When you obtain a property, we charge duty based on the "dutiable value" of the transaction. This is the higher of:
- The consideration (if any) paid for the dutiable transaction, and
- The unencumbered value of the property
The consideration paid for a dutiable transaction includes money or the value of any non-monetary consideration. In broad terms, it includes all things that someone would receive so that the transaction takes place.
Non-monetary consideration can include:
- An assumption of liability,
- A promise to pay an amount of money,
- A guarantee,
- An exchange of property,
- The performance of an obligation by the purchaser, and
- Covenants given by a lessee to a lessor under the terms of a lease
This is usually the market value of the property disregarding any encumbrances such as a mortgage.
For example, you buy Rose Cottage for $700,000 but you buy it subject to an existing mortgage of $200,000. The encumbered value of the property would be $700,000 less $200,000 = $500,000. The unencumbered value would be $700,000.
Unrelated parties that deal with each other independently are commonly seen as trading at arms-length. Where parties are trading at arms-length, there is an assumption that the amount paid for a dutiable transaction is the market value.
Where parties are not trading at arms-length, we would usually ask them to declare what the market value of the property is and support that declaration with an independent valuation from a qualified valuer.
Even where parties are trading at arms-length, where the business and land acquired is $1,000,000 or more, the Commissioner may request a valuation (see Revenue Ruling DA.029).
The dutiable value includes any GST payable for the dutiable transaction.
Special rules apply to consideration for leases.
There are some particular considerations about the dutiable value of retirement village land where the retirement village operates on a loan lease, lease premium and loan licence type arrangement, and the retirement village owner is the registered proprietor and beneficial owner of the freehold title of the retirement village land.