A duty exemption may apply to a tax reform scheme transaction which includes most dutiable transactions involving properties that have entered into the CIPT reform (tax reform scheme land).
A comparable exclusion may apply to the assessment of duty on a relevant acquisition in a landholder whose landholdings include tax reform scheme land. For a duty exemption or exclusion to apply, the property must have a qualifying use on the date of the dutiable transaction or relevant acquisition.
What is a tax reform scheme transaction?
A tax reform scheme transaction includes most dutiable transactions provided the dutiable property the subject of the transaction is tax reform scheme land and the land has a qualifying use on the date of the dutiable transaction.
There are some exceptions, including the acquisition of an economic entitlement, the transfer, assignment, or grant of a dutiable lease, a transaction involving an interest in fixtures that is created, dealt with or held separately to an estate or interest in the land on which the fixtures are located, and dutiable goods which are transacted as part of an arrangement that involves an estate or interest in land.
The Government is considering whether the duty exemption should be extended to all or some of these transactions. We will provide an update should changes be made.
A tax reform scheme transaction is eligible for a duty exemption if:
- the transaction occurs at least 3 years after the subject land became tax reform scheme land (i.e. the entry transaction); or
- the "entry interest" for the land to which the transaction relates (including any "further interest" in the land that was obtained and subject to duty) was a 100% interest; or
- if the land that is the subject of the transaction is the same or substantially the same as either or both the entry interest for the land and any further interest acquired in the land before the tax reform scheme transaction.
Only one of the above conditions is required for the exemption to apply. A partial exemption may apply in certain circumstances.
The "entry interest" in this context 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 that the entry interest was acquired under a qualifying dutiable transaction or a qualifying landholder transaction.
Example 1
On 1 January 2025, James takes transfer of a 100% interest in a property that satisfies all the requirements to be an entry transaction. Accordingly, the entry interest for the property is 100%.
On 1 January 2026, James transfers his 100% interest in the property to Melinda. The property has a qualifying use at settlement of the transfer. The transfer is a tax reform scheme transaction and will be exempt from duty because the entry interest for the property was 100%.
Example 2
Ravi acquires a 60% interest in a property under a transfer of the property that occurs on 1 January 2025. This is a qualifying interest in the property (as it is an interest of 50% or more) and the dutiable transaction is an entry transaction.Joshua is the owner of the remaining 40% interest in the property.
On 15 July 2026, Tahlia purchases a 40% interest in the property from Joshua under a tax reform scheme transaction.
The duty exemption will not apply to the tax reform scheme transaction as:
- the interest acquired by Tahlia is not the same or substantially the same as the entry interest for the land; and
- the interest acquired by Tahlia was acquired within 3 years of the entry transaction.
Example 3
Liying acquires a 70% interest in a property under a transfer of the property that occurs on 15 August 2026. Liying pays duty on the acquisition of the 70% interest in the property. This is a qualifying interest in the property and the dutiable transaction is an entry transaction.Liying acquires a further 20% interest in the property on 30 August 2026 under a qualifying dutiable transaction. Liying pays duty on the acquisition of the further 20% interest in the property as this transaction happens within 3 years of the entry transaction.
Philip is the owner of the remaining 10% interest in the property.
On 3 November 2026, Rebecca purchases 100% of the property from Liying and Philip.
No duty is chargeable on this tax reform scheme transaction to the extent that the interest acquired by Rebecca is the same, or substantially the same, as the entry interest for the property (70%) and the further interest acquired in the property (20%).
The outcome is that duty is assessed on the remaining 10% interest in the property acquired by Rebecca from Philip as the transfer to Rebecca happened within 3 years of the entry transaction for the property and this 10% interest is not the same or substantially the same as the entry interest (70%) and the further interest acquired in the property (20%).
Exclusion of the value of tax reform scheme land from a landholder duty assessment
The value of a property that has entered the CIPT reform (tax reform scheme land) is taken into account in determining if the relevant entity is a landholder under Part 2 of Chapter 3 of the Duties Act 2000 (the Duties Act).
