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Arbitration Awards and Stamp Duty – Exemption or no Exemption?

Arbitration and Stamp Duty

As the delays within the family law judicial system grow, many litigants are moving toward the use of arbitration as a method to resolve their dispute.

Arbitration provides parties with the ability to resolve their dispute within months, rather than years if they proceed through traditional litigation.   Arbitration provides a binding outcome on parties and can be conducted as if a traditional trial, including oral evidence and cross examination or “on the papers” whereby written evidence and submissions are provided and the arbitrator makes a determination.

Pursuant to the Family Law Act 1975 (Cth) (the ‘Act”) a registered arbitration award has the effect of a Court Order.  Transfers of property pursuant to Court Orders are exempt from transfer duty pursuant to the Duties Act 2001 as they are defined as “matrimonial instruments”.  The definition of matrimonial instrument is as follows (pursuant to s 420 of the Duties Act):

  • An agreement registered or approved under the Act; or
  • An order of a court under the Act.

As a result of the concern about the application of the stamp duty exemption to arbitration awards, the Queensland Law Society recently consulted with the Office of State Revenue to clarify the matter.

Confirmation was provided as follows:

  1. If an agreement results from an award and that agreement is registered or approved under the Act, it would be classified as a matrimonial instrument pursuant to s420(2)(a) of the Duties Act.
  2. However an award on its own may not be an agreement and would not therefore be considered a matrimonial instrument.
  3. If, pursuant to s13H(1) of the Act, an award is registered with the Court the award then has the same effect as a “decree” made by the Court.
  4. A “decree” is defined under the Act as a decree, judgment or order.

Therefore the transfer of property pursuant to a registered arbitration award will receive the benefit of the stamp duty exemption.

There is the possibility that an unregistered arbitration award will fall within the definition of a matrimonial instrument, however the process is much more complex and subjective.

The manner in which a transfer pursuant to such an award can attract the exemption is as follows:

  • A Court proceeding has commenced for the dissolution or annulment of marriage (i.e. an Application for Divorce; and
  • An unregistered financial arbitration award is made after the start of a proceeding, which is then considered a matrimonial instrument pursuant to s 420(2)(2)(d) of the Duties Act; and
  • The Commissioner of State Revenue is satisfied that the instrument (such as a transfer of land) was created after the start of the proceedings; and
  • The transfer occurs after the marriage has been dissolved or annulled.

It is the case therefore that the registration of the award with the Court is a far more expeditious and clear manner to attract the stamp duty exemption which attaches to transfers between spouses.

Marino Law offers expert advice in relation to family law and property settlements, including conducting arbitrations to resolve matters.  Additionally we have an experienced property law department who can assist with the transfer of matrimonial property and ensuring all relevant transfer duty exemptions are applied.  If you have a property settlement matter that is currently languishing in the court system and you wish to expedite its resolution, contact Marino Law for advice on how to conclude your matter by arbitration.

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