ByLawyers News and Updates

Unoccupied land – NSW

by

The period for which unoccupied land in New South Wales may be treated as a person’s principal place of residence for land tax purposes has been extended.

The Revenue Legislation Amendment Act 2023 (NSW) commenced on 1 July 2023. The Act permits the Chief Commissioner of Taxation to extend from four tax years to six tax years the maximum period during which unoccupied land may deemed a person’s principal place of residence.

The Chief Commissioner’s discretion is enlivened if they are satisfied that delays in completing building or other work has rendered the land uninhabitable. Any such delays must also have been due to circumstances outside the control of the property owner that they could not have reasonably avoided.

The Act is intended to ensure that owners who faced building and construction delays due to the exceptional circumstances during the COVID-19 pandemic, or the recent bushfires and floods, will not be penalised by being required to pay land tax on their still unoccupied land. Any four-tax year period that ended on or after 31 December 2019 may be extended to six years, at the Chief Commissioner’s discretion. Any property owner granted an extension will have up to six tax years in total to complete their building or renovation work, and to occupy the property as a principal place of residence, before land tax is charged.

The By Lawyers New South Wales conveyancing publications have been updated accordingly. The Purchase of Real Property (NSW), Sale of Real Property (NSW), and 1001 Conveyancing Answers (NSW) guides include extensive sections of commentary on land tax and land tax exemptions.

Windfall gains tax – VIC

by

A new tax on windfall gains arising from rezoned land applies in Victoria from 1 July 2023 under the Windfall Gains Tax Act 2021 (Vic).

Rezoning

This tax captures the increased value from a significant uplift in a property’s worth from government decisions to rezone land. Revenue raised is intended to fund the construction of infrastructure to complement development from a rezoning.

Land that is rezoned, resulting in an increase of more than $100,000, will have the tax applied: s 9 of the Windfall Gains Tax 2021. The owner of the rezoned land pays the tax, with liability arising when the rezoning occurs.

A tax assessment containing a due date for payment will issue to the owner.

Section 3 creates exclusions, including land zoned for public places or land subject to the Growth Areas Infrastructure Contribution. Residential land not exceeding 2 hectares is also exempt, as are rezonings underway before 15 May 2021.

Rate

If the increase in value is more than $100 000 but less than $500 000, the tax is applied at 62·5% of the part of the taxable value uplift that exceeds $100 000.

If the gain is $500 000 or more the tax is 50% of the taxable value uplift.

Deferral

Owners can defer some or all their liability until the earlier of:

  • a dutiable transaction occurring with the land, for instance a sale and purchase;
  • the landowner being the subject of a relevant acquisition;
  • 30 years after the rezoning event.

Interest accrues on deferred windfall gains tax liability at the 10-year Treasury Corporation of Victoria bond rate.

For a deferral not to cease when a dutiable transaction occurs, the purchaser or transferee must elect to assume the windfall gains tax liability including any accrued interest. If so, the deferral continues and the tax liability rolls over to the new owner.

Full payment is due within 30 days of a deferral ceasing. A form available from the State Revenue Office website needs to be completed to request a deferral. A part payment can be made at any time before the deferral period ends.

The relevant By Lawyers Victorian conveyancing publications have been updated accordingly. The Purchase of Real Property (VIC), Sale of Real Property (VIC), and 1001 Conveyancing Answers (VIC) guides contain extensive coverage of windfall gains tax.

Duty concessions – VIC

by

The Victorian state budget contains provisions commencing on 1 July 2023 that affect transfer duty concessions and exemptions for special disability trusts and pensioners.

From 1 July 2023, pensioners purchasing real property for up to $600,000 are exempted from duty. These purchasers buying property valued between $600,001 and $750,000 pay a concessional rate of land transfer duty. The exemption and concession caps mirror the thresholds for first home buyers. Eligibility is assessed on the total value of the purchase.

