Option agreements toolkit

This toolkit brings together everything you need to know about self assessing transfer duty on option agreements if you are a registered self assessor.

An option agreement transaction is dutiable if it relates to dutiable property. Generally, you must self assess any transactions involving option agreements. Find out more about approved transactions for self assessors.

The grant of an option to purchase property is considered an acquisition of a new right, whereas the transfer of an option is a transfer of an existing right.

Assessing option agreements

An option will usually involve 2 transactions - the option agreement, and the agreement to transfer the property once the option is exercised. These are assessed separately, with duty calculated on the consideration stated in each agreement.

The option agreement

You calculate transfer duty on the option agreement applying the rate of duty to the entire consideration to acquire the option, even if part of the consideration depends on a condition that has not been fulfilled.

Example

The consideration for an option is $5,000. The option agreement states that if a condition is fulfilled after 2 weeks, a further $10,000 is payable.

Duty is assessed on the total consideration of $15,000 (even if the condition is not fulfilled).

The agreement to transfer property

If the option is exercised, transfer duty is charged on the agreement to transfer. Under section 23 of the Duties Act 2001, a credit of the duty paid on the option is allowed if the option agreement states that the option fee forms part of the consideration.

Procedures

Read step-by-step instructions for assessing option agreement transactions in OSRconnect for:

Records you need to keep

For each option agreement transaction, you must keep a completed dutiable transaction statement (Form D2.2).

Find out more about your record keeping obligations.

Also consider...

Contact

Office of State Revenue
For transfer duty self assessment queries:

For queries on payroll tax, land tax and royalties:

  • call 1300 300 734 (Australia) or +61 7 3179 2500 (overseas)
  • send an email using our online enquiry form.