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 obtained beneficial ownership in the land in proportion to the economic entitlement obtained. That entitlement may be subject to land transfer duty.
The economic entitlement provisions are contained in Part 4B of Chapter 2 of the Duties Act 2000 (the Duties Act), titled 'Economic Entitlements in Relation to Land'.
There are separate economic entitlement provisions that concern relevant acquisitions of an economic entitlement in relation to private landholders.
Revenue Rulings
To provide guidance on the application of the Economic Entitlement in Relation to Land provisions, the Commissioner has issued these Revenue Rulings:
- DA-065 - Acquisition of economic entitlements in relation to land (Service Fees)
- DA-066 - Calculation of economic entitlements
- Draft DA-067 - Economic entitlements in relation to land - Key concepts and transitional rules (currently issued for public consultation)
Revenue Ruling DA-065 provides clarification on the application of the economic entitlement provisions to ordinary fees for service as well as when the economic entitlement provisions can apply in relation to certain arrangements involving retirement villages.
Guidance on the calculation of economic entitlements is set out in Revenue Ruling DA-066. This ruling addresses how to determine the percentage of beneficial ownership of land taken to have been acquired under an economic entitlement and the circumstances where the Commissioner would consider it appropriate to exercise discretion under section 32XE(3) of the Duties Act to determine a percentage less than 100%.
Draft Revenue Ruling DA-067 (currently issued for public consultation) addresses the meaning of several key concepts including the meaning of the term 'arrangement' under the economic entitlement provisions. This ruling also deals with acquisitions of shares in companies and units in unit trust schemes that may be outside the scope of the landholder provisions in Part 2 of Chapter 3 of the Duties Act.
Exemptions and concessions
Several exemptions, concessions and reductions can apply to the beneficial ownership of land taken to be acquired under the Economic Entitlement in Relation to Land provisions. These include:
- the exemptions and concessions applicable to dutiable transactions under Part 5 of Chapter 2 of the Duties Act,
- the exemptions and concessions for corporate reconstructions under Chapter 11 of the Duties Act. A transfer of an economic entitlement between members of a corporate group can also be an eligible transaction under Chapter 11 of the Duties Act, and
- section 32XI of the Duties Act can reduce the amount of duty payable on a transfer of land to a person who, before the transfer, held an economic entitlement in relation to the land.
Further information and lodgment
Further information and answers to commonly asked questions are available on our economic entitlements FAQ page.
If you acquire an economic entitlement and a duty liability arises, you must lodge the acquisition with us for a duty assessment and pay the duty liability. Learn more about lodging economic entitlement arrangements in Duties Online.