From 1 July 2023, the special disability trust transfer duty deduction threshold will be increased from $500,000 to $1,500,000 for transfers of a principal place of residence. A new land transfer duty exemption will apply for the transfer of a home by an immediate family member to an individual eligible to be a beneficiary of a special disability trust. The property can be valued at up to $1,500,000. This new exemption is designed to complement the duty concessions and exemptions in s 38A of the Duties Act 2000. The exemption is intended to assist families who wish to provide a home for a severely disabled family member, but consider the process of creating and managing a special disability trust to be too expensive and complex.

The relevant By Lawyers Victorian conveyancing publications have been updated accordingly. The commentary in the Purchase of Real Property (VIC), Sale of Real Property (VIC), and 1001 Conveyancing Answers (VIC) guides contain extensive coverage of land transfer duty and land transfer duty exemptions.

Foreign surcharge – NSW

by

Foreign surcharge applies to land tax and purchaser duty on any residential land in New South Wales owned by foreign persons. A foreign person is defined in the Foreign Acquisitions and Takeovers Act 1975 of the Commonwealth, as modified by s 104J of the Duties Act 1997 (NSW).

The requirement to pay the foreign surcharge is subject to exceptions for the citizens of some countries. This arises due to New South Wales’ obligations under the foreign surcharge provisions within certain international tax treaties.

On 21 February 2023, Revenue NSW announced that citizens of New Zealand, Finland, Germany, and South Africa were no longer required to pay surcharge purchaser duty or surcharge land tax.

On 29 May 2023, Revenue NSW added India, Japan, Norway, and Switzerland as countries whose citizens are exempt from paying surcharge purchaser duty and surcharge land tax.

The exemption applies only to residential property in New South Wales, and only to natural persons. If a trust relationship exists, or a partnership or corporate entity is involved, the exemption may still apply but is not automatic.

There is a refund period for purchasers and landowners from the eight exempt nations who have already paid the surcharge purchaser duty or surcharge land tax. Transactions on or after 1 January 2021 are eligible for a refund, extending the previous refund period by six months from 1 July 2021.

The Purchase of Real Property (NSW), Sale of Real Property (NSW), and 1001 Conveyancing Answers (NSW) guides, which contain detailed commentary on surcharge purchaser duty and surcharge land tax regimes, have been updated accordingly.

Retail Leases – VIC

by

The Retail Leases Regulations 2023 (Vic) came into operation on 15 April 2023. They are made under s 99 of the Retail Leases Act 2003 (Vic) and prescribe certain matters that are required to be prescribed under the Act. They repeal the Retail Leases Regulations 2013 (Vic) and the Retail Leases Amendment Regulations 2022 (Vic).

The provisions of the new regulations largely replicate those of the previous regulations, while:

  • making updated provisions for the monetary amounts of occupancy costs for the purpose of excluding certain retail premises from the disclosure obligations under the Act;
  • prescribing the outgoings payable by a tenant, by reference to a percentage of the rent; and
  • updating the forms for the disclosure statements that must be issued under the Act. Disclosure obligations apply to new leases, renewals of leases, and assignments of leases.

The prescribed forms are now contained in Schedules 1 to 4 of the 2023 regulations.

From 15 April landlords and their agents need to be aware of the changes to the prescribed forms and only issue disclosure statements in the new form for leases that fall under the provisions of the Act.

The By Lawyers Lease (VIC) and 1001 Conveyancing Answers (VIC) publications have been updated accordingly. They include the prescribed forms of disclosure statement for all retail leasing scenarios, as well as commentary about time frames for landlords issuing disclosure statements to tenants, and the consequences of non-compliance.

Sale of business – QLD

by

The new, fourth edition of the Real Estate Institute of Queensland sale of business contract was released on 9 February 2023.

The changes in the new edition incorporate electronic execution and businesses having a digital presence on social media.

