The Law Society of NSW Specialist Accredititation 

BLOGS

Any information contained in a blog on this website is general in nature only. The content of any blog posted below reflects information which is known to us as at the date of the posting of the blog. Please be aware that the law regularly changes. Please do not rely on the general information contained in the below blogs, instead we recommend that you contact us to obtain legal advice tailored to your own specific situation.

 

Sep18

Blog authored by Andrew Cannon   (email aac@peacockes.com)

Between the competing tensions of the all enveloping emergence and dependence of technology in modern Australian society, the innovation of legal firms to increasingly deliver digital services to clients’ against the fading abyss of traditional ‘paper’ conveyancing practices, the time for property and conveyancing transactions to be completed ‘paperless’ and electronically has come of age. Conversely, with the rise of the brave new world of breakthroughs consequence of technology’s introduction into the legal, property and conveyancing spheres, lawyers and conveyancers are also in equal measure becoming increasingly exposed to an unprecedented number and forms of cyber-risks, fraud and ethical dilemmas when transacting with clients and other parties digitally.

To date, such examples of the forms of cyber-risk and fraud omnipresent online are cited from, amongst others, Astell v Australian Capital Territory [2016] ACTSC 238, Infotrack’s ‘The Increasing Threat of Identity Crime – A guide to the VOI landscape’ and the Legal Practitioners’ Liability Committee ‘Security Warning for PEXA users’ in response to the well covered ‘Masterchef case’.

Subsequently, relevant government, law and policy makers have responded in kind to these examples of very real and present cyber threats of fraud and identity theft. As evinced in s12E of the Real Property Act 1900 (NSW) (“RPA”) practitioners must satisfy their professional obligations in conveyancing and property transactions for verifying a person’s identity or (“VOI”) of clients’ and/or their agents’ acting by either:

  1. Applying the “VOI standard”; or
  2. Verify the identity of a person “in some other way that constitutes reasonable steps”.

This requirement also applies to the identity verification of mortgagees.

Authorities and best practice guidelines derived from sources such as the Electronic Conveyancing National Law (NSW) section 23 and the Model Operating Requirements prescribed by the Australian Registrars National E-Conveyancing Council (ARNECC) Verification of identity confirm VOI is now a mandatory requirement for lawyers and conveyancing representatives in NSW, applicable to both traditional ‘paper’ and ‘new-age’ electronic settlements. VOI is also a mandatory requirement for all conveyancing transaction in Qld, SA, WA and VIC. However, NT, TAS and the ACT are yet to ‘get onboard’ and recognise formal requirements for VOI in conveyancing and property transactions.

Both electronic settlement platforms PEXA and Sympli also recognise the necessity for representatives to complete verification of identity for each of their client’s and/or acting agents’ in order to complete settlement, through the mandate of their respective participation rules and agreements with network users (ostensibly law firms).

Section 12E of the RPA, which also deals with the requirements of gaining client authorisation and certification, provides:

“…The Registrar-General may from time to time determine, in writing, rules for or with respect to the preparation and lodgment of documents to give effect to conveyancing transactions (the
"conveyancing rules" ), including rules for or with respect to the following:

(a) the verification of identity and authority, including:

(i) the standards to which identity and authority are to be verified, and

(ii) the classes of persons in respect of whom identity and authority are to be verified, and

(iii) the classes of documents in relation to which verification of identity and authority requirements apply, and

(iv) the classes of persons who can undertake verification of identity and authority, and

(v) any supporting evidence and retention requirements…”

Subject to s12 E of the RPA, the Office of the Registrar General’s Conveyancing Rules (“Conveyancing Rules”) sets out that a representative must take ‘reasonable steps’ to verify the identity of both:

  • Each client; and
  • Each agent that acts for the client (such as an adult child giving /taking instructions for their parents or a buyers’ agent etc).

The necessity for practitioners (lawyers and conveyancers) to verify the identity of clients and their agents’ applies to a broad range of conveyancing transactions and dealings with property to ‘cover the field’ including:

  • To create, transfer, dispose of, mortgage, charge, lease or deal with in any other way an estate or interest in land;
  • To register, note or record anything on the title to a property; or
  • To get the registration, note or record of something on title changed, withdrawn or removed.

