Queensland Consolidated Acts

DUTIES ACT 2001 - SECT 14

14 What is the unencumbered value of property

(1) The
"unencumbered value" of property is the value of the property determined without regard to—

(a) any encumbrance to which the property is subject, whether contingently or otherwise; or

(b) any arrangement—

(i) the parties to which are not dealing with each other at arm’s length; and

(ii) that results in the reduction of the value of the property; or

(c) any arrangement for which a significant purpose of any party to the arrangement was, in the commissioner’s opinion, the reduction of the value of the property.

Example for paragraph (c)—

A owns land that B wishes to purchase. The land is valued at $1m. Before the purchase, A grants B a 50 year lease of the land. B is not required to pay any rent under the lease. A and B then enter into an agreement to transfer the land for $50,000, being the value of A’s interest in the land taking into account that it is subject to the lease to B.
The unencumbered value of the land is determined without regard to the grant of the lease if the commissioner is of the opinion there is an arrangement under which A or B’s significant purpose in entering into it was to reduce the value of the land.

(2) Also, the
"unencumbered value" of property held on trust or by a partnership must be determined without regard to the liabilities of the trust or partnership, including for a trust, the liability to indemnify the trustee.

(3) The
"unencumbered value" of property that is the goodwill of a business includes the value of any restraint of trade arrangement entered into by the transferor or a related person of the transferor to protect the value of the goodwill acquired by the transferee.

(4) If, before a dutiable transaction mentioned in section 9 (1) (a) , (b) or (d) for which the dutiable property is land, improvements are made to the land at the transferee’s expense, the unencumbered value of the land must be determined as if the improvements had not been made.

Note—

For provisions about the aggregate minimum value of the shares comprising all of the issued capital of a corporation or society and the unencumbered value of each of the shares, see section 504 .