From July 2022, Victorian land transactions will be subject to a duty payable on late settlements, as well as default interest
In July 2022, Victorian land laws will undergo a raft of changes to that may impact you and your business. The changes will include changes impacting land transactions. The State Revenue Office of Victoria (SRO) has announced a duty payable on late settlements and default interest.
What should I know about the changes?
Duty is payable on the dutiable value of a property transaction. It includes interest that accrues as a result of late settlement or settlement failing and being rescheduled (Late Settlement Interest).
The dutiable value of the dutiable property that is the subject of the transaction is the price you paid for the property or its market value, whichever is greater. GST is included in the value of dutiable property.
What are the interim changes?
From 1 July 2022, a minimum dutiable value of $5000 for Late Settlement Interest will apply for 12 months.
As a consequence, parties will be required to re-lodge land transactions for reassessment of duty if:
- The contract of sale or arrangement was entered on or after 1 July 2022; and
- the Late Settlement Interest is $5000 or more
There are some important things to note during this interim period:
- Penalties: the SRO must be notified of all Late Settlement Interest via a post settlement lodgment. This must happen within 30 days of the settlement date, or SRO penalties will apply
- Eligibility for concessions and grants: late settlement will not form part of the dutiable value of the land for the purpose of determining your eligibility for certain schemes and concessions. For example, these include:
- First Home Owner Grants;
- First home buyer duty exemptions, concessions or reductions;
- Off-the-plan concessions;
- Young farmer exemptions or concessions