As per rule 4.1.1, the Conveyancing rules took effect on 26 November 2016 and places the onus on lawyers and conveyancer representatives to take “reasonable steps”, which are imposed as a professional ethical obligation owed to each client and their agents’, for identity verification. Furthermore, rule 4.1.5 of the Conveyancing rules provides a higher standard of ‘reasonableness’ for representatives to make further inquiries’ to verify the identity of each client and their agents’ in dubious or suspicious situations where:

“the Representative knows or ought reasonably to know that:

(i) any identity Document produced by the Person Being Identified and/or any Identity Declarant is not genuine; or

(ii) any photograph on an identity Document produced by the Person Being Identified and/or any Identity Declarant is not a reasonable likeness of the Person Being Identified or the Identity Declarant; or

(iii) the Person Being Identified and/or any Identity Declarant does not appear to be the person to whom the identity Document(s) relate; or

(b) it would otherwise be reasonable to do so.”

In the event that representative cannot be satisfied of a person’s identity to a transaction, arguably legal practitioners are availed the benefit under the s12E of the RPA and chorus of VOI best practice guidelines from property and conveyancing institutions to cease acting any further in the conduct of the conveyancing/property transaction in lieu of the exercise of due diligence and professional responsibility owed.

The Australian Registrar’s National Electronic Conveyancing Council (ARNECC) provides some guidance to lawyers and conveyancers on what ‘reasonable steps’ means under RPA legislation and the Conveyancing Rules when taking a client’s or their agent’s VOI. However, whilst “reasonable steps” is not a defined term under either the RPA or the Conveyancing Rules in NSW, the concept of “reasonable steps” does allow practitioners to demonstrate professional judgment and exercise their discretion and independence to assess what is reasonable in the circumstances of each case and the client when applying the VOI standard.

What is the VOI standard ?

The VOI standard, which is one method for representatives to verify a person’s identity, can be read as a two-tiered process requiring that:

  • A “face-to-face” interview with the client/client’s agent to be identified; and
  • Examination of original identity documents, from the list of approved and acceptable documents, be tendered and produced by a person to be identified.

Face-to-FaceTime interview ? – Issues with video technology for “face-to-face” for VOI interviews

Pursuant to ARNECC Model Practice Rules Guidance Note 2, “face-to-face” interviews conducted via video technologies such as Zoom, skype, FaceTime and others can be “manipulated and forged” and carry inherent risks for legal representatives to be cautious and aware of. As advised by ARNECC, when applying the VOI standard, such modern video technologies “…do not constitute a face-to-face in person interview, nor does it allow identification of original documents, as required by the Verification of Identity standard…” .

Where a representative “uses some other way that constitutes the taking of reasonable steps” to verify a client’s or their acting agent’s identity, there is scope within this ‘less rigid’ method and it may be more suitable and appropriate in some circumstances, particularly where currently the Verification of Identity standard is not. Examples where the use of skype or other similar technologies may be appropriate include for remote/regional clients with no or limited access to VOI agent services or the ability to attend their legal representative’s office. However, given the currency of the VOI laws (in NSW and Australia wide), there is yet to be a ‘test-case’ in NSW or another Australian jurisdiction on this point, determining the legitimacy and suitability for video technology to be used to conduct “face-to-face interviews”. ARNECC arguably eludes to the latter point by stating that:

“use of the (Verification of Identity) Standard is not compulsory and may not be practical in some circumstances.”

However, this was qualified with its submission that:

“where the standard is not used and there is a dispute the subscriber will be required to establish that the method used to verify the identity of a Person constituted “taking reasonable steps” in the particular circumstances.”

How can I complete my VOI ? – Paper and Digital services

Despite the strict requirements on all parties including buyers, sellers and legal representatives to ensure compliance with VOI, identity verification in NSW can be satisfied in several ways such as:

  • In the office with your conveyancer/lawyer (usually at the time of, or just after the completion of exchange); OR
  • VOI agent services such as Australia Post Land Title verification, ZipID, ID Secure and MaxID. These services aim to provide quick and accessible services, paper-based or digital forms. Additionally, most practitioners now have accounts with these VOI agent providers which allows them the equal convenience to access secure and confidential portals which produces and stores a client’s verification of identity, usually sent to the representative as a report.
  • However, depending on the priority required/ordered, both your conveyancer/lawyer representative or VOI agent will likely charge a fee for the service of verifying your identity and authority (express or non-express) according to the standards prescribed by the RPA and the Conveyancing Rules.

To the latter point, only equal to the embrace of technology in the  conveyancing and property spheres has been the rising tide of tech enabled identity agents and providers, free from the constraint of legal ethical obligations, to make identity verification a viable ‘market’ and the ‘clients’ of law firms and conveyancing practices their ‘consumers’. In concert with settlements ever-increasingly being settled more efficiently electronically, VOI services today are arguably most popularly offered and delivered digitally, via tech enabled and online identity verification agents offering the convenience of well branded and trendy VOI apps. Most digital VOI agents’ services via apps are tailored for both apple and android powered tablets and smartphones, which comprise amongst other features, GPS mapping and sophisticated ‘real-time’ video and photographic technologies allowing identity verification to occur “some other way that constitutes reasonable steps” and in the broadest sense of the meaning, “face-to face”. As such, these digital VOI agent providers offer their services ‘anytime’, from either the convenience of work or from the comforts of home.

