Need urhent help........and/or nominee in WA

[Ralph]

I know this is in the wrong spot (should be under acct and tax, but trying to get quick exposure due to short timeframe).

I signed a contract on and/or nominee on November 24th in WA. Was setting up a trust and not 100% it would be done in time, so covered by saying myself or XYA pty ltd ATF Trust.

XYZ was setup on the 10th November, but trust stamped in Dec/Jan.

Anyway, WA law says if you sign a contract as an Agent for the buyer, then levy for doing this is $20. If you sign it because you're not sure who will buy, then they will consider it an onsale and you will pay a cool 50% of the stampduty.

The clincher is that we settle tomorrow at 2.15pw perth time and my settlement agent has just rung. He's a friend and is arguing for me, but upshot from the SD office is that if I don't pay an extra 15k for tomorrow, then no settlement (which my bank has already kindly facilitated to be a few days late). My settlement agent has done heaps of and/or nominee's and has never come across this before. He challenged the $20 and may have p'''ssed them off and this is the retaliation. They spouted something about a Directive on October 5th 2004 teling them to get tougher etc.

Q.) I signed as 'Ralph', who is the director of XYZ, with the intention for the property to be bought by XYZ ATF. Therefore Ralph should be argued to be an agent. If signed as an agent, there is apparrently nothing more than $20 to be levied.

I even have a signed resolution (by Ralph as sole director) on the day before the contract signing that this was to be bought by MiReh for the Trust. Also myriad emails about getting the Trust setup to buy the property.

Surely that's a pretty good argument that Ralph was acting as an agent??

Anyone had experience in this. I know if I have to pay the extra 15k stamp duty then I'm very unlikely to get it back. If I miss already late settlement....then costs likely from the vendor (though cheaper than the stamp duty I hope).

This sux............appreciate any help with experience in this situation or what to do here.

Cheers,

Ralph.......half laughing, half crying.

 

[Ausprop]

gees don't p off the stamp duty office!!

I was never aware of this 50% on-sale reduction - why would you be eligible for a 50% reduction? I always thought you payed it or you didn't (well $20 anyway). Could be a very handy piece of info.

I am not sure of the specific problem here... are they basically saying that because the trust wasn't in existence when you signed the offer that it is logically an on-sale? did you specifically name the trust (that hadnt yet been created) on the offer, or just say 'a trust to be set up'?

this does seem unreasonbly harsh. have you tried calling the stamps office yourself... letting a little quiver thru in your voice and telling them your family will be on the streets?

 

[Ralph]

They are (maybe were...... ) calling it an onsale.

Contract entered into on 24th Nov. XYZ pty ltd established 10/11 (corp trustee), Trust deed signed 12/11. Used the following:

Ralph and / or Ralphs wife and xyz pty ltd atf Trust. No names have changed.

Their issue is that because it could be sold to Ralphs wife and ralph and the trust, we did this to enable us to onsell.

Don't know why the 50%, just what the Set agent has advised, no time to check for myself as yet.

We may be sorted because the act app says if the trust is a Unit Trust, and the initial buyer (Ralph) is the sole holder of units in the trust, then $20 and a name change and off you go. Fortunately I am the sole holder of units in the Trust. It seems (and there may be alot of not very well informed people involved here......as it's all a bit rushed) that had I have had a normal discretionary trust i would still be arguing the 15k.

My Set agent says that this has never happened to him before and that the SD Office advise following the 5th October directive, they're just now enforcing it...... He says that this is a significant issue as it is not generally known in the settlement or RE industry (the Directive was not public). From what I can gather, no laws have changed, just a focus placed on it, and ofcourse while it was perhaps? law all the time, people quickly adopt common practice and assume it must be law if they haven't been hit with the SD in the past.

I may dodge the bullet, but not 100% as yet.

Will let you know.

 

[Ralph]

Funny thing about bullets........can be hard to dodge.

I have some more clarity on their position now.

Their key issue is they are saying because I used "X and/or nominee. Nominees are Y and Z."

We are saying that we would use either X or (Y and Z) OR X and Y and Z. i.e. we cannot use either Y OR Z, must use both together. As we haven't, and wish to only use Z, Y has sold its 50% share to Z. And because Z is a discretionary trust, Z is not eligible for exemption from the extra sduty.

I spoke to a lawyer last night who thinks the interpretation is 50/50 on "......nominee. Nominees are Y and Z." Indicating that we meant a single nominee as opposed to both together.

Stupid thing is that Y is a principal beneficiary of Z and so there is ofcourse no logical reason you would buy under a Y AND Z structure and anyone assessing the situation reasonably would agree to this.

Anyway have to settle today, so seems I'll need to pay and then chase it down.

Thinking of joining the government, finding them, sacking them

 

[Ausprop]

ah yes, this all makes sense now and explains why you are paying 50% of the going stamp duty. I have seen this happen before (actually I did it!) and got away with it, they must be getting a bit stricter (..or you p'd them off totally). Talk about revenue raising. They probably set up a speed camera to catch aggressive drivers on the way out too... an excellent co-marketing strategy from our low taxing state government!

