Transferring Land in South Australia
In the 2015-16 South Australian State Budget stamp duty was abolished on non-real property transfers executed on or after 18 June 2015. As a result, only transfers of real property or interests in real property or potentially of interests in entities which hold real property are subject to duty in South Australia and required to be stamped by RevenueSA.
Any disposal or deemed disposal of real property or of an interest in real property by any entity may be dutiable. Stamp duty is applicable to all real property transactions unless an exemption applies. Duty is generally born by the purchaser but it must be remembered that all parties to an instrument are jointly and severally liable to RevenueSA.
Since the imposition of duty is restricted to real property it is imperative that one has a clear understanding of what constitutes real property for the purposes of the Act. Property is defined to include an interest in property and so real property includes any interest in real property. At law a lease, easement, rent charge or profit a prendre are all interests in land and the Act also includes mining tenements or rights, options to acquire land rights or to acquire an estate or interest in land. This means a transfer may be a dutiable transfer even if there is no transfer of title to be registered. The most common example of this is the sale of a business which includes the assignment of the lease of business premises.
Land includes anything fixed to the land, whether or not that item would include a ‘fixture’ as legally defined. A fixture is generally something which is attached to the land such that it is considered part of the land. Whether or not fixing something to the land makes it a fixture is a question of fact; the degree of annexation, the intention at the time it was fixed, the nature of the item and the purpose of fixing it to the land must all be considered.
The ownership of an item affixed is not the issue, merely whether or not the item is fixed to the land. An item fixed to land by a lessee which is required to be removed at the end of the lease is considered part of the land for duty purposes until it is actually removed. The market value of the land, the fixtures and the items fixed to the land which are not fixtures at law will be considered in the aggregate to determine stamp duty payable.
From 7 December 2015 stamp duty payable was reduced in respect of transfers of ‘Qualifying Land’. Qualifying land is defined as land that is used for a purpose other than residential or primary production on the date it is conveyed or transferred. Land is taken to be used for residential purposes if the Commissioner of State Taxation (‘Commissioner’) after taking into account information provided by the Valuer General determines that the land:
• is predominantly used for residential purposes;
• should be taken to be used for residential purposes due to improvements which have a residential character; or
• is vacant but within a zone that envisages the land being residential.
Land is taken to be used for primary production if the Commissioner after taking into account information provided by the Valuer General determines:
• that it is being predominantly used for primary production purposes; or
• that although the land is not being used it should be taken to be used for primary production purposes due to a classification that has been assigned to it by the Valuer General.
Generally, ‘commercial’ land falls within the definition of qualifying land. Stamp duty on qualifying land is being phased out to be abolished from 1 July 2018.
Date Proportion of Duty payable
Pre 7 December 2015 100%
From 7 December 2015 to 30 June 2017 66⅔%
From 1 July 2017 to 30 June 2018 331/3%
From 1 July 2018 0%
The creation of the concept of ‘qualifying land’ has given land use codes (’LUC’) a whole new role in stamp duties legislation. This is potentially a key role as the classification of land being transferred may result in a significant revenue cost or saving. The Commissioner takes the Valuer General’s LUC classification as prima facie evidence of whether land should be taken as used for a particular purpose. Thus, if you as the taxpayer were not in agreement with the LUC assigned to a particular title the first step might be to apply to the Valuer General for the code to be changed.
If the Valuer General implements the required change before the transaction takes place there is no issue. However, things are far more complex if the Valuer General does not consent to alter the LUC or if the issue was not considered until after the transaction takes place and an unexpected (and inevitably unwelcome) assessment is received.
The Commissioner will certainly give consideration to evidence which is presented to him that a particular LUC is not properly descriptive of the character of land in a particular instance. One can object to a valuation of land or to assessments or decisions of the Commissioner but there is no clear process for objection to the allocation of a LUC.