Navigating the division of assets during family law proceedings can be both confusing and emotional. Often, properties need to be divided between the parties, leading to the transfer of property ownership interests. When property is transferred due to the breakdown of a marriage or de facto relationship, a stamp duty exemption applies. In this article, we explore the complexities of stamp duty and the legal framework associated with these exemptions in family law proceedings.

Stamp Duty Exemptions

Stamp duty or transfer duty is a duty payable to the state government when the ownership of an interest in the property is transferred. Stamp duty is calculated based on the sale price or value of the property being transferred.

However, after the breakdown of a marriage or de facto relationship, relief from stamp duty is available.

In New South Wales under Sections 68 of the Duties Act 1997 (NSW), stamp duty is not payable on transfers or acquisitions of matrimonial or relationship property, if the property is being transferred to or acquired by each or either of the parties to a marriage or a de facto relationship that has irretrievably broken down and any child/children of the parties to such a marriage or de facto relationship (including a trustee on behalf of such child).

Requirements for Stamp Duty Exemptions

For an exemption, there is a further requirement that the transfer or acquisition of an interest in property of the marriage or the relationship must be recorded in one of the following ways:

  1. A financial agreement under the Family Law Act 1975 (Cth); or
  2. A court order made pursuant to the Family Law Act (including a registered arbitral award pursuant to section 13H of the Family Law Act following a private arbitration); or
  3. An agreement documented in a deed or instrument that the Chief Commissioner of State Revenue is satisfied has been made to divide matrimonial or relationship property, as a consequence of the breakdown of the marriage of relationship.

Examples of the exemption being available include:

  • where there is a former family home or investment property in joint names and as a part of an agreement made by the parties or a determination by the Court to divide property following a marriage or relationship breakdown, that property is required to be transferred into the sole name of one of the parties.
  • If the property is held solely by one party and the property is to be transferred to the sole name of the other party.
  • if matrimonial or relationship property is sold at public auction pursuant to a financial agreement or court order, and one of the parties (or a child or trustee on behalf of the child) acquires the property.

Where there are multiple properties in the asset pool, and the properties are each being transferred in accordance with the above requirements, the duty relief can be applied on multiple transactions.

The exemption does not apply if each party or either of them disposes of their interest in property to a third party (who is not a child of the marriage or relationship). Legal advice must be obtained if the proposed transfer of property is from a trust or a company to an ex-spouse or de facto spouse.

Denial of an Exemption

In the event that the Commissioner denies an application for exemption, an objection to the decision may be lodged within Revenue NSW within 60 days. Further, in the event that the matter is not resolved in the objection process or the Commissioner fails to respond to an objection within 90 days, there is a right of review to the NSW Civil and Administrative Tribunal (NCAT).

How is a Stamp Duty Exemption Implemented?

In practice the implementation of the stamp duty exemption is completed as part of the PEXA conveyancing process following verification of identity, completion of the transfer form and purchaser/declaration form. It involves the completion of an Application for Exemption or Refund – Breakup of a Marriage or De facto relationship which is then processed by the Office of State Revenue or one of its authorised agents.

How We Can Assist You

Dividing assets in a family law proceeding can be more complex than it seems, often bringing emotional and confusing challenges. Our team of family lawyers has extensive experience and knowledge in property division. As a multi-practice firm with a residential and commercial conveyancing division, we offer tailored advice to assist you with property division in your family law matter. We can help you navigate the complexities of stamp duty exemptions. If you are unsure about your entitlements in the property division, it is imperative to seek professional legal advice. If you would like assistance, please do not hesitate to contact us to arrange an initial consultation to discuss your family law matter.

The content of this article is intended to provide general guidance to the subject matter and must not be relied on as legal advice. Specific advice should be sought about your circumstances.