Who is required to complete VOI ? Natural/legal persons and Australian/foreign and overseas status

VOI in NSW is required to be taken for all applicable conveyancing and property transactions regardless of whether the entity is:

  • A natural or legal person; or

On the basis of citizenship status is:

  • Australian citizen or resident;
  • Foreign citizen or resident;
  • Overseas at the time of the relevant conveyancing/property transaction.

The Registrar General’s Guidelines for Verification of Identity on the NSW Land Registry Services (“LRS”) website sets out the minimum documents requires for persons who are Australian citizens or residents, including a identifier declaration, as well as the requirements for foreign persons and/or residents. The documents which most readily satisfy the identity verification standards in NSW include, but are not limited to:

  • A current valid Australian drivers’ licence;
  • Australian passport; and
  • Birth certificate.

During the conduct of the examination of the original documents to be verified, the (lawyer/conveyancing) representative or VOI agent must be satisfied, so far as reasonably possible, that the original documents tendered, photographs taken (if any) and/or searches conducted for verification are true and confirm the identity of the person to the transaction. A representative lawyer or conveyancer should also verify the identity of such entities like appointed individual acting for a company or as power of attorney. For a Company, VOI can be satisfied by:

  • Conducting and producing an ASIC search confirming such records of the existence and identity of the registered company name; and
  • The identity of the individual duly appointed Officers (Directors and Secretaries) whom are authorised to sign or witness documents on behalf of the Corporate body in such capacity, including the affixation of the Company seal.

Reasonable steps for taking VOI in NSW for a power of attorney can also be satisfied by:

  • Confirming the currency and validity of a certified original copy of the power of attorney appointing the person as power of attorney for another party to the property/conveyancing transaction; and
  • Verifying the identity of the person appointed to act as power of attorney.

In relation to overseas clients and/or their agents’, one method legal/conveyancing representatives may use to satisfy the requirements for VOI in NSW involves:

  • Instructing clients and or their agents’ acting to have their ID documents certified at their nearest Australian embassy or Australian Consulate office which will sign, date and endorse copies of the original identity documents; and
  • The certifying Australian embassy or Australian Consulate officer completing with the client and/or their agent acting the approved Australian Embassy/High Commission/ Consulate identity/ witnessing certification (certification) and client authorisation. Other methods may include, with the legal representative taking further ‘reasonable steps’, having overseas client verify their identity at an international law firm.

How long does my VOI last for once completed?

However, once a person’s VOI is confirmed, it need not be updated for a period of 2 years and should be held securely (either paper or electronically) by the representative (lawyer or conveyancer) for a period of 7 years.


Jun01

Over 65 and Thinking of Downsizing?

Amanda Quin - Friday, June 01, 2018

Over 65 and Thinking of Downsizing? Potential new superannuation benefits

From 1 July 2018, if you meet the eligibility requirements, you may be able to make a downsizer contribution into your superannuation of up to $300,000 from the proceeds of selling your home.

To be eligible to make a downsizer contribution of up to $300,000 into your super:

  • You will need to be 65 or older at the time of the contribution
  • Your house sale contract must have exchanged on or after 1 July 2018
  • You must make your downsizer contribution within 90 days of selling your home (unless the ATO grants you an extension on this time limit)
  • You can only make a contribution from the sale of one home (ie you cannot previously have used the downsizer contribution scheme). However you can make multiple contributions from the sale of that one home – but all contributions must be made within 90 days of the sale completing and cannot exceed the cap of $300,000 per person
  • You or your spouse must have owned your home for 10 years or more before selling it
  • Your home must be in Australia and you must apply the main residence exemption for CGT to the sale of the home (unless you acquired the home prior to 20 September 1985)
  • You must submit the downsizer contribution form to your super fund either before or at the same time as making your contribution
  • The contribution cannot be greater than the total proceeds from the sale of your home

If you choose to make a downsizer contribution then:

  • If you have a spouse, then each of you may be able to make your own contribution of up to $300,000
  • A downsizer contribution will not count towards your concessional contributions cap
  • A downsizer contribution can be made even if your superannuation balance is greater than $1.6 million
  • However a downsizer contribution will count towards your transfer balance cap of $1.6 million (nb the transfer balance cap applies when you move your super savings into the retirement phase)

You should carefully consider whether a downsizer contribution is suitable for you, as they are not tax deductible and will be taken into account for determining eligibility for the age pension.

