Duty payable on late settlement and default interest

Duty payable on late settlement and default interest

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NOTE:

This article is listed as of the 15th of June, 2022 for our clients information, and we stress that everyone should click on the SRO Article to seek the latest and most correct information.

Duty is calculated on the dutiable value of a property.

Dutiable value includes late settlement interest resulting from:

  • a late settlement
  • a settlement failing and being rescheduled.
Why is duty paid on late settlement interest?

Late settlement interest is part of the consideration which 'moves' the transfer of the land.

Therefore, it is a component that forms part of the dutiable value of the land.

When is duty payable on late settlement interest?

As an interim position, which applies for 12 months from 1 July 2022, a minimum dutiable value of $5000 for late settlement interest applies.

This means that a transaction must be re-lodged for reassessment if:

  • the contract of sale or arrangement was entered on or after 1 July 2022, and
  • the late settlement interest is $5000 or more.

Transactions that incur additional consideration resulting in late settlement interest of less than $5000 do not need to be re-lodged.

Does late settlement interest form part of the dutiable value for the purposes of duties concessions and exemptions and the First Home Owner Grant?

During the interim period, late settlement interest will not form part of the dutiable value of the land for the purpose of determining eligibility for the:

  • principal place of residence concession
  • first home buyer duty exemption, concession or reduction
  • off-the-plan concession
  • pensioner concession
  • young farmer exemption or concession
  • First Home Owner Grant.
How is duty paid on late settlement interest?

Where late settlement interest is payable, the amounts should not be included in Duties Online.

In these cases, settlement can proceed with the original estimation based on duty calculated without late settlement interest.

You must notify the SRO by email and re-lodge the transaction for reassessment of duty within 30 days of settlement. You must provide:

  • your contact details (including address for service)
  • the bundle/transaction ID of the original lodgement
  • the dutiable value declared as part of the original lodgement
  • the amount of the late settlement interest or any other additional consideration paid for the transfer not declared as part of the original lodgement.
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