$253,055 in duty on a draft that did not transfer anything. It should have been $100.
The solicitor uploaded an unsigned, undated draft transfer to eDuties on a routine trustee change. The Commissioner did not wait for the transfer. He locked in the upload date as the liability date, when the trust deed did not yet comply, then assessed full duty before the transfer even happened.
The Supreme Court said he was wrong.
Forever Grateful Holdings Pty Ltd v Chief Commissioner of State Revenue [2026] NSWSC 761
What happened
Under s 54(3) of the Duties Act 1997 (NSW), a transfer of trust property on a change of trustee can attract $100 nominal duty, provided no trustee is or can become a beneficiary, among other requirements.
The solicitor uploaded an unexecuted transfer to eDuties on 24 May 2024. The trust deed did not comply with s 54(3). It was amended on 24 June. The transfer was digitally signed on 15 July. By then, the requirements were met [4].
The Commissioner assessed on 26 June [6].
Under s 12(4)(b), an electronic registry instrument not digitally signed is “taken to be first executed” when the Commissioner first receives information about it. The draft arrived 24 May: the liability date, when the trust did not comply. Assessment: $93,055 ad valorem plus $160,000 surcharge purchaser duty [34].
Where the Commissioner went wrong
Hmelnitsky J held that s 12(4) is “epexegetical to s 12(2)” [69]. It explains when an electronic registry instrument is taken to be first executed, but only where that instrument effects a transfer. It does not cause an instrument that does not effect a transfer to create liability as if it did [63].
The 24 May draft was “just that: unexecuted”. Undated. Unsigned. No “alteration in legal or equitable rights” [72].
That construction would produce an absurd disparity. An unsigned electronic draft on eDuties would trigger immediate liability. An identical unsigned paper draft would not: under s 295(1), a paper instrument is first executed only when first signed. Contrary to s 10, duty is payable regardless of form [71].
Legislative history confirmed this. Section 12(4)(b) was a “minor” amendment to address unsigned instruments that do effect transfers - not drafts to be signed later [80]-[83].
Assessment revoked [84]. Transfer assessed at $100.
Why this matters
First, uploading a draft to eDuties does not trigger duty. Liability arises when the transfer is effected: here, when digitally signed.
Second, get trust deed amendments done before execution. The s 54(3) requirements were met at execution and that counted.
Third, make sure the right entity signs amendments. The first deed here was signed by the former trustee, who was no longer trustee. Ineffective [25].
General information only. This note was accurate when written. The law may have changed since and the note is not updated. It is not legal or tax advice, does not take account of your circumstances and must not be relied upon as a substitute for advice on your own matter. If the issue is live for you or your client, email arda@nortonquaytaxlaw.com.au for advice on the current position.