If you sell your home, are eligible and choose to make a downsizer contribution, there is no requirement for you to purchase another home, however purchasing a new home is also permitted.

 



Aug07

Changes to Retail Leases Act

Amanda Quin - Monday, August 07, 2017

 

On 1 July 2017 a number of changes to the Retail Leases Act (NSW) (“the Act”)commenced including:

Removal of 5 year term

Section 16 of the Act was removed. As a result there is no longer a minimum term for a Retail Lease and no requirement for a solicitor’s certificate to be executed for short term leases.

Lease registration

  • The Landlord must supply the Tenant with a copy of the fully signed lease within three (3) months of the tenant returning the signed lease to the Landlord.
  • In addition, where the term of a lease is three years or more then the lease must be registered within 3 months of the Tenant returning the signed lease to the Landlord. This period may however be extended where any mortgagee delays in consenting to the lease.
  • The Landlord cannot require the Tenant to pay any mortgagee consent fees.
  • The maximum fine that may be imposed is 50 penalty units (which is currently $5,500).

Disclosure Statements

  • If the estimated amount of an outgoing is not disclosed in a Lessor’s disclosure statement, then the Tenant does not need to pay the outgoing.
  • Where the estimate for any outgoings is less than the cost of the actual outgoing – then unless there was a reasonable basis for the estimate, then tenant does not need to pay more than what was estimated.
  • If a Landlord fails to provide a Tenant with a disclosure statement (which is to be supplied at least 7 days before the lease is entered into) or has served a defective disclosure statement (ie an incomplete or misleading disclosure statement), then the Tenant may terminate the lease during its first 6 months.
  • If the Tenant does exercise its right to terminate the lease then the Tenant will be entitled to claim compensation for costs such as their expenditure on fitout. (Although the Tenant cannot terminate the lease under this section in relation to a defective disclosure statement if the Landlord had acted honestly and reasonably when issuing the disclosure statement and if the Tenant is in substantially as a good a position as they otherwise would have been if the disclosure statement had been correct).
  • Lessor disclosure statements are now required for Agreements for Lease.

Bonds and Bank Guarantees

Bank Guarantees must be returned to the Tenant within two months after the Tenant has performed all of its obligations under the lease.

Whilst it has not yet started, there is now provision for the Retail Tenancy Unit to move to an on-line bond lodgment system.

Assignment Process

When a Tenant is seeking consent to assign its lease to an assignee, then the Tenant may ask the Landlord for an updated lessor’s disclosure statement.

If the Landlord fails to provide the Tenant with an updated lessor’s disclosure statement within 14 days of it being requested to do so, then the Tenant may prepare its own updated lessor’s disclosure statement for service on the assignee.

If the Tenant then serves an assignor’s disclosure statement and the updated lessor’s disclosure statement on the assignee and the Landlord AND if the Landlord consents to an assignment of the lease (or is deemed to have consented, where the Landlord fails to respond within 28 days) then the Tenant and its guarantors will be released from liability under the lease from the assignment date.

NCAT jurisdictional limit increase

NCAT can now hear retail lease dispute matters up to $750,000.


 

Aug07

What is stamp duty?

Transfer of land duty (formerly known as stamp duty) is a duty payable on the sale or transfer of land, including improvements in NSW.

Put simply, stamp duty is a tax imposed on the purchaser of land in NSW. The tax is payable to the Revenue NSW (formerly known as the NSW Office of State Revenue).

How is stamp duty calculated? 

Stamp duty is calculated on an ad valorem basis – meaning the amount of stamp duty payable is proportional to the value of the land.

Revenue NSW has a calculator to assist you with your calculations and you may access this on the Revenue NSW website at:

https://www.apps08.osr.nsw.gov.au/erevenue/calculators/landsalesimple.php 

When am I required to pay stamp duty?

You are required to pay stamp duty prior to land being transferred (acquired by you). However there are some exemptions for First Home Buyers.

Who is a First Home Buyer:

Eligibility criteria:

An eligible purchaser is a purchaser who has not, and whose spouse has not:

  • At any time owned (either solely or with someone else) residential property in Australia other than property owned solely as a trustee or executor;
  • Previously received an exemption or concession under the First Home Buyers Assistance Scheme
  • Furthermore an eligible purchaser must:

  • Be over the age of 18 years;
  • Must be an Australian citizen or permanent resident;
  • Must be a natural person - not be a company or trust;
  • Must purchase the whole of the property; and
  • Acquire an interest of at least 50% of the property.
  • First Home Buyers:

    The NSW State Government established the First Home Buyers Assistance Scheme on 1 July 2017 to assist First Home Buyers with acquiring land in NSW by providing them with an exemption from stamp duty in certain circumstances:

