Stamp duty exemptions in Family Law property settlements

Introduction

Understanding the concept and legalities of stamp duty exemptions and other potential taxation relief in Family Law property settlements is essential for those navigating relationship breakdowns. This blog post discusses stamp duty exemptions in Family Law for parties involved in a marriage or de facto relationship breakdown. We’ll cover the relevant legislation, eligibility requirements, and application process to help you make informed decisions.

What is a stamp duty exemption in Family Law?

Stamp duty is a tax imposed when you buy or acquire property.

A stamp duty exemption in family law is a type of relief from having to pay stamp duty on certain transfers or acquisitions of property that are made between parties following a marriage or de facto relationship breakdown. A common scenario is when the jointly owned former matrimonial home is to be transferred into one party’s sole name.

The stamp duty exemption also applies when property is transferred from a party to the relationship to a child of either party, or to a trustee of a child of either party.

It’s important to be familiar with the Duties Act 1997 (NSW), specifically sections 68 and 163B, which provide the legal foundation for stamp duty exemptions in Family Law property settlements.

Am I entitled to a stamp duty exemption in my Family Law property settlement?

To qualify for a stamp duty exemption you will need one of the following:

1. An Order of the Court made under the Family Law Act 1975;
2. A Binding Financial Agreement made under the Family Law Act 1975;
3. From 19 May 2022, an additional qualification was included whereby the Chief Commissioner will accept an agreement between parties if they are satisfied the agreement was made for the purpose of dividing relationship property as a consequence of the breakdown of the relationship.
4. The transaction must be documented in an appropriate deed or instrument and must comply with the requirements of relevant state laws. It is also important to note that different states have different rules regarding stamp duty exemptions.
5. We always recommend that any agreement reached about the division of assets post separation be documented by way of Consent Orders or a Binding Financial Agreement. This provides finality, certainty and enforceability, as well as meet the requirements to achieve a stamp duty exemption (if relevant) without the need for the Commissioner’s discretion for the application to be approved
6. How to apply for a Stamp duty exemption in your Family Law property settlement
7. Applying for a stamp duty exemption in a family law property settlement can be done by submitting the appropriate paperwork to the relevant state authority. In NSW, you must complete an ‘Application for Exemption or Refund – Break-up of a Marriage or De facto Relationship’ to be provided to Revenue NSW.
8. You will need to provide supporting documents, including the Court Orders or Binding Financial Agreement.

Once your application has been received and approved, you will receive an exemption or refund for any stamp duty that you have already paid.

Closing

Understanding the intricacies of stamp duty exemptions in Family Law property settlements is vital for those going through a financial separation involving the transfer, disposition or acquisition of property. By familiarising yourself with the relevant legislation and eligibility requirements, you can better navigate this challenging time.

At Turnbull Hill Lawyers, our experienced family lawyers are here to guide you through the process, ensuring your agreements are compliant and that you can take advantage of any potential stamp duty exemptions.

Reach out to our friendly team for assistance and achieve the best possible outcome for your situation.