s12 and Liability for Transfer Duty

By Tim Lynch

Section 12 of the Duties Act NSW says that liability for transfer duty arises on the date the instrument effecting the transfer is first executed. Since real property transfers in NSW are affected by electronic registry instruments, ss12(4) states that the electronic instrument is first executed when first digitally signed by the subscriber or otherwise when the Chief Commissioner first receives information relating to the instrument.

Recently the Supreme Court interpreted s12 as applied to a transfer of real property between a retiring trustee of a discretionary family trust to the replacement trustee in circumstances where Revenue NSW assessed full ad-valorem duty plus foreign person purchaser surcharge duty on the transfer, because at the time the request for assessment of duty was submitted to Revenue, the trust deed did not exclude the trustee or any foreign person from the class of potential beneficiaries. Requisitions from Revenue prompted the trustee to amend the deed to exclude itself (in order to satisfy ss54(3)) and foreign persons as potential beneficiaries before digitally signing and lodging the transfer but Revenue nevertheless assessed duty according to the terms of the trust deed as they existed on the date they first received information relating to the transfer - being the date the request for assessment was submitted - before the amendments to the trust deed. Because the electronic transfer that actually effected the transfer was not the same document as the draft transfer initially submitted to Revenue for assessment, the Court allowed the objection to Revenue's ad-valorem and surcharge duty assessments finding that s12 fixes the date on which the duty liability arises (and therefore the applicable trust terms for the purposes of making the assessment) as the date the effecting transfer was first executed, which in this case was the same day on which it was lodged for registration and that the earlier draft transfer was not dutiable because it never effected a transfer. Forever Grateful Holdings Pty Ltd v Chief Commissioner of State Revenue [2026] NSWSC 761.

Disclaimer

The above does not constitute legal advice, but is information which may be of general interest. Beswick Lynch Lawyers will not be held liable or responsible for any claim, which is made as a result of any person relying upon the information contained in this publication.