Property Transactions

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1. Beware of buying "and/or nominee"

Legislation now exists (under the sub-sale provisions) for the Victorian Government to take double duty where the purchaser named in the contract is different to the person to whom the property is ultimately transferred, unless an exemption applies.

If you do not satisfy the conditions for the exemption duty is taken on the value of the property in the contract between the vendor and the named purchaser and then again on the transfer to the ultimate transferee.

The most common occurrence of the application of the sub-sale provisions is in the instance where a purchaser signs a contract " and/or nominee".

2. Transfers involving land development

If certain criteria exists then again double duty will be payable- four criteria must be met:

It is immaterial whether a subsequent purchaser obtains a transfer right from the first purchaser or from another subsequent purchaser.
Each assignment, novation, nomination or other arrangement by which a subsequent purchaser obtains a transfer right is a subsequent transaction that may be assessed for duty.

The occurrence of land development between the first sale contract being entered into and the property being transferred Is the key element that triggers this particular provision.

The term Iand development is defined to mean anyone or more of the following in relation to land:

a) preparing a plan of subdivision of the land or taking any steps to have the plan registered under the Subdivision Act 1988;
b) applying for or obtaining a permit under the Planning and Environment Act 1987 in relation to the use or development of the land;
c) applying for or obtaining a permit or approval under the Building Act 1993;
d) doing anything in relation to the land for which a permit or approval referred to in (c) above would be required;
e) developing or changing the land in any other way that would lead to the enhancement of its value.

Note the obtaining of a permit or the registering of a plan of subdivision is included in the definition of
land development even though the land may not have been physically altered.

Double duty is not charged of the sale contract if :

the consideration given or agreed to be given by the first purchaser under the sale contract included

If the land development was included in the conditions for the original sale, there will not be a sub-sale. However if the first purchaser or their associate undertook or participated in the land development at any time before a subsequent transaction occurred, the exclusion will not apply. In relation to (b), a planning opportunity also arises here and that is to ensure that any land development activities are delayed until after the subsequent transaction occurs.