Stamp Duty & Capital Gains Tax Concessions
In Family Law Settlements
By Carlos Turini – Family Law Specialist
There are many good reasons why former spouses should formalise legally their property settlement including that they may be exempted from paying stamp duty which is otherwise payable for the transfer of title to their real property, cars and shares.
They may also be exempted from paying capital gains tax when they sell the home they formerly owned together.
These exemptions normally represent savings of tens of thousands of dollars.
The exemptions will apply to married couples and their children and to partners of a de facto relationship and their children.
The exemptions are available if the parties enter into consent orders or a financial agreement under the Family Law Act 1975.
New South Wales
Part 7 of the Duties Act 1997 (NSW) details the exemptions applicable to the payment of duty for certain transactions including the transfer of title transfer to property between former spouses or between former spouses and their children.
The transfer of the property of a trust to one of the spouses may also be exempted from stamp duty.
Importantly, in order to be entitled to the exemption, the parties must enter into a legal document which is recognised under the Act as appropriate including:
• Orders made under the Family Law Act including consent orders;
• A financial agreement
The Chief Commissioner also has the discretion to accept other form of agreements provided that the Commissioner is satisfied that that the agreement was made “for the purpose of dividing matrimonial property as a consequence of the dissolution, annulment or breakdown of the marriage”.
The easiest way to obtain the exemptions is for the parties to enter into consent orders or a financial agreement. Such documents if properly drafted will attract the exemptions without the need for the Commissioner’s discretion in order to be approved.
Australian Capital Territory
Similarly, in the Australian Capital Territory, former spouses may be exempted from paying stamp duty in relation to the transfer of title to their property if made as part of consent orders or a financial agreement under the Family Law Act 1975 (Cth) or the Married Persons Property Act 1986.
First Home Owners Grants Entitlements and Family Law Property Settlements
In addition, there are concessions offered in the ACT to persons who previously received a First Home Owners Grant but have since transferred title to the property as a result of a family law property settlement – See: http://www.legislation.act.gov.au/di/2011-162/current/pdf/2011-162.pdf
For more information please contact:
Carlos Turini at: cturini@elringtons.com.au
Claire Naidu at: cnaidu@elringtons.com.au
or call the Family Law Team on 02 6206 1300
