Settlement adjustments in an Australian conveyancing matter: what gets apportioned, and what cannot be passed on

Settlement adjustments apportion a property's outgoings between vendor and purchaser at the adjustment date: council rates, water and sewerage charges, owners corporation levies, and land tax where the state allows it. The arithmetic is simple; the risk is the evidence behind each figure. MatterFirst, a legal practice management platform for Australian law firms, keeps that evidence on the matter.

What an adjustment actually is

A contract of sale fixes a price. It does not sort out the fact that the vendor has already paid council rates for a quarter that runs past settlement, or that the water meter was last read six weeks ago, or that an owners corporation levy fell due in a period the purchaser will own part of.

The adjustment statement does. Every recurring outgoing is split at the adjustment date, usually the settlement date, and the difference is added to or subtracted from the balance payable at settlement. The usual convention is that the vendor bears outgoings up to and including the day of settlement and the purchaser from the day after, but the contract governs, so read the adjustment clause before you assume.

A worked example, using a settlement on 15 March 2026 and council rates of $1,800 for the rating year 1 July 2025 to 30 June 2026, already paid in full by the vendor:

• Days the purchaser will own the property in the rating year: 16 March to 30 June, which is 107 days.
• Purchaser's share: $1,800 multiplied by 107, divided by 365, which is $527.67.
• That $527.67 is added to the balance the purchaser pays at settlement, because the vendor has already paid the council for a period the purchaser will own.

If the rates were unpaid, the same arithmetic runs the other way, and the outstanding amount is usually paid to the council out of settlement proceeds rather than adjusted.

The items on almost every settlement statement

Two figures are not adjustments and should never be netted into one: the withholdings described below, and the payout of an existing mortgage. Both leave the settlement proceeds as separate directions.

Land tax is the item that differs by state

Land tax is the adjustment most likely to produce a complaint after settlement, because the rule is not national: prohibited below a threshold in Victoria, a private matter between the parties in Queensland and Western Australia, and in New South Wales dependent on whether the contract marks it adjustable.

The single holding point is where money is actually lost. A vendor who owns six investment properties is assessed on their aggregate value, at a far higher marginal rate than the property being sold would attract alone. Adjusting on that assessment rather than on a single holding figure transfers part of the vendor's portfolio tax to the purchaser.

Two withholdings that are not adjustments

Both sit on the settlement statement, change the cheque directions, and strand settlements that were otherwise ready.

Foreign resident capital gains withholding. Since 1 January 2025 the ATO applies a 15 per cent rate to the value of all property, the previous $750,000 threshold having been removed. Every Australian resident vendor now needs a clearance certificate and must give it to the purchaser at or before settlement; without it the purchaser withholds 15 per cent and pays it to the ATO. The ATO says a certificate can take up to 28 days to issue, which makes it an intake task, not a settlement week task.

GST at settlement. For new residential premises and potential residential land, the purchaser withholds and pays the ATO either one eleventh of the contract price, or 7 per cent where an eligible margin scheme supply applies. The supplier must notify the purchaser in writing whether a withholding obligation exists, and that notice can sit in the contract or in a separate document before settlement.

Both are the purchaser's obligation and the purchaser's exposure if missed, but both are usually detected first on the vendor's side, from the residency question at intake and the character of the property.

When the settlement date moves

Most adjustment errors are not arithmetic errors on the first calculation. They are the first calculation being used after the date changed. When settlement moves, every apportioned figure moves, the special water reading may need reordering, a new rates instalment may have fallen due, and penalty interest under the contract has to be computed and added.

Keep one rule: the adjustment statement is versioned, the version that settled goes on the file, and superseded versions stay on the file marked as superseded, because the client who queries the figure in six weeks is querying a number from one of them.

How MatterFirst handles this

State the limit first: MatterFirst does not calculate settlement adjustments, and there is no adjustment calculator in the product. The apportionment stays where your firm does it today, a spreadsheet, a settlement platform or a calculator your principal has used for years.

What it does is hold the matter around that calculation, so the figures can be defended later. Matter management carries custom matter types and role-based contacts with key dates synced to the calendar, so the settlement date, the cooling off expiry and the finance date sit in one place rather than in a diary note. The obligations engine calculates key and limitation dates and cites the governing statute alongside them.

