Victorian State Revenue Office, stamp duty

Discussion in 'Accounting & Tax' started by Burramys, 22nd Nov, 2021.

Join Australia's most dynamic and respected property investment community
  1. Burramys

    Burramys Well-Known Member

    Joined:
    26th Jun, 2015
    Posts:
    1,917
    Location:
    Melbourne
    A Victorian IP was bought in early 2014. The SRO has now asked for verification that stamp duty has been paid. As settlement is approaching eight years ago, is the SRO request valid? There may be a statute of limitations, 5-7 years. Also, is not stamp duty usually paid by the conveyancer from the sale proceeds?
     
  2. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    There is no statute of limitations. A "default"occurs after 30 days s16. The Vic Tax Administration Act also govern unpaid tax. I have seen a taxpayer pinged 2 years after they sold the property and they remained liable. Its very rare as usually title wont be transferred but it can happen and doesnt foregive or exclude a debt. And both NSW and Vic seem to have a process to review it was paid based on past experience so it must happen from time to time to be a profitable exercise. Legal advice will confirm that position and any legal claim concerning being statute barred.. The "owner" is assessed and liable for duty. If the owner is a company each Director is also personally liable. The liability is joint and several. There is also the penalty and interest to consider.
     
  3. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,130
    Location:
    03 9877 3000
    I'm not sure who physically transfered the money back in 2014, but I suspect it was the bank (or their solicitors). It was before everyone was using PEXA though, so there were certainly flaws in the system.

    Your lender should have retained a settlement statement of who they paid from the settlement funds. Your conveyancer may also still have a copy of this.

    If you didn't borrow money, they your conveyancer would be a good place to start.
     
  4. Burramys

    Burramys Well-Known Member

    Joined:
    26th Jun, 2015
    Posts:
    1,917
    Location:
    Melbourne
    Thanks. I'm making further enquiries. As far as I'm aware, Australian Consumer law does not apply to governments. I've seen false and misleading government advice and actions, but there were no legal remedies. Now there's no statute of limitations on stamp duty. Asking nearly eight years later to prove something is unfair when records only have to be kept for less time.

    Records to keep longer than five years
    There are some situations, where you will have to keep records for longer than the general five-year retention period, including:

    Records connected to a tax return or document that's corrected or amended
    Records of information used again in a future return
    Records of depreciating assets
    Records of capital gains tax assets
    Petroleum resource rent tax records

    What happens if the records are no longer available? If the SRO is saying that payment has not been made, is the onus on the property owner to disprove this? It's messy.
     
  5. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    SOME settlement statements show the duty and otherwise it is assumed the buyer paid it. Duty must be paid at or prior to settlement. However this isnt proof it was paid to OSR. It is a mere accounting. Banks will generally require duty has been paid prior to settlement but again this isnt foolproof. These records should be in the property CGT records anyway...since duty is a costbase element you should have two records - Payment and how it was paid. . Ideally those records should also show source of funds and how this was applied and settled. eg Owners own $$$, loans etc. Even a mere bank statement. If the ATO ask a decade later and want to trace borrowings that expect to go back to day one of all loans and see the setlement docs for example..

    Statute of limitations could apply to a civil claim if a party to settlement failed to remit the duty and misappropriated it for example. Or it may be governed by a solitors practice trust account etc. Time may be ticking on that so legal advice and exploration asap should be explored.

    yes, onus is on the taxpayer to show they paid duty. Hard to prove actually since they dont even issue a receipt !! But but a clear paymnet and date may assist. But if this was paid to a conveyaner and they stole the funds that doesnt mean the duty was paid but may give rise to a claim against the conveyancers for fraud or malfeasance
     
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,667
    Location:
    Australia wide
    why do you think this may be relevant?

    Was the property mortgaged at settlement? It is likely the lender would have not advanced the borrowed funds if the duty wasn't paid.

    The relevant legislation you should be looking at is
    TAXATION ADMINISTRATION ACT 1997 (VIC)

    There is a requirement to keep records, s 50

    But s55 might be of interest
    TAXATION ADMINISTRATION ACT 1997 - SECT 55 Period of retention


    Best to seek specific legal advice if you cannot find evidence that you have paid the duty
     
  7. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    The vibe...
     
  8. Burramys

    Burramys Well-Known Member

    Joined:
    26th Jun, 2015
    Posts:
    1,917
    Location:
    Melbourne
    I cited Australian Consumer Law to show that like statute of limitations it does not apply to governments. I did not say that ACL applied to the SRO matter.

    Section 55(1) of the Taxation Administration Act 1997 (Vic) (the Act) says:
    (1) A person who is required by a taxation law to keep a record must retain the record for not less than 5 years after—
    (a) the date it was made or obtained; or
    (b) the date of completion of the transaction or act to which it relates—
    whichever is the later.

    The property was bought in early 2014, and five years from the end of FY14 is 30 June 2019. It's now November 2021, two years later. There seems to be no reason to keep records after 30 June 2019 except to prove a few payment when purchasing, as this may be needed for CGT calculations.

    The property was bought outright, no mortgage.
     
  9. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    s55(1) doesnt mean that an assessment doesnt stand. It may mean you may still lack a defence to the Commissioner now raising an assessment.
     
  10. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    10,256
    Location:
    Australia
    If one was to try to provide evidence for this, could the settlement letter from the conveyancer/solicitor be used as evidence? If not, what would be needed?
     
  11. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,667
    Location:
    Australia wide
    bank transfer
     
  12. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    1. Transfer to a trust account (could be included in the settlement reconcilation for owners funds?)
    2. Transfer to OSR
    3. Bank cheque acquired ?
    Generally OSR require cleared funds and dont accept personal cheques which limits payment mechanisms.

    The conveyancers letter etc may indicate WHO was responsible in the accounting for the duty but isnt proof of payment. Imagine you paid the conveyancer and they didnt pay OSR and got away with it and they kept your money ?
     

Buy Property Interstate WITHOUT Dropping $15k On Buyers Agents Each Time! Helping People Achieve PASSIVE INCOME Using Our Unique Data-Driven System, So You Can Confidently Buy Top 5% Growth & Cashflow Property, Anywhere In Australia