Stamp Duty Exemption with Consent Orders in NSW: A Comprehensive Guide

 

 

1. Introduction: Transfer Duty (Stamp Duty) and Family Law Property Transfers in NSW

• Transfer Duty (Stamp Duty): A state-level tax in NSW on property transfers.
• General Applicability: Usually applies to various property types (residential, investment, land, businesses involving land), even in family law settlements.
• Significance: A significant financial consideration in property transactions, including those arising from relationship breakdowns.

 

2. The Role of Consent Orders in Family Law Property Settlements

• Definition: Legally binding agreements approved by a court (Federal Circuit and Family Court of Australia or equivalent).
• Purpose: Formalise the terms of property division agreed upon by divorcing parties.
• Legal Weight: Carry the same enforceability as court-ordered decisions after a full hearing.
• Importance: Provide legal certainty and finality to the division of assets.

 

3. Legislative Basis for Stamp Duty Exemptions

• Key Legislation:

• • Section 68 of the Duties Act 1997 (NSW): Addresses exemptions for transfers of matrimonial/relationship property to parties involved in the separation, individually, or to their children.

• • Section 163B of the Duties Act 1997 (NSW): Provides further exemptions related to the breakdown of marriage or de facto relationships.

• Important Note: Exemptions are not automatic. They require:

• • Approval of the property settlement.

• • Formalization through consent orders approved by the court or a Binding Financial Agreement (BFA) that complies with the Family Law Act.

• Legislative Intention: Specific sections of the Duties Act 1997 (NSW) demonstrate a clear intention to allow stamp duty exemptions for individuals undergoing a property settlement.

 

4. Eligibility Criteria for Stamp Duty Exemption

• General Requirement: Specific criteria must be met for a property transfer under consent orders to qualify for a stamp duty exemption in NSW. These criteria depend on the relationship type and transfer timing.

• • 4.3 Transfers Following a Relationship Breakdown (Marriage, De Facto, Domestic)

• • • Applicability: Exemptions are available for transfers of matrimonial or relationship property between former partners after a marriage, de facto, or domestic relationship breakdown.

• • • Property Types: Applies not only to the former family home but also to other assets in the shared property pool (investment properties, financial assets).

• • • De Facto/Domestic Relationships: The Chief Commissioner of Revenue NSW has discretion to accept an agreement as sufficient evidence that the transfer is for dividing relationship property due to the breakdown.

• • 4.4 Transfers to Children or Trustees for Children

• • • Applicability: The exemption applies when property is transferred from one or both former partners to their child/children (directly or to a trustee).

• • • Rationale: Focuses on the well-being of children affected by relationship breakdowns, allowing property transfer for their benefit without stamp duty.

 

5. Types of Property Covered by the Exemption

• Broad Coverage: The stamp duty exemptions apply to a wide range of property types.
• Common Scenario: Transfer of the matrimonial home (principal place of residence).
• Other Covered Assets:

• • Investment properties (part of the shared asset pool).

• • Parcels of land.

• • Vehicles.

• • Shares and other financial instruments.

• Key Principle: The broad definition of “matrimonial property” and “relationship property” ensures that diverse assets acquired during the relationship can be transferred without stamp duty, provided the transfer is a direct result of the relationship breakdown and formalized through appropriate legal channels (consent orders or BFA).

 

6. The Application Process for Stamp Duty Exemption

• Process: Individuals must follow a specific application process with Revenue NSW.
  1. Complete the Application Form: Use the designated form: ‘Application for Exemption or Refund – Break-up of a Marriage or De facto Relationship’.
  2. Gather Supporting Documents:

• 1. • Certified copy of the sealed court order (consent orders) or the original Binding Financial Agreement.

• 1. • Proof of identity for each party.

• 1. • Original executed transfer document or certified copy (if eConveyancing was used).

• 1. Lodge the Application: Submit the completed application and all documents to Revenue NSW electronically (often through a solicitor/conveyancer registered with PEXA) or via postal mail.
  2. Refund Eligibility: If stamp duty was initially paid, and an exemption is later determined to apply, the applicant may be eligible for a refund.

Key Takeaways:

• Consent Orders or BFA are Crucial: You must formalize the property settlement through consent orders or a Binding Financial Agreement (BFA) to be eligible for the stamp duty exemption.
• Broad Property Coverage: The exemption applies to a wide range of assets, not just the family home.
• Application Process: Follow the specific application process with Revenue NSW and provide all required documentation.
• Seek Professional Advice: Given the complexities, it’s highly recommended to consult with a solicitor initially and then a conveyancer. They can guide you through the process of drafting the agreement and applying for the exemption.

This guide provides a general overview and should not be considered legal advice. You should always consult with specialist legal and financial professionals.