The changes to the sale of business contract include:

  • Item J in the Schedule has a new section to insert the details of the business’s social media and electronic media accounts to be transferred at settlement;
  • A new optional special condition annexure requiring the seller to allow an adjustment to the buyer for any prepaid coupons or gift cards that have not expired at settlement. The buyer must accept any prepaid coupons or gift cards that were issued before completion, provided they have not expired.
  • A new optional due diligence special condition annexure, allowing the buyer to terminate the contract if not satisfied with due diligence investigations by a specified date. The seller is obliged to provide access to and copies of any information reasonably required by the buyer.
  • The restraint of trade clause has been bolstered to protect the goodwill the buyer is paying for. The new restraint clause expands what a seller is prohibited from doing during the restraint period and within the restraint area. The prohibited actions now include having an interest in or being concerned with a competing business, dealing with a customer of the business being sold, interfering or disrupting the relationship between the business and its customers or prospective customers, and soliciting any person who was an employee, contractor, or agent of the business.
  • Clause 18 has been amended to require the buyer to notify the seller of the employees it intends to employ five business days before settlement. The buyer must offer employment to those employees at least two business days before settlement. This leaves the seller responsible for employees who do not receive an offer of employment from the buyer, or do not accept its offer of employment within one business day before settlement.
  • A new sub-clause has been inserted through which the buyer indemnifies the seller against any claims under the lease until the date of the lessor’s consent, should they elect to settle before obtaining the lessor’s approval to an assignment of lease.
  • A buyer may terminate the contract if any disclosure required under the Retail Shop Leases Act has not been given.
  • Clause 32 is a new warranty that the buyer has conducted its own searches and satisfied itself of the type of business and the permissible use.
  • Clause 40 now contains an electronic counterparts clause, allowing the contract to be signed electronically under the Electronic Transactions (Queensland) Act.

The By Lawyers Purchase of Business and Franchise (QLD) and Sale of Business and Franchise (QLD) guides have been updated accordingly.

Sale of land – QLD

by

The Real Estate Institute of Queensland and Queensland Law Society have released updated versions of their standard contracts for the sale of land.

The updated sale of land contracts are:

  • Contract for Houses and Residential Land (18th edition),
  • Contract for Residential Lots in a Community Titles Scheme (14th edition),
  • Contract for Commercial Land and Buildings (10th edition), and
  • Contract for Commercial Lots in a Community Titles Scheme (9th edition).

The sale of land contracts are now fully aligned with the Queensland electronic conveyancing mandate which came into effect on 20 February 2023 under the Land Title Regulation 2022. It requires all property transactions in Queensland to be conducted electronically.

To comply with the new mandate, the updated contracts feature significant changes to clause 11, the electronic settlements clause. This is now more detailed and comprehensive, ensuring all parties involved in a property transaction are aware of their obligations when it comes to electronic settlements.

Specifically:

  • The requirement for electronic settlements is compulsory under the Land Title Regulation 2022, which defines transfers as a necessary instrument, with exemptions. The first exemption is for transfers dated before 20 February 2023, but does not extend to the contract itself. The second exemption applies where one of the parties involved in the required instrument is neither a subscriber to an Electronic Lodgment Network nor represented by a legal practitioner.
  • Clause 11 outlines the process for nominating an Electronic Lodgment Network system by the seller.
  • The option for parties to switch from electronic settlement to a manual paper settlement has been removed, and unless an exemption applies the parties are obliged to settle electronically.
  • The definition of Qualifying Conveyancing Transaction that was included in previous versions of the contract has been omitted.
  • Clause 10.4(9) in the Contract for Houses and Residential Land (18th edition) has been added to clarify that a message sent using an Electronic Lodgment Network in an electronic conveyancing environment does not constitute a notice for the purposes of the contract. The sole exception being the nomination of an Electronic Lodgment Network by accepting or issuing an invitation through an Electronic Lodgment Network system: clause 11.2(2) in the Contract for Houses and Residential Land (18th edition).
  • Certain definitions relating to electronic settlement have been relocated from clause 11 to the definitions clause, being clause 1.

