SOUTH AUSTRALIA
RevenueSA
Stamp Duties
Circular No. 241
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STAMP DUTIES (RENTAL AND MORTGAGE DUTY) AMENDMENT
ACT 2003
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Your attention is drawn to the Stamp Duties (Rental and Mortgage Duty) Amendment Act
2003 (“the Act”).
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RENTAL BUSINESS DUTY
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The Act amends the Stamp Duties Act 1923 to give effect to certain 2003-04 State Budget
measures regarding stamp duty on rental business arrangements and stamp duty payable on
mortgages. The amendments take effect from 1 October 2003.
There have been changes to the rental duty rates and nexus provisions. Circular No. 242
includes details of these amendments.
Details of the stamp duty on mortgages amendments are as follows.
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MORTGAGE DUTY
Effective 1 October 2003, a dual mortgage rate regime will be introduced. A higher
mortgage duty rate of 45 cents per $100 will apply to all mortgages, except home mortgages
(see following definition), which will continue to be charged at the current mortgage duty
rate of 35 cents per $100.
For both rate regimes, the secured liability threshold above which the proposed differential
rates apply will increase from $4,000 to $6,000. Secured liabilities under $400 will continue
to be exempt from duty and secured liabilities greater than $400 but not more than $6,000
will attract duty of $10.
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The following table summarises the application of the new rates after 1 October 2003:
Sum Secured
Home mortgages for
owner occupation
All other mortgages
$400 and less
Exempt
Exempt
Greater than $400 but not $10
more than $6,000
Greater than $6,000
$10
$10 plus $0.35 for every $10 plus $0.45 for every
$100 or part of $100 over $100 or part of $100 over
$6,000
$6,000
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In accordance with section 16 of the Stamp Duties Act 1923, any instrument that is stamped
on or after 1 October 2003 will be subject to the new rates of duty, regardless of the date on
which the instrument was executed.
Definition of “home mortgage”
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The Act provides that a mortgage is a home mortgage if the mortgagor is a natural person
and the whole of the amount secured by the mortgage has, or is to be used for any of the
following purposes:
• purchasing land on which a home that the mortgagor intends to occupy as his or her
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sole or principal place of residence has been, or is to be built;
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• building, or making additions or improvements to, a home that the mortgagor
occupies or intends to occupy as his or her sole or principal place of residence;
• repaying a loan previously taken out for one or more of the above purposes.
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If the amount secured by the mortgage has or is to be used for some purpose in addition to a
purpose mentioned above, the mortgage will not be considered a home mortgage.
Home means any residential premises.
If a portion of the amount secured by a mortgage is to be used for the payment of costs such
as stamp duty, Land Titles Office fees or conveyancing charges, the mortgage will still be
considered to be a home mortgage and subject to the lower mortgage duty rate of 35 cents per
$100.
Redraws
Where the amount of a re-draw/overdraft does not exceed the amount of the original loan,
upon which mortgage duty has already been paid, additional duty will not be required to be
paid.
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Mortgage duty will be required to be paid where the further amount advanced and secured by
the mortgage exceeds the amount of the original loan and for which the original mortgage
was stamped. The purpose for which the further funds are to be used will determine which
rate is applicable.
The higher rate of 45 cents per $100 will be applicable in the following circumstances:-
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Portfolio loan
Upstamping
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Where a financial institution provides a customer with a portfolio facility (line of credit)
that is used to purchase, for example, a house, shares, a car or a holiday, the higher rate
of duty will apply to the entire portfolio, as the whole of the amount secured is not being
used for a “home mortgage” purpose.
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A customer borrows money from a Financial Institution to purchase a home to be used as
his/her sole or principal place of residence (a “home mortgage”), and thereafter borrows
further funds to purchase a house for investment purposes.
Mixed purpose premises
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In circumstances where a mortgage is upstamped for a purpose other than a “home
mortgage” purpose, the higher rate of duty will apply to the new, upstamped portion of
the loan. The higher rate of duty will not apply retrospectively to the pre-existing
portion of the loan. Where a customer subsequently borrows further funds for a “home
mortgage” purpose, the higher rate of duty will apply to the additional upstamped portion
of the loan as the whole of the amount secured by the mortgage is not for a home
mortgage purpose.
If a person takes out a loan for the purchase of a business with a house attached (eg. a
deli, a farm), the higher rate of duty will apply as the mortgage is being used to secure
property that has both a commercial and residential purpose.
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Consolidated loans
If a customer utilises a product that enables him/her to consolidate various personal and
business loans under one loan arrangement, the higher rate of duty would apply to such
an arrangement as it is not solely for a “home mortgage” purpose.
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FURTHER INFORMATION
Postal
RevenueSA
State Administration Centre
200 Victoria Square East
ADELAIDE SA 5000
Commissioner of State Taxation
RevenueSA
GPO Box 1353
ADELAIDE SA 5001
Telephone
Facsimile
(08) 8226 3750
(08) 8226 3734
Website
E-mail
http://www.revenuesa.sa.gov.au
[email protected]
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Location
COMMISSIONER OF STATE TAXATION
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25/9/2003