CHANGES to mortgage and cheque duty under the Stamp Act 1921 have been mooted for some time now.
The Office of State Revenue has announced that the amendments to the mortgage and cheque duty provisions of the Stamp Act will now take effect from January 1.
The relevant legislation is still to be passed and proclaimed but the Office of State Revenue has already indicated that January 1 will be the likely changeover date.
The changes are significant in that cheque duties will be abolished, instruments of security (for example mortgages, guarantees and charges) will now be stamped at a flat mortgage duty rate, the current concessionary rate of 0.25 per cent will apply to instruments of security in relation to the financing of the acquisition, construction or renovation of a borrower’s principal place of residence, the number of instruments that will be subject to the security head of duty will be narrowed and cross-jurisdictional stamping will be simpler.
The security head of duty will not apply to bonds, covenant, unsecured debentures, loan agreements, loan applications, agreements to grant a mortgage and instruments securing the payment and repayment of money at stated periods.
This will mean that from January 1, offer letters and loan contracts will not be liable for duty and therefore, should not be stamped with primary duty.
The securities backing into offer letters and loan contracts will still be liable to duty.
Stamp duty will be calculated on a pro-rata basis.
It will be based on the proportion of the amount advanced that is secured by WA property and compared against the total secured by all property under that mortgage.
This is a much simpler formula than is the case currently.
Tommy Chong, senior associate
Geoff Stevens, partner
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