From 4 December 2024, land transfer (stamp) duty exemptions and exclusions are available for ‘non-standard transactions’ involving properties that have entered the commercial and industrial property tax (CIPT) reform.
A property that has entered the CIPT reform is known as ‘tax reform scheme land’.
What is a non-standard transaction?
A non-standard transaction is one of the following dutiable transactions that involves tax reform scheme land with a qualifying use:
- the transfer, assignment, grant or surrender of a dutiable lease over tax reform scheme land
- a transaction involving an interest in fixtures that is created, dealt with or held separately to an estate or interest in tax reform scheme land
- the acquisition of an economic entitlement in relation to tax reform scheme land.
The tax reform scheme land must have a qualifying use on the date of the non-standard transaction.
Prior to 4 December 2024, an exemption or exclusion from duty was not available for non-standard transactions involving tax reform scheme land.
Duty exemptions for non-standard transactions
A non-standard transaction may be exempt from duty in 3 cases:
- the 3-year test;
- the 100% interest test; or
- the Commissioner exercising a legislative discretion.
The 3-year test
A non-standard transaction will be exempt from duty if:
- at least 3 years has elapsed between:
- the date when the tax reform scheme land first entered the CIPT reform (e.g. entered via an entry transaction); and
- the date of the contract or other agreement or arrangement for the non-standard transaction; and
- the value of the tax reform scheme land, for the purpose of calculating the duty payable on the entry transaction:
- was not reduced by a lease over the land or part of the land; or
- did not exclude the value of an interest in fixtures located on the land; or
- was not reduced by an economic entitlement in relation to the land.
The first set of requirements apply to standard and non-standard transactions. However, the second set of requirements only apply to non-standard transactions. This is because, among other things, a non-standard transaction may be structured to reduce the duty payable on an entry transaction.
The 100% interest test
A non-standard transaction will be exempt from duty if:
- either:
- the ‘entry interest’ for the land was a 100% interest; or
- the ‘entry interest’ and any ‘further interest’ obtained in the land before the non-standard transaction amounted to a 100% interest
- the value of the tax reform scheme land, for the purpose of calculating the duty payable on the entry transaction:
- was not reduced by a lease over the land or part of the land; or
- did not exclude the value of an interest in fixtures located on the land; or
- was not reduced by an economic entitlement in relation to the land.
The first set of requirements are necessary because that the duty paid on an entry interest (and/or a further interest) in tax reform scheme land may have been impacted by a lease, fixtures or economic entitlement such that it is not appropriate to provide an upfront exemption from duty.
In the context of the 100% interest test:
- an ‘entry interest’ means the interest in the tax reform scheme land that was obtained under the entry transaction (or any interest that was aggregated together with the entry transaction). It does not matter if the entry interest was acquired under a qualifying dutiable transaction or a qualifying landholder transaction
- a ‘further interest’ means an interest in the tax reform scheme land that is different to the entry interest (and any other further interest), was subject to duty, and was obtained under a qualifying dutiable transaction or a qualifying landholder transaction that occurred after the entry transaction but before the subject standard transaction.
Example 1
On 1 July 2025, Joe acquires a 100% interest in commercial land under a qualifying dutiable transaction that is an entry transaction. The entry interest is 100% and the land becomes tax reform scheme land.
At the time of the entry transaction, fixtures referred to in section 10(1)(ad) of the Duties Act were located on the land. The value of these fixtures were not taken into account when determining the duty payable on the entry transaction. This is because the fixtures were not transferred to Joe or an associated person.
On 1 July 2026, the fixtures on the land (but not the underlying land) are transferred to a third party. This is a non-standard transaction.
The non-standard transaction is not exempt from duty under the 100% interest test. This is because the value of the fixtures located on the land were not included in the calculation of duty on the entry transaction.
If the value of fixtures had been included in the calculation of duty on the entry transaction, the non-standard transaction involving the fixtures would be exempt from duty.
Example 2
On 1 January 2026, Emily acquires a 100% interest in land under qualifying dutiable transaction that is an entry transaction. The entry interest is 100% and the land becomes tax reform scheme land.
Emily paid nominal duty on the entry transaction as the value of the land was reduced by a 99-year lease over the land that only required a peppercorn rental to be paid.
On 1 December 2026, the leasehold interest in the land is transferred. This is a non-standard transaction.
Although the entry interest for the entry transaction was 100%, the non-transaction is not exempt from duty under the 100% interest test. This is because the value of the land for the purpose of calculating duty on the entry transaction was reduced by the lease over the land.
The Commissioner’s discretion and legislative factors
If a non-standard transaction is not exempt under the 3-year test or 100% interest test, the Commissioner may reduce the duty payable on the transaction if the Commissioner is satisfied that it is appropriate to do so.
The Commissioner must have regard to various legislative matters in exercising the discretion.
Matter 1: the quantum of the entry interest and any further interests
The Commissioner must have regard to the quantum of the entry interest and any further interests acquired in the tax reform scheme land. This is intended to recognise duty previously paid in relation to the tax reform scheme land.
Example 3
In December 2024, Thanuri acquires a 60% interest in commercial land under a qualifying dutiable transaction that is an entry transaction. Thanuri pays duty on the transaction by reference to a 60% interest in the land. The entry interest is 60% and the land becomes tax reform scheme land.
In January 2027, a dutiable lease is granted over the land. This is a non-standard transaction and neither the 3-year rule or 100% interest test apply. Accordingly, duty would be payable on the grant of the lease unless the Commissioner exercises the discretion to reduce the duty.
In determining whether to exercise this discretion, the Commissioner must have regard to the quantum of the entry interest (60%). Having regard to this matter only, the duty payable on the grant of the lease is likely to be reduced by 60% in recognition that duty was already paid on 60% of the land as part of the entry transaction.
However, this outcome may change as the Commissioner must also have regard to other relevant matters.
Matter 2: impact of leases, fixtures and economic entitlements
The Commissioner must have regard to the duty payable on an entry transaction (or earlier acquisition of a further interest) and the extent to which the value of the tax reform scheme land for that purpose:
- was reduced by a lease over the land or part of the land; or
- excluded the value of an interest in fixtures located on the land; or
- was reduced by an economic entitlement in relation to the land.
This matter is intended to recognise the impact leases, fixtures and economic entitlements can have on the duty payable on an earlier transaction. The greater the impact, the less likely the Commissioner will exercise their discretion.
Example 4
In March 2025, Caryna acquires a 100% interest in commercial land under a qualifying dutiable transaction that is an entry transaction. The entry interest is 100% and the land becomes tax reform scheme land.
Caryna paid significant duty on the transaction. However, the amount of duty was reduced by a long-term lease over the land with peppercorn rental. The lease was initially granted for 90 years, but, at the time of the entry transaction there was only 2 years left on the lease.
In April 2026, the leasehold interest is surrendered. This is a non-standard transaction. It is not exempt from duty under the 100% interest test because the duty payable on the entry transaction was reduced by the lease over the land. Accordingly, duty would be payable on the surrender of the lease unless the Commissioner exercises the discretion.
In determining whether to exercise the discretion, the Commissioner must have regard to the duty payable on the entry transaction and the extent to which the value of the tax reform scheme land was reduced by the lease over the land. To this end, it is relevant that:
- at the time of the entry transaction there was only a short period before the lease was due to expire.
- significant duty was paid on the entry transaction as the value of the land was not heavily suppressed because of the lease.
As a result, this matter points is in favour of reducing the duty payable on the surrender of the lease.
If only nominal duty was paid on the entry transaction because the lease heavily suppressed the value of the land, then this matter would weigh heavily against reducing the duty payable on the non-standard transaction.
Matter 3 and 4: Specified transaction before an entry transaction
If a ‘specified transaction’ occurs in relation to land, the Commissioner must have regard for:
- the time period between the specified transaction and the entry transaction; and
- the duty paid on the specified transaction.
A specified transaction can occur on or after 1 July 2024 but before an entry transaction or after an entry transaction but before the non-standard transaction being assessed for duty.
A ‘specified transaction’ in this context includes the grant, transfer, assignment of a dutiable lease, a dutiable transaction involving an interest in fixtures or the acquisition of an economic entitlement. It also includes a relevant acquisition in a landholder whose land holdings include a dutiable lease, interest in fixtures or economic entitlement.
Matter 3 and 4 are intended to address the trade-off between when duty is paid on a specified transaction involving land and when CIPT is to commence for that same land. Under the CIPT reform, duty exemptions are provided for transactions of tax reform scheme land on the basis that the tax reform scheme land will be subject to CIPT in less than 10 years.
Example 5
In August 2024, a dutiable lease is transferred. This is a specified transaction and duty is paid on the transfer.
