Conveyances on sale are principal “head” or category of charge to stamp duty. A conveyance on sale for stamp duty purposes, is very widely defined to include any transfer of an asset for money or monies worth.
Title / ownership of real property (land and buildings) is usually transferred by way of a deed of conveyance. There may be a sale contract, which provides for the terms of sale. However, this is not strictly necessary, and title may be pass by a deed of conveyance wit out a prior contract.
Generally a contract for sale of real property, precedes a conveyance. It contemplates a later conveyance, being made in order to transfer the legal interest.
Title to goods and movable property may be transferred without a conveyance. Title passes by delivery. A contract may be entered for their sale, but title does not usually pass under it.
On payment of the price, the beneficial interest will usually pass in full, under a resulting trust. If however, the contract does not contemplate a conveyance, it may be stampable as a conveyance of the beneficial interest in itself.
Conveyance on Sale
A conveyance on sale is every instrument, decree or order of a court, whereby any property or interest in property, on its sale or compulsory acquisition, is transferred to or vested in a purchaser or in a person on the purchaser’s behalf or at his direction. This definition is very broad and embraces a wide range of transaction.
Revenue laws are generally interpreted against the interests of the State. However, a “conveyance on sale” has been interpreted in an expansive way over a long period of time.
Under this wide definition, almost any document in writing may be capable of being deemed a conveyance for this purpose. This can be confusing, as in the concept context of property law, a “conveyance” usually refers to a formal deed of conveyance of real property. However in the stamp duty context, the expression has a much broader meaning.
Contract v Conveyance
A conveyance does not include an agreement for sale (in effect, a contract for a conveyance). However anti-avoidance legislation deems contracts for the sale of certain interests, to be themselves stampable.
A contract for the sale of land may be effective to transfer the beneficial interest in the property. The later conveyance gives effect to a transfer of the “bare” legal interest. However the courts will interpret the transaction as a whole that the later conveyance is deemed to be a full transfer for value, notwithstanding that it may transfer a nominal legal interest only (because the beneficial interest has vested in the purchaser under a contract which has been performed.
The following conveyances are not deemed conveyances on sales for stamp duty purposes
- a transfer made for nominal consideration for the purpose of securing a sale;
- a transfers by way of security;
- a transfer for the purpose of appointing new trustees;
- a transfer where no beneficial interest passed
- transfer made by trustees to the beneficiary under a trust.
An oral transaction in itself, is not stampable. However, if a document is intended to record this, this may be stampable. There documents may be created informally and even inadvertently.
Transfers on foot of of court orders are stampable.
“Property” in the context of stamp duty, refers to any class of property whatsoever. This includes real property, movable property and intangible property. Different types of property have been subject to different rates over time.
Residential property is now subject to a lower rate than non-residential property. The rates structure of stamp duty has changed very significantly over time.
Property includes rights in property, such as leases, mortgages and easements. Title to most classes of assets, other than “real” property (land and buildings) are capable of being transferred without a conveyance. Title to goods may be transferred by delivery. However if a written conveyance of goods is undertaken, it will be stampable.
Property includes legal and beneficial interest on property. A contract for the transfer of a beneficial interest in property is itself stampable. A beneficial interest may arise under a formally created trust. It may arise by operation of law, such as where the purchase monies are paid under a contract ( a resulting trust).
Generally a power of attorney in itself is not a stampable conveyance. However, in some contexts, the delivery of a power of attorney may itself be a conveyance. This is so, where it gives the buyer power to vest a property in himself or his nominee. In this case it is in substance a conveyance / general power of appointment.
The concept of what represents property or an interest of property, becomes important in the context of stamp duty. A mere contractual right in itself may not be property in some contexts.
On the other hand, certain contractual rights are valuable property assets. In context of real property, a line is drawn between a lease and a license. The latter is not an interest in property. The grant of a lease is stampable. The grant of a license is not stampable.
The assignment an existing contractual interest is more likely to be the assignment of property.
Exchanges and Partitions
Formerly, there was stamp duty relief for exchanges of property. However exchanges of property are stampable at the value which passes in each case. An exemption remains for partition.
A partition occurs when existing co-owners, split the land between themselves. Provided and to the extent that there is no exchange in value, stamp duty is not charged. Stamp duty would be payable on any inequality element, such as where one party obtains a greater share, typically by paying equality monies. Partition relief applies only, to freehold property.
A document which creates an option may be a conveyance on sale. It is stamped on the basis of the premium or price paid or on the value of the option given. Certain financial services sector options are exempt. See the sections on those exemptions.
A contingent option is not generally subject to stamp duty until the relevant conditions are fulfilled and it vests. Accordingly where the option is subject to a contingency, the duty or obligation to stamp as conveyance arises where the relevant conditions is fulfilled.
The assignment of an option is subject to stamp duty as a conveyance on sale. Certain exemptions exist in the financial services sector. Options over shares are stampable at one percent.