Notice on land and building contracts

Notice to taxpayers

On 20 December 2013 the ACT Court of Appeal handed down its judgment in the matter of Commissioner for ACT Revenue v Araghi [2013] ACTCA 54 (“the judgment”).  The judgment concerned the correct amount of duty payable under the Duties Act 1999 with respect to the sale of a property and the construction of a home in the suburb of Crace.

The transaction involved two separate contracts, one for the sale of land and the other for the construction of a building, which were executed on the same day.  Each contract contained clauses rendering them interdependent, but were entered into by the purchaser with two separate parties.  It is believed that many properties in the suburb of Crace were originally sold under similar arrangements.

The ACT Revenue Office had previously assessed this type of transaction in Crace as an Off the Plan Purchase agreement with duty being calculated on the combined value of the land and the building.  The Court of Appeal has now ruled that, in such cases, duty is only payable on the contract for the sale of the land and not on the interdependent building contract.  The Commissioner for Revenue has accepted the judgment and will assess transactions similar to the Crace arrangements accordingly.

Application for reassessment

In relation to transactions already assessed, the ACT Revenue Office will only accept applications for reassessment, subject to the following conditions and accompanied with the following documentation:

• Written request for reassessment and refund.
• Original notice of assessment/lodgement form/lodgement number if possible.
• If possible, original Contract for Sale, dated and signed by the seller.
• Any additional documents required for Home Buyer Assistance Schemes.
• The taxpayer bears the burden of providing all necessary information that is required to issue a reassessment.

However, it should be noted that the Commissioner’s discretion to reassess is limited by legislation to a period of five years from the date of the original assessment (section 9 of the Taxation Administration Act 1999).  Transactions that fall outside this limitation period will not be reassessed.

Therefore all applications for reassessment must be received by the ACT Revenue Office with sufficient time to enable any reassessment to be issued within five years of the original assessment.

For further information on this matter please contact the ACT Revenue Office on (02) 6207 0028