Document AI extracts key terms from an uploaded contract and connects them to the matter, and custom extraction rules let a firm define its own fields, so the adjustment date, the settlement date and the price come off the contract as matter data rather than being retyped. Automations run trigger, condition and action rules, including generating a document as a workflow step, which is how a certificate request goes out on a date rather than on a memory. Documents are built from sections that are deterministic by default: merge fields, matter data projections and clause library entries, with AI only where a section genuinely calls for synthesis.

Finance and reporting covers time tracking, invoicing and payment collection, with trust accounting built for Australian jurisdictions and a compliance review workflow covering NSW, VIC, QLD and WA. Matters can be recorded in all eight Australian jurisdictions, and data and AI processing run in the AWS region the firm chooses, Sydney by default, as set out on the security page. Pricing is per workspace, from $199 per month with users included, not per seat: see pricing.

One integration point to be exact about on a property file: PEXA and InfoTrack are listed as coming soon in the integration catalogue and are not connectable today. What you can connect now is Xero, Stripe, Microsoft 365 and Google Workspace, plus a documented REST API with webhooks. If PEXA workspace creation from inside the matter is a requirement this year, weigh that before anything else on the list.

How the products compare

Facts below come from each vendor's own public pages, read in September 2026. "Not published on the pages checked" means exactly that, not that the capability is absent.

If high volume conveyancing is the whole practice, a purpose-built adjustment calculator with state-specific logic is worth paying for, and two of the products above publish one. If conveyancing is one of several practice areas and the adjustment work is already handled elsewhere, the question moves to matter data, document generation and trust compliance.

Who this suits, and who it does not

MatterFirst suits Australian firms of roughly two to twenty fee earners running several practice areas, that want onshore hosting they can point to, trust accounting aligned to NSW, VIC, QLD or WA, and contract data extracted rather than retyped.

It does not suit a settlement-only conveyancing practice that needs adjustment figures calculated in the system and a PEXA workspace opened from the matter today; that firm should choose on those two capabilities first. The evaluation checklist sets out the questions to put to any vendor, including this one. MatterFirst is built by North Cape Technology, a Melbourne software company.

Frequently asked questions

Who pays the council rates for the day of settlement? By the usual convention the vendor bears outgoings up to and including settlement day and the purchaser from the day after, but the adjustment clause decides it, particularly where the general conditions have been amended.

Can a vendor in Victoria adjust land tax at settlement? Not for a contract entered into on or after 1 January 2024 below the threshold amount, published by the State Revenue Office as $10,700,000 from 1 January 2026. Sections 10G and 10I of the Sale of Land Act 1962 make such a provision void, and the prohibition covers windfall gains tax. At or above the threshold, apportionment is permitted.

What happens if the vendor has no ATO clearance certificate at settlement? The purchaser must withhold 15 per cent of the price and pay it to the ATO. The threshold that exempted lower value property was removed on 1 January 2025, so the rule reaches every sale, and a certificate can take up to 28 days to issue.

Should land tax be adjusted on the vendor's assessment or on a single holding basis? Where adjustment is permitted, the single holding figure is the convention, and it is what state revenue offices issue on a certificate for settlement. Adjusting on the aggregate assessment shifts part of the vendor's portfolio tax onto the purchaser.

Does MatterFirst calculate settlement adjustments? No. There is no adjustment calculator in it. MatterFirst holds the matter, key dates, extracted contract data, generated documents and the trust ledger; the calculation stays where your firm does it now.

Does MatterFirst connect to PEXA or InfoTrack? Not today; both are listed as coming soon. What connects now is Xero, Stripe, Microsoft 365 and Google Workspace, plus a documented REST API with webhooks.

Does MatterFirst handle Queensland trust accounting? Yes. Trust accounting is built for Australian jurisdictions and the compliance review workflow covers NSW, VIC, QLD and WA. Matters can be recorded in all eight jurisdictions.

The short version

Adjustments are simple arithmetic over facts that are easy to get wrong: the wrong rates notice, an estimated water reading, a special levy allocated by assumption, or land tax adjusted on the wrong basis or in a state that no longer permits it. Order the certificates at intake, calculate on the single holding figure, recalculate every time the date moves, keep every version on the file, and treat the two ATO withholdings as separate directions rather than as adjustments.