Hi ,
I am seeking an independent advice regarding an SRO investigation (VIC) and whether my former conveyancing/legal firm may be liable for negligence.
Background (short summary)
• A spouse/domestic partner transfer was completed in 2021 for a property A (% of ownership was changed with mortgage refinancing) after advice we received from an accountant and legal firm, and the duty exemption was claimed.
• The property A was rented out within 12 months after the transfer. We lived in property A from 2011.
• We moved from property A into property B, which was purchased in Feb 2021, but we physically moved to property B in in May 2021.
• On 3 March 2026, I received an SRO Notice of Investigation questioning whether the required 12‑month principal place of residence condition was met and asking for a response by 17 March 2026.
"The State Revenue Office (SRO) collects revenue to assist with delivering essential services and programs for the benefit of all Victorians. Our aim is to help all customers meet their state tax responsibilities fairly and efficiently. Our records show you received a spouse/domestic partner exemption (Spousal Exemption) from land transfer duty in relation to your Property A in April 2021. From 1 July 2017, the Spousal Exemption only applies to the transfer of a residential property between people who are married or in a domestic relationship, where there is no consideration, and that the residence requirement is met. The SRO, as part of its role in administering Victorian taxes and duties, conducts regular investigations into known or suspected tax defaults to ensure customers are complying with the relevant Acts. I am writing to advise that you have been selected for such an investigation under section 73 of the Taxation Administration Act 1997 (the TAA). The aim of the investigation is to assess compliance with the Duties Act 2000 and Land Tax Act 2005 in relation to the Property. Section 73 of the TAA (Attachment 1) allows the Commissioner of State Revenue, or any officer authorised by the Commissioner to request in writing that any person produce information in his/her custody or control. This letter constitutes a written notice for the purposes of section 73 of the TAA. Duty Residence Requirement To satisfy the residence requirement, you and/or your spouse/partner must: a) use and occupy the property as your principal place of residence (PPR), within the 12-month period commencing immediately after the spousal transfer date, and b) live in the property for a continuous period of at least 12 months"
• We were never advised by the legal firm about the residence requirement on our property A, the audit risk, or the duty to notify the SRO if the condition would not be met.
Questions
1) Based on these facts, is the SRO’s position correct that the exemption would not apply if the 12‑month PPR requirement was not satisfied?
2) If the firm failed to warn us of this requirement and its consequences, could they be negligent, and should their professional indemnity insurance be expected to cover resulting duty, interest, penalties, and associated costs?
We would really appreciate your independent advice on this matter as it has been very stressful during past week.
I am seeking an independent advice regarding an SRO investigation (VIC) and whether my former conveyancing/legal firm may be liable for negligence.
Background (short summary)
• A spouse/domestic partner transfer was completed in 2021 for a property A (% of ownership was changed with mortgage refinancing) after advice we received from an accountant and legal firm, and the duty exemption was claimed.
• The property A was rented out within 12 months after the transfer. We lived in property A from 2011.
• We moved from property A into property B, which was purchased in Feb 2021, but we physically moved to property B in in May 2021.
• On 3 March 2026, I received an SRO Notice of Investigation questioning whether the required 12‑month principal place of residence condition was met and asking for a response by 17 March 2026.
"The State Revenue Office (SRO) collects revenue to assist with delivering essential services and programs for the benefit of all Victorians. Our aim is to help all customers meet their state tax responsibilities fairly and efficiently. Our records show you received a spouse/domestic partner exemption (Spousal Exemption) from land transfer duty in relation to your Property A in April 2021. From 1 July 2017, the Spousal Exemption only applies to the transfer of a residential property between people who are married or in a domestic relationship, where there is no consideration, and that the residence requirement is met. The SRO, as part of its role in administering Victorian taxes and duties, conducts regular investigations into known or suspected tax defaults to ensure customers are complying with the relevant Acts. I am writing to advise that you have been selected for such an investigation under section 73 of the Taxation Administration Act 1997 (the TAA). The aim of the investigation is to assess compliance with the Duties Act 2000 and Land Tax Act 2005 in relation to the Property. Section 73 of the TAA (Attachment 1) allows the Commissioner of State Revenue, or any officer authorised by the Commissioner to request in writing that any person produce information in his/her custody or control. This letter constitutes a written notice for the purposes of section 73 of the TAA. Duty Residence Requirement To satisfy the residence requirement, you and/or your spouse/partner must: a) use and occupy the property as your principal place of residence (PPR), within the 12-month period commencing immediately after the spousal transfer date, and b) live in the property for a continuous period of at least 12 months"
• We were never advised by the legal firm about the residence requirement on our property A, the audit risk, or the duty to notify the SRO if the condition would not be met.
Questions
1) Based on these facts, is the SRO’s position correct that the exemption would not apply if the 12‑month PPR requirement was not satisfied?
2) If the firm failed to warn us of this requirement and its consequences, could they be negligent, and should their professional indemnity insurance be expected to cover resulting duty, interest, penalties, and associated costs?
We would really appreciate your independent advice on this matter as it has been very stressful during past week.
