Tips For First Appearances

Arbitration Awards – Exempt From Stamp Duty? Probably But Be Careful.

In Australia, certain transfers of property between parties to a marital or de facto (domestic) relationship are subject to various revenue laws.

General Background

In Australia, certain transfers of property between parties to a marital or de facto (domestic) relationship are subject to various revenue laws.

The Commonwealth can recover capital gains tax on a transfer of property from one spouse to another or from one spouse to a third party. The States can recover stamp duty on dutiable property or transactions specified under various respective revenue legislation.

However, when parties to a domestic relationship transfer property pursuant to a court order or a financial agreement, capital gains tax rollover provisions apply. Those parties can also obtain exemptions from stamp duty.

But what about transfers of property as a result of an award pursuant to a family law financial arbitration?

The Status of An Award

It is important to understand there are two types of arbitration.

First, a s13E arbitration –where the order or referral for arbitration has been made by the Court by consent.

Second, a relevant property or financial arbitration – all other family law financial arbitrations other than a s13E arbitration (i.e. where the parties have agreed privately to arbitrate). There are nuances to be aware of with either type of arbitration which are for another article.

For an award to be enforceable, it needs to be registered (see section 13H of the Family Law Act 1975). The award then has effect as if it were a decree made by that court.

Section 4(1) of the FLA defines “decree” as a “decree, judgment or order”. If the registered award is not complied with, steps to enforce same can be taken pursuant to the relevant rules of court as if the award were an order made under Part VIII of the Act, regulation 67S.  

However, there is no compulsion to register the award. The parties may be willing to comply with the award without it being registered.

Will The Award Be Exempt from Commonwealth and State Taxes ?

Happily, the Income Tax Assessment Act was amended in 2006 to extend the rollover relief provisions to include arbitral awards:

There are similar provisions for transfers from a spouse to a company / trust (sec 126.15).

Although not entirely clear whether the award needs to be registered, CGT rollover relief applies to arbitral awards. The process of registering an award is not that arduous, unless of course there is an objection to registration.

The water becomes murkier in terms of the various State legislation concerning dutiable transfers.

The starting point

Section 90 falls within Part VIII of the Family Law Act. Corresponding provisions exist for de facto property orders (sect 90WA) and for financial agreements (sect 90L). Gazzo v Comptroller of Stamps (Vic) (1981) 149 CLR 227 famously held that sect 90 was constitutionally invalid in its attempt to exclude state stamp duty on transfers of property between married persons pursuant to Family Court Orders.

Since then, the States and Territories have enacted exemption provisions surrounding the transfer of property between spouses after separation pursuant to a court order.


Under the Duties Act (Qld) 2001 Part 3 contains provisions for the exemption of matrimonial and de facto relationship instruments. Pursuant to section 424 duty is not imposed on a transaction to the extent that it gives effect to a matrimonial instrument or a de facto relationship instrument.


Section 422 contains mirror definitions of a de facto relationship instrument.

It can be seen immediately that an “award” that is “registered” does not fit neatly into any of those definitions of matrimonial instrument.

Relying upon section 13H(2) and s4(1), the award, once registered, has effect as if it were an order of that court. Accordingly, there would be significant force to the argument that a registered award falls within s420(2)(b).


Another sustainable interpretation is that for the purposes of s420(1)(2)(a), the award is the product of the agreement to arbitrate and is being “registered” under the FLA.

Financial agreements are exempt despite section 420 seemingly not including those forms of instruments. Section 90L of the Family Law Act (Cth) does apply in this scenario however – at least that is what the OSR website would have one understand.

New South Wales

The position of our southern neighbours is contained in section 68 of the Duties Act (NSW) 1997.


Subsection (2) contains similar provisions for de facto breakups.

Again, an “award” does not fit neatly into that definition provision either however one could make the same strong arguments as above. Namely, by virtue of section 13H(2) and s4(1) a registered award falls within s68(1)(b)(ii). Alternatively, the registered award is part of an agreement referred to in sub-clause (iia).


