Commercial and industrial property will not automatically enter the CIPT reform on 1 July 2024.
The Commercial and Industrial Property Tax Reform Act 2024 (the CIPT Act) provides that property will enter the CIPT reform if:
- the transaction happens on or after 1 July 2024;
- the transaction occurred pursuant to an agreement or arrangement entered into on or after 1 July 2024; and
- the transaction is a qualifying dutiable transaction or a qualifying landholder transaction; and
- on the date the transaction happens, the property has a qualifying use; and
- the transaction relates to an interest in property that is a qualifying interest (of 50% or more) or amounts to a qualifying interest when aggregated with certain other interests.
A property that has entered the CIPT reform is known as "tax reform scheme land".
Qualifying dutiable transaction
A qualifying dutiable transaction can comprise most forms of dutiable transactions involving Victorian property. Transactions that will not be a qualifying dutiable transaction include:
- the grant, transfer or assignment of a dutiable lease
- the acquisition of an economic entitlement
- a dutiable transaction that is eligible for an exemption from duty/has no duty chargeable
- a dutiable transaction that is eligible for the corporate reconstruction or corporate consolidation concession
- a transaction involving fixtures that are owned separately to the underlying land.
Qualifying landholder transaction
A qualifying landholder transaction may be a relevant acquisition under section 78 of the Duties Act 2000 (the Duties Act) other than a relevant acquisition that is eligible for an exemption from duty or that is eligible for the corporate reconstruction or corporate consolidation concession.
Example 1
On 1 December 2024, the legal personal representative of a deceased person transfers commercial property to a beneficiary of the estate in accordance with the terms of the deceased’s will. The transfer of the property is a dutiable transaction however no duty is chargeable as the exemption for deceased estates applies to the transfer.
As the dutiable transaction is exempt from duty, the transfer will not cause the commercial property to enter the CIPT reform.
What is a ‘qualifying interest’ in property?
A qualifying dutiable transaction or qualifying landholder transaction must relate to an interest of 50% or more in the property. A qualifying dutiable transaction or qualifying landholder transaction may:
- of itself relate to an interest of 50% or more in the property; or
- amount to an interest of 50% or more in the property when aggregated with other interests in the property in certain circumstances.
Aggregation of interests in property acquired under qualifying dutiable transactions
The CIPT Act provides that separate interests in a property acquired under 2 or more qualifying dutiable transactions may be aggregated together to determine whether the aggregated interest amounts to a qualifying interest of 50% or more in the property.
Interests in a property acquired under 2 or more qualifying dutiable transactions must be aggregated if:
- the dutiable transactions are aggregated under section 24 of the Duties Act; or
- the dutiable transactions occur within 3 years and either:
- the transferee under each dutiable transaction is the same person, or
- the transferees under the dutiable transactions are "associated persons".
An "associated person" is broadly defined in section 3 of the Duties Act and includes, among other things: relatives; related bodies corporates; trustees of different trusts that have a common beneficiary; and persons who are associated persons of the same person.
The Commissioner has discretion to determine that persons are not associated persons if the Commissioner is satisfied that the interests of the persons:
- were acquired, and will be used, independently; and
- were not acquired, and will not be used, for a common purpose.
The Commissioner’s discretion does not apply if persons are associated persons because they are related bodies corporate.
Example 2
Jack is the transferee under a transfer of property occurring on 1 December 2024 relating to a 40% interest in the property (qualifying dutiable transaction A).
Renee is the transferee under a transfer of property occurring on 1 July 2026 relating to a separate 15% interest in the same property (qualifying dutiable transaction B).
Jack and Renee are associated persons as they are related persons. The interests Jack and Renee acquired in the property are aggregated and together amount to a qualifying interest (i.e. an interest of 50% or more). Dutiable transaction B is the entry transaction for the property.
Jack and Renee will not be associated persons if the Commissioner is satisfied that the interests acquired by Jack and Renee:
- were acquired and will be used independently; and
- were not acquired, and will not be used, for a common purpose.
In this example, if the Commissioner exercises this discretion and determines that Jack and Renee are not associated persons, the interests acquired by Jack and Renee will not be aggregated. Accordingly, dutiable transaction B will not be an entry transaction for the property as the interest acquired is less than 50%.
Determining the interest in land taken to be acquired under a qualifying landholder transaction
The CIPT Act includes a formula for determining the interest in a property that a person is taken to have acquired under a qualifying landholder transaction.
This formula is relevant to determine whether the qualifying landholder transaction relates to an interest in a property that is of itself, or when aggregated with certain other interests in the property amounts to, a qualifying interest of 50% or more in the property. The formula is as follows:
A × B where:
- A is the interest acquired in the landholder under the qualifying landholder transaction on which duty is chargeable under Part 2 of Chapter 3 of the Duties Act. If a relevant acquisition that is the qualifying landholder transaction results from the aggregation of interests acquired by a person, associated persons and/or other persons in an associated transaction, then variable A will reflect all the interests acquired by those persons on which duty is chargeable on the relevant acquisition under Part 2 of Chapter 3 of the Duties Act.
- B is the interest the landholder holds in the land at the time the relevant acquisition is made. This interest is to be determined in accordance with Part 2 of Chapter 3 of the Duties Act.
One effect of the formula (in combination with the requirement that a qualifying landholder transaction must relate to a qualifying interest of 50% or more in the property) is that duty must be chargeable on an interest of 50% or more in the relevant property under a qualifying landholder transaction (or qualifying landholder transactions that are aggregated together).
Example 3
A landholder that is a private company holds a 100% interest in property.On 15 January 2025, Miguel acquires a 10% interest in the landholder.
