With the introduction of electronic conveyancing throughout Australia, there have been many changes to the way property is conveyed. In addition, the Commonwealth is requiring greater transparency with respect to foreign investment in property and the management of Capital Gains Tax through the introduction of the Commonwealth Reporting Portal.
There have been a number of recent changes to the property and conveyancing landscape. The purpose of this article is to provide a summary of some of the changes relating to Property Exchange Australia Limited (PEXA) and the Commonwealth Reporting Portal.
PEXA provides an electronic business environment for completing property transactions throughout Australia including electronic lodgement with Land Registries and the electronic settlement of funds.
PEXA is a collaboration between many industry participants, including financial institutions, Land Registries and the Reserve Bank of Australia and was an initiative of the Council of Australian Governments (COAG).
Broadly speaking some of the advantages of using PEXA are:
- no need to physically attend settlement;
- real-time lodgment of documents and settlement;
- fast access to cleared funds;
- reduced risk of fraud;
- increased transparency; and
- pre-populated data from Land Registries.
At the moment each of the States and Territories are in a transitional phase from traditional conveyancing practices across to the PEXA regime.
In South Australia currently certain transactions must be carried out through PEXA (for example stand-alone mortgages). In other States, fixed timelines have been set for mandatory electronic lodgment of standalone transfers. Whilst a date has not yet been confirmed in South Australia, it is likely that the transition to PEXA for standalone transfers will occur at some stage later this year with a full transition for all transactions to be carried out through PEXA anticipated in 2019-2020.
Therefore whist it is not yet compulsory to complete settlements electronically through PEXA, it is undoubtedly the way of the future.
Commonwealth Reporting Portal
The Federal Government now requires all states and territories to collect additional data for real property transfers which will contribute to a National Register of Foreign Ownership of Land Titles.
The data is also proposed to be used by the Australian Taxation Office for the purpose of providing transparency into foreign investment and ensuring compliance with the taxation laws of the Commonwealth including the management of Capital Gains Tax and other taxable events. The ATO also intends to make this data available to taxpayers for prefill and preparation of tax returns and activity statements.
In South Australia, all conveyancers and practitioners are required to provide the data for each transaction related to a property sale/transfer into the Commonwealth Reporting Portal governed by Revenue SA (“Portal”).
The following data is required to be submitted into the Portal at the time the Transfer is assessed for stamp duty:
- Property details, including land title information, property address and other descriptors;
- Transactional information including transfer price, contract date and settlement date; and
- Identity data of the purchaser/transferee and vendor/transferor.
The information required for the Portal will primarily be obtained from the verification of identity documents provided to the conveyancer or practitioner. The respective parties to the transaction or their representatives will not be able to view the other party’s data.
Earlier this year Revenue SA expanded the Portal to permit electronic lodgment and online payment of stamp duty for all property transactions. Currently there is a transitional phase, but it is intended that this will result in the decommissioning of RevNet for stamp duty.
It is expected that the new platform will provide a better system of evidence of stamping of documents/instruments in South Australia as well as providing better compatibility with mobile devices and will ensure that all stamp duty transactions can be processed through eConveyancing.
These changes continue on from a number of other significant and related changes to the procedural requirements for property transactions in recent times including verification, authorisation and certification procedures.
The Cowell Clarke property and conveyancing team have vast experience and are across the changes taking place in this rapidly evolving industry.