Posted on February 08, 2024
As of 1 January 2024, a change in how land tax between a Vendor and Purchaser is adjusted at settlement has commenced. Previously, regardless of whether or not a Purchaser was to use the property as their principal residence or not, if a Vendor paid land tax then it would have been adjustable between the parties at settlement for that settlement year ending 31 December. Now, this is prohibited unless the consideration is $10 million or greater. The new method is only applicable for contracts that are entered into from 1 January 2024.
This will greatly benefit Purchasers who are intending to use the property as their principal residence and would normally have been subjected to unnecessary land tax payments. It will, however, have the opposite effect on a Vendor, especially if a settlement was early in the year as they would have otherwise been able to pass it onto the new Purchaser.
With regards to WGT as of 1 January 2024 you will not be able to pass this onto a Purchaser if the liability was triggered before the signing date of either a contact or agreement. Again, this does not apply to contracts or agreements entered into prior to 1 January 2024.
Penalties will apply to contracts that have clauses suggesting that either of these taxes need to be apportioned between a Vendor and Purchaser at settlement. As this is a common clause in contracts, it is prudent to ensure they are reviewed correctly.
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