Property settlement: changes to stamp duty arrangements in Queensland

Section 90 of the Family Law Act purports to say that no stamp duty is payable arising from orders made under the Family Law Act. Back in 1981, the High Court in Gazzo v Comptroller of Stamps (Vic) held that s.90 was not valid so far as it applied to transfers of land in Victoria, in attempting to prevent Victorian stamp duty being charged.

In Queensland, the Office of State Revenue has allowed exemptions for transfers between spouses, but in theory at least has charged duty for transfers to or from third parties. This can be significant, especially if for example there is a transfer from the family company to one of the parties. I am aware from other practitioners that the practice of whether or not duty is chargeable has been inconsistent between offices.

I have recently been made aware by Sarah Minnery, a family lawyer in Brisbane, that a client of hers was so concerned about the possible stamp duty that the client joined the Commissioner of State revenue as a second respondent in family law proceedings.

Sarah said:

This client gave instructions join the Commissioner of State Revenue as a Second Respondent to proceedings in the Federal Magistrates Court for property settlement and to seek an order binding on the Commissioner that the transfer sought by my client be assessed at $0 duty.

As a result of those proceedings (which are ongoing), I have recently received notification this the Office of State Revenue has revoked Practice Direction 45.1. In-house Counsel at Queensland Treasury who represent the Commissioner in the matter, have been indicating for some months that they agree with our submissions that Section 90 of the Family Law Act overrides relevant sections of the Queensland Duties Act in so far as there is any inconsistency between the two by virtue of Section 109 of the Constitution. It now seems that the Office of State Revenue shares that view and transfers should now be properly protected by Section 90 of the Family Law Act in practice as well as in theory.

The Commissioner’s legal representatives have advised that all transfers lodged for the assessment of transfer duty claiming an exemption under Section 90 of the Family Law Act have been put on hold within the assessing area of OSR pending the determination of this issue.

On 26 June, this announcement was released by the Queensland Office of State Revenue :

New Practice Direction released

Practice Direction DA 45.1 sets out whether the Commissioner accepts that certain instruments executed in accordance with consent orders are entitled to an exemption under s.90(1)(a) of the Family Law Act 1975.

The Commissioner is currently reviewing his policy in relation to the assessment of transfers of dutiable property from a party or parties outside the marriage where the transfers are executed for the purposes of, or in accordance with, a consent order made under Part VIII of the Family Law Act.

Practice Direction DA 45.2 withdraws Practice Direction DA 45.1 as of 23 June 2008 pending the outcome of the policy review.

Thank you for advising, Sarah. Let’s see how it develops.