The two most common concessions available to Queensland home buyers are the home concession and the first home concession. The recent Queensland case of Commissioner of State Revenue v Di Sipio & Anor (‘Di Sipio’) has clarified a buyer’s eligibility requirements when claiming such concessions.
To qualify for the home concession, the buyer(s) must meet the following requirements under Part 9 of the Duties Act 2001 (Qld) (‘Act’):
- The property must be residential land, that is, land with a residence constructed on it;
- The residence must be fixed to the land, approved by local council for human habitation by a single family unit and used for residential purposes; and
- The buyer(s) must occupy the residence as their principal place of residence within one year from the ‘Transfer Date’, being the date that they become entitled to possession of the land (e.g. the settlement date under a contract of sale).
First home concession
In addition to the above, first home buyers must meet the following further requirements under Part 9 of the Act to qualify for the first home concession:
- The unencumbered value of the land (or the purchase price) is not more than $500,000;
- The home buyers must be at least 18 years of age;
- The home buyers have never claimed the first home vacant land concession; and
- The home buyers have never owned residential land anywhere in the world.
Disposition of property
Part 14 of the Act states that a buyer who receives a concession can have their transfer duty liability reassessed by the Commissioner of State Revenue (‘Commissioner’), who oversees the administration of transfer duty in Queensland. This effectively means that the Commissioner can seek further transfer duty from the buyer as if the concession had never applied.
The Commissioner can reassess transfer duty for a buyer who receives a home or first home concession in the following circumstances:
- The buyer does not occupy the property as their principal place of residence within one year from the transfer; or
- The buyer disposes of the property:
- before occupying the property as their principal place of residence; or
- within one year after the buyer commences occupying it as their principal place of residence.
Both sections 153 and 154 of the Act explain that a buyer disposes of property by either transferring, leasing or otherwise granting exclusive possession of part or all of the property to another person. However, under section 154(2) of the Act, a buyer does not dispose of the property if the person to whom the buyer grants exclusive possession is either:
- the transferor (e.g. the previous owner or seller) who vacates the property within six months from the transfer date; or
- a tenant under an existing lease who vacates the property on the termination date of the lease or within six months from the transfer date, whichever is the earlier.
Di Sipio: Background
The respondents in this case obtained a first home concession when they purchased a property at Aspley (‘Property’) in August 2011. The contract was subject to an existing lease, which expired in April 2012. Because the lease expired more than six months from the settlement date, the Commissioner reassessed their liability for transfer duty on the basis that the respondents disposed of the Property. When the Commissioner disallowed their objection to the assessment, the respondents applied to the Queensland Civil and Administrative Tribunal (‘QCAT’) to review the Commissioner’s decision.
After QCAT decided in the Commissioner’s favour, the respondents appealed this decision to the QCAT Appeal Tribunal who set aside the original decision. The Commissioner then appealed this decision to the Queensland Court of Appeal (‘Court’). The primary question before the Court was what constitutes a disposition of land for the purposes of section 154(2) of the Act.
Di Sipio: Decision
In coming to their decision, the Court considered the construction of section 154 of the Act. The Court held that the acts of disposition contemplated by section 154(2)(b) of the Act must occur after the transfer date and as such, the Court concluded that a buyer cannot dispose of a property by simply acquiring that property subject to a lease that was created before the transfer date.
This conclusion was elaborated upon by Holmes CJ, who said, “[T]here is no warrant for construing s 154(2) as contemplating that a lease or grant of exclusive possession can occur merely by the transferee’s acquisition of a property subject to an existing lease. The fact that for many purposes the transferee may stand in the shoes of the lessor does not mean that a disposition of land has occurred…And attornment by the tenant is the tenant’s acknowledgement of obligations now owed to a new owner; it does not amount to a disposition by the latter.”
Accordingly, the Court dismissed the Commissioner’s appeal and found in favour of the respondents.
Implications for home buyers
In light of the Court’s decision in Di Sipio, home buyers can receive the above concessions even if a tenant under an existing lease does not vacate the property within six months from the settlement date. The focus of a buyer’s eligibility to receive a home concession is their occupation of the home within one year of the settlement date.
Section 154(2) of the Act effectively allows a home buyer to grant the seller’s tenant a lease for a further term not exceeding six months from the transfer date without losing their eligibility to receive the home concession. Otherwise, provided a tenant under an existing lease vacates the property within one year from the transfer date, the buyer should still be eligible for a home or first home concession.
If you would like further advice about transfer duty or other matters relating to buying or selling property in Queensland, please contact us and one of our experienced property lawyers will be able to assist.
  QCA 198.
 Act, s 86A.
 Act, s 87.
 Act, ss 86(1) and 91.
 Act, s 92(1)(c).
 Act, s 92(1)(b).
 Act, s 86(2)(b).
 Act, s 86(2)(a).
 Act, s 154(1)(b)(ii).
 Act, s 154(1)(b)(i).
 Act, s 153(1)(b).
 Act, s 153.
 Di Sipio  QCA 198 at .
 Ibid at .
 Ibid at .