  • First Home Buyers Assistance Scheme:
  • Provides an exemption on stamp duty on new and existing homes valued up to $650,000.00;
  • Provides a concession on stamp duty on new and existing homes valued between $650,000.00 - $800,000.00;
  • Provides an exemption on stamp duty on vacant land valued up to $350,000.00;
  • Provides a concession on stamp duty on vacant land valued between $350,000.00 - $450,000.00;
  • Allows purchasers to receive an exemption or concession (as per the above values) if they are purchasing the property with someone that is not a first home buyer and they are purchasing at least 50% of the property. ( Note: this does not apply to spouses). These are called Shared Equity Arrangements and would apply if the first home buyer was purchasing with a relative (other than a spouse) or friend for example. Duty is calculated with reference to the proportion of the property purchased by other parties.
  • First Home Owner Grant (New Homes) Scheme:
  • The First Home Owner Grant (New Homes) Scheme was established to assist eligible first home owners to purchase a new home or build their home by offering a grant.
  • The grant amount is determined based on the date of the eligible transaction:
  • For eligible transactions made on or after 1 January 2016, the grant amount is $10,000.00;
  • For eligible transactions made on or after 1 October 2012 and 31 December 2015, the grant amount is $15,000.00
  • What is a new home?
  • A home that has not been previously occupied or sold as a place of residence.

    Residence Requirement:

    Both the First Home Buyers Assistance Scheme and the First Home Owner Grant (New Homes) Scheme require the home purchased or built to be occupied by at least one of the eligible purchasers as his/her principal place of residence for a continuous period of at least 6 months with that occupation commencing within 12 months after settlement.

    Should you have any queries regarding the abovementioned Schemes, please do not hesitate to contact our office or review some further information on the Revenue NSW website:

    http://www.revenue.nsw.gov.au/grants

    Feb03

    Changes to Strata Laws

    Amanda Quin - Friday, February 03, 2017

    Strata legislative changes

    On 30 November 2016 the Schemes Management Act (2015), Strata Schemes Management Regulations (2016) and the Strata Schemes Development Act 2015 commenced.

    There are over 90 changes to the Strata Laws and not all of them are significant. For example, Executive Committees are now called Strata Committees. However, some of the main changes to Strata laws are:

    Collective Sale/demolition of strata property

    • There is a new process which could allow the whole building to be sold or demolished or replaced, if 75% of the owners agree to this occurring.
    • This new power does give greater flexibility to replenish an old crumbling building, but could mean that some owners may be forced to relocate regardless of whether they want to or not.
     

    By-laws

     

     

     

    • There are new standard by-laws for new schemes. As previously, the by-laws may be modified or amended.
    • All pre-existing schemes must review their by-laws by 30 November 2017, but the new by-laws will not apply to the pre-existing schemes unless the pre-existing schemes choose to use them and register them.
    • Changes to by-laws will not be effective until they are officially registered with the Registrar General.
    • An owners corporation may pass a by-law that limits the number of occupants of a unit (to stop overcrowding). However any such by-law must permit a minimum of 2 people for each bedroom in the unit.
     

    Renovations or other works by Owners

     

     

     

     

     

    • Under the previous strata laws, all works required approval from the Owners Corporation.
    • The new laws now divide works into cosmetic, minor and major.
    • If a change is cosmetic, a lot owner only needs to notify the committee and the committee does not need to approve the cosmetic change. Cosmetic works include: installing or replacing hooks, nails or screws for hanging paintings or other things on walls, installing or replacing handrails within the lot, painting, filling minor holes and cracks in internal walls.
    • If the works are minor, then approval may be granted by a vote of the committee ( which does not need to be at a general meeting. Minor works might include renovating a kitchen (but only if no structural work is required), installing or replacing wood or other hard floors, installing environmental measures (such as a clothesline or reverse cycle air conditioner). Whether these types of work are minor will depend on whether or not there is any structural work and whether any changes to the lot will be externally visible.
    • Major works, such as structural alterations, will require approval by a special resolution at a general meeting.
     

    Strata Managers

     

    • When a new scheme is created, the initial Strata managers can only be appointed for the first year – to allow the new owners to determine if they are happy with the manager.
     

    Abandoned Goods

     

     

    • There is a new process to follow that permits the Owners Corporations to sell or dispose of goods which have been abandoned on common property.
    • A disposal notice may be required to be placed on the goods (although this is not required for perishable food).
    • The owner of the goods is entitled to apply to NCAT for payment of the net proceeds from the sale of such abandoned goods, otherwise, the proceeds go to the administrative fund.
     

