This ruling clarifies the application of duty under the Duties Act 2001 (the Act) to various transactions which are also subject to GST.

Ruling

Chapter 2 – Transfers of dutiable property

Ad valorem duty at the rate specified under Chapter 2 of the Act is charged on the greater of the consideration for, or the full unencumbered value of, the property being conveyed.

GST is imposed under A New Tax System (Goods and Services Tax) Act 1999 of the Commonwealth on taxable supplies at 10% of the value of the supply. The value of a taxable supply is 10/11ths of the price.

The price of a taxable supply is the amount or market value of the consideration for the supply without any discount for the amount of GST (if any) payable on the supply. GST is payable by the person who makes the taxable supply.

Where a dutiable transaction is silent as to whether the transferor is liable to GST in respect of the transaction, duty will be assessed on the consideration or the full unencumbered value of the property, whichever is the greater (ie: on the basis that 1/11th of the consideration or full unencumbered value is attributable to GST).

Where a dutiable transaction contains a condition that the transferee will pay the stated consideration plus an amount equal to the GST payable by the transferor, duty will be assessed on the GST “inclusive” amount. The GST component forms part of the consideration and duty is assessed on the greater of the consideration (including the GST component) or the full unencumbered value of the property, whichever is the greater.

Where a contract contains a clause or provision which indicates that the transferor’s liability to GST is unknown as at the date of contract or transfer but that should it be payable, an amount equal to that liability will be paid by the transferee to the transferor, the duty will be assessed on either the consideration (exclusive of any GST component) or the full unencumbered value of the property provided that an undertaking from the transferee accompanies the lodgement. A ruling in respect of this issue with a pro forma declaration attached has been issued. That ruling is entitled "GST on Dutiable Transactions".

Chapter 4 – Lease Instruments

The “cost of a lease” is described under section 101 of the Act. Any liability for GST is specifically excluded from the calculation of the cost of the lease. Duty is therefore calculated on the GST exclusive price.

Chapter 5 – Hire of Goods

Duty is paid on “hiring charges” that are described in section 124 as payments made to the person who hires out the goods by or on behalf of the hirer. Any liability for GST incurred by a person who hires out the goods is specifically excluded from the hiring charges. Duty is therefore calculated on the GST exclusive price.

Chapter 7 – Insurance

Duty is calculated on the premium on general, term policies and mortgage insurance policies. The premium includes any tax, charge or levy given to an insurer. Duty is therefore calculated on the GST inclusive price of the premium.

Chapter 8 - Motor Vehicles

Duty is levied on the dutiable value of the motor vehicle. The “dutiable value” is defined as the consideration given for the acquisition of the vehicle or the market value of the vehicle at the time of acquisition whichever is the greater. Where duty is assessed on the consideration for the acquisition of the vehicle and the consideration includes a payment by the purchaser to the vendor amounting to the equivalent of GST payable by the Vendor, the duty is calculated on the GST inclusive price.

All rulings must be read subject to Revenue Ruling PUB-GEN-2001-1.






Peter Coe
COMMISSIONER OF STATE REVENUE