ByLawyers News and Updates

Foreign surcharge – NSW

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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

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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

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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

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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

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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

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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

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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.

Shared equity scheme – NSW

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The NSW Government Shared Equity Home Buyer Helper scheme launched on 23 January 2023. It allows eligible applicants to purchase a home with as little as a 2% deposit.

The scheme applies to residential property only and is currently only available through one lender, Bendigo Bank. Other lenders will have the opportunity to join later in the year.

Under the scheme the government can contribute equity up to 30% of the price of an existing home, or up to 40% of a new build, lowering both the loan amounts and repayments of eligible applicants.

The Shared Equity Scheme is limited to 3,000 purchasers per financial year. Applications will be accepted during the 2022 – 2023 and 2023 – 2024 financial years. Eligible applicants for the scheme are:

  • single parents with dependent children
  • single people who are 50 years or older
  • first home buyers employed as key workers: nurses, midwives, paramedics, teachers, early childhood educators, and police officers.

Applicants must be Australian citizens or permanent residents over the age of 18 and have at least a 2% deposit. They cannot own any other land or property in Australia or overseas at the time of application.

Purchase prices for homes under the scheme are capped at $950,000 for Sydney and major regional areas, and at $600,000 for other areas.

Gross annual income tests of $90,000 for singles and $120,000 for couples apply, as well as asset tests.

Shared equity means the Government has a percentage share of the home, equivalent to what the applicant has contributed, secured by a registered second mortgage. There is no interest or rental payment required, but the expectation is that the government’s equity share is repaid over time or, when the property is sold.

The By Lawyers Conveyancing (NSW) guides have been updated to reflect the detailed eligibility criteria for the Shared Equity scheme and links to the Revenue NSW online assessment tool.

1 January updates – All states

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1 January updates are always a big focus for By Lawyers. While the profession takes a well-earned break By Lawyers remains hard at work ensuring our publications are updated for legislative and regulatory changes that take effect from the new year.

This year’s 1 January updates for relevant jurisdictions include:

Land tax

In New South Wales and Victoria, land tax is calculated for the calendar year. Threshold values increase annually.

In New South Wales, the 2022 threshold combined land value has increased to $969,000 for all liable land. Special trusts and non-concessional companies are excepted. A marginal tax rate of 1.6% of the aggregate taxable value above the tax-free threshold, plus $100 applies from 1 January. If the aggregate taxable value exceeds the premium rate threshold of $5,925,000 then $79,396 is payable, plus a marginal tax rate of 2% over that amount.

In Victoria, the tax-free threshold for general land tax remains at $300,000. The trust surcharge threshold remains at $25,000.

All relevant commentary and precedents in the By Lawyers Conveyancing and Property and Trusts guides for each relevant state will be updated for these new threshold amounts from 1 January.

By Lawyers Contract of sale of land

The 2023 edition of the By Lawyers contract will be available 1 January in the Sale of real property publications for Victoria and New South Wales. The contract is located in the Contract folder on the matter plan.

Leases and subleases

In New South Wales, Victoria, Queensland, South Australia and Western Australia the 2023 editions of our lease and sub-lease precedents are available from 1 January. These are found in the Leases – Act for Lessor section of each Leases publication.

Keeping up to date

In addition to our 1 January updates, By Lawyers updates our publications for 1 June and other regulated adjustments when necessary.

Of course, we also update our content for relevant legislative amendments and other legal developments throughout the year, in all jurisdictions, as required.

Keeping up to date is one of the ways By Lawyers help our subscribers enjoy practice – and holidays – more!

The team at By Lawyers wishes everyone a prosperous and safe 2023.

First home buyers – NSW

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Eligible first home buyers who exchanged contracts from 11 November 2022 on properties valued up to $1.5 million can now choose to pay an annual property tax instead of transfer duty.

For properties settling on or before 15 January 2023, purchasers pay transfer duty and apply for a refund after 16 January 2023.

Settlements occurring after 16 January 2023 do not require transfer duty to be paid if the property tax option is chosen.

The Property Tax (First Home Buyer Choice) Act 2022 (NSW) received assent on 11 November 2022.

The existing first home buyer duty concessions still apply.

The property tax is indexed annually, capped at 4% per year.

Eligible first home buyers who are not Australian citizens can still be liable for surcharge purchaser duty, even after opting into the property tax.

A residence requirement of 6 continuous months within the 12 months after settlement applies. Purchasers who then use the property as an investment face a higher rate of property tax.

See the By Lawyers Conveyancing (NSW) guides and the Revenue NSW website for more information.

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