Buying Property? Be Careful When Changing the Purchaser — You Could Pay Stamp Duty Twice 

When buying property, it is common for a purchaser to sign a contract in their own name and later nominate another person or entity, such as a company or trust, to complete the purchase. 

While this can be a useful and legitimate arrangement, it can also create serious stamp duty consequences if it is not handled correctly. 

In some cases, the State Revenue Office may treat the arrangement as involving two separate dutiable transactions. This can result in duty being charged twice — once on the original contract and again on the transfer or nomination. This is commonly referred to as “double duty.” 

A nomination occurs when the purchaser named in the contract directs that another person or entity will take the transfer of the property at settlement. 

For example: 

• you sign the contract personally; 

• you later decide the property should be purchased by your company or family trust; and 

• you nominate that company or trust to complete the purchase. 

This often happens for tax planning, asset protection, finance, or structuring reasons. However, the timing and circumstances of the nomination are critical. 

A nomination is not automatically a problem. However, duty issues can arise if certain things happen between the contract date and the nomination date. 

The two main risk areas are: 

1. land development occurring before the nomination; and 

2. additional consideration being given for the nomination. 

If either of these occurs, the sub-sale provisions may apply and the SRO may assess duty on both the original contract and the nomination. The SRO gives examples where a planning permit application before nomination can result in two lots of duty being charged. (State Revenue Office) 

1. Land development before nomination 

This is one of the most common traps. 

You do not need to physically build anything on the land for “land development” to become an issue. Early steps may be enough. 

Examples can include: 

• applying for a planning permit; 

• applying for a building permit; 

• lodging or amending subdivision plans; 

• making requests to council about planning controls or zoning; 

• demolition works; 

• seeking changes that improve the development potential of the land; or 

• other steps that enhance or develop the land. 

Even lodging an application may be enough to trigger duty consequences. 

Simple example 

You sign a contract in your personal name. 

After signing, you apply for a planning permit. 

You later nominate your company to complete the purchase. 

In that situation, the SRO may treat the arrangement as involving two transactions: 

1. duty on the original contract entered into by you; and 

2. duty on the nomination or transfer to your company. 

The SRO’s guidance confirms that applying for a planning permit before nominating another purchaser can constitute land development and result in duty being charged twice. (State Revenue Office) 

2. Additional consideration for the nomination 

The SRO will also look at whether anything extra of value has been provided in connection with the nomination. 

This is not limited to cash. 

Additional consideration may include: 

• a nomination fee; 

• payment to the original purchaser; 

• payment for a profit, gain or uplift; 

• assumption of liabilities beyond the contract price; 

• side agreements connected with the nomination; 

• informal or undocumented benefits; or 

• other value given in exchange for the right to take the transfer. 

Reimbursement of certain costs, such as a deposit, may not always be treated as additional consideration, but this depends on the circumstances. The SRO gives an example where reimbursement of a deposit was not additional consideration, but a separate nomination fee was. (State Revenue Office) 

The safest approach is to get the purchasing structure right before signing the contract. 

Before signing, consider: 

• who should own the property; 

• whether the purchaser should be an individual, company, trust or SMSF; 

• whether finance approval depends on a particular purchaser; 

• whether asset protection or tax advice is required; and 

• whether any development steps are likely to be taken before settlement. 

If a nomination is required, it should usually be done as early as possible and before any development steps are taken. 

You should also avoid receiving any fee, profit or benefit for nominating another purchaser unless you have obtained specific advice about the duty consequences. 

Before changing the purchaser, ask: 

1. Has any planning permit application been lodged? 

2. Has any building permit application been lodged? 

3. Have any subdivision plans been prepared, lodged or amended? 

4. Has there been any request to council or a planning authority? 

5. Has any work been done to increase the value or development potential of the land? 

6. Is the nominee paying anything more than the contract price and ordinary excluded costs? 

7. Is there any side agreement or informal arrangement connected with the nomination? 

8. Has legal and accounting advice been obtained before the nomination is signed? 

If the answer to any of these questions is yes, further advice should be obtained before proceeding. 

Stamp duty is often one of the largest costs in a property transaction. Paying duty twice can add tens or even hundreds of thousands of dollars to the cost of the purchase. 

A nomination may seem like a simple administrative step, but it can have major financial consequences if the timing or surrounding arrangements are wrong. 

Changing the purchaser part-way through a property transaction should not be treated as a formality. 

If you are considering nominating another purchaser, get advice early — preferably before signing the contract, and certainly before taking any planning, building, subdivision or development steps. 

A short conversation at the start of the transaction can avoid a very expensive problem later.