    Unpaid levies

     

    • The Owners Corporation may either enter into payment plan with a non-paying lot owner or the Owners corporation can take recovery action by applying to the Local Court.
     

    Fines

     

     

    • Higher upper limits on fines for breaches of general by-laws and new fines for overcrowding offences may be levied by NCAT.
    • The Owner’s corporation is to receive the money from such fines. The Owner’s corporation may enforce the fines in the Local Court.
    • Strata schemes are encouraged to arrange medication prior to taking proceedings at NCAT.
     

    Meetings

     

     

    • If registered tenants make up more than 50% of the occupants of a Scheme, they can nominate a tenant to be their representative on the strata committee. However, in practice, hardly any owners register their tenants with the scheme, so it is unlikely that this new law will be of any practical value.
    • New limits on the number of proxies that any one person may hold. If the scheme has 20 lots or less, then only one proxy vote may be held per person. For larger schemes, the maximum number of proxies that may be held by one person is 5% of the total number of lots in the scheme.

     

    Dec20

    Rental Bonds Online

    From 30 January 2017, it will be mandatory for landlords and real estate agents to invite residential tenants to lodge their residential rental bonds in NSW using Rental Bonds Online (RBO).

    When a new residential tenancy agreement is entered, then the landlord (or the landlord's real estate agent) must be registered with RBO and must invite the new tenant to provide their email address for the purpose of initiating the RBO bond lodgement process.

    A landlord or agent who fails to invite a new tenant to lodge their bond using RBO, prior to accepting a bond, will be in breach of the Residential Tenancies Act.

    Tenants who do not have internet access can continue to give their bond directly to the landlord or landlord's real estate agent. The landlord or agent is then required to lodge the bond with the Rental Bond Board using the current paper based method.

    More information is available athttp://www.fairtrading.nsw.gov.au/rentalbondsonline

     


    Dec12

    SURCHARGE STAMP DUTY

    Amanda Quin - Monday, December 12, 2016

    SURCHARGE STAMP DUTY

    Surcharge Stamp Duty is payable on residential property in NSW (at a rate of 4% of the value of the property) – where residential property in NSW is transferred or sold to foreign persons (including foreign trusts and companies). The surcharge duty is payable by the foreign person or entity.

    Residential property includes vacant lots of land that are designated for residential purposes AND any land on which there are one or more dwellings (including buildings which are being constructed).

    It is payable on all transfers of property, not just on purchases – unless an exemption applies.

    There are some exemptions for break-up of marriages, corporate reconstructions, partitions, deceased estates etc.

    Normally when a person buys property "off the plan" in NSW, they are granted 12 months to pay stamp duty. However, where a foreign person buys property "off the plan", then the stamp duty must be paid within 3 month of exchange of contracts.

    Where a foreign person purchases land jointly with a non-foreign person, then the surcharge duty is only charged on the proportion of the value that relates to the interest which the foreign person bought.

    WHO IS A FOREIGN PERSON

    FOREIGN PERSONS ARE:

    • Any natural person who is not ordinarily resident in Australia or does not have a right to reside in Australia.
    • Any natural person with only a temporary right to reside in Australia (irrespective of how long that temporary right may be or how long they have lived here).
    • Any natural person holding a permanent visa, who has not been in Australia for at least 200 days during the 12 months prior to the relevant liability date. (NB there are special rules for off the plan though).
    • Any discretionary trust where any foreign person (including foreign companies or foreign trusts) are a potential beneficiary (irrespective of whether any distributions have ever been made to them).
    • Any company or unit trust in which a foreign person (whether natural or otherwise) and the associates of that foreign person (even where the associates are Australian citizens) has at least a 20% interest in the entity. (For example, if your spouse was a UK citizen and if he or she held 5% of the shares in a company and you held 18% of the shares in that company, then because you are an associate of your spouse, then that makes that company a foreign person. Likewise with units trusts).
    • Any company or unit trust in which multiple foreign persons (and the associates of those persons) hold at least a 40% interest.

    PEOPLE WHO ARE NOT FOREIGN PERSONS:

    • Australian Citizens, no matter whether they currently reside in Australia or not.
    • Any natural person holding a permanent visa, who has been in Australia for at least 200 days during the 12 months prior to the relevant liability date.
    • Any citizen of New Zealand who entered Australia legally and has resided in Australia for at least 200 days during the 12 months prior to the relevant liability date.
    • Any discretionary trust where none of the potential beneficiaries are foreign persons.

    HOW TO MEASURE INTERESTS IN A COMPANY OR UNIT TRUST

    A person holds an interest in an entity if that person, either alone or with one or more of their associates:

    • Controls that percentage of the voting power; or
    • Holds interests in that percentage of the issues securities in the entities (ie shares or units); or
    • Holds options which would give them that percentage of interest if the options were exercised.

