An Act to amend the Real Property Act 1900 and the Real Property Regulation 2008 in order to abolish the Torrens Assurance Levy ad valorem tax was introduced into the NSW parliament on 9 May, 2011. It was assented to on 24 May 2011.
History of the ad valorem tax
Ad valorem means ‘according to value’ and this instance refers to the added levy on land transfer calculated according the value of the property being transferred. The Torrens Assurance Levy has had two parts since 1 July 2010. Initially the levy had a set lodgment fee for registration of all land transactions; this has been in place since 1992. This fee has been fixed at $4.00 since 2004. An additional levy was introduced on 1 July 2010 of an ad valorem tax payable on the registration of a property transfer in NSW over $500,000. The tax is administered on a sliding scale according to property value — a higher tax applied to a higher property price and is payable to the Land and Property Management Authority NSW (LPMA). The rate of the levy is .2 per cent on land transfers valued between $500, 000 and $1m and .25 per cent on transfers over $1 million.
The Torrens Assurance Levy’s additional ad valorem tax was introduced under the Labour State government. Debate ensued over the levy, before and after its introduction, with most real estate and property market agents opposed to the tax, and even the Law Society of NSW stating in its ‘Justice and Fairness Policy Platform 2011’ that “The stated intention (of the tax) was to fund fraud mitigation measures designed to protect the integrity of the Torrens Title system for registration of interests in property. The Law Society of NSW believes that it is fundamentally inequitable for one group only of users of the system to fund fraud mitigation measures that benefit all users of the system. It also seems likely that much more revenue will be raised than is actually required, and that this will end up falling into the Consolidated Fund.”
It is advisable to discuss these changes with your solicitor to ensure that the correct levies are paid and to obtain specific advice about how these changes affect your property transfers.
Repeal of the ad valorem tax
The Real Property Amendment (Torrens Assurance Levy Repeal) Bill 2011 was introduced into parliament on 9 May 2011 and was assented to on 24 May 2011.