Sub-sales, nomination and options

A sub-sale can arise in two situations. A vendor enters a contract of sale for dutiable property but all or part of the property is transferred either to a person not listed as purchaser in the contract or to a person listed in the contract in different proportions to those in the contract. A sub-sale can also arise where an option is granted over property either by the vendor to a person and/or by a person to the vendor. The only situations where Part 4A will apply to make the transfer liable to duty as more than one transaction is where the transfer:

  1. Involves additional consideration,
  2. Involves land development,
  3. Results from options and there is land development and a change in option holders between the option date and the transfer date.

In all other situations, the transfer is assessed as a single transaction from the transferor to the transferee.

There are a number of definitions that only apply to sub-sales and are used in this form.

First purchaser means the person who entered the contract of sale (called the ‘sale contract’) with the vendor of the property. It also means the person who was granted an option over the property by the vendor or granted an option to the vendor.

Subsequent purchaser means the person who obtained the right to have all or part of the property in the sale contract transferred either from the first purchaser or a previous subsequent purchaser. A subsequent purchaser can also be a first purchaser who is transferred a different proportion of the property than that listed in the contract. It also means a person who enters a sale contract with the vendor of a property that an option has been granted over and land development is carried out prior to transfer.

Subsequent transaction means the nomination, assignment, novation or other arrangement by which a subsequent purchaser obtains a transfer right.

Transfer right means the right to have the property, or any part of it, transferred on completion of the sale contract to the subsequent purchaser. In the case of an option it can also be the right or obligation to enter into a sale contract for the property, or any part of it, with the vendor. A transfer right can be given by the option holder, the first purchaser or a previous subsequent purchaser to a subsequent purchaser. The right can be obtained by nomination, assignment, novation or other arrangement.

Relatives Part 4A contains a specific exemption for relatives. See Explanatory note 4 for the definition of ‘relative’. The definition includes spouses, domestic partners, parents, children, aunts and uncles but does not include cousins.

Associate means an ‘associated person’ of a person or anyone acting in concert with the person. See Explanatory note 1 for a definition of associated person.

Option means ‘put options’, ‘call options’ and put and call options in their usual commercial sense:

  1. An option granted by the vendor to the first purchaser, which entitles the first purchaser (or their assignee) to:
    • Require the vendor to enter into a contract of sale of the property with the first purchaser (or their assignee), or
    • Transfer the property to the first purchaser (or their assignee), and/or
  2. An option granted by the first purchaser to the vendor, which requires the first purchaser (or their nominee) to:
    • Enter into a contract to buy the property from the vendor, or
    • Accept a transfer of the property from the vendor.

Duty is not chargeable on a sale contract or option if:

  1. The subsequent purchaser is a relative of the first purchaser and is not the trustee of a trust, or
  2. The subsequent purchaser is the trustee of a fixed trust of which the only beneficiaries are relatives of the first purchaser.

Land development means:

  1. Preparing a plan of subdivision or taking any steps to have a plan registered,
  2. Applying for or obtaining a planning permit,
  3. Applying for or obtaining a building permit, or doing anything for which a building permit would be required,
  4. Otherwise developing or changing the land in a way that would lead to the enhancement of its value.

Parallel arrangement means a building contract or other arrangement entered into by a subsequent purchaser (or an associate), before, at the time of, or after obtaining a transfer right, under which

the first purchaser or previous subsequent purchaser (or an associate of either) is to construct, or arrange construction of, building works on the land for consideration. The consideration for a parallel arrangement is taken to be additional consideration.

Additional consideration means any consideration to be given by the subsequent purchaser or an associate of the subsequent purchaser in order for the subsequent purchaser to obtain the transfer right (other than reimbursement of ‘excluded costs’) that exceeds the consideration to be given by the first purchaser (or the previous holder of the transfer right).

Excluded costs means:

  1. Legal costs or other fees or charges, including reasonable selling agents’ fees and any statutory fees or charges,
  2. Survey or valuation payments,
  3. GST except where an input tax credit or reduced input tax credit is available,
  4. Any other costs that, in the opinion of the Commissioner of State Revenue, were reasonably incurred by the first purchaser (or the previous holder of the transfer right).