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.

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.

Here are some tips to help you self assess these types of transactions in OSR Online.

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.

Transfer of an existing option

A transfer of an existing option is a dutiable transaction and must be assessed as the transfer of an existing right.

How to lodge online

You must complete all mandatory fields under each tab in OSR Online. Mandatory fields are marked with a red asterisk. There are some specific data entry requirements, depending on the type of transaction you are assessing.

Option agreement

  • Select Acquisition of new right as the Transaction class.
  • Select Acquisition of new right as the Type of dutiable transaction.
  • Select Land in Queensland as the Type of dutiable property.
  • Answer Yes to the question: Is there an agreement in writing?
  • Answer No to the question: Does this transaction also include a transfer(s) assessed under section 22 of the Duties Act 2001?
    Note: A transfer assessed under section 22 will only accompany an agreement after the option is exercised.
  • Enter Option agreement as the detailed description of the property (other than land).
  • For options to acquire real property:
    • Enter the lot number in the Lot from field.
    • Select the Plan type from the drop-down list.
    • Enter the Plan number in the field.
  • The grantor of an option is the transferor.
  • The grantee of an option is the transferee.

Agreement to transfer dutiable property after an option is exercised

  • Enter the duty paid on the option agreement in the Less duty payable on previous option agreement field.
  • Enter the transaction number for the previous option agreement.
  • The total duty will be calculated once the form is saved.

Transfer of an existing option agreement

  • Select Transfer - other than land as the Transaction class.
  • In the Type of dutiable transaction drop-down list, select either:
    • Agreement to transfer dutiable property - for transactions evidenced by an agreement
    • Transfer of dutiable property - for transactions evidenced by a transfer only.
  • Select Existing right as the Type of dutiable property from the drop-down list.
  • Enter the details of the option agreement in Detailed description of property (other than land).
    For example, ‘Option agreement to purchase lot 51 on RP25589 from DEF Pty Ltd’.

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.