    Associates are a person’s spouse, parents, lineal descendants (including adopted children), siblings, aunts, uncles, nephews, nieces and grandparents AND all those people for their spouse as well.

    POSSIBLE REFUND CIRCUMSTANCES

    If a person was a foreign person at the time of entering into the contract for sale, but is not a foreign person at the time of completion of the transfer/settlement, it may be possible to apply for a refund of the surcharge duty.

    This might occur where a Permanent Resident had only lived in Australia for less than 200 days at the time of signing an off-the-plan contract, but by the time it settled, they had met the 200 days requirement.


    Dec02

    Mandatory Energy Efficiency ratings for Commercial Office Space

    Amanda Quin - Friday, December 02, 2016

    As at 1 July 2017, the threshold for reporting energy efficiency ratings pursuant to the Building Energy Efficiency Disclosure Act 2010  will be reduced from 2,000 square metres to 1,000 square metres.

    Where the said legislation applies, then a Building Energy Efficiency Certificate (BEEC) needs to be obtained and registered. A BEEC incorporates both a National Australian Built Environment Rating System (NABERS) Energy star rating and a Tenancy Lighting Assessment (TLA) of the relevant area of the building.

    Where the BEEC requirements apply, then the BEEC must be registered prior to approaching the market regarding a proposed sale or lease and the Energy star rating must be included in any advertising for the sale or lease or sublease. Therefore if you do need a BEEC for a building, then you need to obtain the BEEC and register it before you advertise the office space for sale or for lease.

    This legislation does not apply if:

    • The proposed lease is for less than 12 months;
    • The building is a strata titled building;
    • The occupancy certificate for the building is less than 2 years old; or
    • The building is a mixed use building and the office space is less than 75% of the building’s net lettable area.

     

    In addition the disclosure requirements only apply where either:

    (a) the office space is owned by a corporation/company; or

    (b) where the tenant is a corporation/company (and in this case, only where the tenant or purchaser asks for a BEEC).

    That is, this law does not apply to office space that is owned by natural persons and leased or sold to natural persons.

    You can also apply for an additional exemption, if you are approached by someone who is seeking to buy or lease the building (as opposed to you as the owner advertising it for sale or for lease).


     

     


     


     



    Jul25

    NEW WITHHOLDING TAX ON TRANSFERS OF PROPERTY

    Amanda Quin - Monday, July 25, 2016

    From 1 July 2016 every person or entity who acquires land in Australia which has a value of $2 million or more must withhold money on account of the transferor’s potential Capital Gains Tax liability. The person acquiring the property is then required to remit any such amount to the ATO.

    In addition, entering into an option to purchase (regardless of the value of the underlying property) and acquiring interests in certain landholding companies and trusts will also be caught by this new tax requirement.

    If the transferee (ie purchaser) fails to withhold the correct amount of tax, then the purchaser will be penalised. Significant penalties will apply.

    Generally, the amount to be withheld will be 10% of the purchase price or the value of the property, but this may be varied if the vendor obtains a variation notice from the ATO and serves a copy of the notice on the purchaser prior to completion of the sale.

    The transferee is also not required to withhold or remit any money if an exception applies.

    Accordingly, unless an exception or variation notice applies, all persons selling land or interests in land for $2 million or more must be aware that the purchaser will withhold 10% of the purchase price from completion.

    Any withheld amount will be credited to the Vendors when the Vendors next lodge their tax return with the ATO.

    Exceptions to the new withholding regime

    There is no requirement for a purchaser to withhold any money on account of the vendor’s potential CGT liability if:

    1. The market value of the property is less than $2 million; or

    2. A clearance certificate has been obtained from the ATO by the vendor (or all of the vendors when there is more than one vendor) and provided to the purchaser before settlement; or

    3. In relation to an option or an interest in a landholding company, the vendor gives the purchaser a declaration that the vendor is or will be an Australian resident for a period which covers the transaction (and the purchaser is not on notice of the declaration being false), or

    4. The vendor is under external administration or in bankruptcy.

    Who is eligible for a Clearance certificate

    Australian residents are eligible for clearance certificates.

    Foreign residents are not eligible for clearance certificates, but they may be able to obtain a variation notice to reduce or eliminate the need formoney to be withheld from the sale, if they can show that a CGT exemption or other exemption will apply.


