Legislation to address potential avenue for stamp duty avoidance

27/12/96

The State Government will legislate to address a potential avenue for stamp duty avoidance which has arisen as a result of a recent case in the Victorian Supreme Court.

In the case of Commissioner of State Revenue v Bradney Pty Ltd, the court found that for the purposes of the Victorian stamp duties legislation, a lease of property was not to be viewed as an encumbrance upon that property.

As a result, the Victorian Commissioner was required to take into account the effect of a lease which resulted in a depressed property value when calculating the stamp duty chargeable upon the transfer of that property.

This significantly reduced the stamp duty which would otherwise have been payable.

Finance Minister Max Evans said the Western Australian Stamp Act similarly calculated duty on the conveyance of property on the basis of the consideration paid or the unencumbered market value of the property, whichever was the greater.

"The Bradney decision therefore leaves open a potential avoidance avenue where parties conveying property could artificially depress its value by entering into a long term lease involving only a nominal rental," Mr Evans said.

"The Government will therefore seek to amend the Stamp Act 1921, with effect from the date of this announcement."

The proposed amendment would give the Commissioner of State Revenue power to disregard any arrangement which artificially depressed the value of property.

Media contact: Hugh Ryan 322 6529