OSR no later than 30 days after the contract is entered into (even if the contract hasn’t yet settled), or if the contract is conditional, within 30 days of the contract becoming unconditional.
- The OSR may impose Unpaid Tax Interest (UTI) on the party liable for duty if it does not receive payment of duty by the required timeframe.
- The OSR may demand stamp duty from either party to a transaction if it has not been paid (that includes the buyer and/or seller). Generally property contracts cover this scenario by including an indemnity whereby the buyer promises to pay the duty to the OSR, or to the seller if the OSR recovers it from the seller.
- Double duty will be payable when a party is added to a contract during the transaction, as the law deems this to be a new contract. If a new party is to be added to a contract, lawyers will usually arrange for the existing contract to be cancelled and a new contract on the same terms to be entered into. This avoids having to pay stamp duty twice.
- Stamp duty is payable even when a property is being transferred between related parties (even if no money is changing hands). In these cases, an independent valuation of the property is required and the stamp duty will be calculated on the greater of the independent valuation or the amount of money paid under the contract.
- If GST is payable on a dutiable transaction, then you must pay stamp duty on the gross amount. That’s right – you pay stamp duty on top of the GST! Although this is very controversial, the law is very clear on this point.
Many people get caught out on these and other stamp duty traps. It is vital that you consult a lawyer when you enter into a dutiable transaction to ensure that your comply with your liabilities under the Duties Act. Smith & Stanton is registered with the OSR as a self assessor for dutiable transactions. This means that we can provide advice to you with respect to stamp duty and also arrange for your duty to be paid and documents stamped. Please contact us if you require assistance.