    May24

    Swimming Pool Certification

    Amanda Quin - Tuesday, May 24, 2016

    Swimming Pool Certification - Requirements for Selling or Leasing

    If you are selling, purchasing or leasing a property in NSW that has a swimming pool, spa or any excavation, structure or vessel that is capable of being filled with water to a depth greater than 30cm designed for human aquatic activity (all of which for the purposes of this Article will be referred to as a “Pool”), then you need to be aware of new regulations that came into effect from 29 April 2016.

    What do the new regulations mean for Pool Owners in NSW ?

    All Pool Owners in NSW must:_

    • (a)register their Pool (including Strata Schemes and Community Schemes), if they have not already done so. To register your pool all you need to do is go to http://www.swimmingpoolregister.nsw.gov.au/ and enter your name, address, contact details, pool type, approximate age of the pool and complete a self-assessment checklist on your pool; and
    • (b)maintain a safe pool barrier; and
    • (c)comply with any Council orders regarding the safety of their Pool (nb Local Councils have the right to randomly inspect any Pool)

    All Pool Owners should generally ensure that their Pool complies with all relevant safety regulations relating to their Pool.

    Additional requirements for Landlords:

    Before entering into a lease for a premises in NSW that includes a Pool, the Landlord must obtain and attach to the Residential Tenancy Agreement either:

    • (a)A compliance certificate (from either the relevant local Council or an independent registered certifier) in relation to the Pool at the property. The purpose of this certificate is to confirm that the Pool meets the relevant safety requirements. This certificate should be attached to the residential tenancy agreement for the property; or
    • (b)An occupation certificate for the Pool, which is less than 3 years old, together with evidence of registration of the Pool on the Swimming Pool register.

    NB The above requirement to obtain and attach documents to the Residential Tenancy Agreement does not apply where the Pool is on common property and the premises are part of a Strata Scheme or Community Scheme that has more than 2 lots.

    Additional requirements if you are selling a property in NSW with a Pool:

    Before entering into a Contract for Sale for a Property in NSW that includes a Pool (n.b. there are limited exemptions for pools that are on “common property”) the Vendor must obtain and attach to the Contract for Sale either:

    • (a)An occupation certificate for the Pool, which is less than 3 years old, together with evidence of registration of the Pool on the Swimming Pool register; or
    • (b)A compliance certificate (from either the relevant local Council or an independent registered certifier) in relation to the Pool at the Property. The purpose of this certificate is to confirm that the Pool meets the relevant safety requirements; or
    • (c)A non-compliance certificate for the Pool which indicates that the issues that cause the Pool to be non-compliant are minor issues.

    Where a non-compliance certificate has been issued and should it show that the Pool has significant safety problems, then the Pool Owner is obliged to rectify the safety problems and then seek a re-assessment of the Pool by a certifier, prior to selling the Property.

    However, if the non-compliance certificate indicates that the problems are minor then a non-compliance certificate may be attached to the Contract for Sale and in such a case the Purchaser will instead be responsible for ensuring that the safety issues are rectified. (It may be the case that some Purchaser’s may seek to renegotiate the purchase price based on whom is required to rectify any minor compliance issues).

    NB The above requirement to obtain and attach documents to the Contract for Sale does not apply where the Pool is on common property and the premises are part of a Strata Scheme or Community Scheme that has more than 2 lots.

    If none of the above certificates are attached to the Contract of Sale, then the purchaser may be able to rescind the contract within 14 days of exchange (or in some circumstances they may be able to rescind the contract right up until the completion date if there is a breach of a Vendor warranty). Therefore it is very important to attach the correct certificates to the Contract for Sale.

    What this means if you are buying a property in NSW with a Pool:

    The purchaser of a property with a Pool (other than where the pool is on common property of a strata or community title scheme where there are more than two lots in the scheme) should checkthat the Contract of Sale includes at least one of the following;

    • -A certificate of compliance (no greater than 3 years old), or;
    • -An occupation certificate (no greater than 3 years old) and a certificate of registration, or;
    • -A certificate of non-compliance (no greater than 1 year old).

    If the Contract for Sale includes a certificate of non-compliance and theproblems with the Pool do not pose a significant risk, then the Vendor can sell the property without being obliged to ensure that the Pool safety is up to standard and insteadthe purchaser will be required to rectify the “minor” non-compliant issues identified by the certifier.

    If you are a purchaser faced with the decision of purchasing a property with a certificate of non-compliance you can ask to see a copy of the notice outlining the non-compliant issues. This will give you the opportunity to estimate the potential costs involved to undertake the rectification works and therefore negotiate on the purchase price. Please be aware however that price negotiations should be undertaken prior to exchange of contracts.

    For further information visit the NSW Government Swimming Pool Register website at http://www.swimmingpoolregister.nsw.gov.au/ or contact our office on (02) 6882 3133.