 

[Ralph]

Ausprop,

Did you challenge it and get a ruling, or did they just let it through?

Because, according to Ronny at the sduty office they NEVER let this through and this is normal practice, etc.etc. etc......

 

[Ausprop]

it got thru. maybe there is a subtle diff. I had

X and/or nominee

nominees are:

* Y

* Z

And i ended up buying as X and Z as joint tenants. Perhaps the absence of both 'and' and 'or' left it a little grey. Talk about pedantic, i will be sure to write 'and/or' everywhere in future!

I think if they have been backed into a corner you may be hard pressed to resolve this.

 

[Ralph]

Thanks, settled today and has left a sour taste.

Can understand an attitude of enforcing regulations, but not "screw you at any opportunity".

Intent etc. was clear. RE Agent filled out the form, not me, he knew what I wanted and based on his experience (similar to my sett agent), this wording was fine.

I assume that while the RE Agent filled out the contract, the offer was mine and therefore my responsibility.

Can't help but feel a little victimised here, had the right intent, got what should have been the right advice and SRO have taken an opportunity that in my view is completely immoral. I negotiate contracts for a living and would never treat a counterparty like this.

This wasn't someone doing their job, it was someone bending over to screw another person.

End of rant, good luck to them if they're ever on an equal footing negotiation......

 

[Ausprop]

agree - this was a general screwing at your expense. I would protest all the way to the top. heck call A Current Affair, whatever it takes... someone needs to get these bureaucrats to pull their heads in

 

[Ausprop]

the greediness at the WA stamps office continues... I have a contract that clearly says in black and white:

Purchaser: A and/or nominee/s

Nominees are: B and/or C

I have chose to use C, but the stamps office considers (quite adamantly) that the nominee is B and C and therefore 50% of the stamp duty needs to be paid again for the on sale from one to the other. How can you argue with the stupidity? Where do these bureaucrats get off? And to make it worse, I can't take time to argue the case as if I do I will be late lodging and subject to a penalty.

Fortunately I can get away with a related party transfer for $20... but if this was a big deal I would be about ready to punch someone in the head! Has the Labor Govt here compeltely lost the plot? Are they trying to make up for the lost revenue when Costello knocks them into shape for double taxing us??

Quite seriously... I would be very very wary of using more than one nominee on a WA contract. I will call them tomorrow and keep you posted on the outcome of that intelligent discussion.

 

[Ausprop]

well the stamps office have come out and said it - in WA they will not accept more than one nominee now. This will burn more than a few people I would say.

 

[tonyd]

well the stamps office have come out and said it - in WA they will not accept more than one nominee now. This will burn more than a few people I would say.

Amazing. What is the reasoning behind this directive?
Thanks for the heads-up on this Ausprop.

Tony

 

[Ausprop]

the logic relayed to me via my settlement agent's discussion was that (in their opinion of course) the use of nominees was never intended to allow you to list a heap of people to work out what name to put it in later. they say it was designed to just allow a spouse to sign up a deal if the partner was out of town for example. a far cry from a year or so ago when you could include a list of who's who around town!

this is an annoying tax grab that makes life awkward - I legitimatley have a few entities that I like to put down as nominees which I obviously can't do any more.

 

[Ralph]

SRO approves stamp duty appeal

For those that saw this post originally you'll know that I settled on a property in WA end Feb this year where the SRO objected to my "Buyer is X and or nominee. Nominees are Y and Z" when I tried to use Z as the sole buyer. They argued that the wording meant (Y and Z) OR (X), but not either Y or Z.

I argued this till blue in the face with the SRO officer but to no avail.....frankly felt she was a bit of a .... . The SRO accordingly charged me an additional 50% stamp duty saying a purchase by Z meant Y had sold its share to Z = 1.5 sales = 1.5 * stanp duty!!

Anyway, I went to a solicitor who put together a submission on the wording and SRO have come back and agreed that was wrong and I was right. Great news as I'll get a 16k refund, unfortunately it has costy me 2k in legal fees to prove this Damn shame that the SRO officers ineptitude has to cost me 2k and foregone interest on the 16k.

Another interesting point is that we bought the property under a Trust (buyer Z above) of which I was acting as an agent (as sole director of the Trustee). In the SRO's other ruling (we appealed on a couple of angles) they said they were not convinced that I was acting as an agent for the Trust as the contract had the potential for a buyer other than the trust, X or Y to buy.

Funnily this was opposite to the view gave me on the day of settlement and her reason for only charging another 50% instead of 100% extra stamp duty. However, may be an interesting point for taxation given I'll be looking to claim all of the costs in finding that property as a tax deduction.

I know from my settlement agent in Perth that there is alot of animosity between the industry and SRO on similar issues..........a word of caution for any buyers out there to check with a solicitor on wording unless you're comfortable with your own experience. In this instance my settlement agent and r/E agent had advised the wording was OK (based on countless other experience) - they were ultimately right, but clearly the SRO hasn't got its act together, so best not to take any risks.

Ralph