If you plan to convert company title to strata title, do you have evidence of paying stamp duty on your company title?

Company Title to Strata Title

Conveyances, the sale of property, is subject to conveyance stamp duty. It is often one of the largest costs associated with the purchase of a property.

Prior to July 1987 the stamp duty payable on the sale of a company title lot was calculated as a transfer of shares. This is effectively what the purchase of a company title lot is, what you are purchasing is a share group in a company. In that company’s constitution, that share group is associated with the exclusive use and enjoyment of a lot. Stamp duty on shares is charged at a lower rate.

However, amendments to the Stamp Duty Act 1920 in 1987, meant that from that time, the purchase of a company title lot, while still the purchase of shares, will be calculated at conveyance rates. This means the purchase of shares in a company title company (which correspond to a lot) for $1,000,000 will be charged the same stamp duty as the purchase of a $1,000,000 property.

Often when a building is converting from company title to strata title, it is difficult for shareholders to demonstrate that they have paid the correct amount of stamp duty. Especially those who may have owned their shares for some time. This can be something that will prevent a lot being converted to strata.

If a lot owner is unable to produce evidence that they paid stamp duty, a separate application has to be made to the Office of State Revenue confirming that the owner has exclusive use and rights to occupy the unit and that there is no charge in the beneficial ownership of the shares compared to beneficial ownership of the proposed strata title lot. Statutory declarations are usually required in this regard.

If you would like advice around company title, conversion to strata title or stamp duty please call JFMLAW on (02) 9199 8597.