A Guide to Stamp Duty Exemptions in Victoria with Consent Orders.

In Melbourne, Victoria, a significant financial advantage exists for separating couples undertaking a property settlement: the exemption from land transfer duty (commonly known as stamp duty).

This exemption substantially reduces the financial burden when real estate or other dutiable property is transferred between former partners as part of their family law settlement.

Legislation for Stamp Duty Exemption in Victoria:

The relevant legislation in Victoria that provides for this exemption is primarily the Duties Act 2000 (Vic), which works in conjunction with the Commonwealth’s Family Law Act 1975 (Cth).

Specifically, the key provisions are:

• Duties Act 2000 (Vic):

• • Section 44(1): This is the primary section that provides the exemption. It states that no duty is chargeable on a transfer of dutiable property if it is made solely because of the breakdown of a marriage or domestic relationship, and where the transferor(s) and transferee(s) are parties to that relationship, and no other person takes an interest in the property.

https://www.sro.vic.gov.au/evidentiary/breakdown-marriage-and-domestic-relationships-declaration-trust

• • Section 44(3): This extends the exemption to transfers where the transferor is a corporation, provided certain conditions regarding the parties’ interests in the corporation are met.

• • The Victorian State Revenue Office (SRO) provides clear guidance that this exemption applies to transfers between spouses or domestic partners (including de facto relationships) resulting from a relationship breakdown.

•  Family Law Act 1975 (Cth):

• • While the Victorian Act directly provides the exemption, it’s crucial to understand that the property transfer should be undertaken in accordance with a legally recognised family law process, such as:

• • • A court order made under Part VIII (for married couples) or Part VIIIAB (for de facto couples) of the Family Law Act. This includes Consent Orders.

• • • A Binding Financial Agreement (BFA) made under Part VIIIA (for married couples) or Part VIIIAB (for de facto couples) of the Family Law Act.

• • Sections 90L (for married couples) and 90WA (for de facto couples) of the Family Law Act specifically state that transactions executed in accordance with a court order or a financial agreement under those parts are exempt from State or Territory duties. Victoria’s Duties Act aligns with this Commonwealth provision.

In essence, if a property transfer in Victoria is a direct consequence of a marriage or domestic relationship breakdown and is formalised by a Family Court Consent Order or a Binding Financial Agreement, it will generally be exempt from land transfer duty under Section 44(1) of the Duties Act 2000 (Vic).

The Process for Claiming the Stamp Duty Exemption in Victoria:

Claiming the land transfer duty exemption in Victoria is typically managed through the State Revenue Office (SRO) Victoria’s Duties Online system, usually by a legal professional (solicitor or conveyancer).

Here’s a general outline of the process:

1. Obtain a Sealed Court Order (Consent Orders) or a Binding Financial Agreement (BFA):

1. • This is the fundamental requirement. The FCFCoA must have approved and sealed your Consent Orders, or you must have a valid Binding Financial Agreement. These documents must clearly specify the property being transferred, the parties involved and confirm that the transfer is part of the family law property settlement.

1. Prepare Transfer Documents:

1. • For real estate, a Transfer of Land document (from Land Use Victoria) is prepared.

1. • For other dutiable property, the appropriate transfer forms for that asset type will be used.

1. Complete a Digital Duties Form:

1. • As of October 2018, the SRO requires the use of the Digital Duties Form for all dutiable transactions, regardless of the contract or transfer date.

1. • This online form will require you to select the appropriate exemption (e.g., “Breakdown of Relationship transfer between spouses/domestic partners” or similar category under Section 44 of the Duties Act).

1. • You will need to provide details of the parties, the property, and the basis for the exemption (i.e., the family law breakdown).

1. Lodge Documents via Duties Online (Preferred Method):

1. • Most property transfers in Victoria are now processed electronically through platforms integrated with the SRO’s Duties Online system. Your conveyancer or solicitor will use this system to lodge the transfer documents and claim the exemption.

