On the 15th of June 2022, the Victorian State Revenue Office (SRO) confirmed changes to the duty payable arising from Late Settlement Interest. These will come into effect on the 1st of July 2022.
Why is duty paid on late settlement interest?
The 2020 case of 1043 Melton Highway Pty Ltd confirmed that late settlement interest is part of the consideration which ‘moves’ the transfer of the land. Therefore, the SRO states that it is a component that forms part of the dutiable value of the land and duty is payable as a result.
When is duty payable on late settlement interest?
For contracts of sale entered into after 1 July 2022, duty will be payable on late settlement interest amounts of $5,000.00 or more.
A transaction will therefore need to be re-lodged for reassessment within 30 days of settlement if:
- The contract of sale or arrangement was entered into on or after 1 July 2022, and
- The late settlement interest is $5,000.00 or more.
Note, late settlement interest will not form part of the dutiable value of the land for the purpose of determining eligibility for the:
- Principal place of residence concession;
- First home buyer duty exemption, concession or reduction;
- Off-the-plan concession;
- Pensioner concession;
- Young farmer exemption or concession; or
- First Home Owner Grant.
How is duty paid on late settlement interest?
The SRO must be notified by email and the transaction must be re-lodged within 30 days of settlement.
The following details must be provided:
- contact details;
- the bundle/transaction ID of the original lodgment;
- the dutiable value of the original lodgment; and
- the amount of Late Settlement Interest.
Looking for assistance with your property transactions? Look no further! Contact Nevile & Co. today to find out how we can be of assistance.
The information contained on this page is general in nature and does not take into account your personal situation. It is not intended to be relied upon as, nor is it a substitute for specific legal advice. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice.