You may have to pay duty when you acquire an interest in a company or unit trust scheme that has land of $1 million or more
What is landholder duty?
When you acquire an interest, such as shares or units, in a company or unit trust scheme that has land holdings in Victoria of $1 million or more (a landholder), you may be liable for duty at the general rate.
You must notify us within 30 days of your relevant acquisition in the landholder.
Prior to 1 July 2012, duty may have applied under the land rich provisions.
What is a landholder?
A landholder is any company or unit trust scheme (whether private or public) that has land holdings in Victoria with an unencumbered value of $1 million or more.
What are land holdings?
Land also includes land the landholder and/or any of its linked entities have agreed to purchase but not settled at the time of the acquisition.
What is a relevant acquisition?
A relevant acquisition is the acquisition of a significant interest or a further interest in a landholder. A significant interest:
- In respect of a private unit trust scheme, is an interest of 20 per cent or more,
- In respect of a private company or a wholesale unit trust scheme, is an interest of 50 per cent or more,
- In respect of a listed company or a public unit trust scheme, is an interest of 90 per cent or more
A further interest is any interest acquired after a significant interest is acquired in any of the above landholders.
In respect of a private landholder, a relevant acquisition can also arise:
- Where a person acquires 50 per cent or more of certain economic benefits or entitlements in respect of the landholder and/or any of its land holdings, and
- Where a person acquires control over the landholder, being the capacity to determine or influence the outcome of decisions about the landholder's financial and operating policies
What is an interest in a landholder?
You have an interest in a landholder if you have an entitlement to a distribution of property on the winding up of a landholder.
An interest in a landholder can be acquired by any means, including purchase, gift, allotment, issue, cancellation, redemption or surrender of a unit or share, the abrogation or alteration of rights pertaining to a unit or share, the payment of an amount owing on a unit or share and a change in the beneficial ownership of a unit or share.
Exemptions and concessions
Acquisitions of interests in a landholder are exempt from duty in a number of circumstances.
These include where an exemption under Chapter 2 of the Duties Act 2000 (the Act) would have been available if the acquisition had been a direct transfer of land.
Additionally, exemptions may be available if the acquisitions are made by:
- Receivers/trustees in bankruptcy,
- Liquidators or executors/administrators of a deceased estate,
- A compromise or arrangement with a company’s creditors, or
- A pro rata increase in the interests of all unit holders or shareholders
The landholder provisions also provide concessions from duty. These concessions may apply in respect of acquisitions securing the provision of finance and acquisitions that result in an anomalous duty outcome.
Your obligations on making a relevant acquisition
A landholder acquisition statement must be completed and lodged within 30 days of a relevant acquisition occurring. Duty must also be paid within this time otherwise a tax default occurs under the Taxation Administration Act 1997.
If you are unsure about the application of the landholder provisions to your particular circumstances and require further assistance, you can request a private ruling.
Calculating landholder duty
Landholder duty is generally charged at the same rates that apply to land transfers under Chapter 2 of the Act.
However, different methods of duty calculation and concessions apply depending on the nature of the landholder, the relevant acquisition and the value of the land holdings.
Registration for unit trust schemes
The trustee of a unit trust scheme can apply for registration of the scheme as:
- A declared public unit trust scheme,
- A wholesale unit trust scheme,
- An imminent wholesale unit trust scheme, or
- A declared wholesale unit trust scheme
The effect of registration is that a unit trust scheme is provided with concessionary treatment under the landholder provisions.
As a result of being registered, a scheme that would otherwise be treated as a private unit trust scheme can be treated as either a public unit trust scheme or a wholesale unit trust scheme.
Getting it right
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