How Is It Solved ?

In short, the answer from this writer is to “act cautiously”.

OSR may not interpret the words “take effect as if a decree of the court” contained in sect 13H as being synonymous with “an order of the court” for the purposes of s420 of the Duties Act despite the arguments made above.

Arbitration remains a viable option even if an exemption from stamp duty is a critical and significant factor, however caution needs to be applied to prevent or at least minimise the risk of an OSR assessment of duty.

While it is clearly arguable that an award resulting from a section 13E arbitration (i.e. a consent order referring the matter to arbitration) would fall within both above definitions in Queensland and NSW, absent any clear practice direction, ruling or legislative amendment, a practitioner exercising due diligence should advise their client that treasury may take a different, and more expensive, view.

Circumvention of the problem

One method (and this writer is aware of this approach being adopted in New South Wales) is for the parties to enter a s90C or 90D Binding Financial Agreement that provides for the transfers of relevant property within the body of the BFA. The only matter being determined by the arbitration then is just the quantum of any cash adjustments. This is often the case in matters in Court in any event.  

An example financial agreement might include the following;



  1. Definitions

    1. “the arbitrator” is the arbitrator referred to in the Arbitration Agreement between the parties dated (insert date) and is annexed to this agreement as attachment “B”;

    2. “the Settlement Sum” means the amount agreed upon by the parties or failing agreement as determined by the arbitrator;


  1. Property Settlement and Adjustment

    1. That Husband shall pay to the Wife the Settlement Sum within 60 days of the earlier of;

      1. the making of consent orders reflecting the parties’ agreement; or

      2. the registration of the award.


  1. That upon the Husband;

    1. Causing the preparation of the relevant transfer documentation for XYZ Company Pty Ltd at his cost;

    2. Paying to the Wife by bank cheque directed to the Trust Account of Good Family Lawyers Trust Account the amounts specified in paragraph 1(b)

the Wife shall contemporaneously transfer, or cause to be transferred, to the Husband at the expense of the Husband, the 1 ‘B’ Class share the Wife holds in XYZ Company Pty Ltd.

  1. In the event the Husband does not make a payment prescribed in paragraph 2 by on or before 4:00 p.m. (EST) default interest shall accrue daily upon the entire Settlement Sum from the date of default until the date of rectification of the default by the Husband OR final payment by the Receiver at the rate of 9.5% per annum.


  1. The Husband indemnifies, and forever holds indemnified, the Wife in relation to the director’s loan made to the Wife from XYZ Company Pty Ltd.


  1. Each party to retain own financial institution account.


  1. The Husband and the Wife retain any money in their respective credit in any financial institution or account/accounts held by them in their respective names.


  1. That the Applicant/Respondent Husband and the Applicant/Respondent Wife each remain solely liable for and indemnify the other for all credit card debt or liability held in their own respective names.


  1. That save as for provide for herein the furniture, contents and chattels of the Husband & Wife be divided in accordance with the agreement reached by the parties and each party forthwith do all things necessary to give effect to the distribution of those chattels, and pending distribution, the person in whose possession the items are held, shall properly maintain such items.


  1. If the Husband or Wife fails to collect the furniture and chattels on the agreed due date ownership shall pass to the party in whom the items are in the possession of.


  1. That save as for provided for herein the Wife retain as her absolute property, the title and possession to and of the following:


  1. Set out all items to be retained


  1. That the Wife retain sole liability for and indemnify the Husband with respect to:


  1. Set out all liabilities to be retained / refinanced


  1. That save as for provided for herein the Husband retain as his absolute property, the title and possession to and of the following:


  1. Set out all items to be retained


  1. That the Husband retain sole liability for and indemnify the Wife with respect to:


  1. Set out all liabilities to be retained / refinanced

  2. XYZ Company Pty Ltd

with such indemnity to include the Division 7A Director’s Loan which has been made to the Wife from XYZ Company Pty Ltd and is referred to at Order 4 herein.



