Insights from Williams + Hughes
Handshake deals and transfer duty: you can’t avoid paying duty by not documenting the deal
Post by Damian Quail | Posted 3 years ago on Tuesday, January 28th, 2020

Sometimes two parties to a deal are tempted to use a "handshake agreement" to try avoid paying stamp duty/ transfer duty. Apart from the obvious legal risks about "no-paperwork deals", taking this approach to try avoid paying transfer duty simply will not work !

When is transfer duty payable? 

Transfer duty is payable in Western Australia (and other Australian jurisdictions) where there is a transfer of dutiable property or a dutiable transaction takes place, whether or not there is a physical document or agreement documenting the transaction. 

The obligation to pay transfer duty arises from the intention to transfer dutiable property or from actually transferring the dutiable property. This means that failing to document a dutiable transaction does not result in no transfer duty liability arising.

Duty is (generally) payable by the purchaser or transferee of the dutiable property.

Dutiable property includes land in Western Australia and business acquisitions involving the transfer of business assets in Western Australia, such as stock, plant and equipment, goodwill and intellectual property. 

Dutiable transactions can include an agreement to transfer dutiable property, a trust acquisition or surrender, amongst other things. 

If a transaction is, or will be, effected by an instrument (for example a business sale agreement), liability for transfer duty arises when the instrument is executed. If the dutiable transaction is not effected by an instrument, and is not going to be effected by an instrument, then the Duties Act 2008 (WA) sets out when transfer duty on a dutiable transaction will arise. For example, if there is an some sort of agreement to transfer dutiable property (maybe a verbal agreement or an informally documented "agreement"), then the liability to pay duty will arise when that agreement is reached between the parties. Even if there is no agreement, an obligation to pay duty arises when dutiable property is actually transferred. 

Therefore, the obligation to pay transfer duty is not avoided by simply not documenting the deal. Transfer duty will arise regardless of whether an agreement of any sort is actually recorded. 

Assessment of Duty – Documents to be lodged

To recap, where parties agree to transfer dutiable property, it is the date of that agreement on which liability to pay duty arises, regardless of whether a formal document is executed between the parties at a later stage. 

What documents are required to be submitted to the Office of State Revenue for the purposes of assessing the duty payable will depend on whether there is hard copy documentation of the transaction. 

If there is hard copy documentation (such as a sale agreement or other contract), then that instrument will need to be lodged for duty assessment.  

If there is no hard copy evidence or record of the transfer or the agreement to transfer, the person who is liable to pay the transfer duty must either lodge: 

  • an instrument in hard copy form that evidences the transaction, and if there is more than one instrument, each of them; or
  • make a transfer duty statement to provide evidence of the transfer and have the transfer assessed for duty. 

The required documents must be lodged within 2 months after the day on which liability for duty on the transaction arises. This is typically the date on which the parties agreed to transfer the property, not the date on which the formal document is signed. For example, if the base agreement terms are agreed between parties for a business sale, and later the parties agree to formally document the transaction by executing a business sale agreement, the date on which duty arises is the earlier date on which the basic agreement was made.

Reaching a handshake agreement and then "leaving the document to the lawyers to sort out" can be a trap - the obligation to lodge and the two month period starts on the date of the handshake, not the date the documents are finalised (which may be many months later).

Failure to lodge a transaction record within the time period is an offence and can result in fines and penalties and additional duty being payable . 


Liability to pay transfer duty will arise regardless of whether hard copy agreements are entered into. Parties who agree to transfer dutiable property should be aware that failing to document the transaction will not avoid the liability to pay duty, and may lead to fines and additional duty liaibility.

Where a transaction is documented "after the fact", always bear in mind that the date on which the parties agreed to transfer the dutiable property is the date from which the lodgement obligation is calculated, not the later date on which the formal document is signed.

For further information regarding transfer duty obligations please contact Damian Quail or Cassandra Bailey of our office. 


This article is general information only, at the date it is posted.  It is not, and should not be relied upon as, legal advice.  This article might not be updated over time and therefore may not reflect changes to the law.  Please feel free to contact us for legal advice that is specific to your situation.

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