Is a transmission of land to a personal representative dutiable?
A recent article1 dealt with the duty liability which arises on death by virtue of the statutory vesting of dutiable property in the executor or administrator (collectively called the legal personal representative or LPR) under section 41 of the Succession Act 1981 (Succession Act).2
Where the dutiable property the subject of the statutory vesting is an interest in land in Queensland registered in the Land Titles Register, is a transmission of title to the LPR dutiable under the Duties Act 2001 (Duties Act)?
If the transmission is a dutiable transaction for the purposes of the Duties Act then, for the same reasons mentioned in the recent article, it will not be exempt under section 124 of the Duties Act.3
A transfer of land in Queensland is a dutiable transaction.4
If the transmission of the registered title to the land can be characterised as a transfer for the purposes of the Duties Act, then Queensland transfer duty would be payable on the unencumbered value of the registered interest in the land.
A transmission by death is not a transfer under the Land Titles Act 1994 (LTA).
To effect a transmission, the LPR must apply to the registrar to be registered as the personal representative for a registered owner who has died and the registrar has the authority to register the interest in the name of the applicant as personal representative if certain criteria are satisfied.5
The term ‘transfer’ is not defined in the LTA. It is defined in the Acts Interpretation Act 1954 (AIA) as the passing of an interest in land other than by transmission. ‘Transmission’ is relevantly defined as the passing of an interest in land because of death.6
An interest may be transferred by the registrar registering ‘an instrument of transfer’.7 A transmission application is ‘an instrument’8 but it is not ‘an instrument of transfer’ as it does not contain an acknowledgment of the relevant consideration which is a mandatory requirement to be a transfer.9
Does the Duties Act import a wider meaning?
The definition of ‘transfer’ in the Duties Act includes assignments and exchanges10 neither of which is directly relevant.
Therefore the ordinary natural meaning of ‘transfer’ in the context of a transfer of ownership of property applies.
The outcome of a transmission dealing under the LTA is that the registered owner of a registered interest in land is changed from the deceased person to the LPR.
Prima facie the transmission by death is a transfer of ownership because a different person becomes the registered owner of the interest in land in Queensland.
However, the change of ownership is neither triggered nor effected by any act done by the putative ‘transferor’ – the deceased person who is no longer in existence at the time the application is made or the time the LPR becomes the registered owner. It is difficult to conceptualise ownership being transferred by a person who does not exist.
Nevertheless, a court may determine a transmission is a transfer of dutiable property for the purposes of the Duties Act simply on the basis it effects a change of ownership.
No double duty?
If this was to be the case, all is not lost as it is possible the Commissioner may treat the transmission under the LTA and the statutory vesting under the Succession Act as the one transaction for property and that the statutory vesting is the most applicable dutiable transaction.11
Each of the abovementioned dutiable transactions places ownership of the deceased’s property in the hands of the LPR in the LPR’s representative capacity and the transmission may be characterised as simply “perfecting” the statutory vesting where the property is an interest registered in the land titles register.
Uncertainty for self-assessors
Law firms which act in estate administration matters and are duty self-assessors should at the very least consider the potential for a transmission by death in favour of a LPR to be dutiable and take appropriate steps to deal with this risk.
A legislative fix or an appropriate public ruling by the Commissioner on this issue would remove the uncertainty surrounding whether transmissions by death are dutiable in Queensland.
Vince Bailey is the Principal at Vince Bailey Lawyer and practises exclusively in estate planning.
1 ‘Death duties in Queensland – Who would have thought?’, written by the author and published on Queensland Law Society’s QLS Proctor; also published on The Tax Reformer.
2 Devolution of property on death.
3 Exemption for deceased estates.
4 Sections 9(1) & 10(1) of the Duties Act.
5 Section 111 of the LTA.
6 Schedule 1 Acts Interpretation Act 1954.
7 Section 60 of the LTA.
8 Definition of ‘instrument’ in Schedule 2 – Dictionary of the LTA.
9 Section 61(1)(e) of the LTA.
10 Schedule 6 – Dictionary of the Duties Act. As the term is defined in the Duties Act, the definition in the Acts Interpretation Act 1954 does not.
11 Section 21 of the Duties Act.