Stamp Duty in Western Australia
Western Australia imposes stamp duty on certain kinds of dutiable transactions. The Department of Finance is responsible for administering stamp duty in Western Australia and grants exemptions and concessions. Stamp duty can be a rather complex area of law, so it is better to seek legal advice before lodging documents to avoid any complications. The rules for how stamp duty is imposed are in the Duties Act 2008. The Department of Finance also publishes guidelines which may be useful.
Stamp duty is imposed on certain kinds of dutiable transactions which are listed in the Duties Act 2008. The most frequent kind of dutiable transaction is a transfer of dutiable property (for example, the sale of land). Other kinds of dutiable transactions include declaring trusts over dutiable property, entering into an agreement to transfer dutiable property (as distinct from transferring the property itself e.g. entering into a contract to sell land) and mortgage foreclosures over dutiable property. A dutiable transaction does not have to be in a particular form to be dutiable i.e. it does not have to be pursuant to a written agreement. There are other kinds of duty such as vehicle licence duty and landholder duty, but these are not discussed in this article.
A dutiable transaction only gives rise to a liability for stamp duty if it relates to dutiable property. The most relevant kind of dutiable property is land located in Western Australia. Other kinds include Western Australian business assets and certain kinds of rights such as a right to acquire dutiable property or a right to income from dutiable property (e.g. a right to income from rental premises). Some kinds of dutiable transactions will only be dutiable in relation to certain kinds of dutiable property. For example, a surrender of special dutiable property is dutiable, and special dutiable property includes certain assets such as life interests in land. The transfer of shares in a company may also be subject to landholder duty.
Calculation of stamp duty
Stamp duty is calculated based on the dutiable value of the dutiable property that is the subject of the dutiable transaction (e.g. in the case of a land sale, the dutiable value of the land). Generally speaking, the dutiable value is equal to the amount paid for the dutiable property, or if greater, its market value free of other interests like mortgages. Different rates of duty are then applied to the dutiable value of the property. For example, if the dutiable value is $400,000 and an exemption or concession does not apply (discussed below), the amount of stamp duty payable is equal to the total of $7,790 plus 4.75% of each $1 that is above $250,000 (i.e. $7,125). Therefore, the total payable would be $14,915.
If the dutiable value is greater than $500,000 or less than $250,000, different rates of stamp duty apply. Note that there are rules to stop you from having to pay stamp duty twice; for example, if you enter into a contract to buy land, entering into the contract and the subsequent sale are both types of dutiable transactions. However, you only have to pay stamp duty on one of them.
How stamp duty is paid
To pay stamp duty, you need to lodge certain documents with the Department of Finance, together with a cheque for the amount of stamp duty payable. To save time, you should get legal advice before you lodge the documents or you may have to do it again. If the dutiable transaction occurred pursuant to a written agreement, the written agreement and its counterparts are lodged, stamped and returned to you. If the dutiable transaction did not happen under a written agreement, you need to lodge a transfer duty statement.
You might also need to lodge a form to be granted an exemption or concession. Generally speaking, you need to lodge the documents within two months of being liable to do so. You then need to pay the stamp duty within one month of receiving a duties assessment notice. If you fail to do so you might need to pay penalty tax.
Exemptions and concessions
There are a number of exemptions from having to pay stamp duty in Western Australia, and concessions which reduce the amount of stamp duty you might have to pay. For example, the transfer of units in a unit trust scheme is exempt from stamp duty. If you purchase a home that is worth less than $530,000 but more than $430,000 you are also entitled to the first home owner grant, you are entitled to a concessional rate of duty. If the value of the home is less than $430,000, no stamp duty will be payable.
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