Leasing Arrangements may be subject to payment of duty - The Duties Amendment Act (Vic) 2009

The Duties Amendment Act (Vic) 2009 received Royal assent on 7 July 2009 but with retrospective effect from 21 November 2008. The amending Act introduces 2 following significant changes with the intention to address the growing concerns that leasing arrangements are being used to circumvent the payment of duty:

• a grant of a lease for consideration (other than rent reserved); and
• a transfer, assignment or surrender of a lease for consideration.

The amending Act provides for the definition on what is "rent reserved" which includes rent paid or payable during the lease term and the usual outgoings. However, there are foreseeable problems with this definition and it will be tested in due time. The good news is that leases, licences or other documents creating rights in a retirement village under the Retirement Villages Act 1986 are amongst others exempted from duty. The amending Act also clarifies what a dutiable change in beneficial ownership is and the definition of beneficial ownership has been amended to include ownership of dutiable property by a person as trustee of a trust. Although the amending Act took effect from 21 November 2008, the State Revenue Office (SRO) has announced that no penalty or interest will be payable if full disclosure is made to the SRO of any dutiable leasing arrangements entered into between 21 November 2008 and 7 July 2009 and duty is paid by 7 October 2009. If you suspect your leasing arrangement may be affected by this amending Act or need advice on this matter, please contact our office at the earliest time to discuss or you may see 'latest news' on the SRO website at www.sro.vic.gov.au for further information.