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By Selwyn Black, Esq. and Nicholas Huang, Esq.
Carroll & O’Dea Lawyers
Sydney, Australia

Version 2 of Revenue Ruling No. DUT 35 has been released by Revenue NSW. The ruling helps to clarify the duty consequences of partitioning New South Wales land.

What is a partition?

  1. A partition occurs for the purpose of Section 30 of the Duties Act 1997 (NSW) when dutiable property comprised of land in New South Wales that is held by persons jointly (as joint tenants or tenants in common) is transferred or agreed to be transferred to one or more of those persons.
  2. The ruling clarifies that:
    • NSW land that is not held jointly cannot be assessed under Section 30 (for example where land is held in the form of a dual entitlement);
    • any partitioning of estate land by a trustee, executor or executrix does not fall within Section 30; and
    • partitions are not limited to situations that involve one parcel of land or adjoining parcels of land.

What are the duty consequences of a partition?

  1. The ruling clarifies that duty on a partition is calculated on the dutiable value of the partition, being the greater of:
    • the sum of the amounts by which the unencumbered value of the dutiable property transferred, or agreed to be transferred, to a person by the partition exceeds the unencumbered value of the interest held by the person in the dutiable property transferred, or agreed to be transferred, to each person by the partition immediately before the partition; and
    • the sum of any consideration for the partition paid by any of the parties,

with a minimum of $50 in duty being chargeable on a transaction that effects a partition.

  1. The ruling provides an example in which the unencumbered value of the undivided share of each partitioner in all the land being partitioned is equal to the unencumbered value of the divided part taken by that person. In this scenario, the ruling states that the partition is ‘equal’ in that the total excess value will be nil and it is unlikely that any consideration would have been paid. The dutiable value in this scenario would be nil, and the minimum duty of $50 would be chargeable on the partition.
  2. The ruling clarifies that:
    • if there is an Agreement for Partition of NSW land, the Agreement is stamped with the applicable duty and any transfers in conformity with that Agreement are charged with $50 each under section 30(4) of the Duties Act; and
    • if there is no Agreement for Partition of NSW land, one instrument is stamped with the applicable duty and any additional instruments which effect the partition are charged with $50 each under section 30(4) of the Duties Act.

Evidence

  1. The ruling clarifies that the following documents need to be lodged to enable assessment of duty on a partition:
    • evidence of value (and a copy) for each parcel of land subject to the partition; and
    • a current certificate of title for each parcel of land subject to the partition.