Rescind contract - Stamp duty payable?

Relates to the purchase of a vacant/unregistered block of land from a large developer. The Land still has not registered. We are still several months away from settlement./ registration.

The first contract exchanged and was initially in our two names.. due to unforeseen circumstances, my partner's name needs to be removed from the contract and can no longer be a purchaser. The developer is in agreement and has no issue with the situation, and will issue a fresh contract essentially on same terms, but with only one name and the other name removed.

Is rescinding the contract entirely the best way to go?

Questions:

1. Am I liable for stamp duty on rescinded contract?

2. Does the recission of the first contract prevent me from getting the first home builder concession on the second?

Advice appreciated. Thanks.
 
Thanks Terry, I just went and looked that up. To be honest it confused me but am I right to conclude that it should fall within one or more of those subsections, therefore duty is not payable?
 
Below is general advice for QLD, this obviously state by state basis. My firm would generally not act for someone where we were not involved in the initial conveyance anyway.

According to the Duties Act, the liability for transfer duty arises when the contract is made. If a contract is terminated due to breach or an inability to comply with a condition (eg terminates on finance) then the liability is cancelled unless there is entry in to a resale contract.

Standard practice in QLD in the circumstance above is that both the buyer and the seller enter into what is called a Deed of Rescission. This is a fairly complex document that requires time to draft and consult with the solicitor acting on the other side. There is also the necessity to prepare and enter into a new contract, arrange signing etc. If we were charging on a time costed bases this would cost between $700 and $900 for us to draft and negotiate with the other side or $400-$700 if we were reviewing the document and negotiating with the other side. BUT we charge fixed fee for this $500 if drafting, $300 if otherwise. Most firms charge around the same.

Even where there is a chance that the transaction entered into could be found not to have been a resale agreement it is not worth the risk for the sake of $500. If it goes wrong and the individual is later caught then they are liable to pay penalty interest from the date of the termination, on top of penalties and legal costs.

A Deed is not a get out of jail free card, eg if teh party or a related entity were to gain a financial benefit then all it achieves is indemnifying the seller against paying duty and the buyer will remain liable for it.

OSR briefs a top tax law Barrister to sue people who don't do this properly (and also claim home concessions and then rent out etc). They don't muck around with this sort of thing. There is at least $10,000 in legal fees to defend a duty infringement.

It might be called a duty but it is a tax and governments do not like tax avoidance and are happy to expend significant sums of money as warnings to others not to do it.

2. It would not affect the 1st home grant in QLD

The problem in QLD is the definition of direct and indirect financial benefit is so wide.
 
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Thanks Terry, I just went and looked that up. To be honest it confused me but am I right to conclude that it should fall within one or more of those subsections, therefore duty is not payable?

I think it is pretty straight forward. If you rescind you can apply for a refund.
 
Thank you very much for your input Daryl and Terry, much appreciated. I will get onto lawyer/conveyance and follow through with the process of recission.
 
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