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DUTIES ACT 2008 - SECT 42

DUTIES ACT 2008 - SECT 42

42 .         No double duty — particular dutiable transactions

        (1)         Duty is not chargeable on the transfer of dutiable property to a transferee in conformity with an agreement for the transfer of dutiable property if that agreement is duty endorsed.

        (2)         Duty is not chargeable on the transfer of dutiable property to a transferee under an agreement for the transfer of dutiable property if —

            (a)         when liability for duty on the agreement arises, the transferee and the purchaser of the property under the agreement are related as referred to in section 43; and

            (b)         the agreement is duty endorsed on the basis that duty has been paid or is payable at the general or a concessional rate (that is, under Schedule 2 Division 1 or 2); and

            (c)         duty would, but for this section, be chargeable on the transfer of the property at the rate at which duty was chargeable on the agreement.

        (3)         If an agreement for the transfer of dutiable property is duty endorsed and either, or both, of the following applies —

            (a)         there is a difference in the parties liable to duty under the agreement and the transferees under the transfer, and subsection (2)(a) does not apply;

            (b)         there is a difference between the division of the property between the transferees under the transfer and the division of the property between the parties liable to duty under the agreement, and subsection (2)(a) does not apply,

                duty is not chargeable on the transfer of the property except to the extent of the change between the agreement and the transfer.

        Note for this subsection:

                Example for subsection (3) —

                On 1 July, under an agreement for the transfer of dutiable property, A agrees to sell land in Western Australia to B and C as tenants in common in the undivided shares of 90/100 to B and 10/100 to C for $100 000.

                At settlement, under the transfer, B and a new party, D are tenants in common in equal shares.

                Transfer duty is chargeable on the transfer of the property only to the extent of the change in the interests in the property between the agreement and the transfer.

                Transfer duty would be chargeable on the transfer of the property on 50/100 X $100 000, which is $50 000 i.e. 10/100 from C to D and 40/100 from B to D.

        (4A)         If, but for this subsection, subsections (1) and (3) would both apply to the transfer of dutiable property, subsection (1) does not apply.

        (4B)         If an agreement is for the transfer of dutiable property to a purchaser acting in the purchaser’s own capacity, but the property is transferred to the purchaser acting in a capacity as a trustee of a trust, subsection (1) does not apply to the transfer of the property unless —

            (a)         the purchaser is an individual and the trust is a unit trust scheme in which the purchaser is the sole unit holder; or

            (b)         the trust is a unit trust scheme in which the purchaser is a unit holder and each of the other unit holders are related, as referred to in section 43(1)(a), (b), (c), (ca), (cb), (d) or (e), to the purchaser; or

            (c)         the trust is not a discretionary trust or a unit trust scheme and each beneficiary of the trust is related, as referred to in section 43(1)(a), (b), (c), (ca), (cb), (d) or (e), to the purchaser.

        (4C)         A reference in subsection (4B) to a unit holder or to a beneficiary is limited to a reference to a unit holder or beneficiary acting in their own capacity and not as agent, trustee or otherwise on behalf of any other person.

        (4)         If an agreement for the transfer of dutiable property is duty endorsed, duty is not chargeable on the subsequent transfer of the property if, when liability for duty on the agreement arose, the person named in the instrument effecting, or evidencing, the agreement as the purchaser was acting as the agent of the transferee of the subsequent transfer.

        (5)         If —

            (a)         an agreement for the transfer of dutiable property is duty endorsed; and

            (b)         the person named in the agreement as the purchaser entered into the agreement with the intention that the property would be transferred to —

                  (i)         a corporation that the person intended to be incorporated; or

                  (ii)         a dormant corporation, the shares in which the person intended to be acquired,

                and that property will not be held by the corporation as trustee of a trust; and

            (c)         when liability for duty on the agreement arose, action was being taken to —

                  (i)         incorporate the corporation referred to in paragraph (b)(i); or

                  (ii)         acquire the shares in the corporation referred to in paragraph (b)(ii),

                duty is not chargeable on the subsequent transfer of the property to the corporation referred to in paragraph (b)(i) or (ii).

