29 April 2005
Key Points:
Victoria abolished mortgage duty on 1 July 2004. Queensland and Western Australia took the opportunity to take a greater share of the pie.
On 1 July 2004 the Victorian Government abolished Victorian mortgage duty. The Government's objectives included reducing the cost to businesses of borrowing money. One wonders if it is happy that the Queensland and Western Australian Governments are "collecting" some of that abolished Victorian duty.
The Queensland and Western Australian Government's response to the abolition of mortgage duty in Victoria was to increase their share of mortgage duty on multi-jurisdictional mortgages. They adjusted their mortgage duty apportionment rules for where a mortgage or mortgage package is secured on property located in more than one mortgage duty jurisdiction. The result of the adjustment was that Queensland and Western Australia increased their mortgage duty "take" to include part or all of the mortgage duty no longer payable in Victoria.
For example, if prior to 1 July 2004 the amount secured by a mortgage was $200m, and that mortgage was 50% over Victorian property and 50% over Queensland property, then $400,000 mortgage duty was payable in each of Victoria and Queensland. Today, in the same circumstances, the Victorian mortgage duty of $400,000 is not payable. But the mortgage duty liability in Queensland is not the previous $400,000, but rather it is $800,000. Queensland effectively collects its duty share, and then collects Victoria's share as well.
The moral of the story? Be aware that multi-jurisdictional mortgages or mortgage packages involving Victorian property can have unusual and surprising results. If faced with such a scenario, always seek stamp duty advice as soon as possible.