The By Lawyers publications Purchase of Real Property (QLD), Sale of Real Property (QLD), and 1001 Conveyancing Answers (QLD) have been updated accordingly.

Surcharge purchaser duty – NSW

by

From 21 February 2023 some foreign purchasers are no longer required to pay surcharge purchaser duty, or surcharge land tax, on residential property in New South Wales.

Citizens of New Zealand, Finland, Germany, and South Africa are exempt for purchases of residential related property or land. International tax treaties exist between Australia and each of  these countries that have the force of federal law and override inconsistent state-based revenue provisions.

Current purchasers and existing landowners from these countries may seek a refund of any surcharge purchaser duty and surcharge land tax paid in NSW on or after 1 July 2021. See the Revenue NSW website for the eligibility criteria for refunds, and a list of common questions and scenarios stemming from international tax treaties.

The exemptions relate only to natural persons. Where a trust relationship exists, or a non-individual entity such as a corporation or partnership is involved, and the entity or trustee is associated with these nations, the international tax treaties and the exemption may also be enlivened but is not automatic.

The relevant By Lawyers New South Wales conveyancing publications have been updated accordingly. The Purchase of Real Property (NSW), Sale of Real Property (NSW), and 1001 Conveyancing Answers (NSW) guides already contain extensive sections of commentary on surcharge purchaser duty and surcharge land tax regimes.

Electronic lodgment – QLD

by

Mandatory electronic lodgment applies for conveyancing in Queensland from 20 February 2023.

Section 4 of the Land Title Regulation 2022 requires legal practitioners and licensed conveyancers to draft and lodge the following required instruments via an Electronic Lodgment Network (ELN):

  • transfer;
  • mortgage;
  • release of mortgage;
  • caveat;
  • request to withdraw a caveat;
  • priority notice;
  • request to extend a priority notice;
  • request to withdraw a priority notice; and
  • application to be registered as a personal representative for a deceased owner.

There are some exceptions to the electronic lodgment of these required instruments, including where:

  • the ELN does not have the functionality to draft and lodge the instrument;
  • a required instrument, such as a transfer or mortgage, for example, was executed in a hard copy form before 20 February 2023: s 6;
  • the required instrument needs to be lodged with another instrument that cannot be lodged using an ELN; or
  • a party to the instrument is a self-represented natural person who is not subscribed to an ELN.

Section 5(2) of the Land Title Regulation 2022 provides the full list of exemptions to electronic lodgment.

Electronic conveyancing is already the preferred method for the lodgment of title instruments by lawyers and licensed conveyancers, having been introduced in Queensland in 2013. The two Electronic Lodgment Network Operators (ELNOs), Property Exchange Australia Limited (PEXA), and Sympli Australia Pty Ltd (Sympli).

The By Lawyers Queensland Conveyancing publications have been updated to reflect this change. For more information see:

  • E-Conveyancing – Required instruments in the Purchase of Real Estate (QLD), Sale of Real Estate (QLD), and Mortgage (QLD) guides;
  • A brief explanation of the transition to E-conveyancing,  on the matter plan in all By Lawyers Conveyancing Guides, which includes information on how to get connected and the full timeline for implementation.

Recent property cases – VIC

by

Recent property cases have been added to the By Lawyers reference manual 1001 Conveyancing Answers (VIC).

This publication has been extensively reviewed and updated by our esteemed author Russell Cocks.

Helpful recent property cases added to the publication in this review include:

1001 Conveyancing Answers (VIC) is available in all By Lawyers Victorian property law guides – Sale of real property, Purchase of real property, Leases, and Mortgages.

This comprehensive publication assists property practitioners to understand deeper issues in conveyancing and solve problems for clients when they arise.

Connect with us