Commercial and industrial property will transition into the CIPT reform if there is a qualifying dutiable transaction or qualifying landholder transaction in relation to the property, on or after 1 July 2024, that meets several other requirements to constitute an entry transaction. However, transitional provisions may apply.
The new CIPT provisions will not operate to transition commercial and industrial property into the CIPT reform if the qualifying dutiable transaction occurs or relevant acquisition that is the qualifying landholder transaction is made pursuant to an agreement or arrangement that was entered into before 1 July 2024.
Meaning of agreement or arrangement
An arrangement means a concerted action or plan by the relevant parties to undertake specific actions under which the dutiable transaction or relevant acquisition will be made. While an executed binding agreement is not required to show that there is a concerted action or plan between the parties, the intended actions must be captured in writing, sufficiently certain and envisage the dutiable transaction/relevant acquisition to qualify as an arrangement. In this context, an arrangement is not considered to include a pre-exemptive right such as a right of first refusal.
Example 1
A commercial property in Victoria is transferred from vendor to purchaser on 1 December 2024. This is a dutiable transaction. The transfer of the property was made pursuant to a contract of sale dated 1 May 2024. As the dutiable transaction occurred pursuant to an agreement that was entered into before 1 July 2024, the property will not enter the CIPT reform.
Example 2
Rowan is the owner of a commercial property in Victoria. On 1 July 2023, Rowan granted an option to Mei Ling to purchase the property. The terms of the contract of sale were settled at the time the option was granted, including the sale price. On 1 December 2024, Mei Ling exercises the option and enters into a contract of sale to purchase the property.
The settlement of the contract of sale occurred on 20 March 2025 when Rowan transferred the property to Mei Ling. The transfer of the property is a dutiable transaction.
As the dutiable transaction was made pursuant to an arrangement entered into before 1 July 2024, the CIPT transitional provisions apply and the property will not transition into the CIPT reform.
Example 3
Isaac owns 100% of the shares in ABC Pty Ltd, a company that holds commercial and industrial property in Victoria with an unencumbered value of $5 million. On 1 January 2024, Isaac and Anna enter into a non-binding Heads of Agreement outlining the key terms of a proposed transfer of 100% of the shares from Isaac to Anna including the relevant parties, property, proposed purchase price and target completion date.
Anna makes a relevant acquisition when Isaac transfers the shares to her on 1 December 2024. The Heads of Agreement between Isaac and Anna will qualify as an arrangement entered into before 1 July 2024 because the document provides sufficient certainty of the terms of the proposed transfer of shares.
Example 4
Aisha acquires a 20% interest in a landholder that is a private company on 1 January 2023. On 1 August 2025, Aisha acquires another 30% interest in the landholder under an agreement or arrangement entered into on or after 1 July 2024.
The acquisition on 1 August 2025 is a relevant acquisition as it amounts to a significant interest in the landholder when aggregated with the interest acquired on 1 January 2023. Landholder duty is payable with reference to the 50% aggregated interest acquired.
The relevant acquisition will amount to a qualifying landholder transaction because the acquisition of the interest which resulted in the relevant acquisition occurred on 1 August 2025 and was made under an agreement or arrangement entered into after 1 July 2024. It does not matter that the initial 20% interest was acquired prior to 1 July 2024.
Example 5
Damian acquires a 20% interest in a landholder that is a private unit trust on 1 January 2023 (Relevant Acquisition 1). This is a relevant acquisition and Damian pays duty on the acquisition of the 20% interest in the landholder.
On 1 August 2025, Damian acquires a further 30% interest in the landholder (Relevant Acquisition 2). The acquisition on 1 August 2025 is also a relevant acquisition and duty is payable.
However, Relevant Acquisition 1 is not a qualifying landholder transaction because it occurred prior to 1 July 2024 and was a relevant acquisition in its own right. Duty was paid on Relevant Acquisition 1 with reference to the 20% interest acquired. Accordingly, it cannot be aggregated with Relevant Acquisition 2 when determining whether Relevant Acquisition 2 amounts to a qualifying interest in the property and an entry transaction for CIPT.
Example 6
A 20% interest in property with a qualifying use was transferred to Family Company Pty Ltd on 22 January 2023 (Transfer 1). Family Company Pty Ltd paid duty on the transfer.
On 28 November 2026, a further 30% interest in the same property was transferred to Family Company Pty Ltd under an arrangement entered into after 1 July 2024 (Transfer 2). The transfer of the property is a dutiable transaction. Family Company Pty Ltd paid duty on this transfer.
Transfer 1 is not a qualifying dutiable transaction because it occurred prior to 1 July 2024.
Transfer 2 is a qualifying dutiable transaction because it occurred on or after 1 July 2024 under an arrangement entered into on or after 1 July 2024. However, Transfer 2 is not an entry transaction for the purposes of the CIPT reform (i.e. it will not result in the property entering into the CIPT reform) because it:
- does not of itself relate to a 50% or more interest in the property; and
- does not amount to a 50% or more interest in the property when aggregated with other interests obtained under another relevant qualifying dutiable transaction.
To this end, the interests in the property obtained under Transfer 1 and 2 cannot be aggregated together because Transfer 1 is not a qualifying dutiable transaction.
