Legislative Wrap-Up 2022: Strata schemes required to disclose more

On 30 June 2022, new regulations under the Strata Schemes Management Act 2015 (NSW) were written in through the Strata Schemes Management Amendment (Information) Regulation 2021 (NSW) (the Regulations). The Regulations impose a number of new reporting requirements that owners’ corporations must follow.

In summary, strata schemes must ensure the following requirements are adhered to.

• • Pursuant to s 43 of the Regulations, owner’s corporations are required to provide information specified under s 43A annually. Section 43A details the kind of information to be disclosed to in the public annual report. The list is extensive, which includes details from the date of registration of the strata scheme, to information regarding building and safety inspection.

• • Owners’ corporations must help cover the cost of administration and enforcement of the scheme by payment of a lodgement fee of $3 per lot with their annual report.

• • Owners’ corporations must submit their first report within three months from 30 June 2022 to 30 September 2022.

• • Owners’ corporations are required to upload their report online through the Strata Hub. We note that if owners’ corporations do not provide their annual report within the allotted time from 2022 onwards, they may be fined a maximum of $5,500.

The new reporting requirements under s 43A are detailed, and perhaps intrusive. However, the intention of the new regulations are to create public transparency for strata schemes in NSW.  

Legislative Wrap-Up 2022: Grant of option now dutiable

On 19 May 2022, the Duties Act 1997 (NSW) was amended by the State Revenue and Fines Legislation Amendments (Miscellaneous) Act 2022 (NSW) (the Act). Upon its royal assent, a new head of duty and substantial amendments to the current Act were made and imposed on transactions which result in a “change of beneficial ownership”.

Pursuant to s 8(1)(b)(ix) of the Act, the term “change in beneficial ownership” includes:

• • the creation of dutiable property;
  • the extinguishment of dutiable property;
  • a change in equitable interests in dutiable property;
  • dutiable property becoming the subject of a trust; and
  • dutiable property ceasing to be the subject of a trust.

The above is designed to broaden the scope of transactions which are now considered dutiable under this Act.

How does this affect you?

One of the most important outcomes from the introduction of this legislation is that duty is now payable on the grant of an option.

Under ss 11(1)(K) of the Act, an option to purchase land in NSW is a creation of dutiable property. Pursuant to s 8(3) of the Act, the creation of dutiable property constitutes a change of beneficial ownership. Therefore, duty is now payable on a grant of an option to purchase land in NSW.

At the time the Act came into effect, there was much ambiguity on whether the above assessment was in fact correct. However, Revenue NSW have been quick to suppress any uncertainty, noting the following in their published guidance notes:

“A put option and/or call option granted over dutiable property in NSW (such as over land or an interest in land) is a ‘change in beneficial ownership’.  This means that duty is payable on any grant fee paid for a put and/or call option entered into from this date”.

“Section 8(1)(b)(ix) of the Duties Act 1997 introduces duty on certain transactions that results in a change of beneficial ownership of dutiable property. This includes the creation of dutiable property. This means that duty will be payable on the grant of a put and/or call option.”

The Act also made the following amendments which must be noted:

• • duty on acknowledgement of trust;

• • providing for a refund of foreign purchaser surcharge duty/ surcharge land tax in relation to a transfer of land, after the transfer, the land is used by the transferee whole or predominantly for commercial and industrial purposes; and

• • the introduction of a new anti-avoidance regime into the Taxation Administration Act, which replace anti-avoidance provisions in Part 11A of the Duties Act.