Eligible persons who purchase an eligible property can elect to defer payment of the duty arising from the purchase under Part 2.6A of the Duties Act 1999 (the Act).
A Deferred Duty Application is assessed under the Act, relevant Disallowable Instruments, and the Taxation Administration Act 1999.
An eligible person is a person who is eligible for:
- the First Home Owner Grant; or
- the Home Buyer Concession Scheme applicable at the time of the grant of the lease, agreement for transfer or the transfer (whichever is first).
If purchasing an established property, an applicant may still be eligible for deferral of duty if they would have been eligible for the FHOG under the First Home Owner Grant Act 2000 (the Act) except for the requirement under section 12B of the Act that the property be new or substantially renovated. That is, those first home purchasers who would otherwise be eligible for the FHOG, if not for the fact that the subject property is an established property. Should you have any questions regarding this eligibility requirement, please contact the ACT Revenue Office on (02) 6207 0028.
An eligible property is a property priced at or below the relevant Home Buyer Concession Scheme property threshold.
Timeframe for lodging a Deferred Duty application
The application period is limited. All applications must be received by the Commissioner for ACT Revenue at the ACT Revenue Office by the date the duty must be paid, that is within:
- 90 days of the grant, transfer or agreement (whichever is first); or
- 14 days of the occurrence of one of the events mentioned in Section 16A (1) of the Duties Act 1999, for an Off the Plan agreement.
To enable applications to be processed efficiently, all documents must be lodged with the Commissioner for ACT Revenue at the ACT Revenue Office at least 10 working days before approval is required. Incomplete applications may be returned to you. All applications accepted over the counter or mailed are subject to the same application time limits.
If an application is not received within the relevant timeframe, the Commissioner may accept the late application if it is considered fair and reasonable to do so. Following acceptance of a late application, the Commissioner may reassess the duty liability in accordance with section 9 of the Taxation Administration Act 1999.
Eligibility for Deferred Duty
To be eligible for the deferred duty scheme:
- all applicants named in the grant, transfer or agreement for transfer of the subject property and, in some cases, their non applicant domestic partner, must satisfy all the eligibility criteria for either the relevant Home Buyer Concession Scheme or the First Home Owner Grant; and
- the property (including vacant land) must be priced at or below the upper property threshold under the relevant Home Buyer Concession Scheme; and
- the duty deferred must be $1,000 or greater; view Determination 2007-248 (external site).
If applying for deferral of duty on the purchase of an established property, via the FHOG scheme, applicants and their domestic partner must meet all eligibility criteria for the FHOG (with the exception of the purchase property being new or substantially renovated). Please refer to the FHOG Page or the Deferral of Duty application form for further information regarding FHOG eligibility.
An eligible homebuyer who has a duty amount reduced under the Home Buyer Concession Scheme can, so long as the remaining duty liability is at least $1,000, elect to defer the payment of that duty amount under the Deferred Duty Scheme.
Compliance with residency requirements required
Approved applicants for deferred duty MUST satisfy the residency requirements imposed under the Home Buyer Concession Scheme or the First Home Owner Grant Scheme, as the case requires.
At least one applicant must occupy the home as their principal place of residence for a continuous period of 12 months starting within 1 year of completion of the eligible transaction or issue of the Certificate of Occupancy.
Interest charges apply
Interest will accrue on the deferred amount of duty from the date the duty is payable until it is paid in full. The amount of interest and method of calculation is determined under the Taxation Administration Act 1999 as the market rate component defined in section 26 (2) of that Act. Simple interest accrues on the principal balance of the deferred duty (i.e. not on any accrued interest) and is calculated daily; see Determination 2015-3.
Payment of Deferred Duty
If applicants are approved for deferred duty, they enter into a time payment arrangement with the Commissioner for ACT Revenue. As a condition of this time payment arrangement, the payment of deferred duty and any accrued interest must be made via direct debit.
Applicants must provide the Commissioner with a completed Direct Debit Authority within fourteen (14) days prior to the due date for the first instalment amount. The Direct Debit Authority can be found on the ACT Revenue Office website here.
Time payment arrangement of Deferred Duty and interest
Successful applicants for the deferral of duty can elect to enter one of two payment options. Applicants may commence instalment payments for deferred duty immediately (that is within 90 days, or within one year for an off the plan purchase, from the date of the dutiable transaction) so as to repay the total amount of duty plus accrued interest within 10 years of the date of the dutiable transaction. A voluntary repayment over and above the instalment amount can be made at any time.
Alternatively, no payment is required for not more than the first 5 years after the date of the dutiable transaction but a voluntary payment over and above the instalment amount can be made at any time.
Deferred duty must be paid in full within the next successive 5 years so that the total duty and interest payable is repaid no later than 10 years after the date of the transaction. All approvals of deferred payment of duty are subject to the homebuyer entering into an arrangement based on these terms.
A person with a deferred duty arrangement must pay the duty and any accrued interest before the title to the property can be transferred to a new owner.
If an applicant is approved for deferral of duty and therefore enters a time payment arrangement with the Commissioner for ACT Revenue, the minimum instalment of duty must be paid on or before the day the instalment payment is due. If not paid when due, this constitutes a tax default and will result in the full amount of duty deferred and any accrued interest becoming immediately due and payable.
Where a tax default occurs, the premium rate of interest (8 per cent per annum) will also apply to the outstanding deferred duty amount, in addition to the market rate of interest. Penalty tax may also apply in certain circumstances (section 31 of the Taxation Administration Act 1999). The Commissioner may seek to recover any overdue amount.
Deferred Duty applications
Applicants for deferred duty should seek independent financial advice prior to lodging an application.
Approved applicants will be advised in writing. Approval of an application for deferred duty constitutes the applicant/s entering into a deferral time payment arrangement regarding the payment of duty and interest, as set out above.
If an application is not approved, duty is payable either within 90 days of the date of the agreement for transfer or the longer period allowed for an Off the Plan purchase.
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