A duty exemption may apply to a tax reform scheme transaction involving properties that have entered into the commercial and industrial property tax (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?
From 4 December 2024, there are two types of tax reform scheme transactions:
- a standard transaction; or
- a non-standard transaction.
The duty exemptions and exclusions that applied to dutiable transactions and relevant acquisitions prior to 4 December 2024 broadly remain unchanged. These transactions are now described as ‘standard transactions’. Most dutiable transactions involving tax reform scheme land are standard transactions except for transactions involving dutiable leases, certain fixtures and the acquisition of an economic entitlement. These more complex dutiable transactions are now described as non-standard transactions.
An exemption or exclusion from duty was not previously available for non-standard transactions. By operation of the State Taxation Further Amendment Act 2024, and with effect from 4 December 2024, new upfront duty exemptions and exclusions are available for non-standard transactions provided full duty was paid when the property entered the CIPT reform.
The new non-standard transactions are:
- the transfer, assignment, grant or surrender of a dutiable lease (being a lease of a kind referred to in section7(1)(b)(v) or (va) of the Duties Act) 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 land (being dutiable property referred to in section 10(1)(ad) of the Duties Act) located on tax reform scheme land
- the acquisition of an economic entitlement in relation to tax reform scheme land.
If the new upfront duty exemptions for a non-standard transaction do not apply, the Commissioner of State Revenue may, if satisfied that it is appropriate to do so, reduce the duty payable on a non-standard transaction relating to tax reform scheme land or determine that a non-standard transaction is exempt from duty having regard to various legislative factors.
A new duty exemption for dutiable goods is now also available. This is in recognition that goods may be the subject of a dutiable transaction under an arrangement that includes a tax reform scheme transaction. Previously, the duty exemptions that applied to a tax reform scheme transaction did not apply to dutiable property that is goods within the meaning of the Duties Act. For example, tax reform scheme land is transferred together with goods. Prior to 4 December 2024, the transfer of the land would be exempt from duty however there was no exemption for the duty payable on the goods transferred with the tax reform scheme land.
The new duty exemption operates to provide a duty exemption for goods where they are the subject of an arrangement involving the tax reform scheme transaction.
A duty exemption or exclusion for a tax reform scheme transaction (whether for a standard transaction or a non-standard transaction) is only available if on the date of the dutiable transaction or relevant acquisition, the tax reform scheme land has a qualifying use.
These amendments were made by the State Taxation Further Amendment Act 2024 that received royal assent on 3 December 2024.
Duty exemptions for standard transactions
A tax reform scheme transaction that is a standard transaction is eligible for a duty exemption if:
- the transaction occurs at least 3 years after the entry date for the tax reform scheme transaction to which the standard transaction relates and the date on which a contract or other agreement or arrangement for the standard transaction is entered into. This is known as the 3-year rule; 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 a 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 under an arrangement or agreement entered into 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 as this transaction happens under an arrangement or agreement entered 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%).
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 and this 10% interest is not the same or substantially the same as the entry interest (70%) or the further interest acquired in the property (20%).
Example 4
Steven acquires a 65% interest in property under a transfer that occurs on 15 December 2024. Steven pays duty on the acquisition. The 65% interest is a qualifying interest and the dutiable transaction is an entry transaction. Steven acquires a further 20% interest in the property on 11 February 2028.
The transfer of the further 20% interest was made under a contract of sale dated 1 December 2027. The duty exemption will not apply to the transfer of the further 20% interest, as the interest was acquired pursuant to a contract of sale that was entered into within the 3-years of the entry transaction.
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.
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 entry date for the tax reform scheme land and the date on which a contract or other agreement or arrangement for the relevant acquisition is entered into;
- 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 5
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 6
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 it meets the condition for exclusion. Firstly, the agreement or arrangement for the relevant acquisition occurred at least 3 years after the entry transaction for Land 1. Alternatively, the entry interest for Land 1 was a 100% interest.
Example 7
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.
