By Ken Astridge Ken Astridge is a solicitor with Mallesons Stephen Jaques in Sydney. In the absence of the contract splitting provisions the end result of this structure may be, even if it is not the original objective, that the aggregate ad valorem duty paid on the 10 agreements is less than the ad valorem duty that would be payable if the sale was done under a single agreement for the whole property. Consistent with the general trend in stamp duty legislation away from an instrument based tax towards a transaction based tax, the contract splitting provisions of the Act operates to treat the above 10 instruments as one transaction and charge ad valorem conveyance duty on one of those instruments on the greater of the aggregate consideration paid and the aggregate value of the interests being transferred.
Nominal duty is paid on the other nine instruments.
While this example is a common way of explaining the operation of the contract splitting provisions, consideration of these provisions should not be restricted to this kind of fact scenario. Quite possibly the provisions extend much further than you think. The example given above would clearly constitute two or more agreements for the sale of separate interests in the property. Applying the sections, there are two or more agreements for the sale of property in New South Wales between different parties who are related persons. Such a broad interpretation of the provisions would clearly operate to aggregate Mr and Mrs P's agreements for sale.