High Court rules stamp duty consideration extends beyond sales contract value

The High Court of Australia has sided with the Commissioner of State Revenue in a stamp duty disagreement over Docklands developments.

In the decision, made last month, the High Court ruled that the Commissioner was entitled to reference the entire value of a development agreement, rather than just the sales contract value, when assessing stamp duty payable.

Developer Lend Lease made an agreement with VicUrban in 2001 to purchase Docklands land parcels, with Lend Lease to develop and sell large residential and commercial properties on the land. Both Lend Lease and VicUrban agreed to contribute infrastructure, including a bridge, a park and a road extension, on and around the land.

Under the development agreement, Lend Lease was required to pay additional amounts to VicUrban beyond what was outlined in the sales contract. The additional payments included compensation for infrastructure and remediation, as well as a portion of proceeds received by Lend Lease when they sold properties on the land.

Lend Lease objected to the Commissioners assessment of the stamp duty payable, which referenced the entire quantity paid by Lend Lease as part of the development agreement. The developer argued that the consideration paid for each parcel of land only included the amount specified in the sales contract.

However, the High Court disagreed. In the decision, reference was made to a dispute in 2005 between Dick Smith Electronics and the Commissioner. In that case, the majority held that the total consideration included the buyer's execution of several promises outlined in an agreement which contributed to the overall sum, as the vendor would not have transferred the asset (in that instance, a bundle of shares) if the buyer hadn't taken those actions.

After the Commissioner disallowed Lend Lease's initial objections to his assessment, Lend Lease launched an appeals process which saw the High Court ultimately agree with the Commissioner's assessment. Lend Lease has stated that it respects the High Court's decision.