What is an economic entitlement?
An economic entitlement entitles a person to any one or more of the below:
- To participate in the income, rents or profits derived from the land.
- To participate in the capital growth of the land.
- To participate in the proceeds of sale of the land.
- To receive any amount determined by reference to any of the above matters.
- To acquire any entitlement described above.
The land must have an unencumbered value of more than $1 million.
When is duty payable?
Where a person obtains an economic entitlement, the person is taken to have acquired a beneficial ownership interest in the land that is chargeable with duty.
How much duty is payable?
If a person enters into an arrangement in relation to land under which the person is or will be entitled (directly or through another person) to an economic entitlement in relation to the land, that person is taken to have acquired beneficial ownership in the land in proportion to the economic entitlement acquired.
Where an arrangement entitles a person to one type of economic entitlement by reference to a stated percentage, and nothing else is payable to the person or an associated person under the arrangement, the proportion of beneficial ownership of the land taken to be acquired by the person will be the stated percentage. Duty is calculated based on the value of the proportion of the beneficial ownership in land acquired, charged at the standard land transfer duty rate.
Calculate your duty
Duty is calculated on the dutiable value of the land.
If you don't pay your duty within 30 days of settlement, penalty tax and interest may apply.
Foreign Purchaser Additional Duty rates
What is the deeming provision?
You are deemed to have acquired 100% of the beneficial ownership in the land if the arrangement under which the economic entitlement is acquired:
- does not specify the percentage of the economic entitlement acquired
- in addition to specifying the percentage of the economic entitlement acquired, also includes any other entitlement of, or amount payable to, you or an associated person, or
- entitles you or an associated person to more than one type of economic entitlement.
The Commissioner may determine a lesser percentage if the Commissioner considers it appropriate in the circumstances.
How do I lodge for payment of duty?
Completing the Digital Duties Form is mandatory for all transactions involving the acquisition of economic entitlements.
Once you have acquired an economic entitlement, the transferor (who is typically a landowner or a third party transferring you an economic entitlement) or their representative must create and start the Digital Duties Form. The transferor or their representative must then invite you or your representative to complete your section of the form.
Select the ‘change in beneficial ownership’ transaction type, and lodge the Digital Duties Form under ‘Retrieve & claim Settlement Statement (Paper Transfer)’ using the Duties Online portal.
This guide demonstrates how to prepare the Digital Duties Form and lodge the documents to us for a duty assessment.
How do I pay duty?
Payments must be made by electronic funds transfer.
In order to avoid penalty tax and interest, you must pay the estimated duty at the time of lodgement and within 30 days of acquiring the economic entitlement.
For payment details, visit our guide to paying duty on the acquisition of an economic entitlement.
Can I get a private ruling?
You may lodge a request for a private ruling if the acquisition has not completed and:
- it is unclear whether the acquisition will give rise to an acquisition of an economic entitlement, or
- you are requesting the Commissioner determine a lesser percentage than 100%.
If the acquisition has completed, you may request that the Commissioner determine a lesser percentage than 100% as part of your lodgement.
What documents do I have to lodge?
- All contracts and agreements surrounding development and the interest of the parties.
- Valuation of the land showing the unencumbered value at the time the economic entitlement is acquired.
- If you are requesting the Commissioner determine a lesser percentage than 100% either as part of your lodgement or as a private ruling request, you must provide:
- submissions as to the appropriate percentage
- calculations and information in support of your submissions.
To learn more, refer to our evidentiary requirements manual.
