Preamble
This Ruling provides information on the lodging of instruments for stamping including details of the information and documentation ordinarily required. Guidance is also given on the preparation of answers to requisitions.
This Ruling should be read in conjunction with SD 002 and where overlaps exist this Ruling will apply to documents lodged after the date of this Ruling. Where this Ruling refers to stamping procedures which have been altered due to legislative amendment, then this Ruling will apply to documents executed after the commencement of the new provisions.
Ruling
When instruments are lodged for stamping, information known to be required to enable an assessment to be made, should also be attached to ensure that instruments are stamped and returned without delay.
The requirements vary with each application. If the instrument lodged for stamping is complex or the nature of the transaction is not readily evident, the full facts and circumstances surrounding the transaction should be disclosed on a statutory declaration.
Examples of particular classes of instrument are listed below.
Transfer of Shares in a Private Company
Where the parties are related or where there is an element of gift, a balance sheet and revenue accounts for the last five accounting years which were completed prior to the date of signing of transfer, should be lodged.
Details should also be lodged stating how the parties arrived at the consideration.
Depending upon the particular circumstances of each case, an accountant's detailed valuation of the shares may be required. Amendments introduced by the Stamp Duties (Further Amendment) Act 1987 (effective from 16 December 1987) provide that transfers of shares in companies not listed on a recognised stock exchange which are not the beneficial or legal owners of land in NSW are subject to a minimum duty of $10. Where the $10 duty applies the transfer may be stamped using an adhesive stamp.
Leases
Where a lease contains a building covenant the following information should be furnished (letter will suffice):
- A statement of the amount expended to date on improvements or additions; and
- An estimate of the total expenditure the lessee is committed to expend on improvements and additions in terms of section 77(2) of the Stamp Duties Act.
That section provides that any expenditure on improvements made by the lessee as consideration for obtaining the lease is assessable as additional rental.
Where a lessee is required to pay additional amounts under the provisions of a lease, such as outgoings, a letter should be lodged estimating the amount. (Note: Outgoings liable as additional rent include water rates, Council rates and/or land tax and any payment by the lessee for the use of the leased property).
Depending on the term of the lease, and particularly if the term does not exceed five years, an assessment will be made based on estimates of the future outgoings over the period. This practice is designed to finalise the assessment. However, the taxpayer can elect to proceed on an interim stamping basis subject to reappraisement pursuant to section 78D, rather than stamping on an estimate basis. An assessment on an estimate basis is suggested in suitable cases as a practicable solution of benefit to all concerned, in that it provides a "once only" stamping.
Trusts
In all instances where evidence is required to enable an assessment to be made on trust instruments the evidence must be furnished by way of statutory declaration.
For example, when a superannuation trust deed or a settlement deed is lodged, it should be accompanied by a statutory declaration by the trustee detailing the actual New South Wales assets of the fund as at the date of execution of the instrument.
Where a claim is made that a conveyance attracts duty under section 73(1)(e) of the Stamp Duties Act, a statutory declaration is required stating:-
- intention regarding the beneficial ownership at the time of purchase of the property by the apparent purchaser;
- who actually provided the moneys for the acquisition of the property; and
- date of birth, if beneficiary is a person or date of incorporation if beneficiary is a company. Note: If it is claimed that the beneficiary actually provided the purchase moneys, documentary evidence will be required to support the claim. Evidence submitted could consist of bank statements, pass books, etc.
The instrument whereby trust property was acquired by the trustee should be produced.
Agreements For Sale
The following situations usually give rise to requests by the Department for clarification of a party's relationship:
- where there is no selling agent and the same legal firm is acting for both parties;
- where there is no agent and private parties act for themselves;
- where a party is a private company and there is possible connection between individuals, shareholders, directors, etc.;
- where a fractional interest is purchased.
Formal requisitions seeking information about a party's relationship ask for the information to be incorporated in a statutory declaration. However, it is acceptable for the solicitor for the purchaser to lodge a written certification, either by letter for non urgent matters or on the instrument for urgent matters. The certificates must be signed by a principal of the firm.
Loan Securities
- "All Moneys" mortgages: When lodging mortgages of this nature a letter from the mortgagee should be lodged stating the actual amount advanced, if any, at the date of lodgement.
- Credit for duty paid outside NSW:
- in cases where ad valorem stamp duty has not been paid in another State or a Territory, a letter should be furnished stating the amount of ad valorem duty considered to be payable in that State or Territory. In addition, details should be given of the party expected to lodge the instrument for stamping in that place.
- where ad valorem duty has been paid in another State or a Territory and a stamped counterpart or a stamped so-called foreign collateral is lodged as evidence of duty having been paid, a letter certifying the actual amount of ad valorem duty paid outside NSW should also be lodged.
- Caveats: Stamp duty is payable on caveats supporting unregistered mortgages. The Land Titles Office will register unstamped caveats only where the caveat protects interests in contracts for sale, leases, and family law matters. All other caveats must be stamped with the appropriate stamp duty or stamped not chargeable, prior to lodgement at the Land Titles Office.
- Caveat Not Chargeable - The drafting of some caveats does not make it clear whether or not an unregistered mortgage is being protected. Where the caveator has described the protected interest as equitable or the description of the interest implies it is equitable in nature or the caveat describes the interest as a "Deed of Loan", "Deed of Charge", etc. it is necessary to advise in writing whether any documentation, written evidence, or a receipt exists relating to the interest being supported by the caveat. If so, such material should be produced for perusal.
- Caveat Chargeable - If it is claimed that the mortgage has been stamped with ad valorem duty, the mortgage should be produced or, if this is not practicable, sufficient evidence should be provided to indicate that duty has been paid. If it is claimed that ad valorem duty will be paid at a later date on the mortgage, the caveat will be stamped with duty of $10 and Departmental action subsequently taken to ensure that payment of ad valorem duty is made. If the caveat supports an unregistered "all moneys" mortgage or is itself drawn in "all moneys" terms, a statement should be lodged stating the amount advanced to date. In furnishing information in order to establish the liability to stamp duty on caveats, lodging parties will be required to provide a letter signed by a principal of the firm.
Remission of Fines
All applications for remission of fines for late payment of duty must be made in writing.
Procedures are available at the Sydney and Parramatta Urgent Sections to have written requests considered on a 24 hour basis. The stamp duty should be paid prior to the fine being considered.
When payments of stamp duty by return are lodged in the Sydney Office applicants should ensure that the payments are receipted. Any delay in the actual date of receipt being recorded may result in queries as to the date/time of actual lodgement, with a view to determining whether a fine is payable.