General rules for contracts requiring conveyance
Section 8 – Contract and conveyance
28.Sections 8 and 9 establish the general rule that where a contract is to be completed by a conveyance it is the conveyance that represents the land transaction. This rule will apply in the majority of cases and ensures that a transaction is only charged to LBTT once. In a standard house purchase, the missives of sale are the contract and the disposition is the conveyance.
29.Special rules are provided for in sections 9 to 13.
30.Defined terms used in this section:
| “completion” | section 64 |
| “contract” | section 65 |
| “conveyance” | section 65 |
Section 9 – Completion without substantial performance
31.Section 9 provides for the usual case where a contract is completed by a conveyance without having previously been “substantially performed”. The contract and conveyance comprise a single land transaction. In this case, the “effective date” would be the date of completion (i.e. in a normal house purchase, the date of settlement).
32.Defined terms used in this section:
| “completion” | section 64 |
| “contract” | section 65 |
| “effective date” | section 63 |
| “substantial performance” | section 14 |
Section 10 – Substantial performance without completion
33.Modifying the general rule in sections 8 and 9, section 10 also provides that if a transaction is substantially performed and then is formally completed, the contract and any subsequent completion are treated as two separate land transactions but tax is chargeable on the second transaction to the extent only that the consideration exceeds that on the first transaction. On the other hand if a contract is substantially performed but not completed, the contract is treated as the transaction.
34.The rationale for this provision is to remove any tax benefit in a buyer resting on his or her contract and having the effective enjoyment of the interest despite not proceeding to formal completion. Subsection (6) disapplies the section 10 provisions in a case where paragraph 25 of schedule 19 (agreement for lease substantially performed etc.) applies.
35.Defined terms used in this section:
| “completion” | section 64 |
| “contract” | section 65 |
| “effective date” | section 63 |
| “land transaction return” | section 65 |
| “substantial performance” | section 14 |