Transfer Duty Exemptions: Saving Money with a BFA
When property is transferred between partners as part of a relationship breakdown, transfer duty (stamp duty) would normally apply, and at 3–5% of property value, that's expensive. But here's the good news: most Australian states and territories exempt property transfers made pursuant to a BFA or court order.
This can save you tens of thousands of dollars.
How the Exemption Works
Transfer duty is a state/territory tax, so rules vary by jurisdiction. However, all states provide exemptions for property transfers arising from relationship breakdowns, provided certain conditions are met.
Conditions for Exemption:
- Genuine relationship breakdown: The transfer must be connected to separation or relationship property settlement (not just asset restructuring for tax purposes)
- Valid BFA or court order: The agreement must comply with ss. 90B–90D of the Family Law Act, or be a court-approved Consent Order
- Transfer within specified timeframe: Some states require the transfer to occur within a certain period after separation (e.g., 3 years in NSW)
- Proper documentation: You'll need to lodge an exemption application with the State Revenue Office, along with a copy of the BFA and a statutory declaration
State-by-State Breakdown
New South Wales (Duties Act 1997, s. 54)
- Exemption: Full exemption for transfers pursuant to a BFA or court order
- Timeframe: Transfer must occur within 3 years of separation (or with SRO approval)
- Application: Lodge a "Transfer Duty: Relationship Breakdown Exemption" form with Revenue NSW
Victoria (Duties Act 2000, s. 37)
- Exemption: Full exemption for transfers under a BFA or court order
- Timeframe: No strict time limit, but must be genuine relationship breakdown
- Application: Lodge exemption form with State Revenue Office Victoria
Queensland (Duties Act 2001, s. 117)
- Exemption: Full exemption for transfers under a BFA or court order
- Timeframe: Transfer must occur within 2 years of relationship breakdown (or with QRO approval)
- Application: Lodge "Transfer Duty: Relationship Breakdown" form with Queensland Revenue Office
Western Australia (Duties Act 2008, s. 121)
- Exemption: Full exemption for transfers under a BFA or court order
- Application: Lodge exemption claim with RevenueSA
South Australia, Tasmania, ACT, NT
Similar exemptions apply. Check your local revenue office for specific forms and requirements.
What Property Qualifies?
The exemption typically covers:
- Real property (houses, units, land)
- Motor vehicles
- Shares and business interests
Some states also exempt transfers of dutiable property like partnership interests or trust entitlements.
The Catch: Anti-Avoidance Rules
Revenue offices scrutinise BFA transfers to prevent tax avoidance. If they suspect the BFA is a sham (i.e., you're still together and just shuffling assets), they'll deny the exemption and potentially impose penalties.
Red flags:
- Transferring property shortly after signing a BFA, then continuing to live together
- No genuine separation or relationship breakdown
- BFA signed purely for tax purposes
How Much Can You Save?
Example:
Transfer of a $800,000 property in NSW:
- Normal transfer duty: ~$31,000
- With BFA exemption: $0
That's serious money.
The Process
- Execute your BFA (with all legal requirements met)
- Separate (or document your separation date)
- Engage a conveyancer or property lawyer to handle the transfer
- Lodge exemption application with your state revenue office (usually requires a copy of the BFA, stat dec, and transfer documents)
- Transfer completes duty-free (assuming exemption is approved)
Pro Tips
- Get professional advice: Revenue law is complex. Talk to a solicitor or conveyancer before transferring property.
- Check timeframes: Some states have strict deadlines (e.g., 2-3 years post-separation). Missing the deadline = paying full duty.
- Keep documentation: Maintain evidence of your separation (e.g., separate residences, financial separation) in case the revenue office asks questions.
The Bottom Line
A properly executed BFA can save you thousands in transfer duty when splitting property. Just make sure your BFA is genuine, legally compliant, and lodged with the right paperwork, then enjoy the tax savings.