In November 2024, the land (subject to the lease) is transferred under a qualifying dutiable transaction that is an entry transaction. The entry interest is 100% and the land becomes tax reform scheme land.
In January 2026, the dutiable lease is again transferred. This is a non-standard transaction that is not exempt from duty under the 3-year test or 100% interest test. Accordingly, duty would be payable on the transaction unless the Commissioner exercises the discretion.
In determining whether to exercise the discretion, the Commissioner must have regard for the short period between the specified transaction (August 2024) and the entry transaction for the land (November 2024). This is a matter in favour of exercising the discretion to exempt the transfer of the dutiable lease in January 2026, subject to the consideration of any other relevant matters. However, it must be weighed against any impact the lease had on reducing duty on the entry transaction (matter 2).
If the entry transaction and subsequent non-standard transaction both occurred in 2044 (being 20 years after the specified transaction) this goes against exercising the discretion to exempt the non-standard transaction, notwithstanding duty was paid on the lease in August 2024. In this case, the trade-off with granting an exemption for the non-standard transaction and the commencement of the CIPT is not present.
Example 6
In August 2024, Robert acquires a 100% interest in land under a qualifying dutiable transaction that is an entry transaction. The entry interest is 100% and the land becomes tax reform scheme land. Robert only pays nominal duty on this transaction as the land was subject to a 99-year lease over the land that only required a peppercorn rental to be paid.
In August 2026, the dutiable lease is transferred (non-standard transaction 1). This transaction is not exempt from duty under the 3-year test or 100% interest test and full duty is paid on the transaction.
In January 2027, the dutiable lease is again transferred (non-standard transaction 2). This transaction is not exempt from duty under the 3-year test or 100% interest test. Accordingly, duty would be payable on the transaction unless the Commissioner exercises the discretion.
In determining whether to exercise the discretion, the Commissioner must have regard for any duty paid on non-standard transaction 1 (a specified transaction). If any duty was paid, this would go in favour of the Commissioner exercising the discretion to exempt non-standard transaction 2.
If non-standard transactions 1 an 2 were instead transfers of different 50% leasehold interest in the same tax reform scheme land, the duty payable for non-standard transaction 1 would not support an exemption or reduction being granted for the transaction 2 as they relate to different interests.
Matter 5: any other matter that the Commissioner considers relevant
The Commissioner must have regard to any other matter that the Commissioner considers relevant.
Exclusion of non-standard land holdings from a landholder duty assessment
The land holdings of a landholder may sometimes include a dutiable lease over tax reform scheme land, an interest in fixtures located on tax reform scheme land and/or an interest in tax reform scheme land that is taken to be beneficially owned under the economic entitlement duty provisions (i.e. non-standard land holdings).
If a person makes a relevant acquisition in a landholder whose land holdings include a non-standard land holding, the value of the non-standard land holding is to be excluded from the calculation of duty on the relevant acquisition if:
- the tax reform scheme land has a qualifying use at the time of the relevant acquisition; and
- all the requirements for the 3-year test or 100% interest test are satisfied (described above).
If the value of a non-standard land holding is not excluded from the assessment of duty on the relevant acquisition on the above basis, the Commissioner may exclude or partially exclude the value of the non-standard land holdings if the Commissioner is satisfied that it is appropriate to do so.
The Commissioner must have regard to various legislative matters in exercising the discretion. These matters are the same as those matters that must be taken into account for non-standard transactions.
The Commissioner’s discretion is intended to be applied consistently with the discretion for non-standard transactions. Accordingly, the examples provided above for non-standard transaction are also illustrative on how the discretion is intended to apply to a relevant acquisition, with any modifications required for the different context.
The value of a non-standard land holding is taken into account in determining if the relevant entity is a landholder, irrespective of whether the land holding is excluded (or partially exclude) from a duty assessment.
Duty exemption for dutiable goods
The transfer of certain types of tangible goods held or used in connection with land (such as tax reform scheme land) may be subject to duty in certain circumstances, unless an exemption applies.
From 4 December 2024, a dutiable transaction in relation to dutiable goods will be exempt to the extent that:
- the dutiable transaction relates to dutiable goods;
- the goods are part of an arrangement that includes a standard or non-standard transaction; and
- the standard or non-standard transaction is exempt from duty under one of the CIPT duty exemptions described above.
The exemption ensures that goods are exempt from duty when they are part of an arrangement involving an exempt tax reform scheme transaction.
