In a now-deleted Reddit post, a user shared a letter they received from the Territory Revenue Office (TRO) claiming that they had under-declared the value of a used vehicle they had purchased, which could signal the start of a crackdown for this long-running Australian tradition.
The letter reads: “A review of the records held by the registrar indicates that an application to transfer the abovementioned vehicle to you was lodged on 17/04/2024 and the sale price was listed as $5000.
“This value appears to be substantially lower than the sale prices of other vehicles of the same make, model and year. Information available to the TRO indicates that a similar vehicle would likely be sold for $32,300 if the transaction was conducted at arm's length.”
The letter further states that the owner will either have to prove that they actually purchased the two-year-old car for $5000 or pay the stamp duty for the actual price, along with a fine.
Many users shared their opinions on the matter, most of which were in agreement that trying to skirt the stamp duty on a brand-new car is silly.
“I’ve heard of shaving 5–10 per cent off the sale price to save a little on stamp duty… but 85 per cent is asking to be red-flagged," said one user.
“You must have purchased a car with a blown engine and all sorts of other issues to get it for $5K, what a steal.”
“Anything to help fellow man keep money in their pockets,” said one user.
“Not helping a fellow Aussie avoid a tax is un-Australian. I normally write out the receipt and forget to fill in the price,” said another.
While people have done this for years, this is the first time we have seen someone being pursued by an official revenue office. So what is stamp duty, and how badly can you get in trouble for under-declaring?
What is vehicle stamp duty, and how much is it?
Stamp duty, also known as vehicle duty in some states, is often described as a fee for recording the transfer of ownership of property from one owner to another, similar to paying someone to stamp a piece of paper.
The term is outdated, though, as it actually refers to a tax that is levied based on the amount paid. The tax collected is used to fund the state or territory budget.
It is a one-time payment made when buying a new or used vehicle, which is transferred into your name.
Each state has a different stamp duty rate calculated on the price paid for the vehicle. For example, New South Wales charges $3 per $100 of the vehicle's value. For passenger vehicles valued over $45,000 with seating for up to nine occupants, the rate of stamp duty is $1350 plus $5 per $100, or part thereof, of the vehicle's value over $45,000.
Victoria has different brackets depending on whether vehicles are eco-friendly or luxury vehicles.
A stamp duty calculator can be found for each state by clicking on the respective one below:
What is the penalty for under-declaring a used car's value?
What you might not notice when it comes to transferring vehicle rego is that it asks you for the price you paid or the market value, whichever is greater. That means that irrespective of how much you pay, you will still need to pay what the car is worth.
Under-declaring the value of your car will land you with some serious fines, but luckily you won't end up behind bars like some other serious fraud cases.
Victoria and New South Wales will charge interest on any unpaid duty, calculated daily, and a penalty tax, which can result in an additional amount of up to 90 per cent of the unpaid duty.
Queensland will charge either $100 or 75 per cent of the unpaid duty, including the extra duty.
While all other states operate on a case-by-case basis, which can result in fines of thousands for under-declaring the value of a vehicle.
Zane Dobie comes from a background of motorcycle journalism, working for notable titles such as Australian Motorcycle News Magazine, Just Bikes and BikeReview. Despite his fresh age, Zane brings a lifetime of racing and hands-on experience. His passion now resides on four wheels as an avid car collector, restorer, drift car pilot and weekend go-kart racer.