    1. That save as otherwise provided herein the transferee spouse or the spouse receiving the benefit of any transaction pursuant to these Orders prepare the documentation necessary to give effect to the provision of these Orders at their cost and further be responsible for the payment of registration fees and any other fees in relation to the transfer of property into their name.


  1. That any duty payable on any transaction arising out of this agreement be paid by the transferee spouse or the spouse receiving the benefit of such transfer or transaction.


Alternatively – and this is the approach of Legal Aid Queensland arbitrations – the award is something that the parties agree to formalize by way of consent order. Again, this writer sees no reason why an arbitration agreement cannot compel the parties to undertake this step with a failure by one party to open the question of compensation in the event OSR levies stamp duty on the transfer. This seems to have support from at least one other writer;


Best practice would be for stamp duty considerations (along with all other taxation issues) to be addressed at the preliminary arbitration conference with agreed strategies put into place and incorporated into the arbitration agreement as to how issues of duty are to be resolved by the award to ensure no issues with OSR arise subsequent to the award.

An example of a stamp duty provision in an arbitration agreement might look like this;


  1. Without limiting the operation and effect of section 13H of the Family Law Act (Cth) 1975 and regulation s69S of the Family Law Regulations (Cth) 1984, it is a term of this agreement that upon receipt of the award the parties will do all acts and things necessary to file an Application for Consent Orders in either the Federal Circuit Court or Family Court of Australia in terms that give operation and effect to the award and for that purpose;

    1. within 7 days of receipt of the award, the Husband shall prepare the Application for Consent Order and forward a draft of such document to the Wife for confirmation within 48 hours of receipt from the Husband;

    2. within 7 days of receipt of the award, the Wife shall prepare the Minute of Consent Order and the justice and equity letter to the Registrar (if required) and forward a draft of such document to the Husband for confirmation within 48 hours of receipt from the Wife;

    3. both the Husband and Wife shall exchange and execute the aforesaid documents within 48 hours of the confirmation of those documents;

    4. the Husband shall be responsible for the filing of said documents in the relevant court;

    5. the parties pay equally any registration fees of said Application for Consent Order.

    6. each party shall be solely responsible for their own legal costs of any documents prepared pursuant to this paragraph.

    7. In the event of any dispute concerning the drafting of the aforesaid documents, the parties shall refer such dispute to the arbitrator for a determination of such dispute (the further determination), with the parties to accept the arbitrator’s decision and thereafter execute documents reflecting such further determination.


  1. Where;

    1. any duty is payable on any transaction arising out of the award paid by the transferee spouse or the spouse receiving the benefit of such transfer or transaction (the non-defaulting spouse); AND

    2. the other spouse failed or refused to perform the obligations contained in paragraph 15 (the defaulting spouse) such that no Application for Consent Order has been filed

then the defaulting spouse will indemnify the non-defaulting spouse the full amount of any such duty so assessed with such amount being an adjustment against any monies payable to or to be received from the defaulting spouse.  


The other method of course would be to wait and see how OSR will view an award that proposes a transfer of dutiable property. With the completion of most, if not all, stamp duty forms being undertaken as a self-assessment process, it is really a matter for a clear ruling to be made if treasury is to exempt transfers pursuant to awards (as they should).

If consent orders, financial agreements or court orders open the pathway to exemption from duty it is hard to see why an award would not be treated the same way. Perhaps the legal industry needs to approach the various State treasury departments to clarify this important issue.

It is noted that historically there was similar confusion surrounding binding financial agreements and stamp duty provisions. These were ultimately resolved.

Clarity from State governments is needed particularly when, at least the Commonwealth A-G, supports parties undertaking arbitration as a means of alleviating the resource crisis in our family law system.

For my part I have already forwarded a draft of this article to FLPA, AIFLAM and the FLS for consideration and requesting steps be taken on our behalves.


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