Nominations: Are you at risk of attracting double stamp duty?
Often when signing a Contract of Sale you are unsure who the purchasing entity should be. As a general rule, this should not be a concern because the general form of Contract gives you the right to nominate an additional or substituted purchaser. However, prior to nominating it is very important to make sure that you are aware of the stamp duty implications your nomination may have.Often when signing a Contract of Sale you are unsure who the purchasing entity should be. As a general rule, this should not be a concern because the general form of Contract gives you the right to nominate an additional or substituted purchaser. However, prior to nominating it is very important to make sure that you are aware of the stamp duty implications your nomination may have.
In some circumstances, a nomination will be assessed by the State Revenue Office as a separate transaction which will attract additional full stamp duty. For example, you may be at risk of attracting double stamp duty if any additional consideration is paid (over and above the purchase price). In these circumstances the State Revenue Office will view it as two separate transactions and will assess two lots of stamp duty (subject to any exemptions which may be available).
A second example where there can be additional stamp duty is where there is any land development which takes place prior to the nomination. Land Development is broadly defined by the State Revenue Office as follows:-
- Preparation of a plan of subdivision or taking steps to have the plan registered;
- Applying for or obtaining a planning permit in relation to the use or development of the land;
- Applying for or obtaining a building permit or doing anything for which a building permit is required; or
- Developing or changing the land in any other way that would lead to the enhancement of the property’s value.
As you will want to avoid attracting double stamp duty, you will need to consider whether any exemptions are available to you.
In this respect the details and timing of your nomination are very important. Accordingly, if you will be nominating an additional or substituted purchaser please contact your lawyer as soon as possible to discuss your options.