On 27 January 2035, Miguel acquires another 40% interest in the landholder.
The acquisition on 27 January 2035 is a relevant acquisition as Miguel has acquired a significant interest of 50% in the private company. Although the relevant acquisition is of a 50% interest, duty is only chargeable on the interest acquired by Miguel on 27 January 2035 (40%) and each other interest that comprise the relevant acquisition that was acquired in the 3 years preceding the acquisition (0%).
The relevant acquisition is a qualifying landholder transaction. Miguel is only taken to have acquired a 40% interest in the land under the qualifying landholder transaction by applying the formula where:
- A = 40%. The 10% interest acquired on 27 January 2025 is not counted for this purpose as duty was not charged on this interest.
- B = 100%.
The qualifying landholder transaction is not an entry transaction because it does not of itself relate to a qualifying interest of 50% or more in the property (and there are no other interests in the property that can be aggregated). Accordingly, it will not cause the land to enter the tax reform scheme.
This example illustrates that the interest acquired in a landholder for determining whether a person has made a relevant acquisition in the landholder may be different to the interest taken to be acquired in a property for the purpose of determining whether land enters the tax reform scheme.
Example 4
A landholder that is a private company holds a 30% interest in a property.ABC Pty Ltd acquired a 10% interest in the landholder on 22 January 2023.
ABC Pty Ltd acquired a further 45% interest in the landholder on 12 August 2025.
The acquisition by ABC Pty Ltd on 12 August 2025 is a relevant acquisition as it amounts to a significant interest in the landholder when aggregated with the interest acquired on 22 January 2023. ABC Pty Ltd pays duty on the relevant acquisition.
The acquisition is a qualifying landholder transaction. However, the acquisition is not an entry transaction as the interest in the property acquired by ABC Pty Ltd is 16.5% (55% × 30%). As the interest is less than 50% it is not a qualifying interest.
Aggregation of qualifying landholder transactions
The CIPT Act provides that separate interests that are taken to be acquired in a property under 2 or more qualifying landholder transactions may be aggregated together to determine whether the aggregated interest amounts to a qualifying interest of 50% or more in the property.
Interests in a property taken to be acquired under 2 or more qualifying landholder transactions must be aggregated together aggregation provisions apply if:
- the qualifying landholder transactions occur within a 3 year period; and
- under each qualifying landholder transaction, a relevant acquisition is made in the same landholder; and
- the relevant acquisitions in the landholder are made by the same person or "associated persons".
An "associated person" is broadly defined in section 3 of the Duties Act and includes, among other things: relatives; related bodies corporates; trustees of different trusts that have a common beneficiary; and persons who are associated persons of the same person.
Example 5
Kwame makes a relevant acquisition of a 25% interest in a private unit trust under a qualifying landholder transaction occurring on 15 December 2024 (qualifying landholder transaction A).
Jamal makes a relevant acquisition of a 30% interest in the same private unit trust on 1 December 2027 (qualifying landholder transaction B). Kwame and Jamal are brothers and consequently associated persons.
Under the Duties Act, the relevant acquisitions by Kwame and Jamal are separately assessed as 2 different relevant acquisitions.
Under the CIPT Act, the interests in the property taken to be acquired by Kwame and Jamal under qualifying landholder transaction A and B are aggregated and together amount to a qualifying interest in the property (i.e. an interest of 50% in). Accordingly, qualifying landholder transaction B will be an entry transaction (i.e. it will result in the property entering into the CIPT reform).
The Commissioner may determine that Kwame and Jamal are not associated persons. If the Commissioner makes this determination, qualifying landholder transaction B will not be an entry transaction for the property as the interest acquired by Jamal is less than 50%.
An entry consolidation
A consolidation of 2 or more properties into one property will cause the consolidated property to become tax reform scheme land (i.e. enter the CIPT reform) if:
- one or more of the properties to be consolidated is tax reform scheme land; and
- 50% or more of the area of the property that is to be consolidated is tax reform scheme land.
If tax reform scheme land and property that is not tax reform scheme land is consolidated and less than 50% of the area of the consolidated property is tax reform scheme land, then the consolidated property will not be tax reform scheme land. The property that was tax reform scheme land prior to the consolidation is also taken to no longer be tax reform scheme land.
The date on which a consolidated property is taken to enter the CIPT reform is the first date on which land that forms part of the consolidation entered the CIPT reform.
Example 6
Three parcels of tax reform scheme land are consolidated with a property that is not tax reform scheme land on 1 July 2026. Of the tax reform scheme land, one parcel entered the tax reform scheme on 1 January 2025, another on 1 December 2025 and the third on 1 February 2026.The entry date for the consolidated land is 1 January 2025. This is the date on which land that forms part of the consolidation first entered the CIPT reform.
An entry subdivision
A subdivision of a property that is tax reform scheme land into child lots will result in each child lots becoming tax reform scheme land. Each child lot that was derived from the subdivision is taken to have entered the CIPT reform on the date on which the property that was subdivided entered the CIPT reform.
If a plan of subdivision is registered in relation to 2 or more properties, a consolidation of those properties is taken to occur for the purpose of the CIPT reform.
The date of the deemed consolidation of the properties is taken to be the date when the plan of subdivision is registered. The child lots from the deemed subdivision will obtain their CIPT character from the CIPT character of the parent title after the deemed consolidation.
Example 7
Land entered the CIPT reform on 1 November 2025. The property is subdivided into 4 lots (the child lots) on 1 February 2027. Each child lot is tax reform scheme land. The entry date for each child lot is 1 November 2025.
