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Duties ruling released in Victoria
Posted: 04/05/2010
The State Revenue Office of Victoria recently released Duties Revenue Ruling DA.050 (Ruling).
With a view to ensuring that certain leasing arrangements are not used as a mechanism for avoiding duty, the Ruling sets out the meaning of "rent reserved" for the purpose of section 7(1)(b)(v) of the Duties Act 2000 (Vic) (Act).
Under the Act, stamp duty is payable on the grant or transfer of a lease of land in Victoria if consideration other than rent reserved is paid either in respect of a lease or in respect of:
a right to purchase the land or a right to a transfer of the land; or
an option to purchase the land or an option for the transfer of the land; or
a right of first refusal in respect of the sale or transfer of the land; or
any other lease, licence, contract, scheme or arrangement by which the lessee, or an associated person of the lessee, obtains any right or interest in the land that is the subject of the lease other than the leasehold estate.
When determining whether a payment is "rent reserved" the Commissioner will have regard to the nature and circumstances of the transaction as a whole, including:
the value of the land the subject of the lease;
the amount paid and whether any portion of it is refundable on a termination of the lease before the expiry of the term; and
how payment was calculated and the duration of the lease.
To assist in compliance with the Act, the Ruling provides some examples of payments that fall within the definition of "rent reserved", such as:
a bond or guarantee paid by a lessee to a lessor, including "make good" payments;
amounts paid by a lessee to a lessor in respect of the installation or upgrade of services and utilities;
contributions to expenses for the maintenance of common areas;
promotional levies and security costs; and
other costs required to be paid by the lessee to or on behalf of the lessor (e.g. legal fees for drafting and executing the lease). |
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