1. • The sealed Consent Order or a certified copy of the Binding Financial Agreement must be provided as supporting evidence.

1. Assessment and Endorsement:

1. • The State Revenue Office will assess the transaction based on the lodged documents and the information provided in the Digital Duties Form.

1. • If satisfied that all conditions for the family law exemption are met, the SRO will endorse the transfer as exempt from duty.

1. Record Keeping:

1. • It is vital to keep thorough records for at least five years, including:

1. • • The original sealed Consent Order or a certified copy of the Binding Financial Agreement.

1. • • The completed Digital Duties Form.

1. • • The endorsed (stamped) Transfer of Land document.

1. • • Any correspondence from the SRO.

Stamp Duty exemptions Crucial Condition

: The transfer of property must be made solely because of the breakdown of a marriage or domestic relationship and must be in accordance with the terms of the sealed Consent Order or Binding Financial Agreement. The transfer must also be between the parties to that relationship, and no other person should be taking an interest in the property as part of that exempt transfer.

Frequently Asked Questions (FAQs):

Q1: Does this exemption apply to all property types in Victoria?

A: Yes, it generally applies to the transfer of any “dutiable property” in Victoria, which includes real estate (residential, commercial, industrial), and other dutiable assets, provided the transfer meets the criteria of being solely due to a marriage or domestic relationship breakdown and is between the former partners (or in limited cases, their trustee or a corporation as defined by the Act).

Q2: Do I need a lawyer or conveyancer to claim the exemption in Victoria? A: While it’s possible for individuals to register and lodge documents electronically with the SRO, it is highly recommended to engage a lawyer or conveyancer experienced in Victorian property law and family law settlements. They can:

* Ensure the Consent Orders ( both application and Minute of Order) are properly drafted and approved, or the BFA is validly executed.

* Navigate the specific requirements of the SRO and Land Use Victoria.

* Accurately complete the Digital Duties Form and lodge all necessary documentation, significantly reducing the risk of errors or delays.

Q3: What if we have an informal agreement without Consent Orders or a BFA? Will we still get the exemption?

A: No. Informal or verbal agreements, even if amicable, will generally not qualify for the land transfer duty exemption under Section 44 of the Duties Act. The transfer must be formally made in accordance with a legally binding court order (Consent Orders) or a Binding Financial Agreement made under the Family Law Act. This is a key reason why formalising your property settlement is so beneficial.

Q4: Does the exemption apply to Capital Gains Tax (CGT) in Victoria?

A: No, land transfer duty is a Victorian (state) tax, while Capital Gains Tax (CGT) is a federal tax. The transfer duty exemption is separate from CGT. However, the Family Law Act also provides for “rollover relief” for CGT purposes for transfers between spouses or de facto partners as a result of a relationship breakdown, provided the transfer is under a court order or formal agreement. This generally means that CGT is deferred until the receiving party later sells the asset. You should always seek specific advice from a tax accountant or a lawyer specialising in tax law for CGT implications.

Q5: Are there any specific conditions for the property to be eligible?

A: The property must be clearly identified in the Consent Orders or BFA, and the transfer must be solely for the purpose of adjusting property interests due to the relationship breakdown. The transfer must be between the parties to the relationship, or in very limited circumstances, to a trustee for the benefit of a party or a child of the relationship as explicitly ordered.

Q6: Are there any other costs involved in property transfers in Victoria, even with the exemption?

A: Yes, even with the land transfer duty exemption, you will still incur other costs, which may include: * Legal fees for drafting the Consent Orders/BFA and handling the conveyancing process. * Court filing fees for the Consent Order application. * Land Use Victoria registration fees for changing ownership on the property title. * Mortgage discharge fees (if an existing mortgage is being removed). * New mortgage establishment fees (if the receiving party is taking out a new loan).

The land transfer duty exemption in Victoria provides a substantial financial advantage for separating couples. By obtaining legally binding Consent Orders or a Binding Financial Agreement and following the correct procedures, parties can save a significant amount in transfer duty.