Everyday Exemptions Under the Duties Act 2001 (Qld)
Article by Christopher Lee
The Duties Act 2001 (Qld) (Act) governs the imposition of transfer duty on property acquisitions in Queensland. It applies to a variety of property (see section 10 of the Act for a full outline) and is not limited solely to real property (that is, land).
Whilst the Act governs the imposition of transfer duty, it also provides for an array of exemptions. There are three, however, commonly encountered provisions which are most relevant to ‘Mum and Dad’ individuals: Sections 143, 144, and 151.
Section 144 – Exemption for Joint Tenancy Survivorship
Section 144 applies to situations where real property is owned as joint tenants, and one of the tenants passes away. Under the rules of survivorship, the surviving party acquires full ownership of the property without incurring transfer duty.
This exemption is most frequently encountered with couples in a marriage or de facto relationship, who typically hold property as joint tenants. However, it is not restricted to such relationships. For instance, siblings owning property as joint tenants can also benefit from this exemption, as survivorship rules will apply.
As an aside, it is important to determine whether property ownership is held as joint tenants or tenants in common when considering estate planning. Ownership structure can have a significant impact upon an individual’s estate planning strategies in the future.
Section 143 – Change of Tenure Exemption
Section 143 provides for an exemption of transfer duty to property owners when changing the tenure of their property, being a change between holding property as joint tenants and tenants in common.
Whilst this exemption applies to all forms of real property, there is a restriction as to is application, being that the ownership interest must remain the same both before and after the transfer.
For example, if three owners mistakenly acquire property as joint tenants, they could change the tenure to tenants-in-common, with each holding equal one-third shares, and be exempt from transfer duty. However, the exemption would not apply if the owners wish to modify the ownership interests to 50%, 25%, and 25%.
This exemption ensures flexibility in correcting tenure arrangements when the existing interests among co-owners remain consistent.
Section 151 – Particular Residence Exemption
Section 151 provides a transfer duty exemption for residential properties between parties in a marriage, de facto relationship, or civil partnership, but subject to specific criteria being met.
This exemption applies when one party transfers part ownership of residential property by gift to the other party.
For example, if a property is initially owned solely by one spouse, they can transfer part ownership to their partner without incurring transfer duty. This exemption can apply whether one party holds the whole property in their sole name, or, if the property is held by both parties, but in differing proportions.
However, for the exemption to apply, the following criteria must be met:
- Residential Property: The property subject to the transaction must be classified as residential land.
- Gift Transfer: Ownership must be transferred as a gift from one party to the other.
- Subsisting Relationship: The parties must be in a valid marriage, de facto relationship or civil partnership.
- Ownership Structure: After the transaction, ownership must be held as joint tenants or tenants in common in equal shares.
- Principal Place of Residence: The property must serve as the principal place of residence for both parties immediately following the transaction.
These exemptions under the Duties Act 2001 (Qld) highlight the importance of understanding property ownership structures prior to acquiring property and during a relationship.
These exemptions may assist individuals to correct errors in ownership or as a tool for their Estate Planning for the future.
If you require any further information, have any specific questions or wish to discuss your Estate Planning with our friendly team, you can contact us by phone on 07 3397 9622 or visit our website to make an online enquiry.
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