Dealing with multiple transactions for transfer duty
Aggregating dutiable transactions
When several dutiable transactions are related—that is, together they substantially form one arrangement—they are aggregated. This means that multiple transactions can be treated as a single transaction when calculating duty, depending on certain factors.
Aggregation of dutiable transactions is compulsory under section 30 of the Duties Act 2001.
Transfer duty is calculated on the total consideration or value of all the transactions, rather than each dutiable transaction separately. This may result in a higher duty amount payable.
When lodging documents for assessment, each party to the dutiable transactions must state what they know about:
- all the dutiable transactions and property included in the arrangement
- the dutiable value of each dutiable transaction.
Aggregating transactions depends on:
- whether the transactions are contained in one instrument (e.g. an agreement or a transfer)
- whether, when contained in separate instruments, any of the transactions are conditional on entry into, or completion of, any of the other transactions
- whether the parties to any of the transactions are the same or are related
- the timeframe over which the transactions take place
- whether, before the transactions take place, the dutiable properties were used together or dependently by the transferor(s)
- whether, after the transactions take place, the dutiable properties are used together or dependently by the transferee(s).
Example 1—Aggregated transactions
Samantha enters into 2 contracts—1 each for 2 lots of vacant land next to each other. The owner is the same for both lots. Samantha plans to combine both properties and build a large home on it. Both contracts have a condition that the other contract must be completed at the same time.
The transactions are aggregated because the contracts are substantially part of the 1 arrangement. The parties to the transactions are the same and the transactions are conditional on the other being completed.
Example 2—Transactions assessed separately
Dan purchases a home and occupies it. Three months later, a neighbouring property is put up for sale. Dan makes an offer and signs the contract to purchase the land. He plans to extend his current home onto the neighbouring land.
In this case, the seller for each property is different and the transactions are not connected—that is, there is no condition in either contract that connects the sale of one property to the other.
So, although Dan plans to use both properties as his home and the time between the signing of each contract is relatively short, the transactions are not aggregated because there is no integral relationship between them.
Calculating aggregated transfer duty
When calculating transfer duty on aggregated transactions, the transfer duty rate is applied to the total value of all transactions that make up the same arrangement.
Because the duty rate is applied on a sliding scale (i.e. it increases as the value of the property increases), you pay more duty for aggregated transactions than on each transaction individually.
Note: When an aggregation involves a transaction for which you can claim a residential land concession, the concession applies only to the value of the property used for residential purposes. Use our transfer duty calculator to work out how much duty you would pay on an aggregated transaction involving a concession for homes.
Chris signs contract J to buy land with a value of $450,000 from Jennifer, which he will use as his home. A week later, he signs contract B to buy land with a value of $375,000 from Blake. The 2 properties are a suburb apart and the contracts have no conditions relating to each other.
The transactions are not aggregated when the transfer duty is calculated, and a home concession applies to contract J.
|Duty on contract J||$7,000|
|Duty on contract B||$11,550|
|The total transfer duty that Chris pays for both transactions||$7,000 + $11,550 = $18,550|
ABC Company Pty Ltd signs a contract to buy the management rights of a unit complex for $375,000. Chris, the director and shareholder of ABC Company Pty Ltd, buys the manager’s unit for $450,000. Chris has to live in the unit as part of the management agreement and claims the home concession for the unit.
The transactions are aggregated when the duty is calculated, and the home concession is applied.
The transfer duty rate is applied to the total value of both properties:
$450,000 + $375,000 = $825,000
The transfer duty for a transaction with a value of $825,000 where a home concession applies to $450,000 is $22,975.
You can see that, when transactions are aggregated, the duty payable is higher than when the transactions are calculated separately and the resulting duty added together.
- Section 30 of the Duties Act 2001
- Public ruling DA030.1—Transfer duty—aggregation of dutiable transactions
- See the transfer duty self assessor guidelines.