Pre-transaction due diligence. Before electing to opt in, confirm the transfer meets the eligible transfer criteria in s 14: the land must be residential or satisfy the Chief Commissioner it will be residential (s 14(1)(a)), be the whole of the land (s 14(1)(b)), and be within the dutiable value caps ($800,000 vacant, $1,500,000 otherwise) (s 14(1)(c)). Confirm every transferee is an eligible transferee under s 13, or that the s 14(2) exception for proportionate ownership applies. For agreements entered into before 1 July 2023, ensure the timing provisions in s 14(1)(f) and transitional provisions in Sch 4 Pt 2 are satisfied. Check whether any transferee is a company and if so be prepared to satisfy the Chief Commissioner on eligibility where required (s 14(2)).
Prepare the application and evidence. Applications must be in a form approved by the Chief Commissioner (s 16(4)). Make the application before the transfer as required by s 16(2). The Chief Commissioner may require further information at any time, including after approval (s 16(5)-(6)), so gather and retain evidentiary material documenting the transferees’ first home buyer status, citizenship or permanent residency, intended use and residence plans, and any trust arrangements where an approved trust is involved (s 10). If any first home buyer is under 18, consider whether a waiver is sensible and have evidence to support the waiver criteria in s 5(5).
Residence requirement compliance. If approval requires residency under s 15, plan for at least one first home buyer to occupy the property as their principal place of residence for a continuous six months starting within 12 months of transfer (s 15(1)-(2)). If full compliance with the six-month rule is impracticable, apply in advance for Chief Commissioner approval for a shorter occupation, later commencement, or exemption, and supply supporting evidence for the grounds relied upon (s 15(3)-(4)). For vacant land intended to be a site for a home, ensure the Chief Commissioner is satisfied with intended use (s 15(5)). Record occupation and be prepared to prove use and residence dates to avoid retrospective voiding (s 19).
Valuation and apportionment readiness. For mixed-use or partial subject-to-tax situations, consider whether an apportionment factor exists in the Register of Land Values and, if not, expect interaction with the Valuer-General and potential timing for the Valuer-General to determine an apportionment factor under the Valuation of Land Act (s 23(3)-(4)). Keep documentation on floor space, land area and usage patterns to support an apportionment factor or application for deemed lots. Understand the land value used for the land value component is the value entered as at 1 July in the previous financial year, calculated as if the proportion were 100 per cent (s 24(4)(a)).
Tax calculation and instalment planning. Use Schedule 2 parameters: fixed components, land value rates and indexation formulas. For the initial years ending 30 June 2024, know the fixed components ($400 owner-occupied, $1,500 non-owner-occupied) and initial land value rates (0.003 and 0.011 respectively) (Schedule 2 cl 1-2). Be prepared for the schedule’s indexation process using GSP per capita and land value indexation factors for future years (Schedule 2 cl 3-4), and for the Chief Commissioner to publish the figures, though calculations must be made regardless of publication (Schedule 2 cl 5(3)-(4)).
Assessment, payment and instalments. After approval and transfer, expect a notice of assessment as soon as practicable after the land becomes subject to property tax or the start of the financial year (s 28(1)). The Commissioner must offer an option of single payment or multiple approximately equal instalments (s 29(1)). If the notice is issued early in the financial year, instalment due dates are set to practical dates (s 29(2)). Observe that no payment can be demanded less than 30 days after notice (s 28(5)). If intending to pay by instalments, ensure timely payment to avoid tax default treatment under the TAA (s 31).
Record-keeping and reporting obligations. Included owners must notify the Chief Commissioner of any change of land use that will change the payable property tax within three months, using an approved form (s 51). Keep records that substantiate occupation, use, income derived from the land, and any changes in use. Failure to provide required information triggers tax default consequences under the TAA and accrual of interest and penalties (s 52).
Dealing with unpaid tax and deferral options. If there are grounds for deferral,being inability to meet basic living expenses for owner-occupied land,apply early for deferral under s 34 with substantiating income and expense documentation. The Chief Commissioner may grant deferral for a financial year or longer and may impose reasonable conditions (s 34(3)-(4)). Deferred amounts remain a charge on land and attract interest at the relevant interest rate, which is either set by Gazette notice or derived from NSW Treasury Corporation 10 year bond yields published by the RBA on specified months (s 36-37). Ensure any application addresses the factors the Chief Commissioner must consider in assessing grounds for deferral, such as income, disposals of assets, ability to rearrange financial commitments, health impairments, and other relevant matters (s 35).
Title clearance, certificates and transactional checklist. Obtain a property tax status certificate under s 49 before settlement, particularly if purchasing land. A purchaser is entitled to rely on the accuracy of a property tax status certificate (s 49(3)). Ensure settlement statements account for any charge on the land, and check for any waivers or Chief Commissioner authorisations allowing transfer with a charge attached in specified hardship or representative transfers (s 39).
Post-transfer vigilance. After transfer, monitor ongoing obligations including assessments, property tax payable calculations, notification of change of use, and potential reassessments which may be made more than five years after initial assessment in certain circumstances (s 28(3)). Keep records of occupation and use to support the retention of owner-occupied classification under Schedule 3, and consider the special owner-occupied approvals in Schedule 1 where relevant, such as when an owner enters full-time care or is temporarily absent (Sch 1 Parts 1-2).
Engage practitioners early. Given the Chief Commissioner’s role and the Tribunal and administrative review pathways under the TAA and State Debt Recovery Act, consider early engagement with experienced revenue lawyers, conveyancers and valuers when contemplating an opt-in. That is particularly important for shared equity arrangements, approved trusts, company transferees, mixed-use properties, and transactions involving Help to Buy arrangements where s 56 applies.
In sum, compliance requires front-loading due diligence and documentation, strict adherence to timing and form requirements, careful ongoing record-keeping of residence and use, proactive management of valuation and apportionment issues, and the use of statutory deferral mechanisms where hardship circumstances exist.