        (6)         In subsection (5) —

        dormant corporation means a corporation that, since it was incorporated —

            (a)         has not had any assets or liabilities other than share capital for subscriber shares or shares issued to replace subscriber shares of the same value on their redemption; and

            (b)         has not been party to an agreement or a beneficiary or trustee of a trust; and

            (c)         has not issued or sold any shares or rights relating to shares other than subscriber shares, rights relating to subscriber shares or shares issued to replace subscriber shares of the same value on their redemption.

        (7)         Duty is not chargeable on a transfer of dutiable property by the vendor under an agreement for the transfer of the property that results in the property becoming scheme property for a managed investment scheme if —

            (a)         the Commissioner is satisfied that a managed investment scheme has been, or is to be, established by means of an offer to subscribe to the scheme made to the public; and

            (b)         the Commissioner is satisfied that before the establishment of the scheme —

                  (i)         the person named as purchaser in an agreement for the transfer of dutiable property entered into that agreement; or

                  (ii)         the person promoting the scheme arranged for that agreement to be entered into by the person named in the agreement,

                with the intention that the property concerned would become scheme property; and

            (c)         the agreement provides to the effect that, if the scheme is not established, the agreement is terminated; and

            (d)         the agreement is duty endorsed.

        (8)         If —

            (a)         there is an agreement for the transfer of dutiable property (the first agreement ); and

            (b)         after the first agreement takes place, one or more dutiable transactions over all or part of the dutiable property the subject of the first agreement takes place (the intervening transactions ); and

            (c)         to give effect to the first agreement and the intervening transactions, one or more transfers of dutiable property (the transfers ) are effected by one or more parties to the first agreement and the intervening transactions; and

            (d)         the first agreement and the intervening transactions are duty endorsed,

                duty is not chargeable on the transfers.

        Note for this subsection:

                Example for subsection (8) —

                On 1 July, under an agreement for the transfer of dutiable property, A agrees to sell land in Western Australia to B for $100 000. Settlement is to take place on 31 July. On 7 July, under an agreement for transfer, B agrees to sell the land to C for $120 000. Again, settlement is to take place on 31 July. Before 31 July, B directs A, that at settlement, A transfer the land to C.

                The agreement between A and B is the first agreement. The agreement between B and C is the intervening transaction. Transfer duty is not chargeable on the transfer from A to C if the first agreement and intervening transactions are duty endorsed.

        (9)         Duty is not chargeable on a transfer to a trustee of dutiable property subject to a declaration of trust in respect of the same dutiable property if the declaration of trust is duty endorsed, or under subsection (11) duty is not chargeable on the declaration of trust.

        (10)         Duty is not chargeable on a declaration of trust that declares the same trusts as those upon and subject to which the same dutiable property was transferred, or agreed to be transferred, to the person declaring the trust if the transfer, or agreement, is duty endorsed.

        (11)         Duty is not chargeable on a declaration of trust if —

            (a)         the declaration of trust supersedes another declaration of trust which is duty endorsed and declares the same trusts as were declared under the superseded declaration of trust; and

            (b)         the beneficiary under the declaration of trust is the same as under the superseded declaration of trust; and

            (c)         the dutiable property subject to the declaration of trust —

                  (i)         is wholly or substantially the same as the property that was the subject of the superseded declaration of trust at the time of the declaration of the superseded declaration of trust; or

                  (ii)         represents the proceeds of re-investment of property that was the subject of the superseded declaration of trust at the time of the declaration of the superseded declaration of trust; or

                  (iii)         is property to which both subparagraphs (i) and (ii) apply.

        (12)         Duty is not chargeable on a transfer of dutiable property resulting from a dutiable transaction referred to in section 11(1)(d) if the vesting of the dutiable property is duty endorsed.

        (13)         Duty is not chargeable on a transfer of dutiable property in accordance with a foreclosure order if the foreclosure order is duty endorsed.

        (14)         Duty is not chargeable on a transfer of dutiable property in accordance with a partnership acquisition if the partnership acquisition is duty endorsed.

        [(15)         deleted]

        (16)         Duty is not chargeable in respect of a dutiable transaction prescribed, on such condition and under such circumstances as are prescribed, if the dutiable transaction is one of 2 dutiable transactions that relate to the same transaction for the same dutiable property.

        [Section 42 amended: No. 32 of 2012 s. 5 and 6; No. 12 of 2019 s. 18; No. 37 of 2022 s. 7.]