Exemption for correcting a clerical error
Find out if you can claim a transfer (stamp) duty exemption to correct clerical errors.
You may claim an exemption on a dutiable transaction to correct a clerical error if:
- no additional consideration
is paid or payable
- the beneficial interests in the property change only to the extent necessary to correct the error
- it’s not an error about the appropriateness of a transaction intended to achieve a particular legal result.
Clerical errors may be accidental, inaccurate descriptions (‘misdescriptions’) of:
- a party to the transaction
- the property
- the interest in a property.
Party error
Some clerical errors involve an accidental misdescription of a party to the transaction.
Arthur intends to transfer his property, Backacre, to Chris. By mistake, the incorrect transferee is noted on the transfer. As a result, Arthur transfers Backacre to Ben instead of Chris.
There are 2 ways to correct this error and both are exempt under section 152 of the Duties Act 2001.
- Ben signs a transfer of Backacre back to Arthur, and Arthur signs a transfer of Backacre to Chris. Both these transfers are exempt under section 152.
- Ben signs a transfer of Backacre to Chris. This transfer is exempt under section 152.
Property error
Some clerical errors involve a misdescription of the property.
Gary intends to transfer his property, Frontacre, to Ellen, but his solicitor notes the incorrect real property description on the transfer. As a result, Gary transfers Backacre to Ellen instead of Frontacre.
To correct the error, Ellen transfers Backacre back to Gary, and Gary transfers Frontacre to Ellen.
Altogether, 3 transfers are made:
- Gary transfers Backacre to Ellen.
- Ellen transfers Backacre back to Gary.
- Gary transfers Frontacre to Ellen.
Gary and Ellen may claim an exemption on transfer 1 (section 152A) and transfer 2 (section 152).
Duty must be paid on transfer 3 (the intended transfer) because this was the intent of the original transfer, which was liable for duty.
If duty has previously been paid on transfer 1 and that transaction has been reassessed as exempt, the credit can be applied to transfer 3.
Interest error
Some clerical errors involve a misdescription of an interest in a property.
Dan intends to transfer a 10% share of his property, Backacre, to his wife, Betty. By mistake, the incorrect interest is noted on the transfer, resulting in Dan transferring a 1% share of Backacre to Betty.
Dan has evidence that he clearly intended to transfer 10% of the property, and duty was paid on the basis that 10% of the property was transferred.
The transfer is a clerical error, so another transfer to correct the error would be exempt under section 152.
Non-exempt errors
Errors that are not clerical, such as a change in circumstance or when a transaction doesn’t achieve a particular result, are not exempt from duty.
Alan decides to transfer part of his property to his wife, Barbara. Alan instructs his solicitor to transfer 50% of the property to Barbara, which is done.
Later, Alan gets advice that it would be better financially if Barbara had a 99% share of the property.
As Alan’s original intention was to transfer 50% of the property, no clerical error has occurred and the exemption doesn’t apply.
Carl decides to transfer part of his property to his wife, Dianne. Carl instructs his solicitor to transfer 50% of the property to Dianne, which is done.
Later, Carl gets advice that it would be better financially if Dianne held the share as trustee of the family trust.
As Carl’s original intention was to transfer 50% of the property to Dianne, no clerical error has occurred and the exemption doesn’t apply.
How to claim
To claim an exemption, you need to lodge:
- evidence that the original transfer was incorrect because of a clerical error
- a statutory declaration from each party to the transactions establishing that
- there has been a clerical error in a previous dutiable transaction (the defective transaction)
- the dutiable transaction to be considered for the exemption (the correcting transaction) has been entered into to correct the clerical error
- the correcting transaction is for the same property transferred by the defective transaction
- no additional consideration
is payable
- any change to the beneficial interest in the property is only to the extent necessary to correct the error
- a completed (Form D2.2)
- an identity details annexure for each non-Australian transferor and transferee, when transferring real property (e.g. homes, apartments, business premises and vacant land)
- the documents for the defective and correcting transactions
- a covering letter outlining the facts and circumstances of the error, your name, return address and a list of the documents lodged.
See how to lodge documents for assessment.
Also consider…
- Learn about when transfer duty is reassessed.
- Read sections 152 and 152A of the Duties Act 2001.
- See the public rulings on correcting clerical errors:
- Read the correcting a clerical error toolkit if you’re a registered self assessor.
- Use the clerical error exemption interactive tool to check if your transaction is exempt.