However, the value (or part of the value) of tax reform scheme land may be excluded from the duty calculation on a relevant acquisition in a landholder whose land holdings include the tax reform scheme land, in certain circumstances. Importantly, the tax reform scheme land must also have a qualifying use on the date of the relevant acquisition.
The unencumbered value of the tax reform scheme land held by the landholder will be excluded from the calculation of duty chargeable on a relevant acquisition if:
- The relevant acquisition occurs on a date that is at least 3 years after the date of the relevant entry transaction for the property; or
- The entry interest for the property is 100%; or
- The entry interest and any further interest acquired before the relevant acquisition amounts to a 100% interest.
Only one of the above conditions is required for the exclusion to apply.
The unencumbered value (or part of the value) of tax reform scheme land held by the landholder will be excluded from the calculation of duty chargeable on a relevant acquisition to the extent that the interest a person is taken to have obtained in the property under the relevant acquisition is the same or substantially the same as either or both of the following
- the entry interest for the property; or
- any further interest the person is taken to have obtained in the property before the relevant acquisition.
Example 4
On 1 January 2026, a private company takes transfer of a 100% interest in a property with a qualifying use. The transfer satisfies all the requirements to be an entry transaction. Accordingly, the entry interest for the property is 100%.On 1 January 2027, Amira makes a relevant acquisition of a 100% interest in the private company whose only land holding is the 100% interest in the property (it acquired on 1 January 2026). The property has a qualifying use at the date of the relevant acquisition.
The value of the property will be taken into account in determining whether the private company is a landholder. However, the value of the property will be excluded from the assessment of duty on Amira's relevant acquisition. As the landholder has no other land holdings at the date of the relevant acquisition, no duty will be assessed on Amira's relevant acquisition in the landholder.
Example 5
On 30 December 2024, Hiroshi acquires a 100% interest in a landholder that is a private company. The acquisition is a relevant acquisition.The landholder holds a 100% interest in a property that has a qualifying use (Property 1 with a value of $2,000,000) and a 100% interest in a property that does not have a qualifying use (Property 2 with a value of $500,000).
Hiroshi pays duty on the relevant acquisition calculated with reference to Properties 1 and 2. The acquisition satisfies all requirements to be a qualifying landholder transaction and an entry transaction in respect to Property 1, meaning Property 1 has entered the CIPT reform. The entry interest for Property 1 is 100%.
On 3 July 2028, Fatima acquires a 100% interest in the private company under a relevant acquisition. The private company continued to hold the same interests in Property 1 and Property 2 (which has not entered the CIPT reform). On the basis of the combined values of those properties, the private company is a landholder.
Even though the value of both properties are taken into account in determining whether the private company is a landholder, duty is only charged on the relevant acquisition by reference to the value of Property 2. The value of Property 1 is excluded from an assessment of duty on the relevant acquisition because the relevant acquisition occurred at least 3 years after the entry transaction for Land 1. The value of Property 1 would also be excluded from an assessment of duty on the relevant acquisition because the entry interest for the property was a 100% interest.
Example 6
Michael acquires a 60% interest in a landholder under a relevant acquisition that occurs on 30 April 2025. The only landholding of the landholder is a 100% interest in qualifying land. Michael pays duty on the relevant acquisition.The relevant acquisition is taken to relate to an interest of 60% in the property which is a qualifying interest. The acquisition satisfies all other requirements to be a qualifying landholder transaction and an entry transaction. Accordingly, the entry interest for the property is 60%.
Jasmine holds the remaining 40% interest in the landholder.
On 14 January 2026, Sam acquires a 100% interest in the landholder from Michael and Jasmine. The only land holding of the landholder is the 100% interest in qualifying land that was subject to the entry transaction on 30 April 2025.
The value of the land holding of the landholder is to be excluded from the calculation of duty to the extent that the interest acquired by Sam is the same, or substantially the same, as the entry interest for the property. Accordingly, the value of 60% of the property, being the entry interest for the property, is excluded for the purposes of assessing duty on the relevant acquisition. Duty is chargeable on the relevant acquisition by reference to the value of 40% of the property.
