With thanks to team
member Hayden Dunnett, today’s post looks at the High Court decision in
Commissioner of State Revenue v Lend Lease Development Pty [2014] HCA 51. The
decision As usual, a full copy of the decision is available via the following
link http://www.austlii.edu.au/au/cases/cth/HCA/2014/51.html.
In most
jurisdictions, when a dutiable transaction such as a transfer of land occurs,
duty is charged on the greater of the consideration or the unencumbered value
of the land.
The Lend Lease
transaction involved a complex multistage development between Lend Lease and
the Victorian Urban Development Company (“Vic Urban”). Part of the development
agreement included Lend Lease purchasing seven parcels or land, and in
addition, making four payments for various infrastructure and service costs
relating to the parcels of land.
The Commissioner
argued the dutiable value of the transfer of each parcel of land to Lend Lease
included the additional payments. Lend Lease on the other hand thought the
consideration stipulated in the contract of sale for each transfer of the land
was the dutiable proper amount.
The Court found in
favour of the Commissioner, determining that what was received by Vic Urban was
stipulated in the development agreement as a ‘single, integrated and
indivisible’ transaction rather than in separate contracts of sale. Duty was
therefore payable on the additional payments made by Lend Lease.
The decision
confirms that there may be situations where the dutiable value of the
transaction may be greater than the payment made for the asset itself.
Where a transfer is
one part of a wider transaction, the transaction in its entirety should be
considered to determine if any collateral agreements need to be included in
determining the dutiable value of the transaction.
Until next week.
Image credit: Nicki Mannix cc