Family Law – Duty Exemptions in New South Wales for Transfers Between Partners
Couples may wish to transfer property between them to various reasons. They may be motivated by tax minimisation, risk management, family breakdown or other reasons. Many transfers attract duty and any decision as to transferring applicable assets should be made with parties being mindful of the potentially substantial duty liability that may emerge.
In most instances a transfer will attract a duty liability, however there are two important exemptions which may be applicable for transfer involving couples:-
Certain transfers of a principal place of residence
Section 67 of the Duties Act 1997 covers a situation where one partner owns the principal place of residence, but wishes to transfer the property into the names of both partners.
A transfer of a principal place of residence will be exempt from duty if property will be held by the couple as either joint tenants or tenants-in-common in equal shares following the transfer.
To be eligible for this duty exemption couples will need to be either: –
* Married; or
* In a de facto relationship for at least two years before the transfer.
This exemption will not be available for partners who wished to transfer the home to one of the partners, or to both partners in uneven shares.
Transfer under a “matrimonial instrument” following separation
Following separation, couples may enter into a financial agreement or obtained court orders regarding the distribution of property. Under the Federal Family Law Act transfers of property which occur pursuant to the following will be exempt from duty:-
Orders of the Family Court of Australia (including consent orders approved by the Court);
A Binding Financial Agreement duly made in accordance with the requirements of the Family Law Act.
Following amendments to the Family Law Act in 2009, this exemption is also available to the de facto couples who have made Binding Financial Agreements under the new Federal System. For property agreements made before March 2009, or made in South Australia or Western Australia (who are not part of the Federal System) please seek legal advice regarding your eligibility for a duty exemption.
This exemption applies to real property (including property which is not the principal place of residence of the parties), motor vehicles and the transfer of dutiable business assets.
Applicants for this exemption should be aware that the Office of State Revenue will look to ensure that any agreement is genuine and has not been entered into for the purpose of avoiding a duty liability that would otherwise apply to a transaction.
(The transfer of certain business assets is already exempt from duty and the duty of other business assets are scheduled to be phased out by 1 July 2012. Accordingly, if transferring business assets pursuant to a matrimonial instrument please seek legal advice regarding duty liability as the applicable laws are currently in a state of transition.)
Other exemptions
The exemptions above do not constitute a complete list of all exemptions that may be available in New South Wales.
Do not hesitate to contact LAC Lawyers for legal advice if you wish to avoid an unnecessary duty liability.
If you are interested to Read more about Duty Exemptions in New South Wales for Transfers Between Partners and Family Lawyers then please visit our website www.laclawyers.com.au
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